1991 (4) TMI 193

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ddition of Rs. 53,457 to the total income of the assessee. 2. The assessee is a registered firm. It is engaged in the manufacture and sale of soft drinks. The assessee supplies soft drinks in its own bottles and obtains only the price of the beverage. The bottles which remained the property of the assessee are however allowed to be taken by the distributors on payment of a deposit. The receipt fo .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ounting to Rs. 28,000, the balance due as on 31-3-1982 was shown at Rs. 11,860. On these facts, the question was whether the amounts standing in the accounts of the assessee as deposit for bottles could be treated as the income of the assessee. The ITO was of the view that since very little amount had been returned, the intention of the assessee was not to refund the amount and, therefore, it shou .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... during the trading transaction it was properly taken as a trading receipt. 4. On a consideration of the rival submissions, we are of the opinion that the assessee is entitled to succeed. In the case of Punjab Distilling Industries Ltd., the company selling liquor in bottles collected a deposit in addition to the price of bottles fixed under the buy-back scheme. Under the Punjab Excise Rules, the .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... lment. The bottles belong to the assessee and they had been made with the logo of the assessee. The price paid was only for the beverage. The deposit taken was to secure the return of the bottles which always belonged to the assessee. The conditions in the receipt clearly spelt out the obligation of distributor to return the bottles because the main part of the receipt stated that the distributor .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... t arises only when the agency agreement is terminated which apparently had not yet taken place. In the circumstances, the amounts taken as deposits which were burdened with a liability to be repaid cannot be treated as the income of the assessee as long as that liability to repay the same remains unextinguished. We, therefore, delete the addition of Rs. 53,457. The ITO is directed to re-compute th .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X