TMI Blog1977 (9) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... te company limited by shares and is engaged in the business of manufacture and sale of cool drinks. It claimed by way of revenue loss a sum of Rs. 34,482 in the assessment year 1970-71 and a sum of Rs. 35,341 on the same score in the assessment year 1971-72 and contended that the alleged losses arose thus : Assessee has to undertake bottling of the drink manufactured by it for marketing. For that purpose it purchases bottle, fills them up with cool drink and supplies the same to its customers through agencies. The liquid content inside the bottle is the subject-matter of sale and bottles are not intended to be sold. With a view to ensuring the return of the bottles to the manufactory, the assessee keeps a security deposit against the bottle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Flour Mills P. Ltd [1964] 53 ITR 134 regarding the method of accounting regularly followed by the appellant,....... I have carefully considered the appellant's submission and the full particulars of accounts submitted by the appellant and find that though the Income-tax Officer has allowed the breakage claimed by the appellant in manufacturing, he failed to allow the difference between the cost price of the bottles and the sale price deposited by the retail dealers as revenue expenses. Following the method of accounting regularly followed by the appellant, I hold that the Income-tax Officer is not justified in disallowing the claim for the value of depreciation of bottles and shells........" The revenue appealed against the direction to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to customers, scrapped and destroyed." Mr. Mohanty maintains that Pickles is a high authority on the subject and had been quoted with approval by the Supreme Court in the case of Challapalli Sugars Ltd. v. Commissioner of Income-tax [1975] 98 ITR 167. In this case, the Supreme Court was obviously emphasizing on the feature of the method of accounting. Whatever be the method of accounting, the ultimate purpose of its maintenance is to give a true and complete picture of the dealings in respect of which such account is maintained. Under the Act, it is the duty of the Income-tax Officer on the basis of accounts maintained by the assessee and produced before him to ascertain with precision the income earned by the assessee. If the accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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