AI Drafter 
TaxTMI 
TaxTMI 
2004 (11) TMI 37
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....come-tax Act, 1961, for the assessment year 1979-80? (2) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is correct in law in holding that the amount of Rs. 5,46,000 received by the assessee from M/s. Coca-Cola Export Corporation does not constitute a revenue receipt in the assessee's hands? (3) Whether, on the facts and in the circumstances of the case, the finding of the Income-tax Appellate Tribunal that no value can be attributed to the stock of Coca-Cola and Fanta bottles lying with the retailers and also lying in the assessee's factory premises is correct? (4) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal ought to have upheld the dis....
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....er, did not allow this claim in the initial stage, but the Tribunal finally held in favour of the assessee. For the subsequent assessment years 1977-78 and 1978-79, there was a claim for deduction under section 32(1)(ii) of the Act. The reference pertains to the assessment year 1979-80. During this year some unforeseen circumstances happened, as the Government prohibited use of concentrates prepared by the Coca-Cola Corporation. Since the bottles were embossed with the trade mark, they could not be utilized for bottling of any other soft drinks. Thus, all the bottles of the assessee became useless. The assessee claimed deduction under section 32(1)(iii) of the Act. Such useless bottles amounted to Rs. 17,14,341. The Commissioner (Appeals) h....
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....s held entitled to Rs. 5,46,000. The assessee claimed that this amount was not taxable as it was a capital receipt. The Income-tax Officer had accepted his contention. However, the Commissioner of Income-tax (Appeals) felt otherwise. He gave a finding that the payment of Rs. 5,46,000 was directly related to the bottles which were destroyed under the supervision of the Corporation. Therefore, the Commissioner of Income-tax held that the deduction under section 32(1)(iii) amounting to Rs. 17,14,341 should be set off against the compensation amount and only the balance could be treated as allowable. Section 32(1)(iii) of the Act lays down: "(iii) in the case of any building, machinery, plant or furniture in respect of which depreciation is ....
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....uantity of Coca-Cola/Fanta bottles to which this offer of compensation will apply is 54,600 cases." In para. 5 it states: "For each case of 24 Coca-Cola/Fanta bottles thus destroyed in the presence of our appointee, and up to the maximum quantity calculated under the pro rata plan (as mentioned in para. 4 above) the Corporation will pay to the bottler the sum of ten rupees less any tax or other levy which may be applicable to the transaction in law." This letter leaves no room for doubt that this payment of Rs. 5,46,000 was on account of revenue on calculation of bottles and their costs, therefore, it constitutes a revenue receipt. The Tribunal was of the view that, in fact, what was given by the American company to the assessee wa....
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....ny person, for or in connection with vesting in the Government, or in any corporation owned or controlled by the Government, under any law for the time being in force, of the management of any property or business;" There is no doubt that the assessee was doing business on behalf of the American company in India and, therefore, the compensation received by it was exigible to income-tax and it had to be treated as a revenue receipt and not as capital. Question No. 4, in our view, is covered by a judgment of the Supreme Court reported in Mumbai Kamgar Sabha v. Abdulbhai Faizullabhai [1976] 49 FJR 15. There is a finding of fact in the order of the Tribunal which, in turn, is based on the finding of the Commissioner that the expenditure w....