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TMI Blog1988 (5) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... le of which is given below : "D.S.O. No. CT/1 1117 Dated 23-7-1980 To M/s Raj Trading Co., PHIPSON CO. LTD. Governorpet, Vijayawada-2 (A.P) Registered Office : 6, Old Court House Street, Calcutta-700 001 Phone : 23-1001-3, 23-0488 ------------------------------------------------------------------------------- Quantity Particulars Rate Cost Per Dozen Rs. P. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per Dozen Rs. P ------------------------------------------------------------------------------- To Deposit on bottles @ 9/- 5,580-00 --------- 620 Doz. Qts. Kalyani B/L Beer To go with Ch. 1117 d/ 23-7-1980 ------------------------------------------------------------------------------- Per................ Received in full Day Book Fol. No............... Freight............ and in good condition Ledger Fol. No................." The Income-tax Officer held that the amounts represented by way of deposit on bottles will not form part of the purchase price of the liq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es not represent the cost of the bottle and, in this view of the matter, he confirmed the disallowance. 3. Shri K. C. Devadas, learned chartered accountant appearing for the assessee, submitted that the authorities below have not appreciated the issue before them in the proper perspective. Liquor or any alcoholic drink cannot be sold in wholesale or in retail, de hors the container, viz., the bottle. The assessee had purchased liquor from its supplier at Calcutta. The supplier had for reasons best known to him made out two types of invoices or debit notes, one for the contents, i.e., liquor and another for the container. The invoice or debit note dealing with the container, viz., the bottle, described the amount as a deposit. In normal pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he accounts of the assessee is in accord with the general practice in the trade, viz., that the amount represented cost of the bottles. The assessee, in the first year, initially debited the amount as deposit, but then the amount was transferred to the rate difference account from which the final transfer has been given to the trading account and thus the so called deposit has ultimately found its way into the trading account as cost of purchaser of liquor. The trading account bears the credit for the sale of liquor contained in the bottle or, in other words, the sale of bottles containing the liquor. Thus, the cost of bottles is recovered in sales and the difference, if any, between the purchase and the sale is represented by the gross pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntative, agreed that liquors are purchased in bottles and are sold is bottles. The supplier also has subsequently clarified that the deposits are not deposits but represent the cost of the bottles. However, the confusion could have been avoided if such a clarification had been made much earlier. He anyway expressed a doubt whether at this stage of the proceedings such a clarification could be made by the assessee. 5. Having regard to the submissions made before us and the materials on record, we uphold the contention of the assessee. The assessee is a wholesaler-cum-retailer. It does not get the liquor in drums or barrels for sale in driblets. The assessee get the consignment only in crates of bottles containing the liquors which are sold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the Tribunal in accepting this confirmatory letter as it is not a new evidence. In fact, the production of such a letter would dispel any lurking doubt and is indispensable in judging the facts of the case. On the facts of the case also, a part from the confirmatory letter, we are satisfied that the assessee's stand is well founded, because whatever be the description or mis-description of the amount on account of the bottles on the part of the supplier, the assessee had taken these amounts ultimately to the trading account forming part of the purchase cost of the supplies which is pitted against the sale of liquor which is made along with the bottle. Therefore, we feel that there is no substance in the case of the revenue to make any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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