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TMI Blog1984 (7) TMI 204X X X X Extracts X X X X X X X X Extracts X X X X ..... king of those soft drinks. The containers for soft drinks namely bottles are to be got manufactured by the assessee to the specifications given by the American Co. The assessee had got the bottles manufactured and were bottling these soft drinks in them. 2. In May, 1977, the arrangement for selling these two soft drinks came to an end because the Govt. of India denied permission for the American Co. to sell the soft drinks concentrate in India because the American Co., would not agree to the conditions imposed by the Govt. of India. In view of this the business of the assessee of selling Coca-Cola and Fanta also faced the prospect of not being continued. Though during the previous year for this assessment year the business in these two dr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the value of all the bottles in the sum of Rs. 21,67,644.58 and the balance amount of Rs. 20,37,847.18 was written off in the accounts. 5. The IAC (Asst.) did not allow this claim on two grounds: firstly that it was premature because the assessee was still in a position to bottles the two soft drinks with the concentrate which it had in hand and because there was no measure of certainly that the bottles would not be useful to the assessee or would only realise a value of Rs. 1,14,367.50. The second reason was that this would represent a capital loss in the hands of the assessee. 6. The CIT (A) in appeal took into account certain further facts. These soft drinks were marketed in Indian not only by the assessee but by other concerns in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate of 24.89 Paise per bottle, realising in all a sum of Rs. 47,633. He also noticed that the assessee had not destroyed even a single empty bottle in the accounting year nor did the assessee sell a single empty bottle in the open market. He, therefore, held that the claim of the assessee is premature for this assessment year. He did not give any opinion on the question whether it is a revenue loss or a capital loss. 7. It is submitted before us that the assessee was suddenly faced with the problem of having a large stock for bottles which it cannot continue to use in its business, in view of the events that took place in May, 1977, which prevented the American Co. from continuing the supply of soft beverages concentrates. Taking into ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew of the manner in which the replacements have been allowed in the past assessment and in view of the fact that these bottles have really gone out of use with the assessee-company in its business, the loss claimed in this assessment year is to be allowed. 8. It is ascertained at the time of hearing that these bottles have been broken upto the extent of 3,800 cases, that certain bottles had been sold as bottles subsequently and that certain other bottles have been broken up and sold as cullets. It is pointed out that except for the compensation of Rs. 3,80,000 the other amounts have been included as a revenue receipt in the returns filed by the assessee in the subsequent years and assessed as part of its total income for the subsequent y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in manner that are not essentially in the conduct of its business would not be very relevant for determining the question as to when the bottles become useless to the assessee and consequently the question whether the assessee has sustained a business loss during the previous year for this assessment year. That the assessee would not be able to continue to sell these two soft drinks had become certain as on the last day of the previous year for this assessment year. It has also become certain that the bottles in which the drinks were sold had also become useless to the assessee. Therefore, the sustenance of the loss in the from of these bottles has become certain as at the close of the previous year for this assessment year and, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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