HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Commissioner of Income Tax, Punjab, Jammu & Kashmir, Himachal Pradesh and Patiala v. Punjab Distilling Industries Ltd.
Civil Appeals Nos. 107–111 of 1963
[1964] 7 SCR 447 ·
Indian Income Tax Act, 1922: section 10 · Punjab Excise Act, 1914: rule 40(14)(v) and (vi), as amended from 1 April 1948 · Historical excess profits tax and business profits tax, as applicable to connected appeals
Sources & disclosures includedDownload original judgment / order
3-judge bench · A. K. Sarkar, J. · M. Hidayatullah, J. · J. C. Shah, J.
Assessment years: 1946-47, 1949-50, 1950-51, 1951-52
01 · Facts of the case
Punjab Distilling sold bottled country liquor to licensed wholesalers and, in addition to liquor and bottle prices, collected an ‘empty bottles return security deposit’. The amount for a transaction was refundable in full if 90 per cent of the bottles were returned. The present appeals concerned assessment years 1946-47 and 1949-50 to 1951-52, across income tax, excess profits tax and business profits tax. The tax authorities treated the charges as taxable; the Tribunal viewed them as loans, and the Punjab High Court considered the post-1 April 1948 excise-rule amendment sufficient to distinguish the Supreme Court’s earlier decision about the same assessee (SCR pp.448–450; PDF pp.2–4).
Source: Primary judgment: facts
02 · Discussion by the Hon’ble Court
The Court held that the earlier judgment did not turn on absence of Government sanction, since Government approval did not determine a receipt’s tax character (SCR pp.450–451; PDF pp.4–5). Davies and Lakshmanier concerned deposits or loans anterior to later trading transactions; these bottle charges were part of the sale transactions themselves (SCR pp.451–453; PDF pp.5–7). The amended rule did not give the distiller an enforceable right to recover bottles through the wholesale-retail-consumer chain; it made refund depend on return. Nor did the rule itself collect the deposit: it authorised a contract on prescribed terms, under which the charge was actually taken (SCR pp.453–455; PDF pp.7–9).
Source: Primary judgment: discussion
03 · Judicial decision
The Court allowed Revenue’s appeals with one set of costs and answered the referred question affirmatively. The ‘empty bottles return security deposits’ were trading receipts taxable under section 10 (SCR p.455; PDF p.9).
Source: Primary judgment: decision
04 · Outcome / in whose favour
In favour of Revenue/appellant. The statutory-rule amendment did not distinguish the charge from the earlier Punjab Distilling holding; the charge remained part of the consideration surrounding each bottled-liquor sale (SCR pp.454–455; PDF pp.8–9).
Source: Primary judgment: outcome
05 · AKHB REVIEW POINT
AKHB analysis: classify a deposit by the legal and commercial arrangement, not its ledger label. Test whether it is received once as an anterior loan or security for a continuing relationship, or with each sale as part of the trading consideration; document refund triggers, enforceable return rights, control regulations and actual contractual terms. Apply the present statute and accounting context separately (based on SCR pp.451–455; PDF pp.5–9).
Source: Primary judgment: reviewPoint
Source & verification
Download original judgment / order · Open cited source rendition
Full 9-page SCR report read and checked. The editorial headnote was distinguished from the judgment text and operative order.
- Exact source bytes, SHA-256 and 9-page count match catalogue asset 1964_7_447_455; the full extracted report and operative pages were reviewed.
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Statutory scope
The decision concerns historical income-tax, excess-profits-tax and business-profits-tax assessments and the then Punjab excise rules governing licensed liquor sales. It does not determine the present treatment of deposits, refundable packaging charges, indirect taxes or contract liabilities.
Later treatment
Source checked 2026-10-10. Later judicial treatment and current statutory applicability have not been comprehensively checked; no current-law or citator clearance is represented.
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