JUDGMENT
R. Jayasimha Babu, J.
1. The assessee was carrying on business in soft drinks sold under the name “Torino”. The assessment year involved is 1980-81. It had earlier been also carrying on the business as bottler of Coco-Cola and Fanta. The bottles meant for the same were required to be manufactured by the assessee according to the specification given by the American company. Some time prior to 1980-81, the Government of India having declined permission to market Coca-Cola in India, a large number of bottles, which had been manufactured and kept for use could no longer be used. The American company was under no legal obligation to purchase those bottles. It, however, agreed to pay a sum of Rs. 3,80,000 if 38,000 of empty bottles were to be destroyed in the presence of the representative of the American company. That amount was paid. That receipt was not, however, considered as income by the Income-tax Officer. The Commissioner, in a suo motu revision, held that it should have been included as income. He held so, after rejecting the submission that he has no jurisdiction to revise the order, as an appeal had been preferred against the assessment order and that precluded the exercise of the revisional jurisdiction.
2. The Tribunal, on appeal, upheld the assessee’s objection to the exercise of revisional jurisdiction. On the merits it concurred with the Commissioner and held that the receipt was a revenue receipt. The Revenue has brought before us the question regarding the correctness of the Tribunal’s View that the Commissioner has no jurisdiction by reason of an appeal having been preferred against the assessment order, while the assessee has brought before us the question as to whether the Tribunal was right in holding that the amount paid for the destruction of the bottles is a revenue receipt.
3. So far as the revisional jurisdiction of the Commissioner is concerned, the law is now settled by the Supreme Court in CIT v. Shri Arbuda Mills Ltd. [1998] 231 ITR 50 wherein it was held that the exercise of the revisional jurisdiction is permissible when an appeal has been preferred, in respect of such of those matters which are not the subject-matter of the appeal. Here, admittedly, the question as to the manner in which the amount received by the company for the destruction of these bottles should be treated whether as a capital or revenue receipt, was not an issue in appeal. The Commissioner was, therefore, well within his powers in exercising the revisional jurisdiction. The contrary view taken by the Tribunal is untenable. We answer the question regarding the exercise of
the revisional jurisdiction of the Commissioner in favour of the Revenue and against the assessee.
4. As to whether the amount received for the destruction of the bottles should be treated as a revenue receipt, we are unable to accept the view of the Tribunal, and of the Commissioner. This court, in a case concerning this very assessee in CIT v. Soft Beverages (P.) Ltd. [2000] 245 ITR 194 has held that each bottle used for bottling soft drinks constituted, a plant and that it is a capital asset. The court, in so holding, following its earlier decision in the case of First Leasing Co. of India Ltd. v. CIT (No. 2) [2000] 244 ITR 238 (Mad). The court, in that earlier case of this assessee, held that the value of the bottles which the assessee had at the time when Coca-Cola was withdrawn from India, cannot be treated as a business loss.
5. The bottles, being a capital asset, the monies realised from Coca-Cola as consideration of the destruction of the bottles, must be regarded as capital receipt. The first question referred at the instance of the assessee is, therefore, answered in favour of the assessee and against the Revenue.
6. The second question referred to us at the assessee’s instance as to whether the Tribunal was right in holding in the alternative that the compensation received would be deemed profits is academic, in the light of our holding that the compensation received is a capital receipt.