CAPITAL GAINS TAX ON SALE OF SOFT DRINKS BOTTLES

The Supreme Court held that profits on sale of bottles and crates purchased by soft drink companies before 31.3.1995 were not taxable as 'balancing charge' as they did not form part of the block of assets either under Section 41(1) or under Section 50 of the Income Tax Act. In respect of such sales after 1.4.1995, on account of deletion of proviso to Section 31(1)(ii) (vide Finance Act, 1995) such bottles and crates formed part of block of assets and consequently such assets became eligible to capital gains tax under Section 50. Thus, the court has allowed appeals by bottling firms in the case, Nectar Beverages Ltd. Vs. Deputy Commissioner.