PUNJAB DISTILLING INDUSTRIES LTD. vs THE COMMISSIONER OF INCOME-TAX, SIMLA

The Supreme Court held that under Section 10 of the Indian Income-tax Act (XI of 1922), the amounts described as 'security deposit' received by the distiller were trading receipts and thus assessable to income tax. The Court reasoned that these amounts were integral to the commercial transaction of selling liquor in bottles and represented an extra price charged for the bottles, rather than true security deposits. The judgment followed the precedent set in K. M. S. Lakshmanier & Sons v. Commissioner of Income-tax, while distinguishing it from other cases like Davies v. The Shell Company of China Ltd.