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Section 28(i) of the Income-tax Act, 1961 - Business income - Chargeable as CASE REVIEW Morley (Inspector of Taxes) v. Tattersall [1938] 3 All E.R. 296/7 ITR 316 distinguished. K.M.S Lakshmanier & Sons v. CIT and Excess Profits Tax, Madras[1953] 23 ITR followed and relied upon. JUDGMENT Kapur, J.-This is a reference made by the Income-tax Appellate Tribunal of Delhi by their order dated the 20th of November, 1952, stating a case under Section 66(2) of the Indian Income-tax Act. The matter arises out of income-tax appeals which were directed against the assessments for the years 1947-48 and 1948-49 in respect of the profits and gains of the assessee in the previous years ending with November, 1946, and November, 1947. Besides this there were excess profits tax appeals against an assessment made in respect of the chargeable accounting period 1st December, 1945, to 31st March, 1946, and there were two business profits tax appeals against the assessments made in respect of the chargeable accounting periods 1st April, 1946, to 30th November, 1946, and 1st December, 1946, to 30th November, 1947. Thus there were five appeals but the point involved in all of them was the same. The assessee company was incorporated in May, 1945, and obtained the certificate of commencement on the 2nd of June, 1945. In reality it was a reconstructed company which was originally the Amritsar Distillery Company Limited and it had taken over the undertaking of the old company with all its assets and liabilities as from the 1st of December, 1944. For the purposes of income-tax the accounting year of the old as well as the new company ended with November of every year. The point in dispute relates to the "empty bottle security deposit" account which arose in the following circumstances. Before World War II bottles were cheap but difficulty was anticipated in regard to the supply of these bottles as the war progressed. In January, 1940, therefore, the Financial Commissioner of Lahore issued a circular in regard to the excise auctions held in that month. Note 2 to paragraph 6 of this circular was:- "At the time of auction it should be explained to the bidders that for every empty quart,…

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