Judgment ( 1. ) THIS is an income-tax reference made under Section 256 (1) of the Income-tax Act, 1961, by the Tribunal at the instance of the Revenue (Commissioner of Income-tax) in R. A. Nos. 148 to 151/ind of 1992 arising out of an order dated August 6, 1996, passed by the Income-tax Appellate Tribunal in I. T. A. Nos. 730 and 731/ind of 1987 and 316/7/ Ind of 1988 to answer the following questions of law said to arise out of the appellate order referred supra. "1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in allowing the claim of retrenchment compensation though there was no retrenchment of workers or closure of business ? ( 2. ) WHETHER, on the facts and in the circumstances of the case, the Tribunal was justified in treating the bottles used in liquor business as plant ? ( 3. ) WHETHER, on the facts and in the circumstances of the case, the Tribunal was justified in treating the assessee as owner of the bottles used in its business though the ultimate ownership of bottles rest with the Government of M. P. ? ( 4. ) WHETHER, on the facts and in the circumstances of the case, the Tribunal was justified in treating surplus in bottle deposit account as belonging to the customers and is not taxable income of the assessee ?" 2. The assessee (respondent herein) is a liquor contractor. They are a registered partnership firm engaged in the business of manufacture and sale of liquor. The assessee was granted licence for sale of country liquor under the provisions of the M. P. Excise Act for the period April 1, 1975, to March 31, 1978. This licence though claimed to have come to an end on March 31, 1978, the same was renewed for a further period up to March 31, 1981, from March 31, 1978, by the State in favour of the assessee. 3. For the assessment years in question, i. e. , 1978-79 to 1981-82, the assessee claimed a deduction of Rs. 48,941 on the ground that the sum Rs. 48,941 represents retrenchment compensation payable to the workers working in their unit. 3. For the assessment years in question, i. e. , 1978-79 to 1981-82, the assessee claimed a deduction of Rs. 48,941 on the ground that the sum Rs. 48,941 represents retrenchment compensation payable to the workers working in their unit. According to the assessee, since their licence was coming to an end on March 31, 1978, and they felt that the same may be renewed or may not and hence, keeping this uncertainty in mind, the assessee served a notice as contemplated under Section 25ff of the Industrial Disputes Act to workers seeking to retrench their services with effect from March 31, 1978. It is on this ground the assessee claimed a deduction of the said sum (Rs. 48,941) as being one of the admissible deductions under the Act from their total computation of income as retrenchment compensation. The Assessing Officer as also the Commissioner of Income-tax (Appeals) (annexures A/b) disallowed the claim of the assessee. However, in a further appeal to the Tribunal, filed by the assessee, the Tribunal allowed the claim and granted deduction as claimed by the assessee. It is against this claim allowed by the Tribunal, the Commissioner of income-tax prayed for the reference to this court under Section 256 (1) of the Act which as stated supra was accepted by the Tribunal. Accordingly, question No. 1 quoted supra has been referred to this court for answer on the merits along with other three questions, referred to supra. 4. Heard Shri R. L. Jain, learned senior counsel with Ku. V. Mandlik, learned counsel for the Revenue, and Shri K. Bhargav, learned counsel for the assessee. ( 5. ) HAVING heard learned counsel for the parties and having examined the question in the context of the record of the case, we are inclined to answer question No. 1 in favour of the Commissioner of Income-tax (Revenue) and against the assessee. ( 6. ) IT is in the case of CIT v. Gemini Cashew Sales Corporation [1967] 65 ITR 643 (SC) ; AIR 1967 SC 1559 , this question or we may say a somewhat similar question came to be considered by their Lordships of the Supreme Court. In that case, the question arose consequent upon the transfer of business of the assessee as to whether the assessee could claim the deduction as payment of retrenchment compensation. In that case, the question arose consequent upon the transfer of business of the assessee as to whether the assessee could claim the deduction as payment of retrenchment compensation. Their Lordships then in detail examined the scheme of retrenchment compensation in the light of Section 25ff of the Industrial Disputes Act and then in the context of the Income-tax Act for allowing as allowable deduction. In para. 7 their Lordships held as (page 647 of [1967] 65 ITR and under page 1561 of AIR 1967 SC) : "para. 7. Liability to pay retrenchment compensation arises under Section 25ff when there is a transfer of the ownership or management of an undertaking : it arises on the transfer of the undertaking and not before. Transfer of ownership or management of an undertaking in law operates, except in the conditions set out in the proviso, as retrenchment of the workmen. But until there is a transfer of the undertaking resulting in determination of employment, the workmen do not become entitled to retrenchment compensation. So long as the ownership of the business continues with the employer, the right of the workmen to claim compensation remains contingent. A workman may, before the transfer of ownership of the business, himself terminate the employment : he may die or he may become superannuated : in none of these cases the owner of the business is under any obligation to pay retrenchment compensation to the workman. The obligation to pay compensation becomes definite only when there is retrenchment by the employer, or when the ownership or management of the undertaking is, except in the cases contemplated by the proviso, transferred to a new employer, and not till then. The right therefore arises from determination of employment, or from transfer of the undertaking : it has no existence before these events take place. " ( 7. ) THEIR Lordships then in para. 10 held as under (page 649 of [1967] 65 ITR and page 1563 of AIR 1967 SC) : "para. 10. The question which arises in the present case is not about the admissibility of a provision made by a trader by the adoption of a reasonably satisfactory method estimating the present value of an obligation which may arise in future to pay a sum of money to his employees. 10. The question which arises in the present case is not about the admissibility of a provision made by a trader by the adoption of a reasonably satisfactory method estimating the present value of an obligation which may arise in future to pay a sum of money to his employees. The question that falls to be determined is whether the liability which arises on transfer of the business is to be regarded as a permissible outgoing in the account of the business which is transferred. Broadly stated, the present value on commercial valuation of money to become due in future, under a definite obligation, will be a permissible outgoing or deduction in computing the taxable profits of a trader, even if in certain conditions the obligation may cease to exist because of forfeiture of the right. Where, however, the obligation of the trader is purely contingent, no question of estimating its present value may arise, for to be a permissible outgoing or allowance, there must in the year of account be a present obligation capable of commercial valuation. " ( 8. ) FURTHER in para. 12 their Lordship had this to say (page 650 of [1967] 65 ITR and page 1563 of AIR 1967 SC) : "para. 12. Under Section 10 (2) (xv) of the Indian Income-tax Act in the computation of taxable profits (omitting parts of the clause not material) any expenditure laid out or expended wholly and exclusively for the purpose of such business, profession or vocation, i. e. , business, profession or vocation carried on by the assessee, is a permissible allowance. But to be a permissible allowance the expenditure must be for the purpose of carrying on the business. Where accounts are maintained on the mercantile system, if liability to make the payment has arisen during the time the business is carried on, it may appropriately be regarded as expenditure. But where the liability is, during the whole of the period that the business is carried on, wholly contingent and does not raise any definite obligation during the time that the business is carried on, it cannot fall within the expression expenditure laid out or expended wholly and exclusively for the purpose of the business. " ( 9. But where the liability is, during the whole of the period that the business is carried on, wholly contingent and does not raise any definite obligation during the time that the business is carried on, it cannot fall within the expression expenditure laid out or expended wholly and exclusively for the purpose of the business. " ( 9. ) AND at last their Lordships answered the question against the assessee and held as under (page 651 of [1967] 65 ITR and page 1563 of AIR 1967 SC) : "para. 14. The amount of Rs. 1,41,506 claimed as a permissible allowance by the assessee in its profit and loss account cannot, in our judgment, be regarded as properly admissible either under Section 10 (1) or Section 10 (2) (xv) of the Income-tax Act. The answer to the question must, therefore, be in the negative. " ( 10. ) WHEN we examine the facts of this case in the light of what is quoted supra in paras. 7 and 12, it becomes clear that in the present case neither was it a case of determination of employment nor was it a case of transfer of the undertaking. In other words, mere serving of the notice as contemplated under Section 25f of the Act was not sufficient. What was necessary in the facts of this case was determination of employment as a fact of the employees and actual payment to each of the workers under the head retrenchment compensation. No such factual finding was recorded on these issues and the discussion centred around to only issuance of so-called notice. It is not in dispute that the licence though expired on paper on March 31, 1978, but again it was continued to operate and enjoyed by the assessee up to March 31, 1981, uninterruptedly. It is not the case of the assessee that all the workers, therefore, though terminated were re-employed or in their place, new employees were taken in the service. It was, in our opinion, a clear case where neither the business of an assessee came to an end, nor the licence came to an end and nor any of the employees was retrenched. It was, in our opinion, a clear case where neither the business of an assessee came to an end, nor the licence came to an end and nor any of the employees was retrenched. But it was to our mind a case where all the employees services continued uninterruptedly, without any break and without there being any case of retrenchment having taken place as alleged thereby not making the assessee entitled to claim the benefit of any deduction under the Act. ( 11. ) IN our opinion, the Tribunal committed an error in distinguishing the law laid down by the Supreme Court in the case of Gemini Cashew Sales Corporation [1967] 65 ITR 643 and placing reliance on law laid down by the Punjab and Haryana High Court in the case of Ambala Cantt. Electric Supply Corporation Ltd. v. CIT [1982] 133 ITR 343. It should have been in our opinion the other way round. In other words, the Tribunal should have placed reliance on the law laid down by the Supreme Court for deciding the issue rather than on the law laid down by the Punjab and Haryana High Court which was distinguishable on the facts. ( 12. ) IN the case before the Punjab and Haryana High Court, the undertaking was actually transferred by operation of law as a fact in accordance with the provision of the Electricity Act. It is due to vesting of an undertaking with the Electricity Board, the case of retrenchment was made out as a fact on a certain date, i. e. , the date of vesting. Once, an event of determination of employment occurs due to transfer of undertaking by operation of law as a fact then in terms of Section 25ff of the Industrial Disputes Act, a case of payment of retrenchment compensation is made out under the Industrial Disputes Act. Such was neither the case before the Supreme Court nor in the present case. In this view of the matter, the assessee was not entitled to claim the benefit of deduction of Rs. 48,941 under the head "retrenchment compensation", as a permissible deduction under the Income-tax Act. ( 13. ) IN view of the aforesaid discussion, we answer question No. 1 in favour of the Commissioner of Income-tax, i. e. , the Revenue, and against the assessee. 48,941 under the head "retrenchment compensation", as a permissible deduction under the Income-tax Act. ( 13. ) IN view of the aforesaid discussion, we answer question No. 1 in favour of the Commissioner of Income-tax, i. e. , the Revenue, and against the assessee. In other words, we answer question No. 1 by saying that the Tribunal was not justified in allowing the claim of retrenchment compensation in favour of the assessee. ( 14. ) THIS takes us to questions Nos. 2 and 3, as in our opinion both these questions are interlinked with each other. For convenience, we reproduce these questions Nos. 2 and 3, infra : "2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in treating the bottles used in liquor business as plant ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in treating the assessee as owner of the bottles used in its business though the ultimate ownership of bottles rests with the Government of M. P. ?" ( 15. ) IN our opinion, so far as question No. 2 is concerned, it remains no longer res integra and stands answered by several decisions. In substance, the question that falls for consideration is, whether bottles are a plant for the purpose of claiming depreciation under the Act ? ( 16. ) THIS question was examined by the Delhi High Court in the case of Joint CIT v. Anatronics General Co. (P.) Ltd. [2001] 247 ITR 25, the Rajasthan High Court in the case of CIT v. Jai Drinks (P.) Ltd. [1988] 173 ITR 100, the Andhra Pradesh High Court in the case of CIT v. Sri Krishna Bottlers Pvt. Ltd. [1989] 175 ITR 154, the Madras High Court in the case of First Leasing Co. of India Ltd. v. CIT (No. 2) [2000] 244 ITR 238 and the Gujarat High Court in the case of CIT v. Saurashtra Bottling Pvt. Ltd. [1998] 232 ITR 270. of India Ltd. v. CIT (No. 2) [2000] 244 ITR 238 and the Gujarat High Court in the case of CIT v. Saurashtra Bottling Pvt. Ltd. [1998] 232 ITR 270. All the High Courts have consistently taken the view on the basis of the law laid down by the Supreme Court in the case of CIT v. Taj Mahal Hotel [1971] 82 ITR 44 and in the case of Scientific Engineering House (Pvt.) Ltd. v. CIT [1986] 157 ITR 86 (SC) that bottle is a plant for the purpose of claiming depreciation under the Income-tax Act. The facts of all the cases decided by these High Courts and the one involved in this case are not different so as to hold otherwise. In this case also the assessee being engaged in the business of manufacture and sale of liquor in bottle had every right to claim depreciation on the bottles used in the sale of liquor. These bottles were essential tools of the trade for it was through them only the liquor was passed on from the assessee to the customer. Without the bottles, the liquor could not be effectively transported or sold. Indeed, the bottles and their contents were so interdependent with each other that no business can be carried on without them. They could not be, therefore, regarded as stock-in-trade but they (bottles) satisfied the test of being regarded as plant within the meaning of Section 43 (3) of the Act. ( 17. ) THE submission of learned counsel for the Revenue was that since the assessee was not the owner of the bottles and hence, they had no right to claim any depreciation is not acceptable to us. Firstly, in view of the nature of the-licence and the arrangement with the State, the assessee was in a position to claim ownership for the purpose of claiming depreciation under the Act. Secondly, one need not be an absolute owner of the goods for claiming depreciation under the Act. ( 18. ) IN view of the aforesaid discussion, we answer questions Nos. 2 and 3 quoted supra against the Commissioner of Income-tax, i. e. , the Revenue, and in favour of the assessee. In other words, we answer the aforesaid two questions, i. e. , questions Nos. ( 18. ) IN view of the aforesaid discussion, we answer questions Nos. 2 and 3 quoted supra against the Commissioner of Income-tax, i. e. , the Revenue, and in favour of the assessee. In other words, we answer the aforesaid two questions, i. e. , questions Nos. 2 and 3 by holding that the Tribunal was justified in holding that the bottle is a plant and hence entitled the assessee to claim depreciation on the bottles under the Income-tax Act. ( 19. ) THIS takes us to the last question No. 4 which for convenience reads as under : "4. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in treating surplus in bottle deposit account as belonging to the customers and is not taxable income of the assessee ?" ( 20. ) IT is not in dispute that though the assessee used to collect the money from each customer against each bottle sold to him it was in the nature of a deposit with the assessee and on fulfilment of the conditions stipulated in that behalf, the assessee had to refund the money to the customer. So there was a definite obligation on the part of the assessee to return the money to the customer which they had collected by way of deposit or one may say by way of security against the sale of bottle. The money in such cases was not in the nature of income as such because it had to be returned to the customer from whom it was received on fulfilment of certain conditions on behalf of the customer. In this view of the matter the amount of Rs. 72,900 could not be held as an income of the assessee for the year in question. Accordingly, the Tribunal was right in answering this question against the Commissioner of Income-tax and in favour of the assessee. We on our part also answer question No. 4 against the Commissioner of Income-tax and in favour of the assessee. ( 21. ) ACCORDINGLY, and in view of the aforesaid discussion, we answer : (a) question No. 1 in favour of the Commissioner of Income-tax and against the assessee. (b) Questions Nos. 2, 3 and 4 against the Commissioner of Income-tax and in favour of the assessee. ( 22. ) NO costs.