SC issues notice to United Breweries on tax issue

The Supreme Court has issued notice to Bangalore-based United Breweries on a petition filed by the Income-Tax department alleging that the liquor company cannot avoid payment of "actual taxes which it was liable to pay under the law".

The I-T department has questioned the sectoral tribunal's decision that allowed "payment of a guarantee commission" to the tune of Rs 7.85 crore to the United Breweries Chairman when he was not even competent to provide such guarantees.

The apex court, however, asked the department to compute the tax afresh.

Even the revenue had alleged that the Income Tax Appellate Tribunal was not right in allowing gifts and give-aways to be shown as expenditure when the company had not provided proof for such expenses.

Besides, it also challenged the tribunal's decision in deleting additions pertaining to "the accretion to bottle deposits" without verifying their genuineness.

A bench headed by Justice S B Sinha, however, issued notice to the liquor company only on this matter, which pertained to getting depreciation benefits.

According to the petition, the tribunal had erred in its conclusions with regard to accretion to bottle deposits and disallowance of interest on loans, it said.

While stating that the assessee had not furnished any details on accretion to bottle deposits and such details were even unavailable in the company's books of accounts, the petition said that the state exchequer will suffer if the assessee was allowed not to pay the "taxes which it was liable to pay under the law".