2005 (1) TMI 745 - HC - Income Tax

Summary

Issues:
1. Interpretation of Income Tax Act, 1961 regarding the claim of interest on excess realisation of levy sugar price for a specific season.
2. Allowability of the claimed amount of interest on excess realisation of levy sugar price for the season 1973-74.
3. Application of the decision in CIT v. Dhampur Sugar Mills Ltd. (IT Reference No. 18 of 1983) to the present case.

Analysis:
1. The case involved a question of law referred by the Income Tax Appellate Tribunal, Allahabad, regarding the claim of Rs. 2,14,694 on account of interest on excess realisation of levy sugar price for the season 1973-74 under the Income Tax Act, 1961.

2. The respondent-assessee claimed deduction of Rs. 2,14,694 on account of interest on excess realisation of levy sugar price for the season 1973-74. The liability for interest accrued during the relevant accounting year for the assessment year in question. The Tribunal accepted the claim of allowability of the interest amount based on the provisions of the Levy Sugar Equalisation Fund Act, 1976 and the decision in CIT v. Dhampur Sugar Mills Ltd. (IT Reference No. 18 of 1983).

3. The Tribunal's decision was supported by the interpretation that the liability for interest accrued due to statutory provisions of the Levy Sugar Equalisation Fund Act, 1976 is allowable in the year it accrues. Citing the precedent in CIT v. Dhampur Sugar Mills Ltd., the Court affirmed the Tribunal's decision, answering the question of law in favor of the assessee and against the revenue.

4. The judgment concluded by stating that there would be no order as to costs, indicating a resolution of the issue in favor of the assessee without additional financial implications for either party.