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TMI Blog1989 (9) TMI 170X X X X Extracts X X X X X X X X Extracts X X X X ..... ing years 1968 to 1971 covering the assessment years 1969-70 to 1972-73, the assessee had collected over and above the permitted price Rs. 16,97,819. This was offered for assessment in those respective assessment years. There is no dispute that these amounts were taxed. 3. The High Court disposed of the writ petition in 1972 upholding the order of the Government. The High Court also held that the change would not be applicable for the sugar seasons prior to 1972. Thus, in respect of the excess collections made amounting to Rs. 16,97,819, the assessee was permitted to retain them. Against the order of the High Court holding that the levy sugar order would not be applicable for the seasons prior to 1972, the Government had appealed to the Supreme Court. We understand that this appeal is still pending before the Supreme Court. 4. In the meanwhile, the Government had passed an Act called the Levy Sugar Price Equalisation Fund Act, 1976. According to this Act a fund is to be established called the Levy Sugar Price Equalisation Fund. The sugar mills which had collected price over and above what was fixed in the respective zones have to make over such excess collections to the Fund wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finding of the Income-tax Officer has been upheld by the Commissioner (Appeals). 7. The assessee is on further appeal before us. We will first take up the claim for deduction of Rs. 16,97,819. This has not been paid under the Fund Act. It is claimed as a deduction because the Fund Act came into effect during the accounting year and according to the assessee there is a liability to transfer the excess collections made in the earlier sugar seasons and such transfer must be effected within one month of the Fund Act coming into force. That is why they had claimed a deduction of the entire collections of the earlier years. The claim for interest of Rs. 15,80,288 has been calculated on the basis that for every season interest would become payable and the liability of each of the years crystallized during the accounting year relevant to the assessment year 1977-78. 8. We are unable to accept the assessee's submission that they are entitled to a deduction of Rs. 16,97,819. The High Court, while disposing of the writ petition of the assessee, has given a very clear finding that the sugar seasons prior to 1972 are outside the ambit of the Sugar Control Order. This decision was given duri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent as ultra vires. In the case of a compensation or acquisition, it is well settled that the compensation ordered by the Land Acquisition Officer is only an offer and the contract would be completed if the offer is accepted. So long as the assessee appeals, the offer has not been accepted and the contract is not complete. It is this fact relating to the Acquisition Act which had been highlighted by the Supreme Court in the referred case at page 529. Such an issue would not arise in a case where in a writ petition the High Court holds that the Government had neither jurisdiction nor power to call for the deposit of excess collections. 11. We may also refer to certain decisions of the High Courts where they have dealt with liabilities arising out of a statute which was struck down by the High Courts. We may in this connection refer to the decision of the Madras High Court in the case of CIT v. T.S. Srinivasa Iyer [1984] 146 ITR 526. The point at issue was whether the assessee could claim urban land tax as deduction. The levy of urban land tax was a matter of dispute and the High Court had held that the levy was not valid. Subsequently, the Supreme Court, reversing the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority. The assessee no doubt initially had claimed by way of liability to pay gratuity to the employees, an amount of Rs. 92,109. However, the assessee itself had reversed this entry and had given up the claim. This fact has been overlooked by the assessing authority who had disallowed the amount. The mistake arose on the part of the assessing authority because the assessee had credited this amount on reversal to the miscellaneous expenses account. That is how the reversal entry was lost sight of. In view of the factual position, we would delete the addition. 18. The next ground, i.e. depreciation on staff quarters, was not pressed at the time of hearing. 19. In the next ground, the assessee is claiming deduction under section 80P in respect of the interest payments received from District Co-operative Central Bank Ltd. The assessee has certain fixed deposits with the Co-operative Central Bank on which interest is receivable. The assessee has also taken advances on which interest is payable. According to the assessing authority, the claim for exemption of interest under section 80P should not be viewed in isolation and it should be considered along with the interest payable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this had been overlooked. We find that the assessee is entitled to the claim. Therefore, we direct the Income-tax Officer to allow the same. 22. For the assessment years 1982-83 and 1983-84, the claim in respect of the payment to the gratuity fund has been raised. The assessee had created a gratuity fund and had submitted the same to the Commissioner of Income-tax for granting exemption. It appears that by oversight the claim was not at all processed in the Commissioner's office. We understand that it is now being processed. The assessee's only claim is that it should be allowed subject to the Commissioner granting recognition to the gratuity fund. In our opinion, this is a very fair submission and we direct the Income-tax Officer to allow the deduction if the Commissioner recognises the assessee's gratuity fund. 23. For both these years, the assessee has also claimed exemption under section 80P(2)(d) in respect of the interest from the Co-operative Central Bank. The facts are identical with the facts for the year 1981-82. For the reasons given in the earlier paragraphs, we are of the opinion that the assessee is not entitled to the deduction. 24. For the assessment year 1983 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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