9911796707
TMI Blog1999 (3) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 256(1) of the Income-tax Act, 1961 : "Whether, on the facts and in the circumstances of the case, was the Tribunal legally correct in holding that the interest paid under section 17(3) of the Sugarcane (Regulation of Supply and Purchase) Act, 1958, was not penal in nature for infringement of law and, therefore, it was allowable as deduction under the Income-tax Act, 1961 ?" The sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision for speedy payment of the price of cane purchased by him as may be prescribed. (2) Upon the delivery of cane the occupier of a factory shall be liable to pay immediately the price of the cane so supplied, together with all other sums connected therewith. (3) Where the person liable under sub-section (2) is in default in making the payment of the price for a period exceeding fifteen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se view the interest paid was in the nature of penalty. The Tribunal, however, took a different view and held that the interest was not penal in nature and was allowable as an expenditure. It is this view of the Tribunal that is under examination before us in this reference that has been made at the instance of the Commissioner of Income-tax. We have reproduced the provisions of sub-section (3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e before us the interest is not paid on the amount of any tax but is paid for delay in the payment of purchase price of raw material i.e. sugarcane and is clearly an expenditure allowable under section 37 of the Income-tax Act 1961. We therefore answer the aforesaid question in the affirmative i.e. against the Commissioner of Income-tax and in favour of the assessee-respondent. - - TaxTMI - TMI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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