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TMI Blog1989 (12) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... n of M/s. India Sugar Refineries Ltd., for consideration of Rs. 33 lacs. According to the terms of the agreement to purchase, the assessee had taken overall the assets and liabilities of the vendor in respect of the distillery division. The liability relating to the excess realisation of sugar sales amounting to Rs. 33,71,042 was there and continues to be there even now. The purchase of the distillery division was made by the assessee on 1-10-1978. The assessee's claim before the I.T.O. was that it was liable to pay interest at the rate of 12.5 per cent on this transferred liability in terms of the provisions of section 3 of the Levy Sugar Price Equalisation Fund Act, 1976 (hereinafter referred to as 'the 1976 Act'). The I.T.O. disallowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee. The other two first appeals for the assessment years 1980-81 and 1982-83 came to be decided subsequently and were disposed of by a common order of the learned C.I.T. (A) dated 19.8.1985. This appellate order dated 19.8.1985 does not contain any discussion of the issue involved and has been based on the earlier order of the C.I.T. (A) dated 19-12-1984 for the assessment year 1981-82. 3. The arguments of the learned Departmental Representative and the learned counsel for the assessee were heard. 4. It was contended by the learned Departmental Representative that the vendor itself had disputed the liability purportedly fixed on it under the 1976 Act and had, for that reason, filed a Writ petition challenging the liability. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have considered the facts and circumstances of the case and studied with great care the relevant provisions of the 1976 Act and are of the view that the assessee's claim for deduction in respect of the interest charges could not have validly been allowed for any of the three years. There cannot be any quarrel with the proposition that on taking over by the assessee of all the assets and liabilities of the vendor, the assessee stepped into the shoes of the vendor and, therefore, became liable to pay the amount of Rs. 33,71,042 and the interest, if any, chargeable thereon in respect of the period subsequent to the date of purchase of the distillery division, i.e. 1.10.1978. This is irrespective of whether any debit entry on that account has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty days from such commencement, (b) in the case of an excess realisation made after such commencement, within thirty days from the date on which such excess realisation was made, credit to the Fund, the amount representing such excess realisations, together with interest due thereon at the rate of twelve and a half per cent per annum, from the date on which such amount was realised by him. (4) Where, by virtue of any interim order made by any court, whether before or after the commencement of this Act,-- (a) amounts representing the difference between the controlled price and price allowed by any court by an order made in this behalf, have been or are required to be,-- (i) kept with the producer himself, or (ii) kept deposited wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder that the vendor, and for that matter, the vendee, have omitted to deposit the amount of the excess realisation into the Fund thereby giving rise to the transfer of the liability from the vendor to the vendee. The interim order has undisputedly been issued by the courts under sub-section (4) of section 3 of the 1976 Act. Now, sub-section (5) of that section lays down that where, in pursuance of an interim order referred to in sub-section (4), any amount representing the difference between the controlled price and the interim price allowed by the court is held by any producer either with himself or with any other person or with any court, Government, bank or other authority or if collected and kept by the producer under the cover of any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1976 Act. The liability of the assessee, i.e. the vendee, in the instant case, is co-extensive with that of the vendor in respect of both the principal amount of excess realisation and any interest chargeable thereon in terms of the provisions of section 3 of the 1976 Act. Since no interest is payable by the producer in respect of the period during which the interim order of a court under sub-section (4) of section 3 of the 1976 Act is in operation, no such liability fastens on the assessee. 7. As a result of the above discussion and the position of law stated therein, we have come to the conclusion that the assessee was not liable to pay any interest on the amount of the liability relating to excess realisation for the accounting period ..... X X X X Extracts X X X X X X X X Extracts X X X X
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