B.P.JEEVAN REDDY, C.J. - (1.) UNDER section 256(2) of the Income-tax Act, 1961, the Tribunal has stated the following two questions : "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in holding that the extra amount of Rs. 2,07,943 realised as enhanced price as a result of the High Courts decision had not accrued in the year and did not form part of the income of the year and, as such, was liable to be deleted from the total income ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was legally justified in reducing the disallowance of interest by Rs. 23,733 ?"
(2.) SO far as question No. 1 is concerned, it is stated fairly by Sri Bharatji Agrawal, learned standing counsel for the Revenue that this question is covered by the decision of this court in Dhampur Sugar Mills Ltd. v. CIT, 1991 188 ITR 787. Though it is stated that the Revenue has not accepted the said judgment and is approaching the Supreme Court, the cannot be a circumstance for us not to follow the said judgment. Accordingly, following the said judgment, the question is answered in the affirmative, i.e., in favour of the assessee and against the Revenue. So far as question No. 2 is concerned, it is equally covered by another decision of this court in CIT v. H. R. Sugar Factory P. Ltd., 1991 187 ITR 363, and is answered against the assessee. We may briefly state the facts relevant to question No. 2. The assessee is a private limited company engaged in manufacture of sugar. During the accounting year relevant to the assessment year 1972-73, the assessee had borrowed certain amounts from the bank. It claimed deduction of the amount paid by it towards interest on the said loans. The Income-tax Officer, however, found that, out of the moneys so borrowed from the bank, a substantial portion was lent to the directors free of interest. Similar loans were also extended to a firm in which the directors of the assessee were interested. The Income-tax Officer was of the opinion that the interest relatable to the amount lent to the directors and to the said firm cannot be granted deduction, because it cannot be said that money to that extent was borrowed for the purpose of the said company. We find from the statement of the facts and the order of the Tribunal that the amounts advanced to the directors and their firm, free of interest, are quite substantial and that it was a continuing course of conduct and not and isolated transaction. In such circumstances, the principle of the said decision clearly applies. Following the same, we answer question No. 2 in the negative, i.e., against the assessee and in favour of the Revenue. No order as to costs.;