- (1.) The Tribunal, Allahabad, has referred the following question of law under Section 256(1) of the IT Act, hereinafter referred to as an Act, for opinion of this Court: "Whether, on the facts and in the circumstances of the case, the Tribunal was right in disallowing the sum of Rs. 31,415 payable by the assessee as interest under Section 3(3) of the U.P. Sugarcane (Purchase-tax) Act, 1961, in the computation of its business profits for the asst. yr. 1976-77?"
(2.) We have heard Shri Rakesh Ranjan Agarwal, learned counsel for the applicant, and Shri A.N. Mahajan, learned counsel for the Revenue. The question as to whether the interest paid on the amount of purchase-tax under Section 3(3) of the U.P. Sugarcane Purchase Act is allowable deduction or not has been considered by five Judges Bench of this Court in the case of Triveni Engineering Works Ltd. v. CIT, (1983) 144 ITR 732 (All)(FB) wherein this Court has held that Interest on late payment of sugarcane purchase-tax is an allowable deduction. It has overruled the decision of the earlier Full Bench in the case of Saraya Sugar Mills (P) Ltd. v. CIT, (1979) 116 ITR 387 (All)(FB) which has been referred and relied upon by the Tribunal in the present case. It may be mentioned here that the five Judges Bench decision of this Court in the case of Triveni Engineering Works (supra) has been approved by the Hon'ble Supreme Court in the case of Lachmandas Mathuradas v. CIT, (2002) 254 ITR 799 (SC) Thus, the applicant was entitled for deduction for the amount of interest which it had paid on arrears of sugarcane purchase-tax.
(3.) In view of the foregoing discussions, we answer the question of law referred to us in the negative, i.e., in favour of the assessee and against the Revenue. However, the parties shall bear their own costs.;