- (1.) THE Tribunal, New Delhi has referred to following two questions of law under s. 256(1) of the IT Act, 1961 (hereinafter referred to as "the Act") for opinion of this Court : "1. Whether on the facts and circumstances of the case, the Tribunal was right in law in holding that the assessee was entitled to deduction on account of interest on excess levy sugar price ? 2. Whether on the facts and in the circumstances of the case the Tribunal was right in law in holding that the assessee's claim for deduction of interest on additional cane price was allowable -
(2.) BRIEF facts of the case are as follows : Assessee -respondent (hereinafter referred to as "assessee") was carrying on the business sugar. Assessee filed writ petition in this Court and challenged the price of levy sugar as fixed by the Government. In terms of an interim order passed by this Court, assessee was allowed to sell the levy sugar at a price higher than that fixed by the Government on a condition that in the event of final decision of this Court against the assessee, the excess amount realised by the assessee would become refundable along with interest @ 12.5 per cent. The assessee was required to furnish bank guarantee for the excess sale price realised by it. During the accounting period relevant to asst. yr. 1987 -88 the assessee debited a sum of Rs. 38,61,101 being the interest payable @ 15 per cent of the amounts realised in excess of the levy price fixed by the Government. Deduction for the amount was claimed on the ground that as a result of coming into force of the Levy Sugar Price Equalisation Fund (Amendment) Act, 1984, the interest was payable @ 15 per cent. The AO rejected the assessee's claim for deduction of interest on excess collections on the ground that the liability to pay interest would accrue only when the amounts of excess collections become refundable as a result of the final orders on the assessee's writ petitions. The CIT(A), while allowing the assessee's claim for deduction, following his earlier orders, held that the liability was allowable only to the extent of interest payable @ 12.5 per cent because the increased rate of interest as per the Levy Sugar Price Equalisation Fund (Amendment) Act, 1984 was applicable only to the excess collections made after the commencement of such Act whereas in the present case the excess collections had been made prior to the commencement of the above Act. On this basis, the CIT(A) allowed a relief of Rs. 32,19,832 to the assessee. Against the CIT(A)'s above decision, the Department filed appeal before the Tribunal which, following its earlier orders for the asst. yrs. 1983 -84 to 1986 -87, has directed the AO to examine whether the excess collections have been credited to the equalisation fund before the commencement of the Act, in which case the interest would be payable @ 12.5 per cent and if such excess collections were not credited to the fund account till the commencement of the Act, the interest would be allowable @ 15 per cent. The assessee has further claimed the deduction of Rs. 95,380 on account of the interest claimed to be payable on additional cane price, which was disallowed on the ground that in view of the Hon'ble Supreme Court's order on this issue, the liability to pay the interest will arise only when the assessee fails in its appeal. Till such time it was a contingent liability. On appeal filed by the assessee, the CIT(A) felt that this issue was also covered by the earlier decision of the Tribunal in assessee's favour and accordingly, deleted the addition. The Department took the matter before the Tribunal, who has upheld the order (of the) appellate authority. Tribunal held as follows : "The second ground of appeal is relating to the addition of Rs. 95,386 on account of interest on additional cane price. The CIT(A) has deleted the addition under mistaken notion that the issue was covered by the decision of the Tribunal in assessee's own case. It has fairly been conceded by the learned counsel for the assessee that there was no decision of the Tribunal either in favour or against the assessee on this issue. In the past no such disallowance had been made and therefore, there was no decision of the Tribunal. Since the decision of the CIT(A) is contrary to the facts on record, we set aside his order on this issue. The AO disallowed the interest for the reasons as in the case of excess levy sugar price. We instead of remitting this issue back to the file of the AO for a decision, direct the AO to follow the principles laid down by the Tribunal in para 7 of the order for asst. yrs. 1983 -84 to 1986 -87, referred to above, for allowance of deduction in respect of this amount of Rs. 95,386."
(3.) HEARD Sri R.K. Upadhayaya, learned standing counsel appearing on behalf of the Revenue and Sri R.R. Agrawal, learned counsel for the assessee. Learned standing counsel submitted that both the aforesaid questions are covered by the decisions of this Court inter partes in CIT vs. Dhampur Sugar Mills Ltd. (2005) 194 CTR (All) 170 : (2005) 274 ITR 340 (All) and CIT vs. Dhampur Sugar Mills Ltd. (2005) 274 ITR 370 (All) relating to the earlier years.;