- (1.) THE Income Tax Appellate Tribunal, Delhi has referred following two questions of law under section 256(2) of the Income Tax Act, 1961 (here in after referred to as 'the Act') for opinion to this court: '(I) Whether on the facts and in the circumstances of the case, the Tribunal was, in law, justified in deleting the disallowance of interest on excess levy sugar price amounting to Rs. 26,49,900 ? (2) Whether on the facts and in the circumstances of the case, the Tribunal was, in law, justified in deleting the disallowance of Rs. 3,96,000 out of payment of interest as no interest was charged by the assessee company on the advance given to subsidiaries viz,, M/s. Dhampur Yeast Company, U.P. Straw Board and Agro Products Limited. The reference relates to the assessment year 1982 -83.
(2.) HEARD Sri A.N. Mahajan, learned counsel appearing for the revenue and Sri R.R. Agarwal, learned counsel appearing for the respondent assessee. So far as the first question is concerned, we find that this court in CIT v. Dhampur Sugar Mills Ltd. (2005) 145 Taxman 536 which is inter parties had answered the similar question in favour of the assessee. We may make it clear that from the order of the assessing authority as also the Tribunal it is not clear as to whether the amount of interest claimed had accrued during the previous year relevant to the assessment year in question or whether it related to the liability of interest of earlier years also. It is made clear that only that amount of interest which accrued during the previous year in question is liable to be allowed. So far as second question is concerned, we find that this court in ITR No. 196 of 1985 decided on 30 -9 -2004 which is inter parties had answered the similar question in favour of the assessee.
(3.) RESPECTFULLY following the aforementioned decision, we are of the opinion that the Tribunal was justified in deleting the disallowance of Rs. 3,96,000 out of the payment of interest. We accordingly, answer both the questions referred to us in affirmative, i.e., in favour of the assessee and against the revenue. However, there shall be no order as to costs.;