- (1.) The Income Tax Appellate Tribunal, Allahabad, has referred the following two questions of law under Section 256(1) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'), for opinion to this Court: Whether, on the facts and in the circumstances of the case, the Tribunal was legally justified in holding that the assessee's claim for deduction of interest on excess levy sugar price was allowable Whether, on the facts and in the circumstances of the case, the Tribunal was legally justified in upholding the Commissioner (Appeals)'s action in deleting the disallowance of interest of Rs. 3,60,000, when no interest was charged by the assessee-company on the advances given to its subsidiaries, namely, M/s. Dhampur Yeast Co., and M/s. U.P. Strawboards and Agro Products Ltd. '
(2.) The reference relates to years 1983-84 to 1986-87.
(3.) Briefly stated the facts, giving rise to the present reference are as follows: The facts, which are common to question No. I is concerned, that applies for all the assessment years and under reference is related to the rate of interest payable on the excess levy price sugar collected by the assessee. The claim of the assessee was that interest at 15 per cent was allowable while the department had not allowed any interest. The Commissioner (Appeals), however, allowed the interest at 12.5 percent against which allowance, the department carried the matter to the Tribunal and the assessee was aggrieved on the order of the Commissioner (Appeals) for restricting the deduction to 12.5 per cent. The Tribunal in paras 4, 5, 6 and 7 of the order had made the following observations:;