- (1.) The Income Tax Appellate Tribunal, New Delhi has referred the following question 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 correct to hold that the excess price realised on levy of sugar does not become part of trading receipt and was not taxable
(2.) The present Reference relates to the assessment year 1984-85.
(3.) Briefly stated the facts giving rise to the present Reference are as follows: The assessee is a public limited company engaged in the manufacture of sugar and liquor. For this year the assessment was completed by the assessing officer on 20-3-1987. The Commissioner, Meerut on a review of the assessment found that in the balance sheet of the assessee a sum of Rs. 37,43,172 was shown as a liability on account of collection of enhanced levy sugar price. This amount was shown under the head 'Current liabilities'. Out of this an amount of Rs. 30,21,873 was realised by the assessee during the year from the customers as excess price on the levy sugar. This amount was not brought to tax by the assessing officer in the original assessment made on 20-3-1987. Considering that this was a mistake on the part of the assessing officer, which resulted in causing prejudice to the interests of the revenue, the Commissioner gave a notice on 15-12-1988 to the assessee requiring him to explain as to why the assessment made by the assessing officer should not be modified by adding the above sum. There were also two other items which were mentioned in the notice but we are not concerned with those sums in this reference. The assessee replied that this sum was not taxable because this amount was realised by it as per an order passed by the Allahabad High Court by furnishing bank guarantee and the amount was not to be regarded as assessee's income in the sense that it came to the assessee not as a final amount. The Commissioner did not accept this contention for the reasons given by him in his order and directed to include this amount as income of the assessee.;