R.K.AGRAWAL, J. - (1.) THE Tribunal has referred the following questions of law under s. 256(1) of the IT Act, 1961 (hereinafter referred to as "the Act"), for opinion to this Court : At the instance of the CIT : "1. Whether on the facts and in the circumstances of the case, the Tribunal was legally correct in holding that excess sale amounting to Rs. 21,57,611 realised by the assessee company, over and above the levy sugar price fixed by the Government was not a trading receipt completely ignoring the facts that the excess price charged represented income which accrued to the assessee company in terms of interim order of the Calcutta High Court restricting the Government 2. Whether on the facts and in the circumstances of the case, the Tribunal was legally correct in holding that a statutory liability arose against assessee company in the previous year under consideration to credit the Levy Sugar Price Equalisation Fund Act, 1976 by an amount of Rs. 7,77,654 being alleged interest for the year on the price realised by the company over and above the levy sugar price fixed by the Government ? 3. Whether on the facts and in the circumstances of the case, the Tribunal was legally correct in holding that a statutory liability arose against the assessee company in the previous year under consideration to credit Levy Sugar Price Equalisation Fund Act, 1976, by an amount of Rs. 42,788 in respect of excess realisation of sugar price for 1971 -72 season arose to the assessee - At the instance of the assessee : "Whether on a true and correct interpretation of the scheme under which the subsidy was granted by the Government of Uttar Pradesh, read with the provisions of s. 28 of the IT Act, the Tribunal was legally correct in holding that the sum of Rs. 20,11,000 receivable from the State Government was taxable as revenue receipt -
(2.) THE reference relates to the asst. yr. 1985 -86.
(3.) BRIEFLY stated, the facts giving rise to the present reference are as follow : The assessee is a limited company engaged in manufacture and sale of sugar. For the year under consideration, it had filed its return declaring a loss of Rs. 75,160. The assessment was completed on a total income of Rs. 62,59,180 vide disallowances. R.A. No. 240/All/1996 (By the Department) : During the year under consideration, the. assessee provided for a liability of Rs. 21,57,611 in the "sugar sales suspense account under dispute" shown in the balance sheet under the head "Current liability". The amount represented the difference between the price realised from the Food Corporation of India in respect of sale of levy sugar, as per the interim order of the High Court, and the price fixed by the Central Government. The AO brought the amount to tax treating the same as the trading receipt for the year under consideration.;