- (1.) This appeal by the assessee is directed against the order of the CIT(A), dt. 15th Nov., 1988 for the asst yr. 1985-86.
(2.) The assessee is a public limited company manufacturing sugar. It follows mercantile system of accounting. In this appeal, the assessee contests the disallowance of the liability to pay interest on the amounts credited by it to the Sugar Cess Fund. The other ground of appeal is with regard to investment allowance on weighbridge and scale.
(3.) The claim with regard to the interest on the amounts credited by the company to the Sugar Cess Fund was made under the following circumstances. The Government of India, through notifications dt. 28th Nov., 1974 and 11th July, 1975 bifurcated the country into different zones for the purpose of fixing the price of levy sugar. Different prices were fixed for different zones. This zonal classification was contested by the assessee and other few sugar mills in writs filed before the High Court. Pending final disposal of the writ petitions, the assessee was allowed by the High Court to collect price for the levy sugar as before upon the conditions, namely : (1) the assessee should furnish bank guarantee for different in price allowed to be collected and (2) that the assessee would be liable to pay interest on such excess collection at the rate of 12.5% p.a., if ultimately the writ petitions are decided against it, from the date of such collection till the date of payment into the Sugar Cess Fund. The amount on being refunded had to be credited to the Sugar Cess Fund, governed by the provisions of the Levy Sugar Price Equalisation Fund Act, 1976.;