Commissioner of Income Tax vs Bharat Sugar Industries

By the Court

The Income Tax Appellate Tribunal, Allahabad has referred the following question of law u/s 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 Appellate Tribunal was justified in law in upholding the deletion of Rs. 1,02,415 being the difference between the actual payments made for purchase of sugarcane and the amount payable as per the purchase price fixed by the Government, from the total income of the assessee for the assessment year 1979-80?"

The reference relates to the assessment year 1979-80.

Briefly stated the facts giving rise to the present reference are as follows :

The respondent/assessee is engaged in manufacture of sugar. During the relevant accounting period the Government of U.P. had issued a notification on 8-6-.1978, fixing the purchase price of cane sugar at the rate of Rs. 9 per quintal. Subsequently, in terms of an interim order passed by the Hon''ble Supreme Court the respondent was allowed to purchase cane at lesser price than that fixed by the Government. The difference amount was, however, required to be kept in separate bank account till the final disposal of the matter by the Hon''ble Supreme Court. The respondent debited its trading account with the full amount of purchase price payable as per Government notification. The difference between the actual purchase price and the price fixed by the Government worked out to Rs. 1,02,415 which remained unpaid and appeared on the liability side of the balance sheet. The respondent claimed full deduction for the purchase price payable as per Government notification. The assessing officer however, allowed the claim only to the extent of purchase price actually paid and the unpaid amount of Rs. 1,02,415 was disallowed and added back to the assessee''s total income. Feeling aggrieved the respondent preferred an appeal before the Commissioner of Income Tax (Appeals), who deleted the addition following the order of the Income Tax Appellate Tribunal, in the case of Shri Bhagwati Sugar Industries IT Appeal No. 880 (All) of 1983-84, dated 15-12-1986 which order has been upheld by the Tribunal.

We have heard Sri A.N. Mahajan, learned standing counsel for the revenue. No body has appeared on behalf of the respondent/ assessee.

It may be mentioned that the matter relating to M/s. Bhagwati Sugar Industries, Barabanki came up in a reference before this court being ITR No. 117 of 1987 and vide order dated 23-11-2004, this court has answered the question, referred therein in favour of the department and against the assessee.

Respectfully following the aforesaid decision, we answer the question referred to us in the negative, i.e., in favour of the revenue and against the assessee. There shall be no order as to costs.