Commissioner of Income Tax vs National Co-operative Sugar Mills Ltd.

R. Jayasimha Babu, J.—Two questions have been referred to us. The first relates to the claim of the assessee that the contributions made by it to the Molasses Storage Fund during the years 1974-75, 1976-77, 1979-80, 1980-81 and 1981-82 are not to be treated as part of its income, as there has been diversion of income at source. A similar question was considered by this court in the case of Commissioner of Income Tax Vs. Salem Co-operative Sugar Mills Ltd., and that question was answered in favour of the assessee. A similar answer has to be and is recorded in these cases as well.

The second question relates to the Tribunal''s holding that the subsidy received by the assessee should not be deducted from the cost of the machinery for the purpose of depreciation and investment allowance. A similar question was considered by this court in the case of Commissioner of Income Tax Vs. South India Sugars Ltd., and was answered in favour of the assessee. The second question is therefore answered in favour of the assessee.

At the oral request of counsel for the Revenue, we grant leave to the Revenue to appeal to the apex court against our decision with regard to question No. 1, as the earlier decision of this court is already pending in appeal before the Supreme Court, and thereafter, numerous similar matters have been taken to the apex court either by way of certificate from this court, or after grant of special leave.