Ganga Sugar Corpn. Ltd. vs Commissioner of Income Tax

D.K. Kapur, J.—For the assessment years 1966-67 and 1967-68 the following question has been referred to us : Whether, on the facts and in the circumstances of the case, the Tribunal was justified in not allowing as revenue expenditure the interest of Rs. 52,673 on arrears of purchase tax paid by the applicant in the accounting year relevant to the assessment year 1967-68 ?

The first question has been raised at the instance of the assessee and forms the subject-matter of reference [IT Nos. 6 and 7 of 1976], but as the question shows, it relates only to assessment year 1967-68. A similar question was dealt with by this Court in the case of Mahalakshmi Sugar Mills Co. Ltd. [IT Reference Nos. 51 to 55 of 1977]. It was held that the said amount was deductible as a revenue expenditure following the judgment of the Supreme Court in Mahalaxmi Sugar Mills Co. Vs. Commissioner of Income Tax , Delhi, . Following that judgment, we hold that in this case also the assessee is to be allowed a revenue deduction. The first question is, therefore, answered in the negative in favour of the assessee and against the department. 2. The second question has been raised at the instance of the department and is the subject-matter of IT reference Nos. 8 and 9 of 1976. For convenience, as there is only one statement of case, all these references are being dealt with together. This question has also been decided in favour of Mahalakshmi Sugar Mills Co. Ltd.''s case (supra), decided by this Court. It was there held that the commission was deductible expenditure. We would, therefore, answer the second question also in favour of the assessee, in the affirmative. The parties will bear their own costs in all these references.