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CIT v. M/s Pannijee Sugar & Gen. Mills - INCOME TAX REFERENCE No. 133 of 1986 [2004] RD-AH 1276 (1 November 2004)


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Court No. 37

ITR 133 of 1986

Commissioner of Income Tax, Meerut............... Applicant.


M/s Pannijee Sugar & Gen. Mills Co. ...........   Respondent.

Hon'ble R.K. Agrawal, J.

Hon'ble Prakash Krishna, J.

The Income Tax Appellate Tribunal, Delhi has referred the following question of law under Section 256 (1) of the Income Tax Act, 1961, hereinafter referred to as the Act for opinion to this Court :-

"Whether the Tribunal was correct in holding that the amount of Rs. 6,52,732/- was not taxable in the hands of the assessee as income?

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

The respondent assessee is a HUF which derives income from manufacture and sale of sugar during assessment year 1979-80. It has received interest amounting to Rs. 652732/- on the fixed deposits kept by it with the District Magistrate in respect of excess levy sugar price realized by it under the interim orders passed by this Court. Before the Income Tax Officer, the respondent claimed that the aforesaid amount is not taxable as it is not its income. The Income Tax Officer, however, added the said amount towards income. In the appeal filed by the respondent, the Appellate Assistant Commissioner following its earlier orders deleted the addition.  The Revenue's appeal before the Tribunal has failed.

We have heard Shri A.N. Mahajan, learned Standing Counsel for the Revenue. No body has appeared on behalf of the respondent.

From a perusal of the order of the Tribunal, we find that while holding that the amount of interest is not taxable as income it had relied upon its earlier order in the case of Dhampur Sugar Mills Ltd in ITA Nos. 1099 (DEL)/73-74 and 3269 to 3277 (DEL)/74-75, dated 26.7.1976. It may be mentioned here that in respect of Dhampur Sugar Mills' matter this Court in ITR No. 18 of 1993 decided on 25thAugust, 2004 has held that the amount of excess levy sugar price realized by the Sugar Mill, pursuant to the interim order passed by this Court could not be treated as an income of the Sugar Mill and consequently, the interest accrued on the fixed deposits is also not an income.

The aforesaid decision was followed by this Court in ITR No. 196 of 1985, CIT Vs.. DhampurSugar Mills Ltd, decided on 30-9-2004.

Respectfully following the aforesaid decisions, we answer the question of law referred to us in affirmative i.e. in favour of the assessee and against the Revenue. There shall be no order as to costs.

Dt. 1.11.2004



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