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M/S Sir Sadi Lal Enter. Ltd. v. C.I.T. - INCOME TAX REFERENCE No. 141 of 1992  RD-AH 15585 (7 September 2006)
Income Tax Reference No.141 of 1992
M/s Sir Shadi Lal Enterprises Ltd., Muzaffarnagar
v. Commissioner of Income Tax, Meerut
Hon'ble R.K.Agrawal, J.
Hon'ble Vikram Nath, J.
(Delivered by R.K.Agrawal, J.)
The Income Tax Appellate Tribunal, Delhi has referred the following two questions of law at the instance of the assessee :-
"1. Whether on the facts and in the circumstances of the case, the Appellate Tribunal was correct in law in holding that the liability for purchase-tax payable, but which was not fallen due for payment under the U.P. Sugarcane (Purchase-tax) Act, 1961, can not be allowed as an expenditure in spite of introduction of the explanation to Sec.43 B by the Finance Act, 1987 on the ground that the amendment was not retrospective in its operation?
2. Whether on the facts and in the circumstances of the case the Appellate Tribunal was correct in law in holding that the liability incurred by the assessee under the U.P. Sugarcane (Purchase-tax) Act, 1961, payment of which being linked with the dispatches of sugar & not payable upto the close of the year, can not be allowed as an expenditure under the provisions of Sec. 43 B despite the fact that no part of such liability could, in fact, be deemed as claimed as having been adjusted against remission allowed, in terms of Notification dated 24.8.84 and standing to the credit side of the Profit & Loss Account?"
and the following questions of law at the instance of the Revenue :-
"Whether in the circumstances of the case, the Tribunal was legally correct to hold that the excess price realised on levy of sugar does not become part of trading receipt until the matter is finally decided in favour of the assessee?"
under Section 256(1) of the Income Tax Act, 1961, hereinafter referred to as the Act, for opinion to this Court.
The reference relates to the Assessment years 1985-86.
We have heard Sri S.D.Singh, learned counsel for the assessee and Sri R.K.Upadhaya, learned Standing Counsel appearing for the Revenue.
It has come on record that the assessee had paid the amount of the purchase tax under the provisions of the U.P.Sugarcane Purchase Tax Act, 1961, which it was liable to pay in the last month of the previous year relevant to the assessment year in question, in the succeeding month, which fell in the subsequent assessment year. Thus, in view of the decision of the Apex Court in the case of Allied Motos (P) Ltd. v. Commissioner of Income Tax, (1997) 224 ITR 677, the assessee was entitled for deduction. The Explanation added to Section 43B(6) of the Act has been held to be retrospective in operation. Thus, the Tribunal was not correct in holding that the assessee was not entitled for deduction of purchase tax liability which had fallen due for payment under the U.P.Sugarcane Purchase Tax Act, 1961.
The first question is, therefore, answered in the negative, i.e., in favour of the assessee and against the Revenue.
In view of our answer to question no.1, the learned counsel for the assessee has submitted that the question no.2 was raised only in the alternative plea taken by the assessee and has, therefore, been rendered academic. It is returned unanswered.
Now coming to the question raised by the Revenue, we find that the same is covered by a decision of this Court in the case of Commissioner of Income Tax v. Dhampur Sugar Mills Ltd., Dhampur, (2005) 274 ITR 340, wherein this Court has held that the excess levy sugar price was not taxable in the hands of the assessee.
Respectfully following the aforesaid decision we answer the question referred to us in affirmative i.e. in favour of the assessee and against the Revenue. There shall be no order as to costs.
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