COMMISSIONER OF INCOME TAX Vs. MODI INDUSTRIES

JUDGEMENT

(1.) At the instance of the Commissioner of Income-tax in respect of Assessment Years 1969-70 and 1970-71, the Income-tax Tribunal has referred tbe following four questions to this Court :

(2.) [In para 2, at the instance of the assessee a question was referred which was not pressed].

(3.) As regards question No.1, briefly stated the facts are that the. assessee had to pay interest of Rs. 2357.00 in respect of the assessment year 1969-70 and Rs. 51840.00for the year 1970-71 on account of the late payment of commission to the commission agents. This liability arose because of the provisions of Sugarcane Regulation and Supply Purchase Act, 1953 on account of the assessee's failure to pay the price of the sugarcane in accordance with the provisions of that Act. The Income Tax Officer disallowed the deduction on the ground that the same was in the nature of a penalty and was not a liability. The A.A.C however, allowed the said claim and the I.T. Tribunal also, while following the decision in Kamlapat Motilal v. C.I.T. [104 ITR 783] upheld the said allowance.