CIT, VISAKHAPATNAM Vs. ANDHRA SUGARS LIMITED

JUDGEMENT

(1.) THE respondent is a Sugar Factory. As part of its activity, it is under obligation to pay tax on the purchase of sugarcane, made by it from time to time. Before Section 43B of the Income Tax Act, 1961 (for short the 1961 Act) was inserted, the law was that the assessee shall be entitled to deduct any amount representing tax, duty or cess, levied upon him or it, whether or not paid actually. Section 43B of the 1961 Act mandates that certain deductions can be effected only on actual payment.

(2.) FOR the assessment year 1984 -85, the respondent submitted a return claiming deduction of interest payable on the purchase tax, though it was not actually paid. The plea was that the requirement of actual payment to claim benefit under Section 43B of the 1961 Act, is only in respect of tax; and deduction of interest payable thereon, can be claimed even without making payment.

(3.) THROUGH its order, dated 11.12.1995, the Tribunal partly allowed the appeals, but remanded the matter to the Commissioner (Appeals), for fresh consideration. Not satisfied with the result, the Department filed R.A.No.315/Hyd/1996, under Section 256(1) of the 1961 Act, with a prayer to refer the following questions to this Court for answer: