Punjab & Haryana H.C : Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the interest paid for non payment of purchase tax under the U.P. Sugarcane (Purchase Tax) Act, 1961, is not tantamount to penalty.?

Counsel Appeared

None, appeared, for the Assessee : L.K. Sood, for the Revenue

S.P. GOYAL, J.:

The following two questions have been referred under s. 256(1) of the IT Act, 1961, for the opinion of this Court :

“1. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the interest paid for non payment of purchase tax under the U.P. Sugarcane (Purchase Tax) Act, 1961, is not tantamount to penalty.?

2. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the sum of Rs. 60,610 paid on account of interest for non-payment of purchase tax under the U.P. Sugarcane (Purchase Tax) Act, 1961, is a permissible deduction ?”

2. In fact, the answer to the second question depends entirely on question No. 1 and if it is held that the payment of interest is not tantamount to penalty, the second question has to be answered in the affirmative.

3. It is not necessary to note the rival contentions of the parties because the matter stands concluded by the judgment of the Supreme Court in Mahalakshmi Sugar Mills Co. vs. CIT (1980) 123 ITR 429, wherein it was held that the interest paid under s. 3(3) of the U.P. Sugarcane Cess Act was not a penalty paid for infringement of the law and was an allowable deduction under s. 10 (2)(xv). Following that decision, question No. 1 is answered in the affirmative. Question No. 2 follows suit as already stated above and the reference stands answered accordingly.

No costs.

[Citation : 174 ITR 367]