Law: Income Tax Act, 1961

Section: 256

Income-tax---Income---Accrual of income---Sugar industry---On a writ, High Court by interim order allowing assessee to realise price in excess of levy price fixed by Government---Dispute regarding price---Amount realised by assessee in excess of levy price did not accrue to assessee---Indian Income Tax Act, 1961. The assessee was engaged in the business of manufacture and sale of sugar. The Government of India by notification, dated November 20, 1973, issued under the Sugar (Price) Determination Order, 1973, fixed the price of levy sugar of D-29 grade at Rs.153.39 per quintal inclusive of excise duty. By another notification dated December 14, 1973â-ž the Government of India revised the price and fixed the same at Rs.155.30 per quintal. Aggrieved by these notifications, the assessee filed a writ petition in the Allahabad High Court challenging the sugar (Price) Determination Order, 1973. The Allahabad High Court passed an interim order. Pursuant to the said order, the assessee was allowed to realise Rs.18.38 per quintal of levy sugar in excess of the price fixed by the notification issued by the Central Government. The assessee collected Rs.6,36,683 and Rs.18,29,353 in the previous years relevant to the assessment years 1975-76 and 1976-77, respectively, by way of additional price of levy sugar at Rs.18.38 per quintal pursuant to the above order. The High Court allowed the assessee to retain these amounts as deposits pending the final decision in the writ petition subject to the assessee furnishing a bank guarantee in respect thereof. In October, 1976, the writ petition of the assessee was dismissed by the Allahabad High Court. Consequently, the interim order was also vacated and the assessee was directed to refund the excess amount realised by it along with interest to the Food Corporation of India. Against that order, the assessee appealed to the Supreme Court. The Supreme Court admitted the appeal of the assessee and passed an interim order. In the meantime, the Government of India enacted the Levy Sugar Price Equalisation Fund Act, 1976. According to this enactment, the amounts realised in excess of levy prices were required to be credited to the aforesaid…

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