Law:

Section:

I. Section 37(1), read with section 40A(2), of the Income-tax Act, 1961 - Business expenditure - Year in which deductible - Assessment years 1981-82 and 1982-83 - Central Government fixed price of levy sugar at Rs. 124.59 per quintal for crushing season 1971-72 - Assessee filed a writ petition in High Court to challenge said fixation of price - By virtue of interim order made by High Court in said petitions, assessee was permitted to sale levy sugar at Rs.150 per quintal - On 12-3-1973 assessee withdrew said petition and, accordingly, High Court dismissed same - Subsequently Levy Sugar Price Equalisation Fund Act, 1976 came into existence providing excess realisation together with interest was required to be paid into Equalisation Fund as constituted under said Act - High Court on 2-5-1980 passed order directing assessee to credit, to Equalisation fund, excess realisation - Assessee thereafter, claimed deduction of certain sum credited to Equalisation Fund in assessment years 1981-82 and 1982-83 - Assessing Officer as well as Commissioner (Appeals) rejected claim of assessee - Whether since liability to return excess realisation arose on date when High Court dismissed writ petition and interim order passed therein became non-existent and inoperative, assessee could not claim deduction in years under consideration - Held, yes II. Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Year in which deductible - Assessment years 1978-79 to 1980-81 - As per order made by Assistant CST, assessee was not required to pay any sales tax and, therefore, it obtained a refund of sales tax paid - However, Deputy CST issued notice seeking recovery of said amount along with interest on ground that refund was wrongly issued - Assessee, accordingly, made provisions of interests of certain sum for respective assessment years in question and claimed deductions on said provisions of interest - Assessing Officer disallowed claim of provision of interest, on ground that it did not relate to any of assessment years in question - On appeal, Commissioner (Appeals) allowed assessee's claim - Tribunal also confirmed order of Commissioner (Appeals) - Whether since assessee was…

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