Law:

Section:

Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of - Whether provision made for Molasses Storage Fund is an allowable deduction - Held, yes Section 28(i) of the Income-tax Act, 1961 - Business income - Chargeable as - Whether incentives received by way of rebate on excise duty payable and increased percentage of levy-free quota of sugar are not assessable as income - Held, yes - Whether interest earned on Molasses Storage Fund, which was not treated by assessee as forming part of Molasses Storage Fund and was used for his business purpose, would be assessed as income of assessee - Held, yes Section 32 of the Income-tax Act, 1961 - Depreciation - Allowance/rate of - Whether initial depreciation allowed prior to assessment year 1983-84 and earlier years is required to be deducted from written down value of assets - Held, no CASES REFERRED TO CIT v. Salem Co-operative Sugar Mills Ltd. [1998] 229 ITR 285/[1997] 95 Taxman 325 (Mad.) [Para 2], CIT v. Sakthi Sugars Ltd. [2001] 251 ITR 166/ 119 Taxman 977 (Mad.) [Para 2], CIT v. Ponni Sugars & Chemicals Ltd. [2003] 260 ITR 605/ 127 Taxman 188 (Mad.) [Para 3] and CIT v. Sri Ganapathy Mills Co. Ltd. [2002] 256 ITR 657 (Mad.) [Para 4]. Mrs. Pushya Sitaraman for the Applicant. J. Narayanaswamy for the Respondent. JUDGMENT R. Jayasimha Babu, J. - The questions referred, at the instance of the Revenue are : "1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in holding that the provision of Rs. 2,19,163 made to the Molasses Storage Fund is an allowable deduction? 2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in holding that the incentive, received by way of rebate on excise duty payable and increased percentage of levy-free quota of sugar, is not assessable as income of the assessee ? 3. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in holding that the initial depreciation allowed prior to the assessment year 1983-84 and earlier years should not be deducted from the written down value of the assets ? 4. Whether, on the facts and in…

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