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Issues Involved:
1. Deduction of commission paid to sole selling agents. 2. Deduction of interest paid for non-payment of sugarcane cess and purchase tax. 3. Deduction of demurrage paid to Railways. 4. Taxability of compensation awarded for requisitioned property. Summary: 1. Deduction of Commission Paid to Sole Selling Agents: The Tribunal referred the question of whether the assessee is entitled to the deduction of commissions paid to its sole selling agents for the assessment years 1963-64 and 1964-65. The court noted that the facts were similar to earlier years where such deductions were allowed. Following its previous judgment, the court held that the assessee was entitled to the deduction of Rs. 2,49,719 and Rs. 2,27,944 paid as commissions, answering the question in the affirmative and in favor of the assessee. 2. Deduction of Interest Paid for Non-Payment of Sugarcane Cess and Purchase Tax: The question addressed whether the interest paid for non-payment in time of the sugarcane cess and purchase tax is deductible. The Tribunal had previously disallowed such deductions, but the Supreme Court in Mahalakshmi Sugar Mills Co. v. CIT [1980] 123 ITR 429 reversed this, holding that such interest was a compensatory payment and an allowable deduction. Applying this principle, the court held that interest paid for late payment of purchase tax is also deductible, answering the question in the affirmative and in favor of the assessee. 3. Deduction of Demurrage Paid to Railways: The court examined whether demurrage paid to the Railways is deductible. The Tribunal had allowed this deduction, noting it was a recurring business expense similar to interest on arrears of cess. The court agreed, stating that demurrage is a compensatory charge for delayed clearance and is incidental to business, thus deductible. The question was answered in the affirmative, in favor of the assessee. 4. Taxability of Compensation Awarded for Requisitioned Property: The issue was whether compensation awarded for requisitioned property is assessable to income-tax for the assessment year 1963-64. The court reviewed the principles of compensation under the PEPSU Act and noted that the compensation was a recurring payment. The Tribunal's view that the compensation accrued in the assessment year 1955-56 was found incorrect. The court held that the compensation did not accrue in the assessment year 1963-64, answering the question in the negative, in favor of the assessee. The court did not specify the exact assessment year for taxability, noting the pending appeal for the assessment year 1967-68.
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