TMI Blog2001 (7) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal under section 260A of the Income-tax Act Suffice it to state that the respondent is a co-operative society. It is a sugar Karkhana. The appeal concerns the assessment year 1987-88. Answers to the questions: Question No. 1: Disallowance of Shubhechha greetings. Answer: The department disallowed the aforestated expense on the ground that it cannot be said to have been incurred towards advertisement expense. In view of our judgment in Income-tax Appeal No. 677 of 2000, dated June l8, 2001--CITv.Shree Panchaganga Sahakari Sakhar Karkhana Ltd. [2000] 250 ITR 772 (Bom), the issue is answered in favour of the assessee and against the Department. Question No. 2: Disallowance of interest amounting to Rs.1,01,981 for the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... institutions at the rate of 16 per cent. per annum (interest) and kept the cash idle, without deploying the same in the business. Hence, the Department disallowed the interest on cash balance. We do not find any merit in the contention of the Department. firstly, the Tribunal has given a finding of fact. It has recorded that the money has been deployed in the business. We do not see any reason to interfere with the finding of fact. Secondly, the Department has not considered the annual turnover of the Sakhar Karkhana. The turnover is around Rs.200 crores. That, selective dates are taken for arriving at the cash balance. In the circumstances, the Department erred in disallowing the interest on cash balance. Accordingly, question No.3 is ans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epresent trading receipts. Hence, the Department was right in adding the aforestated two amounts as trading receipts to the income of the Karkhana. However, the Department has also added an amount of Rs.29,91,000 as trading receipt to the income of the Karkhana. This amount was deposited by the Karkhana in the Area Development Fund which was required to be maintained by every Karkhana in the State of Maharashtra and which fund, statutorily, belongs to the State Government. In view of our judgment in CIT v. Chhatrapati Sahakari Sakhar Karkhana Ltd. [2000] 245 ITR 498 (Bom), we hold that the Department erred in treating Rs.29,91,000 as a trading receipt and to that extent, we hold in favour of the assessee and against the Department, whereas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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