9911796707
TMI Blog2009 (9) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... first issue pertains to the addition of Rs. 1,68,71,980/- on account of valuation of closing stock by not accepting the change in the method of valuation of closing stock of levy sugar to lower of cost or average realisable value of levy and free sale sugar to lower of cost or realizable value. (ii) Disallowance of deduction with respect to interest payable amounting to Rs. 21,15,615/- in terms of Section 36(1)(iii) and Section 43-B(d) of the Act. (iii) Whether the liability to pay interest on the excess realization for levy sugar pursuant to the order of the Allahabad High Court was a contingent liability or a crystallized liability? 2. Each of the aforesaid issues have been held against the appellant concurrently by all the three au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee so as to deprive the revenue of legitimate tax. It is rightly been found by all the authorities below that the change in the valuation stock was not bona fide. Nothing further need be said on this aspect. 4. The second issue pertains to disallowance of the claim of interest. As per the assessee company, it was entitled to claim of interest because interest accrues daily and the same did accrue as per the mercantile system of accounting adopted by the assessee with respect to the loan obtained by it from the Industrial Finance Corporation of India(IFCI). The repayment of the said loan along with the interest thereon was to be made in five yearly instalments which were payable on 18.11.1996, 18.11.1997, 18.11.1998, 18.11.1999 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of Section 43B(d) directly and categorically dis-entitles the assessee company to claim benefit of interest deduction because with respect to interest due and payable to a financial institution such as the IFCI till the interest is actually paid, the same cannot be allowed as a deduction. The relevant provision of Section 43B is reproduced below:- "43B. Certain deductions to be only on actual payment Notwithstanding anything contained in any other provision of this Act, a deduction otherwise allowable under this Act in respect of— ..... ...... &nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gar Development Fund administered by the Ministry of Sugar, Government of India, is liable to be rejected at the threshold because admittedly the loan is obtained from IFCI by the assessee. It is the IFCI with whom the documentation for the loan has been signed and to whom the loan along with the interest is repayable. Merely because the Sugar Development Fund is under the overall control and administration of the Ministry of Sugar, Government of India does not mean that the loan is not given by the IFCI. The other contention raised by the appellant relying upon the judgment of the Andhra Pradesh High Court in the case Srikakollu Subba Rao & Co. and Ors. Vs. Union of India and Other, 173 ITR 708 that where the amount is not due for payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. When the Writ Petition filed by the appellant had dismissed by the Allahabad High Court, the excess amount realized by the appellant company due to the price of levy sugar became repayable along with interest in terms of interim orders of the Allahabad High Court. However, the appellant preferred a Special Leave Petition before the Hon'ble Supreme Court against the final judgment of the Allahabad High Court dismissing its Writ Petition. The contention of the assessee company is that since no interim orders were passed by the Supreme Court which directed the payment of the amount in instalments, the liability of payment under the orders of the Allahabad High Court stood crystallized and cannot be said to have been contingent. We clearly f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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