Accrual-based deduction for statutory interest on levy sugar price excess upheld in favour of the assessee.

Interest payable on excess realisation of levy sugar price was treated as a statutory liability under the Levy Sugar Equalisation Fund Act, 1976, and therefore accrued during the relevant accounting year. For assessment year 1978-79, the claimed deduction represented interest that had arisen within that year, and the earlier decision on the same point was followed. The liability was held allowable in the year of accrual, so the deduction was permitted in favour of the assessee and against the Revenue.

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Issues: Whether the assessee was entitled to deduction of interest on excess realisation of levy sugar price, being a liability accrued during the relevant accounting year.

Analysis: The reference pertained to assessment year 1978-79. The liability arose under the Levy Sugar Equalisation Fund Act, 1976 and was a statutory obligation to pay interest at the specified rate. The amount claimed represented interest that had accrued during the accounting year relevant to the assessment year in question. Following the earlier decision on the same point, such a statutory liability was allowable in the year of accrual.

Conclusion: The deduction was allowable and the question was answered in favour of the assessee and against the Revenue.

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