TaxTMI 
TaxTMI 
1995 (3) TMI 189
X X X X Extracts X X X X
X X X X Extracts X X X X
....Departmental Representative and was found on a study of the decision that the issue involved in this common ground stands concluded against (sic) Bench of the Tribunal in the case of Panzarakan S.S.K. Ltd. vs. ITO (1985) 4SOT 90 (Pune) (SB). This common ground of appeal thus fails. 3. The second common ground relates to the disallowance of Molasses Storage Fund. A Molasses Storage Fund is created under the orders of the State Government. The collection is on the basis of the molasses sales whereby 1/3rd of the sale prices are credited to the Fund. This amount is then spent on the work of construction of molasses teak. The Assessing Officer (AO) declined to allow the deduction of outgo on the ground that the sales are reduced to the extan....
X X X X Extracts X X X X
X X X X Extracts X X X X
....due dates and that the Karkhana has already sent proposal to the Director of Sugar asking to convert purchase tax into the interest free loan. Since the payment has not been made within the statutory time limit and there is no adjustment done during this assessment year by way of any set off, etc. the disallowance made by the ITO under s. 43B is upheld." On this issue, it was submitted by the learned counsel for the assessee that the Government of Maharashtra vide its Notification PTX/1083/229/3C dt. 14th Aug., 1985 had sanctioned interest free loan totalling Rs. 1,541.60 lakhs to 20 co-operative societies (the assessee being one of them). The loan amounts were to be adjusted against the liability in respect of payment of purchase tax of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....spective contentions and find that the assessee is entitled to succeed on this issue for both the years under appeal. The liability of purchase tax was towards the State Govt. The tax dues could be paid either to the State Govt. in cash or by way of adjustment. We agree with the learned Departmental Representative that this case does not fall in the ambit of the CBDT Circular, but independently of that, the tax liability shall stand paid by way of adjustment consequent upon the grant of loan and, therefore, the dues shall be deemed to have been paid. The State Govt. in exercise of its executive power has sanctioned a loan and directed that the tax liability be adjusted against the loan. No amendment of the sales-tax law as is referred to by....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ies for the reason that the amounts did not represent expenditure wholly and exclusively for the purpose of the assessee's business. 13. We were informed that an identical issue was agitated before the Tribunal in the case of Madhukar S.S.K. Ltd. in ITA's No. 241/Pune/1990, 333/Pune/1992 and 83/Pune/1993 and was concluded in favour of the assessee. Following the ratio of that decision, we allow this common ground of appeals. 14. Ground No. 8 raised in the appeal for the year 1984-85 relating to reserve of Rs. 16,907 was not pressed by the learned counsel and shall, therefore, stand rejected. 15. Ground No. 5 raised in the appeal for the asst. yr. 1985-86 relates to the disallowance of area development fund of Rs. 16,75,937. Both th....