1999 (3) TMI 41

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....s referred the following question of law for opinion of this court under section 256(1) of the Income-tax Act, 1961 : "Whether, on the facts and in the circumstances of the case, was the Tribunal legally correct in holding that the interest paid under section 17(3) of the Sugarcane (Regulation of Supply and Purchase) Act, 1958, was not penal in nature for infringement of law and, therefore, it ....

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....17. Payment of cane price. - (1) The occupier of a factory shall make such provision for speedy payment of the price of cane purchased by him as may be prescribed. (2) Upon the delivery of cane the occupier of a factory shall be liable to pay immediately the price of the cane so supplied, together with all other sums connected therewith. (3) Where the person liable under sub-section (2) is i....

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....ssessing Officer as well as by the Commissioner of Income-tax (Appeals) in whose view the interest paid was in the nature of penalty. The Tribunal, however, took a different view and held that the interest was not penal in nature and was allowable as an expenditure. It is this view of the Tribunal that is under examination before us in this reference that has been made at the instance of the Co....