TaxTMI 
TaxTMI 
1996 (11) TMI 103
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....y the Govt. of India. The claim was negatived by the ITO. 2. On appeal it was pointed out to the CIT(A) that the matter was covered in favour of the assessee by the order of the Tribunal, dt. 14th May, 1992, for the asst. yrs. 1986-87 and 1987-88 in the case of Balarampur Chini Mills Ltd., with which the assessee- company had since merged. It was further pointed out that for the asst. yrs. 1991-92 and 1992-93, in the assessee's own case, the same CIT(A) had decided the matter in favour of the assessee. 3. The CIT(A) was, however, of the view that the matter should be reconsidered in the light of the following judgments, which, according to her, had not been considered by the Tribunal in the order cited supra: 1. Associated Power Co. L....
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....the only expedient to solve the problem. In 1975 the Govt. of India laid down certain further incentives both for new factories as well as in respect of expansion in the existing sugar factories. These incentives were in the form of higher free sale quota and excise duty rebate. These incentives were linked to the actual cost of plant and machinery and were available only if the capital investment exceeded Rs. 200 lakhs. The Govt. of India also took note of the fact that both existing and new sugar factories had to indulge in heavy borrowings from Govt. institutions for the purpose of purchasing plant and machinery. The incentives scheme was initially to remain for a period of five years. Subsequently similar schemes with slight modificatio....
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.... and Shri A. Satyanarayana). 6. It is now for us to consider whether the decisions cited by the CIT(A) make any difference to the position. In the case of Associated Power Co. Ltd. vs. CIT, the facts are different. There, an electricity company was by statute made to create certain reserves if its clear profit exceeded the reasonable return. In accordance with this requirement a contingency reserve was created. The amounts that were paid into this reserve came out of the excess of profits earned by the electricity company over and above the reasonable return. The moneys standing to the credit of the contingency reserve were to be utilised for the stated purposes, such as to meet expenses or recoup losses arising out of accident, strike or....
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....financial institutions by utilising the free-sale price of the sugar. In other words, even at the time of the receipt, there was already an obligation to utilise the same only for the purpose of repaying the term loan and the assessee had no right to retain the excess price received. In other words, as held by the Madras Tribunal in the decision cited supra, in para 10, "the very right to receive the excess price........ was based on the obligation to recoup the capital employed. Since the amount could not have been received without that obligation, there is a clear nexus and consequently a diversion of income. As pointed out by the assessee, such diversion has been accepted by the Supreme Court in the case of Poona Electric Supply Co. Ltd.....
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....he freight paid by the purchasers and deducted from the invoice issued by the assessee dealer, formed part of the sale price under the Rajasthan Sales-tax Act and Central Sales-tax Act. On an examination of the definition of "sale price" appearing in these Acts it was held by the Supreme Court that the amount of freight formed part of the sale price. We are unable to see how this decision can be of any assistance of the Revenue in the present case. It makes no difference to the position obtaining as a result of the Tribunal's order in the case of Balrampur Chini Mills. In our opinion, the CIT(A) was not justified in holding to the contrary. 9. In the course of the arguments the learned Departmental Representative submitted that the initia....