JUDGMENT
N.V. Balasubramanian J.
1. At the instance of the Revenue, the Income-tax Appellate Tribunal has stated the case and referred the following common question of law under section 256(1) of the Income-tax Act, 1961, for the opinion of this court :
“Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the amount set apart towards molasses storage fund account and molasses storage tank fund account should be excluded from its total income as a revenue expenditure ?”
2. The assessee is a private limited company carrying on business in manufacture and sale of sugar. The assessee during the course of the assessment proceedings for the assessment years 1981-82 and 1982-83 claimed that certain amount set apart towards a fund called molasses storage fund account and molasses storage tank fund account should be excluded from its total income. The Income-tax Officer disallowed the claim of the assessee on the ground that the amount set apart by the assessee was only an application of its income after receipt and the assessee was not divested of ownership of the income or the asset. The Commissioner of Income-tax (Appeals) allowed the assessee’s appeal, which was confirmed by the Income-tax Appellate Tribunal. The Revenue has come by way of reference challenging the order of the Tribunal and the Tribunal has stated a case and referred the question as stated above. It is fairly conceded by C. V. Rajan, learned counsel for the Revenue, that a similar question came up for consideration in the case of CIT v. Salem Co-operative Sugar Mills Ltd. [1998] 229 ITR 285 and this court in a similar circumstance has held that the amount set apart towards the molasses storage fund and molasses storage tank fund account should be excluded from the total income on the ground that there was a diversion of income by overriding title.
3. The question referred to us proceeds on the basis that the amount set apart should be excluded as revenue expenditure. But, the proper question would be whether the amount set apart should be excluded from the total income by diversion of income by overriding title. Accordingly, we reframe the question in both the cases as under :
“Whether, on the facts and in the circumstances of the case the Appellate Tribunal was right in holding that the amount set apart towards the molasses storage fund account and molasses storage tank fund account should be excluded from the total income ?”
4. Inasmuch as the point raised in the question reframed by us is covered by the decision of this court in the case of CIT v. Salem Co-operative Sugar Mills Ltd. [1998] 229 ITR 285, following the said decision we answer the question of law referred to us and as reframed by us in the affirmative and against the Revenue. There will be no order as to costs.