JUDGMENT

PATHAK, J. :— This appeal by certificate granted by the Delhi High Court raises the question whether interest paid on arrears of cess under section 3 (3) of the U.P. Sugarcane Cess Act, 1956 is a permissible deduction under Sec. 10 (2) (xv) of the Indian Income Tax Act, 1922.

2. The assessee is a public limited company engaged in the business of the manufacture and sale of sugar. In its income-tax return for the assessment year 1959-60 (the previous year being the period ending 30th June. 1958) the assesses claimed a deduction of Rs. 1,20,859/- paid as interest on arrears of cess due under the U.P. Sugarcane Cess Act, 1956. The Income-tax Officer disallowed the claim,but the Appellate Assistant Commissioner held that the payment of interest constituted a permissible deduction and this view was affirmed by the Income Tax Appellate Tribunal. For the next assessment year 1960-61, (the previous year ending 30th June, 1959), the assessee claimed a sum of Rs. 1,85,731/- paid by way of interest on the arrears of cess. The claim met with the same fortune, disallowed by the Income Tax Officer but upheld by the Appellate Assistant Commissioner and the Appellate Tribunal. At the insta