SHAHABAD CO OPERATIVE SUGAR MILLS LTD Vs. DEPUTY COMMISSIONER OF INCOME TAX
INCOME TAX APPELLATE TRIBUNAL
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J. Kathuria, Accountant Member -
(1.) THIS appeal by the assessee for assessment year 1990-91 raises an important issue. The facts of the case lie in a narrow compass which are these. For assessment year 1990-91, the assessee which is a cooperative society under the Haryana Cooperative Societies Act, filed a return declaring income of Rs. 2,11,77,724. The scrutiny of the case revealed to the Assessing Officer that the assessee had claimed payment of additional cane price of Rs. 5,19,07,100. THIS additional price was debited over and above the minimum price of sugarcane, fixed by the Sugarcane Control Board which was a State Body. It appears that the assessee which is carrying on the business of manufacture and sale of sugar has 23,526 members out of whom 21,463 members are canegrowers and the remaining members are cooperative societies, Gram Panchayats, etc. The minimum price of COJ-64 variety of sugarcane was fixed at Rs. 40 per qtl. by the Government and the minimum price for the general variety of sugarcane was fixed at Rs. 36 per qtl. At the time of supply of the sugarcane, the individual members had to enter into an agreement with the assessee for the supply of sugarcane at the minimum price fixed by the Government and if they failed to supply their requisite quantity of sugarcane, then they could be penalised for the same. In the instant case, however, the Board of Directors in their meeting held on 2-3-1990 decided to pay Rs. 60 per qtl. for COJ-64 variety and Rs. 56 per qtl. for the other varieties. At page 87 of the assessee's compilation is a copy of the minutes recorded at the Board's meeting aforesaid. While considering item at serial No. 6 (to consider and approve the cane price for the crushing season 1989-90), the following minutes were recorded :
The Board considered the matter of fixation of cane price for the crushing season 1989-90. The Board was informed that cane producer members of this Mills had demanded a higher cane price in view of better quality of cane supplied by them and to increase the area under cane crop. The matter was discussed and it was unanimously resolved to pay the under noted cane price to cane suppliers for the season 1989-90 :
At the same page, an item regarding the raising of share capital in view of the funds requirement for expansion of the Mills to 2500 TCD was also considered and the minutes recorded were the following :
The Board considered the matter of funds requirement for expansion of the Mills from 1250TCD to 2500 TCD and unanimously resolved to collect share capital from cane producer members by deducting Rs. 18 per quintal from the cane price for the crushing season 1989-90. The Board further resolved that in addition of Rs. 18 no share capital be deducted from the cane price for the season 1989-90.
(2.) The Assessing Officer came to the conclusion that the payment of purchase price of Rs. 60 per qtl. and Rs. 56 per qtl. for different varieties of sugarcane was not at all warranted by the genuine needs of the Mill and that the assessee had adopted a device only to camouflage the real profit of the Mill without paying the proper taxes. He accordingly disallowed a sum of Rs. 5,19,07,100, by disallowing the additional cane price of Rs. 25 per qtl. Later on, the Assessing Officer passed an order under Section 154 on 28-5-1993 in which the actual additional price of Rs. 20 per qtl. was considered and hence the addition of Rs. 5,19,07,100 was reduced to Rs. 4,15,25,680.
The learned CIT(A) considered the issue at length and upheld the action of the Assessing Officer.
(3.) THOUGH the assessee has raised as many as three grounds, the issue is one regarding the addition of Rs. 5,19,07,100 which after the Assessing Officer's order under Section 154 dated 28-5-1993 should read as Rs. 4,15,25,680.;
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