- (1.) Delay condoned. Leave granted in special leave petitions.
(2.) Having heard learned counsel at length on the applicability of Section 40A(2) of the Income Tax Act, 1961 , as it stood at the relevant time, we are of the view that large number of questions have remained unanswered in these cases.
(3.) The applicability of Section 40A(2) of the Income Tax Act, 1961 ['Act', for short] is linked to computation under Section 28 and Section 37 of the Act. It is the case of the Department in all these cases that the State Advised Price [S.A.P.] is determined on the basis of the price recommended by the assessee(s) after the finalisation of accounts and, therefore, the differential amount between S.A.P. and S.M.P. would constitute appropriation of profits and not expenditure/expense under Section 37 of the Act. On the other hand, it is the case of the assessee (s) that they are bound to pay to the cane growers the final cane price as per the S.A.P. fixed by the State Government and the mere fact that S.A.P. fixed by the State Government is based on the price recommended by the assessee(s) after finalisation of accounts would not constitute appropriation of profits because appropriation would arise only after the profits are determined and profits can be determined only after all the expenses incurred for the business are deducted from the gross income.;