Dipak Kumar Sen, J. - (1.) The facts found or admitted in this reference are shortly as follows. Ganesh Sugar Mills Ltd., Calcutta, the assessee, is a limited company and carries on business of manufacture of sugar. The assessee also owns and runs two farms--one at Chehri and the other at Bagapar, where sugarcane is cultivated. The sugarcane produced in the two farms is mainly utilised by the assessee as raw material for manufacture of sugar in its own factory.
(2.) In the assessment year 1963-64, the corresponding accounting year ending on September 30, 1962, the assessee in its accounts debited on account sugarcane produced in its farms and utilised in the manufacture of sugar at its factory price at the rate the ex-factory gate price fixed by the Government for sugarcane, viz., Rs. 4'34 per quintal, and in addition claimed as deduction Rs. 77,288 on account of transport expenses incurred in bringing the sugarcane from the farms to the factory.
(3.) The assessee was assessed to income-tax in the said assessment year. The Income-tax Officer was of the view that as the assessee had already debited the market price of sugarcane at ex-factory gate price fixed by the Government, it was not entitled to any further deduction on account of transport of such sugarcane from its farms to its factory. The claim for deduction of Rs. 77,288 was disallowed.;