BHOPAL SUGAR INDUSTRIES LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Tribunal, Bombay, has required under S. 66(2) of the Indian IT Act, 1922, stated the case and referred to this Court for its opinion the following question of law :

(2.) THE material facts, as appearing from the statement of the case, are these : The assessee is a public limited company carrying on the business of manufacture and sale of sugar which is produced in its factory at Sehore. It has its own farm for growing sugarcane but the produce is not sufficient to meet its requirements. Therefore, it has to purchase sugarcane from other farms in the neighbourhood. The assessment years are 1956 -57 and 1957 -58, the corresponding account periods being 27th Oct., 1954, to 14th Nov., 1955, and 15th Nov., 1955, to 2nd Nov., 1956. By a notification No. S.R.O. 3419, dt. 22nd Nov., 1955, the Government of India, in exercise of the powers conferred on them under cl. 3 of the Sugarcane (Control) Order, 1955, fixed Rs. 1 -7 -0 per maund as the minimum price to be paid by the producer of sugar for sugarcane to be delivered at the factory gate. The notification further provided for a rebate of 3 pies per maund per mile subject to a maximum of annas 0 -3 -0 per maund for sugarcane taken by the producer by road on his own transport from the purchasing centre. This notification governed both the years 1956 -57 and 1957 - 58. For determination of income chargeable to tax in these years, the assessee claimed to deduct the market value of sugarcane grown by it in its own farms at the rates given below :

(3.) HAVING heard the counsel we have formed the opinion that the conclusion reached by the AAC is correct. As the question referred to us itself shows, it has to be determined upon a construction of r. 23 of the Rules framed under the Indian IT Act, 1922, and the Government notification No. S.R.O. 3419, dt. 22nd Nov., 1955. The relevant provisions of r. 23 are :