RAMNUGGER CANE AND SUGAR CO LTD Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) This reference under Section 256(1) of the I.T. Act, 1961, at the instance of the assessee relates to the assessment year 1973-74, for which the previous year ended on 31st August, 1972. The assessee in the year under consideration was carrying on agricultural activity of growing sugarcane, manufacturing sugar and selling the same, etc. In respect of the sugarcane unit the claim of the assessee for allowing agricultural development allowance under Section 35C of the Act was disallowed by the ITO on the ground that the conditions laid down therein had not been fulfilled. The amount claimed was Rs. 3,16,855.

(2.) The said disallowance was also upheld by the AAC.

(3.) Aggrieved by the said order of the AAC the assessee came in further appeal before the Tribunal. It was urged on behalf of the assessee that the agricultural, development allowance was available to the assessee even if the assessee itself was a cultivator, grower or producer of the products as mentioned in Section 35C of the Act and the provision of the goods, services or facilities was by the assessee-company to the assessee-company itself. This view of the assessee was controverted by the departmental representative by urging that the agricultural development allowance stipulated in Section 35C would cover only that expenditure which had been incurred to provide goods, services or facilities to certain classes of persons, viz., cultivators, growers or producers in India, persons distinct from the assessee-company. In support of such view reference was made to the language used in Clause (a) and (b) of Sub-section (1) of Section 35C of the Act and also to the language used in the Explanation thereto. The Tribunal upheld the order of the AAC by observing as under :