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Issues:
- Disallowance of sugarcane quality improvement expenses claimed by the assessee. Analysis: 1. The Revenue challenged the deletion of the addition made on account of sugarcane quality improvement expenses by the Assessing Officer. The assessee, a society of members engaged in sugarcane production, provided subsidies on pesticides, seeds, etc., to its members. The Assessing Officer disallowed the claim stating lack of bye-law or resolution support and faulty account treatment. The claimed subsidy was spread over time and not directly related to sugarcane business, hence disallowed. 2. The Commissioner of Income-tax (Appeals) allowed the claim, emphasizing that only net sale proceeds were credited to profit and loss account as trade discount for members. The Commissioner found no justification for disallowance without proper appreciation of facts, directing deletion of the addition. 3. The Tribunal upheld the Commissioner's order, citing the principle of consistency in allowing similar claims in previous and subsequent assessment years. Referring to legal precedents, the Tribunal emphasized that unless new facts or grave errors exist, the Revenue cannot change its stance. The Tribunal found the claim justified as the subsidies were provided to support sugarcane production, directly connected to business purpose. 4. The Tribunal noted the cooperative nature of the assessee, selling items at reduced prices to farmers for sugarcane growth. It rejected the Revenue's argument of lack of business connection, stating the sale at reduced prices was a business decision benefiting sugarcane purchase. The Tribunal upheld the Commissioner's order, dismissing the Revenue's appeal and emphasizing the business purpose behind the claimed subsidies. In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the order allowing the sugarcane quality improvement expenses claimed by the assessee, emphasizing the business nexus and consistency in previous assessments.
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