Additional price payable for purchase of sugarcane. - Income Tax - 1347/CBDT

INSTRUCTION NO. 1347/CBDT Dated: August 27, 1980 Attention is drawn to boards Instruction No.745 (F.No.228/28/74-ITA.II) dated 30th August 1974 wherein it was clarified that the additional price payable to cultivators for the purchase of sugarcane in pursuance of an order of price fixation authority is to be allowed as a deduction in the year in which the additional liability arose and not in the year to which it relates to. 2. The matter has been re-examined in consultation with the Ministry of Law. In view of the decision of the Allahabad High court in the case of M/s.L.H.Sugar Factories oil Mills Pvt. ltd., we have been advised that in the cases of assessees following mercantile system of accounting the additional amounts payable under an award or statutory order are entitled to be allowed in respective years and not in the year in which the award is made or the order is passed by the Government. In view of this, the Instruction No.745 dated 30th August 1974 stands modified to this extent. It may be noted that the present instructions will not apply to cases where the cash system of accounting is followed. 3. The above instructions may be brought to the notice of the officers working under your charge.