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TMI Blog2016 (6) TMI 746X X X X Extracts X X X X X X X X Extracts X X X X ..... uiry before coming to a contrary conclusion and that he should not have a reasonable belief for forming the opinion that the income chargeable to tax had escaped the assessment. Also see Shri Narmada Khand Udhyog Sahakari Mandli Ltd. vs. Income Tax Officer [2016 (2) TMI 385 - GUJARAT HIGH COURT ] - Decided in favour of assessee - SPECIAL CIVIL APPLICATION NO. 4513 of 2016 - - - Dated:- 14-6-2016 - MR. AKIL KURESHI AND MR. A.J. SHASTRI, JJ. FOR THE PETITIONER : MR MANISH J SHAH, ADVOCATE FOR THE RESPONDENT : MR SUDHIR M MEHTA, ADVOCATE ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) The petitioner is a sugar co-operative society and has challenged the notice for re-opening assessment issued by the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s by sugarcane factories to sugarcane growers is governed by The Sugarcane (Control) Order (SCO) 1966 made by the Central Government by virtue of the powers vested with it under The Essential Commodities Act, 1955 . By this order, fixation of a Statutory Minimum Price (SMP) by the Central Government every year, for every sugar factory, came into place. This price is fixed as per the recommendations of the Commission for Agricultural Costs and Prices, after consulting the State Government, associations of sugar industries and sugarcane growers and after considering all factors like cost of production of sugarcane, returns to growers from alternate crops, availability of sugar to consumers at fair price, sale price of sugarcane produced by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing season nor during the crushing season. This practice of deciding the cane price after the end of crushing season at the time of finalisation of their accounts, was being followed by them so that these sugar factories came to know of the profits earned by it in that crushing season by that time and so that the cane purchase price can be so adjusted that there would be no incidence of tax in the hands of the co-operative society or in the hands of their members. This was seen to have been done with the motive to substantially suppress the profits of the co-operative sugar societies by the distribution of profit as purchases from its members. The entire profits of the sugar factories, which otherwise would have been taxed in their hands,ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... axes and thereafter distributed it to its members as dividend. The Real Income theory states that the income that was taxable under the Income Tax Act is the income computed on ordinary commercial principles but subject to provisions of the Act. On these considerations, what is taxable in the case of assessee is its commercial profits prior to its distribution to the members in the guise of Final Cane Price and the same cannot be allowed as expenditure either under ordinary commercial principles or under the Income Tax Act and the excess payment of ₹ 1,36,06,90,974/- so made by the assessee during the year represents the Real Income of the assessee, which was taxable. The said excess payments in the form of inflated purchases of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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