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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 ..... sideration was filed by the assessee on 26.9.2010 declaring a total income of Rs. NIL. The return of income was processed under section 143(1) of the Act, accepting the income disclosed in the return of income. 2. The assessee is a co-operative society engaged mainly in activity of manufacturing sugar from sugar cane purchased from its members, who are shareholders of the said cooperative society. During the course of assessment proceedings in the cases of sugarcane growers that the co-operative sugar factories were following a practice of deciding the purchase price of sugarcane after finalisation of its accounts and its profits in the financial year subsequent to procurement of sugar cane. Till the time of finalisation of the purchase pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al tools by specialists and experts of each of such fields. 4. The activity of manufacturing of sugar by a co-operative society is not eligible for any kind of deduction under section 80P of the Act and the entire profits earned from such activity is liable to be taxed. During the course of assessment proceedings, made in the cases of M/s. Shree Chalthan Vibhag Khand Udyog Sahakari Mandli Ltd. And M/s. Shri Khedut Sahakari Khand Udyog Mandli Ltd., it was seen that those sugar factories had purchased sugarcane over and above the Minimum Support Price (SMP)/Fair and Remunerative Price (FRP) declared by the Central Government. It was also seen therein that during a crushing season, the co-operative sugar factories of South Gujarat are in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Government. Thus, it is reasonable to consider that in absence of any purchase price fixed by the co-operative sugar factories for sugar cane, it would be reasonable to adopt the SMP/FRP as the purchase price. 5. The case of the assessee for the year under consideration was also perused from this angle. It was seen that the assessee had purchased 1,14,36,300/- quintals of sugarcane during the year for a consideration of Rs. 3,01,78,80,994/-. The average sugarcane purchase price of the assessee for the year was Rs. 263.89 per quintal, as against the MSP/FRP of Rs. 144.91 per quintal declared by the Central Government. All the sugarcane is purchased by the assessee from its members. 6. All the members of the co-operative society arr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment for the year within the meaning of section 147 of the Act in the hands of the assessee. I am satisfied that the case of the assessee is a fit case for action under section 147of the Act." 2. However, the central question of taxability of income of the sugarcane in the background of reasons recorded had come up before this Court on couple of occasions in the past. A Division Bench of this Court in the case of Shri Chalthan Vibhag Khand Udylog Mandli Ltd. vs. Deputy Commissioner of Income-Tax, reported in 376 ITR 419, had quashed the notice for re-opening which was based on identical reasons, it was held that the difference between the price to be paid to cane growers and the purchase price declared by the Government under sugar Su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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