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TMI Blog1996 (4) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... and circumstances of the case, the addition sustained by the Income-tax Appellate Tribunal on account of additional cane price paid to the sugarcane growers is legally justified ? 2. Whether, on the facts and circumstances of the case, the Income-tax Appellate Tribunal was legally correct in upholding the additional cane price especially when the actual payments at the contracted rate had been paid to members of the petitioner-society who are separate legal entities ? 3. Whether, on the facts and circumstances of the case, the findings recorded by the Income-tax Appellate Tribunal regarding the expenditure being ' not at all laid out wholly and exclusively for business purposes ' is based on irrelevant considerations and beyond the sco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arcane was fixed at Rs. 36 per quintal for the relevant year. The board of directors of the assessee in their meeting held on March 2, 1990, decided to pay Rs. 60 per quintal for the COJ-64 variety and Rs. 56 per quintal for the other variety. The Assessing Officer came to the conclusion that payment of purchase price of Rs. 60 and Rs. 56 per quintal for different varieties of sugarcane was not at all warranted by the genuine needs of the sugar mills and the assessee adopted a device only to camouflage the real profit of the mill without paying the proper taxes. He accordingly disallowed a sum of Rs. 5,19,07,100 by disallowing the additional cane price of Rs. 25 per quintal but, later on, an order under section 154 of the Act was passed o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ercial considerations. The findings recorded by the Tribunal are to the following effect : " We have carefully considered the rival submissions as also the facts on record. At our instance, the assessee supplied certain information with regard to the assessment years 1991-92, 1992-93 and 1993-94. For instance, we were told that as against the minimum price fixed at Rs. 40 and Rs. 36 per quintal, respectively, for two varieties of sugarcane in the year under consideration, the minimum price fixed for the assessment year 1991-92 was Rs. 45 and Rs. 41 per quintal, respectively, and similarly for the assessment years 1992-93 and 1993-94, the minimum price was Rs. 49 and Rs. 45 per quintal, respectively, and Rs. 50 and Rs. 46 per quintal, resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re was a substantial positive income available to the assessee. We have, therefore, to see in the background of the entire facts and circumstances of the case whether there was any justification for paying the extra cane price of Rs. 20 per quintal over and above the minimum price fixed by the Government and whether there were business considerations which actuated the assessee to increase the price or the increase was done for extra commercial considerations. We have carefully looked into the sort of representation signed by a few cane growers, a copy of which is available at page 61 of the assessee's compilation. In the said representation, it is mentioned that the assessee has shown excellent results and looking to the increase in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r quintal as purchase price the business of the assessee would have been jeopardised. The said appeal also appears in the context of the start of the crushing season and the farmers have been issued an appeal by the management to continue supplying the sugarcane with the promise that they will be given the minimum price as and when fixed by the Government. There is no whisper much less a promise of an increase which has been done at the fag end of the crushing season. If the assessee had capitalised the amount after paying the taxes, there would have been no difficulty or quarrel with the approach of the assessee. But, in the present case, it is clear that the assessee has employed a device to increase its capital without paying the taxes w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igures do not show that it was because of the increase in the purchase price that the cane growers had done something extraordinary to justify the increase in the rate." Counsel for the assessee argued that determination of the question as to whether the " expenditure was laid out or expended wholly or exclusively for the purpose of the business " was a question of law. At best it can be said to be a mixed question of fact and law and the Tribunal on ascertainment of facts has held that the action of the assessee was not bona fide and the assessee employed this as a device to avoid payment of its dues towards tax to the Revenue. The assessee increased the price of Rs. 20 per quintal. Out of this, a sum of Rs. 18 was capitalised without ..... X X X X Extracts X X X X X X X X Extracts X X X X
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