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TMI Blog2007 (10) TMI 297X X X X Extracts X X X X X X X X Extracts X X X X ..... lant. JUDGMENT The judgment of the court was delivered by AJAY KUMAR MITTAL J. - This is an application under section 151 of the Code of Civil Procedure for condonation of 46 days' delay in refiling the appeal. 2. Having perused the application, the delay in refiling the appeal is condoned. CM stands disposed of accordingly. I. T. A. No. 84 of 2006 3. In this appeal by the assessee under section 260A of the Income-tax Act, 1961 (for short "the Act"), order dated November 30, 2004, of the Income-tax Appellate Tribunal, Chandigarh Bench "A", Chandigarh (hereinafter referred to as "the Tribunal"), passed in ITA No. 847/Chd/1995 (reported as Budhewal Co-operative Sugar Mills Ltd. v. Dy. CIT [2005] 94 TTJ (Chd) 293) relating to the assessment year 1993-94 has been challenged. The assessee has claimed that the following substantial questions of law arise for consideration of this court: "1. Whether, on the facts and in circumstances of the case, the addition sustained by the Tribunal on account of additional cane price paid to the sugarcane growers was justified in law and is legally sustainable ? 2. Whether, on the facts and in circumstances of the case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal filed by the assessee. The relevant findings are recorded in paragraphs 8 and 10 to 14, which read thus: "8. So, however, there are several gray areas, which cloud the issue of deduction in respect of the additional sugarcane price fixed by the assessee after the end of the previous year. The thrust of the Revenue for disallowance of the claim is that no payment has been made to the sugarcane growers and the assessee has provided the liability by credit to the share deduction account in order to enhance its capital base. As per information available to us, the assessee has adopted this system of enhancing the sugarcane price and crediting the share deduction account for the assessment years 1992-93, 1993-94, 1994- 95 and 1995-96 and not in any other years. The issue before us, as already pointed out is limited to the deduction permissible to the assessee for enhanced price on the basis of fixation of the sugarcane price in the subsequent year. In fact, the real issue involved in this appeal is as to whether deduction is permissible to the assessee on account of unilateral enhancement of sugarcane price by crediting to the share deduction account without making any payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs for allotment of additional shares. 10. In the share deduction account there is a credit of Rs. 117.10 lakhs even as on March 31, 2003. As pointed out earlier share deduction account is accumulation of additional sugarcane prices deducted by the assessee in the four financial years. Clause 24A of the bye-laws to the extent of fixation of final price seems to 'have been operative only for four years. When the requirement of enhancement of share capital of the assessee was satisfied, no need was felt to fix the final price of sugarcane after the end of every crushing season in accordance with clause 24A of the bye-laws of the society. 11. From the agenda of the meeting of board of directors and the resolution passed by the board of directors there is no doubt that the enhancement of sugarcane price braced with the condition of no cash payment was solely with the purpose of enhancing the capital base at the cost of exchequer without payment of taxes in respect of the related amount. The assessee also does not get support from the ratification of the resolution in the general body meeting as the purpose in the said ratification is also indicated to enhance the capital base. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale proceeds of the sugarcane/beet supplied to it. There is no other clause in the bye-laws authorising the board of directors to make deductions from the cane price paid to the members for allotment of shares. Therefore, the act of non-payment of additional sugarcane price fixed by the society demonstrated its real intention behind enhancing sugarcane price with a view to enhance the share capital without payment of taxes in respect of the said profits. 14. Reference to clause 29 of the bye-laws would also be relevant. It provides for distribution of the profits as under: '29. Distribution of profits - The net profits of the mills after making statutory provisions, shall be distributed by the general body in its meeting as follows: (1) 25 per cent. shall be carried to reserve fund. (ii) Remaining amount may be allocated to any one or more purposes detailed below: (a) Dividends on shares at not exceeding 10 per cent. on the value of paid up shares. (b) Price fluctuation fund. (c) Common good fund. (d) Contingent fund to meet any contingent liabilities arising out of taxes or otherwise. (e) Building fund. (f) Rebate to members in proportion to the purchase of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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