1978 (1) TMI 34

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..... e of the revenue, the question that calls for determination is whether the assessee is entitled to claim the entire transport charges of sugarcane grown in its own farm as part of its manufacturing expense. The answer to this question depends upon the construction to be placed on r. 7 of the I.T. Rules. R. 7 to the extent material reads : "7. (1) In the case of income which is partially agricult .....

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..... f India. Therefore, no further deduction on account of transport charges should be allowed. R. 7 disallows expenditure incurred by the assessee as a cultivator or receiver of rent-in-kind. The expenditure incurred by the assessee towards transporting sugarcane from the fields to the assessee-factory is not an expenditure incurred by the cultivator for raising sugarcane or cultivating it. The asses .....

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..... ferently from other ryots. The assessee would, therefore, be entitled to deduct transport charges from the cost of sugarcane supplied by it to its own factory. R. 7 contemplates, as rightly pointed out by the Tribunal, adoption of market rate in the case of an assessee who is also utilising raw materials for manufacturing activity. The deduction claimed by the assessee is in conformity with r. 7. .....

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