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TMI Blog1976 (7) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... t the average purchase rate of sugarcane by the petitioner-company ? " The other common question that has been referred relates to the assessment years 1953-54 and 1954-55 and is as under : " Whether the Tribunal erred in law or misdirected itself in not admitting the additional grounds of appeal filed by the petitioner-company and disposing of the same on merits ?" At the outset it may be stated that so far as question No. 4 is concerned, it is not pressed by Mr. Dwarkadas on behalf of the assessee and it need not be answered. We are, therefore, concerned with the first three questions under the first set. The assessee is a company carrying on business of manufacturing and sale of sugar. The crushing of sugarcane was carried out by the assessee in its own two factories situated at Sakarwadi and Laxmiwadi in Ahmednagar District, which are on either side of the river Godavari. Also in the vicinity of these sugar factories there are other factories belonging to half a dozen other companies engaged in the manufacture of sugar. The assessee had its own sugarcane farms which are situate in close vicinity of these factories. The assessee had also one other farm known as Somay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for carting the same from the farm to the factory. During all the relevant assessment years in order to ensure the sugarcane cultivator a fair market price for the sugarcane grown by him the Government of India used to fix from year to year the minimum prices for the sugarcane delivered by the cultivator at the factory gate of the manufacturer. In the assessments before the Income-tax Officer for the several years under consideration, the Income-tax Officer required the assessee to state the basis on which it had claimed the price for the sugarcane cultivated by it on its own farms and crushed by it in its own factories. The assessee submitted that since the sugarcane cultivated by it on its own farms and used by it for crushing was of a superior quality, it was entitled to claim higher rates for it than the market rates. The Income-tax Officer declined to accept those prices but actually fixed the market prices at lower rates. The Income-tax Officer also took into account, that since the income of the assessee-company was partly agricultural and exempt from payment of income-tax and partly non-agricultural and chargeable to income-tax, the market value of the agricultural prod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x in these assessment years. The appeals preferred by the assessee for the several years were dismissed by the Appellate Assistant Commissioner. He found that, (1) the rate of sugarcane adopted for the various years in the case of the assessee by the Income-tax Officer were also the rates adopted by the department in the case of other sugar factories situate in the same area ; (2) the assessee failed to establish that the quality of sugarcane grown by it on its own farms was superior than that of the sugarcane purchased from others ; (3) the assessee itself sold sugarcane grown on Somayya Farms in the accounting year relevant to the assessment year 1953-54 at Rs. 48 per ton and there was no reason why the assessee should have sold its superior quality of sugarcane to an outsider at a sacrificial price while it had to purchase inferior cane from outsiders at the rate of Rs. 53-10-6 per ton as claimed by it ; (4) the assessee failed to establish that the sugarcane produced by it would have fetched 10% more if sold in the open market than the price of cane produced by others. While dealing with the contention on behalf of the assessee, that while fixing the price in respect of suga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 2 years, 30% for the 3rd year and 15% for the last two years. Bearing all these factors in mind, the Tribunal came to the conclusion that the prices that had been arrived at by the Income-tax Officer and confirmed by the Appellate Assistant Commissioner in appeals were neither unfair nor unreasonable and accordingly upheld the cane rates fixed by the taxing authorities. Questions Nos. 1, 2 and 3 above referred to arise out of this order of the Tribunal. At the outset it may be stated that when a taxing authority or the Tribunal has to fix the price of sugarcane produced on its own farms and used by a sugar manufacturing company, the question of fixation of price will primarily be a question of fact depending upon the evidence in the case. It is difficult to see how normally in such a case a question of law may arise. Even the way in which questions Nos. 1, 2 and 3 above referred to are raised clearly indicates that they are merely worded to challenge the findings of fact arrived at by the taxing authorities and the Tribunal upon appreciation of evidence that was on record. Such being the position, we do not consider it necessary that elaborate discussion is required for answer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de by the company in its manufacturing business. The above discussion clearly shows that question No. 1 referred to above has to be answered in the affirmative, that is to say, there was sufficient evidence on record to show that the cane rate in regard to the sugarcane used by the assessee-company from its own farms was lower than the average rate at which the assessee-company purchased sugarcane from outsiders in the market. Question No. 2 is only a different facet of the very same question and apart from merely different wording thereof, it does not require any independent consideration. Question No. 2 is to be answered accordingly in the negative. Question No. 3 relates to the query whether in the case of the assessee the cane rate should be fixed at the average purchase rate of sugarcane by the petitioner (assessee) company. If, as pointed out above, the instances of purchase of sugarcane from outsiders are not comparable instances, then, naturally, the average price indicated by these transactions can never be a safe guide for determining the cane rate in regard to the sugarcane used by the assessee-company from its own farms. Accordingly, our answer to question No. 3 i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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