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| The Tax Publishers2019 TaxPub(DT) 1651 (SC) : (2019) 412 ITR 0420 : (2019) 307 CTR 0473 : (2019) 262 TAXMAN 0176 INCOME TAX ACT, 1961
Section 37(1)
Where AO treated difference between sugarcane purchase price determined under clause 3 and clause 5A of Sugarcane (Control) Order, 1966 as sharing of profit, matter was remanded back to AO with direction to take into account the manner in which the business works, modalities and additional purchase price/final price was decided and to determine what amount would form part of profit after undertaking such an exercise, whatever the profit component would be considered as sharing of profit/distribution of profit and rest of the amount would be considered as deductible as expenditure.
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Business expenditure - Difference between sugarcane purchase price determined under clause 3 and clause 5A of Sugarcane (Control) Order, 1966 - Sharing of profit -
Assessee a co-operative society was engaged in production of sugarcane and sale thereof. AO took note of difference between sugarcane purchase price determined under clause 3 and clauuse 5A of Sugarcane (Control) Order, 1966 AO held that price determined under clause 5A was excessive as an element of profit was included therein. Accordingly, AO treated additional price payable to growers of sugar cane as per clause 5A as not allowable under section 37(1).Held: Matter was remanded back to AO with direction to take into account the manner in which the business workds, modalities and additional purchase price final/price was decided and to determine what amount would form part of profit after undertaking such an exercise, whatever is the profit component would be considered as sharing of profit/distribution of profit and rest of the amount would be considered as deductible as expenditure.
REFERRED :
FAVOUR : Partly in assessee's favour (by way of Remand).
A.Y. :
IN THE SUPREME COURT OF INDIA
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