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The Tax PublishersITA No. 1040/Pun/2017
2020 TaxPub(DT) 4730 (Pune-Trib)INCOME TAX ACT, 1961
Section 37(1)
Payment over and above regular purchase price of milk paid to milk societies who were members of assessee society was made out of commercial expediency and, therefore, amount paid could not be said to be dividend to members or shareholders or payment in the form of bonus.
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Business expenditure - Payment of purchase price to members of society over and above regular purchase price - AO alleged distribution of profit - Assessee proved commercial expediency
AO noticed that assessee society made payment of Rs. 43,73,1,677 over and above regular purchase price of milk to milk societies who were members of assessee society under the guise of final rate difference. AO held that said payment was nothing but distribution of profit amongst the members and, therefore, not deductible as expenditure. Held: Impugned payment was for the quantity of milk supplied and in terms of quality supplied. The commercial expediency for payment of higher price were the market conditions, and the need to procure more milk from members and non-members to assessee. Therefore, amount paid, by no stretch of imagination could be said to be dividend to members or shareholders or payment in the form of bonus, because bonus also had to be paid from the accrued profits. Accordingly, no addition was called for.
Followed:(2009) 315 ITR 304 (Bom) : 2009 TaxPub(DT) 1619 (Bom-HC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2014-15
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