Law:

Section:

Section 40A(2) of the Income-tax Act, 1961, read with clause 3A of the Sugarcane (Control) Order, 1966 - Business disallowance - Excessive or unreasonable payments - Assessment year 1992-93 - Whether provisions of section 40A(2) are applicable to a co-operative society - Held, no - Assessee, a co-operative society, was manufacturing sugar for which it purchased sugarcane from its members and non-members - Sugar being a controlled commodity, minimum price payable to sugarcane growers by sugar manufacturers was fixed by Central Government under 1966 Order - Under clause 3A of Order, sugar factories were allowed to deduct from sugarcane price rebate towards binding material at 0.1 per cent where sugarcane was brought bound in bundles - As assessee did not deduct cost of binding material permitted under said Order, Assessing Officer made disallowance towards cost of binding materials supplied by members under section 40A(2) and towards cost of binding materials supplied by non-members under section 37 - Whether since neither Central Government nor State Government nor any other authorities, in exercise of powers conferred under clause 3A of 1966 Order, had directed assessee to make said deduction, direction contained in clause 3A was only directory and not mandatory - Held, yes - Whether further, since assessee had made payments to members and non-members as per State Advise Price fixed by State Government, it could not be said that payments were in excess of 1966 Order and, consequently, no disallowance/addition could be made on that ground - Held, yes FACTS The assessee, a co-operative society, was engaged in the manufacture of sugar for which, the raw material, i.e.,sugarcane was purchased by it from its members as well as non-members. While completing the assessment of the assessee, the Assessing Officer was of the opinion that the assessee was bound to deduct 0.01 per cent from the total sugarcane price towards the cost of the binding material as per the Sugarcane (Control) Order, 1966, which the assessee failed to deduct. The assessee explained that most of the time, sugarcane was brought to the factory in bullock carts/tractors-trailers without using any…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492