Law:

Section:

Section 28(i) of the Income-tax Act, 1961 [Corresponding to section 10 of Indian Income-tax Act, 1922], read with Rule 23(2)(a) of Indian Income-tax Rules, 1922 - Business income - Chargeable as - Assessment years 1956-57 and 1957-58 - Assessee sugar-manufacturer, grew sugarcane in its own farm - Assessee also purchased cane from outsiders - Whether factory gate itself could be regarded as a place where sugarcane was marketed and, when a grower using his own transport delivered sugarcane at factory gate and received, minimum price, there was no good reason why assessee doing same thing in its capacity as a grower of sugarcane, should be treated differently - Held, yes - Whether expression "average price" in rule 23(2)(a) meant average of prices paid at centre at which sugarcane was actually supplied by assessee by its own transport - Held, yes - Whether, therefore, for transport charges Government Notification No. S.R.O. 3419 dated 22-11-1955, could be taken into account in fixing average price of sugarcane under rule 23. - Held, yes Words & phrases : Expression 'average price' as occurring in rule 23(2)(a) of the Income-tax Rules, 1922 Circulars and notifications : Government Notification No. S.R.O. 3419dated 22-11-1955 FACTS The assessee-company carrying on the business of manufacture and sale of sugar, had its own farm for growing sugarcane, besides purchasing sugarcane from other farms in the neighbourhood. By a notification No. SRO 3419 dated 22-11-1955, the Government fixed the minimum price to be paid by the producer of sugar for sugarcane to be delivered at the factory gate. It further provided for a rebate for sugarcane taken by the producer by road on his own transport from the purchasing centres. For the assessment years 1956-57 and 1957-58, the assessee claimed to deduct the market value of sugarcane grown by it in its own farms, at the rates comprising rate fixed by Government, average transportation charges and the difference of 15 per cent on account of superior quality. The ITO disallowed the transportation charges and the difference claimed on account of quality. Since the price of sugarcane as fixed by the relevant Government notification…

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