Law:

Section:

â-  Section 28(i), read with section 37(1), of the Income-tax Act, 1961 - Business loss/deductions - Allowable as - Assessment year 1984-85 - Whether a claim for deduction for which there is no specific provision under Act would be admissible under section 28 having regard to accepted commercial practice and trading principles, if it can be said to have been incurred for purpose of business or in course of carrying on business and it is incidental to it - Held, yes - Assessee was an apex co-operative society, i.e., a federation of various milk producers co-operative societies - Such co-operative societies supplied milk to assessee who in turn sold it to consumers and payments were made to its member-societies - Assessee also made payments to its members at end of accounting year by way of additional price and claimed deduction of same under section 28 or 37(1) - Assessing Officer disallowed same on ground that payment was made on last day of accounting period; that price increase declared by managing board of assessee had nothing to do with market conditions and, hence, it was a case of profit adjustment with an objective of evading tax - Tribunal allowed assessee's claim observing that assessee society used to sell milk supplied to it by its members to consumers and used to make payment for milk supplied to it by member-societies on basis of a price per unit called 'kilo fat'; that price was not stationary for entire year but it was ambulatory and was revised from time to time depending upon several factors; revision of prices was made through circulars issued on different dates and those circulars provided that prices determined were only provisional and after considering amount realised by assessee at end of years, final price increase/decrease would be decided and shall be intimated and in pursuance of circulars, Board of Directors decided to give final price increase/decrease at end of year - Whether merely because board resolved to fix final purchase price and pay on last day of accounting period, it would not amount to application of profits - Held, yes - Whether payment made by assessee was and could be termed to be in furtherance of its object and…

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