TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
When case Id is present, search is done only for this
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>Tribunal Decision: Deductions Allowed, Depreciation Upheld, Error in Disallowance</h1> <h3>Commissioner Of Income-Tax Versus Kaira District Co-Operative Milk Producers' Union Ltd.</h3> Commissioner Of Income-Tax Versus Kaira District Co-Operative Milk Producers' Union Ltd. - [2001] 247 ITR 314, 165 CTR 57, 114 TAXMANN 215 Issues Involved:1. Deduction for contribution to the Gujarat Rajya Co-operative Education Fund.2. Depreciation on road.3. Deductibility of cost price of milk powder and soya flour received from UNICEF in the computation of total income.Summary:Issue 1: Deduction for Contribution to the Gujarat Rajya Co-operative Education FundThe Tribunal held that the assessee's claim for deduction in respect of contribution to the Gujarat Rajya Co-operative Education Fund was allowable. This decision was supported by precedents in Mehsana District Co-operative Milk Producers' Union Ltd. v. CIT [1993] 203 ITR 601 and CIT v. Kaira District Co-operative Milk Producers' Union Ltd. [1994] 209 ITR 898 (Guj), which established that such contributions were deductible as business expenditure. Therefore, question No. 1 was answered against the Revenue and in favour of the assessee.Issue 2: Depreciation on RoadThe Tribunal confirmed the decision of the Commissioner of Income-tax (Appeals) allowing depreciation on the road. This was supported by the court's previous rulings in Kaira District Co-operative Milk Producers' Union Ltd. v. CIT [1986] 162 ITR 496 and CIT v. Kaira District Co-operative Milk Producers' Union Ltd. [1991] 192 ITR 608 (Guj), which treated roads as 'buildings' within the meaning of section 32 of the Act. The Supreme Court's decision in CIT v. Gwalior Rayon Silk Manufacturing Co. Ltd. [1992] 196 ITR 149 further reinforced this interpretation. Consequently, question No. 2 was answered in the affirmative against the Revenue and in favour of the assessee.Issue 3: Deductibility of Cost Price of Milk Powder and Soya Flour from UNICEFThe Tribunal erred in holding that the cost price of milk powder and soya flour received by the assessee-Union from UNICEF free of charge was not deductible in the computation of the total income. The assessee received these raw materials under an agreement with the Government of India, which required the assessee to supply weaning food at a price not exceeding 10% profit over the cost of production. The Tribunal's decision was challenged based on several precedents, including CIT v. Groz-Beckert Saboo Ltd. [1979] 116 ITR 125 (SC), which established that the market value of raw materials received free of cost should be considered in determining the profit from the sale of finished products.The court concluded that the raw materials received were not gifts but conditional grants, and their value should be reflected in the trading account. The Tribunal's decision was inconsistent with established accounting practices and legal precedents. Therefore, question No. 3 was answered in the negative, in favour of the assessee and against the Revenue.The reference was disposed of with no order as to costs.
TaxTMI 