Allowability of harvesting and transportation expenses in the cases of Co-operative sugar mills

Tax Board Allows Harvesting and Transport Costs for Co-op Sugar Mills; Expenses Deemed Necessary for Operations.

The circular addresses the issue of disallowance by Assessing Officers of harvesting and transportation expenses claimed by Co-operative sugar mills. These expenses are incurred for procuring sugarcane from farmers who are members of the Co-operative and are contractually obliged to supply sugarcane exclusively to the mills. The Board has examined the matter and concluded that these expenses are necessary for ensuring a steady supply of sugarcane, which is crucial for the mills' operations. As such, these expenses are considered commercially expedient and are allowable for tax computation purposes for Co-operative sugar mills.