Additional price payable to cultivators of sugarcane allowed as deduction in year in which additional liability arises.

Tax Rules for Sugarcane Payments: Deduct Additional Costs When Liability Arises, Not When Related.

The circular clarifies the tax treatment for additional prices payable to sugarcane cultivators. It states that such additional payments should be deducted in the year the liability arises, not the year it relates to, as the liability is determined upon the price fixation authority's order. This applies to market-purchased sugarcane but not to self-grown sugarcane, where the market value is deductible in the year used. For self-grown sugarcane, the deduction can be claimed in revised returns if assessments are incomplete, during appellate proceedings, or through section 264 applications for completed assessments. Section 119(2)(b) may be used to address genuine hardships.