TaxTMI 
TaxTMI 
2010 (5) TMI 782
X X X X Extracts X X X X
X X X X Extracts X X X X
....in law, the learned IV, Surat has erred in deleting the addition made on account of sugarcane quality improvement expenses of Rs. 56,93,735 made by the ." 2. The facts of the case are that the assessee is engaged in the business of manufacturing and selling sugarcane and its by-product, i.e., alcohol. The return of income was filed declaring a loss of Rs. 1,73,05,457. During the course of the assessment proceedings the Assessing Officer found that expenses to the extent of Rs. 56,93,735 have been incurred as sugarcane quality improvement subsidy being monetary benefit provided by the assessee to its members towards pesticides, seeds and other items. Theassessee is a society of members who produced crops of sugarcane. The assessee provide....
X X X X Extracts X X X X
X X X X Extracts X X X X
....The benefit of alleged subsidy is spread over a long period of time. Therefore it cannot be allowed as revenue expenditure. Further, this expenditure has no direct connection with either manufacturing or selling sugarcane in the relevant assessment year. Finally, in any case claim of the assessee is excessive and unreasonable and has no direct nexus with the business purpose. He accordingly disallowed the claim. 3. The learned Commissioner of Income-tax (Appeals) on the other hand allowed the claim by observing as under : "I have gone through the details and the assessment order and Ifailed to understand the logic behind making such addition. The society....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion 143(3) and the assessment year 2005-06 which was also passed under section 143(3), wherein the claim of such subsidy was accepted. He submitted that following the principle of consistency the claim of the assessee should not be disallowed. 6. The learned authorised representative further submitted that claim has direct nexus with the business purpose inasmuch as pesticides and other products were sold to the farmers at subsidised rates for supporting them to improve sugarcane production. 7. We have heard the rival submissions of the parties and perused the materials on record. In our considered view, there is no case for interference in the order of the learned Commissioner of Income-tax (Appeals). It is an undisputed fact that th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt reasons to do so should not deviate from the conclusions arrived at in the case of assessee in earlier years. It is so held by the in the case of K. R. Films P. Ltd. v. ITO [2006] 287 ITR (AT) 1 (Mum). 8. Notwithstanding, we are of the view that the claim of the assessee is justified. The assessee is a co-operative society under the Mumbai State Cooperative Act, 1925. It has 5,600 members as informed by the learned authorised representative. The pesticides, seeds and other items are sold at a reduced price to the farmers in order to help them grow more sugarcane. The sale at a reduced price to the farmers is directly for a business purpose as it is given in relation to purchase of sugarcane crop which is entirely sold to the assessee.....