2002 (1) TMI 49

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....ders involved in these petitions are for the assessment years 1988-89 and 1989-90. The Assessing Officer, by the said assessment orders, made certain additions in respect of various funds and deposits collected by the respondents out of sugarcane price payable to the cane growers during the course of trading operations. The Commissioner of Income-tax (Appeals) allowed the appeals and set aside the impugned orders impugned therein. The said appellate orders were confirmed by the Tribunal by dismissing the appeals filed by the Revenue holding that the funds/deposits collected by the respective societies, being out of the purchase price payable to the cane growers, were not trading receipts of the assessees. On the aforesaid canvass of the bas....

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....ety is obliged to follow the same keeping in view the mandate of the Act to which society owes its existence. The directions in this behalf are generally issued through the Director of Sugar, Maharashtra State, Pune. The cane price is decided by the Government. While determining the cane price to be given to the Karkhana, the Government is required to take into account various factors; such as, the amount of actual sugar sold during the sugar year including the value of the closing stock of controlled and free sugar prevailing on the last day of the sugar year. In the present case, the Director of Sugar, Maharashtra State, Pune, issued directions to the sugar factory herein while communicating the final cane price of the sugarcane for the ....

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....owards the said funds in view of the binding directions, issued by the State Government. This court applying the principles of diversion of income by overriding title, held that income having been diverted at source the same was not assess able in the hands of the assessee. For the same reasons, deductions made by the sugar Karkhana from the cane price on account of C. M. relief fund, education fund were also held not to constitute trading receipts of the Karkhana. Some of the items of deductions involved in the present appeals such as Sane Guruji Education Fund and/or factory education fund, flood relief fund, famine relief fund and natural calamities fund were not the subject-matter of scrutiny in the case of CIT v. Chhatrapati Sahakari ....