TaxTMI 
TaxTMI 
1984 (9) TMI 38
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....d firm ? " The assessee carries on the business of manufacture and sale of sugar. It has factories at Sakarwadi and Lakshmiwadi. It owns a sugarcane farm. It is a partner with a 25% share in profits in two firms, Somaiya Farms, Lakh, and Somaiya Farms, Khanapur. It purchases sugarcane from these two firms as also from outsiders, bagaitdars. It also uses sugarcane grown at its own farm. Sugarcane was procured by the assessee in this manner during the assessment year with which we are here concerned, namely, 1962-23. The previous year ended on May 31, 1961. The State of Maharashtra fixes minimum price at which sugar factories can purchase sugarcane. The price is fixed with reference to each sugarcane factory. For the relevant assessment year....
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....vidence to support the very high price of Rs. 57.50 per ton. It is interesting to note that even for the alleged superiority of the assessee's own sugarcane, the maximum price claimed was Rs. 53 per ton. In our opinion, the disallowance was justified." Mr. Dastur, learned counsel for the assessee, submitted that the ITO had no power to disallow any expenditure that had been incurred on the ground that it was excessive. The deduction for the expenditure was claimed under s. 37 as being expenditure laid out or expended wholly and exclusively for the purposes of the assessee's business. The only power at the relevant time which the ITO had to disallow expenditure was that contained in s. 40(c) as it then read. The provisions of s. 40(c) did n....
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....a notice requiring him to attend and produce the evidence on which he relies in support of his return. The power to " verify the correctness and completeness " of an assessee's return does not, patently, invest the ITO with the power to disallow expenditure which has been in fact incurred by the assessee for the purposes of his business upon the ground that such expenditure is excessive or unreasonable. Section 143(2)(b) does not, therefore, assist the Revenue. The Revenue does not rely upon the provisions of s. 40(c), to which Mr. Dastur adverted. We need not, therefore, consider them. In our view, the case before us is squarely covered by the judgment of the Gujarat High Court in Margabhai Kishabhai Patel & Co. v. CIT [1977] 108 ITR 54, ....