TMI Blog1970 (1) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... have to be in favour of the assessee-company in accordance with the decision of this court in the case of Commissioner of Income-tax v. Maharashtra Sugar Mills Ltd. The two other questions relate to (1) ascertainment of the true value of sugarcane grown by the assessee-company on its plantations and (2) ascertainment of the true value of closing stock of sugar. This second question -arises only in the last three years of assessment mentioned above. The relevant facts appear in the statement of the case. The facts on which reliance is placed and which require to be noticed are as follows : The primary business of the assessee-company is to manufacture sugar from sugarcane grown on its own sugarcane farms, though occasionally, it purchased small quantities of sugarcane grown by others for the purpose of manufacture of sugar. In the assessment year ending September 30, 1950, the company crushed 1,44,837 tons of sugarcane. The purchase from outsiders was only of 61 tons. In the last four years of assessment referred to above the company crushed sugarcane which varied in quantity between 1,84,892 tons and 1,63,106 tons. In the assessment year ending September, 1952, and Septemb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the produce was liable to be calculated at the following respective rates for each of the above five years, viz., Rs. 48, Rs. 58, Rs. 46-4-0, Rs. 51-12-0, and Rs. 51-12-0. The main case of the company in claiming valuation of its sugarcane produce at the above respective rates for the five years was that the above rate had been fixed as the proper rate and proper market value for the years in question by the, circulars issued by the Deccan Sugar Factory Association for each of the above years. In connection with its case for the application of the above rates, the company relied upon the stocks of sugarcane it had purchased from outsiders and the average price which the company paid for the making above purchases. The average price at which the company purchased sugarcane stocks from outsiders for each of the above respective five years was stated by the company respectively at Rs. 48, Rs. 58, Rs. 46-4-0, Rs. 51-12-0 and Rs. 51-12-0. The company further submitted that the quality of the sugarcane grown by the company on its own farm was superior to the quality generally obtained in the market and hence 10 per cent. weightage should be given in connection with the market value of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e claimed by the company. He then referred to the fact about the rate fixed for assessing other companies and that it had been decided to apply the rate of Rs. 42 per ton in the case of other companies operating in the Deccan area. He valued the company's produce at the above rate of Rs. 42. The company's claim in the remaining four assessment years was that its produce should be valued at the rate fixed by the Association by circulars issued for each of the years. In these five years also the company relied upon the fact of the purchases made from outsiders and the average price paid in each year to these outsiders. The company also contended that the sugarcane produced by the company should be given weightage of 10 per cent. as its produce was of higher quality. These contentions of the company were rejected by the assessment orders for each of the above years made respectively on December 20, 1955, February 21, 1958, March 31, 1958, April 11, 1958, and August 22, 1958. It requires to be noticed that in rejecting the company's contentions it was observed on the question of quality and 10 per cent. weightage claimed by the company that "........ it is no use splitting hairs over ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company was superior, but the company had not furnished any data to support its rates. In that connection, it referred to the observation of the Appellate Assistant Commissioner in the order already cited above. The Tribunal found : " ........ the company is not in a position to substantiate its adopted rates......... ". The Tribunal also held that the company's purchases from outsiders were very insignificant and could not be relied upon to represent any average market value. The Tribunal's criticism was : " Further, no material is placed before us as to when the assessee made purchases, whether they were fairly spread over the season or made within a short duration, and, lastly, whether they were made in an open market ". In adopting the rate fixed by the Income-tax Officer as correct, the Tribunal referred to the fact that the assessment made had been accepted in other cases and that fact established that the rate adopted was reasonable. Now, in this reference, Mr. Mehta for the company has again relied upon the following facts : That purchases of diverse quantities of sugarcane made by the company from outsiders in the above five years of assessment. The fact that the compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e burden on the company, therefore, was to prove that the rate claimed by the company was the average price at which sugarcane was sold in the market during the year in question. Towards discharging this burden, apparently, the company has not made any efforts at all. In that connection, the observations made by the tax authorities in the various orders have already been cited above. In three of the five years in question the quantity purchased from outsiders was respectively 60 tons, 1,649 tons and 1,390 tons which was extremely small quantity and the price paid for purchase of that quantity could not be the basis for ascertaining the average price within the meaning of the above rule, In the other two years the quantity purchased was respectively 22,101 tons and 11,388 tons, but this quantity also may rightly be considered as small quantity for finding out average price within the mean ing of the above rule. The difficulty in accepting the contention of the company that the price paid by it for purchasing these quantities was average price is that the quality of the sugarcane purchased, whether the purchase was made in season and out of season and in what months has not been ment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iable to pay to the cultivators for sale of sugarcane. It was also permissible to refer to the fact of assessments made in respect of the other sugarcane companies which were similarly situated, It was also permissible to refer to the fact that these other compaines accepted the rates which were being applied in the case of the assessee-company. Thus, in the the order of assessment dated March 31, 1953, for the year of assessment 1954-55, reliance aswas rightly placed on the facts relating to the assessment of. other companies in the following words : " I have looked into other sugar company cases and found that the average fluctuates a little. In another company which is assessed here and of which the assessee is presumably aware the average purchase price of cane was Rs. 36-4-6 per ton and this gives a clear idea of the prevailing market. " The Tribunal in its order dated July 27, 1960, similarly rightly relied upon the other case. With reference to that year, the same rate has been adopted as was done in other cases and they were accepted by 3 sugarcane cultivating companies of this region. It is difficult to reject the findings made in the several orders of the authoriti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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