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2017 (8) TMI 1492 - ITAT NEW DELHIDisallowance on account of sugarcane development expenses - assessee company is engaged in the business of manufacturing of white crystal sugar - allowable busniss expenses u/s 37 - Held that:- AO in a very summarily manner has disallowed the expenses on the ground that it is relatable to agricultural income. Expenses have to be incurred by the assessee as per the direction or mandate of the State Government; and have been debited as cane development expenses in the profit and loss account which is part of the assessee’s main activity of manufacturing of sugar crystals. The cane development expenses debited to the profit & loss account and the agricultural income are completely unrelated and therefore, to say that it is directly related to assessee’s agricultural income from its own land is sans any material. The similar claim of expenses have always been allowed by the Assessing Officer in the scrutiny assessments right from the assessment year 2001-02 to 2006-07. CIT (Appeals) has referred to CBDT’s circular No. 578 dated 15.2.1990, wherein CBDT has clarified and upheld that the expenditure incurred by the sugar factory on cane development programmes is eligible for deduction u/s 37(1). - Decided in favour of assessee.
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