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2009 (4) TMI 19 - HC - Income TaxAppropriation of profits or business expenses - Amount paid by milk societies to members and non-members - A.O. refused to exclude the final rate difference paid - Is the price difference paid out of the profits? -commercial expediency for payment of this price - HELD THAT:- As this is not the case of distribution of profits) as the amount to be paid was not out of the profits ascertained at the annual general meeting. It is not paid to all shareholders. The amount which is the subject matter is paid to members who supply milk and in some case also to non-members. The payment is for the quantity of milk supplied and in terms of the quality supplied. The commercial expediency for payment of this price are the market conditions, and the need to procure more milk from the members and non-members to the assessee. To our mind, therefore, the amount paid by no stretch of imagination can be said to be dividend to the members or shareholders or payment in the form of bonus as bonus also has to be paid from the accrued profits. We are in agreement with the views taken by the tribunal and the question at present has to be answered in the affirmative in favour of assessee.
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