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2019 (5) TMI 628 - AT - Income TaxAddition u/s 40A(2) - Excessive sugarcane price paid to members as well as non-members of the assessee - HELD THAT:- Set-aside the impugned order on this score and remit the matter to the file of the A.O for deciding it afresh as per law in consonance with the articulation of law by the TASGAON TALUKA S.S.K. LTD. [2019 (3) TMI 321 - SUPREME COURT] AO would allow deduction for the price paid under clause 3 of the Sugar Cane (Control) Order, 1966 and then determine the component of distribution of profit embedded in the price paid under clause 5A, by considering the statement of accounts, balance sheet and other relevant material supplied to the State Government for the purpose of deciding/fixing the final price/additional purchase price/SAP under this clause. The amount relatable to the profit component or sharing of profit/distribution of profit paid by the assessee, which would be appropriation of income, will not be allowed as deduction, while the remaining amount, being a charge against the income, will be considered as deductible expenditure. It is made clear that the distribution of profits can only be qua the payments made to the members. In so far as the non-members are concerned, the case will be considered afresh by the AO by applying the provisions of section 40A(2) as has been held by the Hon’ble Supreme Court supra. Needless to say, the assessee will be allowed a reasonable opportunity of hearing by the AO in such fresh determination of the issue. Since we have remitted the matter to the file of AO with certain directions as enunciated above, the cross objection filed by the assessee becomes infructuous. - Revenue’s appeal is allowed for statistical purposes
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