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2020 (12) TMI 591 - AT - Income TaxAdditional of additional price/withheld price of milk produced - whether CIT(A) erred in not appreciating that the said payment is in the nature of distribution of profits without paying due taxes though there is no obligation to tax a final price? - search conducted u/sec.132 - HELD THAT:- As decided in own case [2017 (11) TMI 1363 - ITAT VISAKHAPATNAM] the only doubt expressed by the Assessing Officer is that the above payments are only made to avoid taxes. In our opinion, the assessee producer company running in the lines of mutuality basis for the benefit of the members, in the interest of the members instead of payment cash, some shares are allowed and established educational institutions and also hospitals for treatment of the members of the milk suppliers and certain payments made out of withheld price as per Companies Act and also Articles of Association followed by Board resolution. AO is not correct in saying that the assessee adopted device for avoidance of tax.Once the milk suppliers having shares in the company, they will be having a feeling of supplying milk to their own company. The assessee company will be able to procure milk from the milk producers continuously. Therefore, allotment of equity shares to the milk producers for the above reason has to be considered as business expediency. So far as case-laws relied on by the Assessing Officer are concerned, they have no relevancy to the facts and circumstances of the case. Keeping in view of the above, we find no infirmity in the order passed by the ld. CIT(A) and uphold the same - This appeal filed by the Revenue is dismissed.
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