TMI Blog2010 (1) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... ance-sheet date would constitute an expenditure under Section 37 of the Income Tax Act, 1961; and whether such differential payment would, applying the real income theory, constitute an expenditure or distribution of profits? – held that – matter remanded on the issue of determination of the question whether the obligation is attached to income or to its source – AO directed to determine whether t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the price recommended by the assessee(s) after the finalisation of accounts and, therefore, the differential amount between S.A.P. and S.M.P. would constitute appropriation of profits and not expenditure/expense under Section 37 of the Act. On the other hand, it is the case of the assessee(s) that they are bound to pay to the cane growers the final cane price as per the S.A.P. fixed by the Stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applying the real income theory, constitute an expenditure or distribution of profits?" 6. In deciding the above questions, the Assessing Officer will take into account the manner in which the business works, resolutions of the State Government, the modalities and the manner in which S.A.P. and S.M.P. are decided, the timing difference which will arise on account of the difference in the accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to be examined because, in these case, we are not only concerned with the applicability of Section 40A (2) of the Act but we are primarily required to consider whether the said differential payment constitutes an expense or distribution of profits? Ordinarily, we would not have remitted these matters, particularly when they are for Assessment Year 1992-1993, but, for the fact that this issue i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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