TMI Blog1972 (1) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... During the previous year relevant to the assessment year 1964-65, the assessee contributed a sum of Rs. 24,000 to the Development Council, Siswa Bazar, pursuant to a scheme for intensive cane development in the area. The scheme was launched by the State Government on the recommendation of the Sugar Industry Advisory Committee, and the object of the scheme was to develop intensively an area of four thousand acres around the assessee's sugar mill for a period of three years with a view to raising the average yield of sugarcane per acre. The scheme contemplated that the total cost would be borne by the factory, the canegrowers of the area, the State Government and the Government of India. The share of the sugar mill was determined at Rs. 24,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med a deduction of the amount in the assessment proceedings for that year. The Income-tax Officer did not accept the claim and the Appellate Assistant Commissioner also rejected it. On second appeal, the Tribunal took into consideration certain further material on the record and held that the claim should have been allowed. The Tribunal examined the terms and conditions of the scheme and deduced therefrom that the canegrowers were bound to sell their produce to the assessee, that full accounts of the expenses incurred by the Development Council were maintained and the assessee joined the scheme not under any compulsion but of its own volition. In the circumstances, the Commissioner of Income-tax had obtained a reference of the following que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd made it in circumstances which indicated that it would benefit from the payment. In that belief the payment was clearly made, and there is nothing to show that at the time of making the payment the assessee thought otherwise. In fact, when the Income-tax Officer rejected the claim he did not doubt that the payment was made by the assessee for the purpose of benefiting its business. He rejected the claim on the ground that it brought into existence an enduring benefit and the expenditure was, therefore, capital in nature. The Appellate Assistant Commissioner observed : " If the yield of sugarcane increases, the factory will get benefit through increased supplies and better recoveries. " He rejected the claim on the ground that the exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee nor is it the case of the revenue that the entire cost of development of those roads was defrayed by the assessee. It only made certain contributions for road development between the various cane producing centres and the mills. The apparent object and purpose was to facilitate the running of its motor vehicles or other means employed for transportation of sugarcane to the factory. From the business point of view and on a fair appreciation of the whole situation the assessee considered that the development of the road in question could greatly facilitate the transportation of sugarcane. This was essential for the benefit of its business which was of manufacturing sugar in which the main raw material admittedly consisted of sugarca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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