TMI Blog2001 (6) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... on the ground that such interest did not constitute a trading receipt. Similarly, the Tribunal disallowed additions made on account of excess price of sugarcane being charged by the Karkhana. The Department took the view that the Karkhana had charged price of sugarcane in excess of the price statutorily fixed by the Government. Accordingly, the Department took the view that the excess price constituted trading receipt/ income in the hands of the assessee. Accordingly, the Department has made additions to the income of the assessee which has been disallowed by the Tribunal. Therefore, the present, appeal has been filed by the Department. Similarly, the Department made additions on account of expenses incurred by the Karkhana on account of sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not trading receipts. In other words, in view of our judgment in CIT v. Chhatrapati Sahakari Sakhar Karkhana Ltd. [2000] 245 ITR 498, non-refundable deposits and interest thereon constituted trading receipts in the hands of the assessees-Karkhana. Accordingly, the decision of the Tribunal is set aside on this question. Accordingly, question No. I is answered in favour of the Department and against the assessee, The judgment of the Full Bench of the Bombay High Court in the case of CIT v. Shree Nirmal, Commercial Ltd. [1995] 213 ITR 361, has no application to the facts of the present case. In that matter, the deposit collected from the shareholders in exchange for occupancy rights was treated by the court as a non-refundable deposit. Theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s came to be disallowed. Such additions were made for both the aforestated two assessment years. In our view, the Tribunal was right in ordering deletion of such additions. While fixing the cane price, the Karkhana took into account the price paid by the neighbouring sugar factories. If the Karkhana had paid a lesser price, the Karkhana could not have been able to procure sugarcane for running of the factory because the sugarcane growers would not have supplied sugarcane to the assessee-Karkhana if it offered a price below the price offered by the neighbouring Karkhanas. Therefore, the price fixed by the Karkhana was based on commercial expediency and merely because the price paid was in contravention of the bye-laws, it cannot be said that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present case. As stated above, in the judgment of this court reported in CIT v. Chhatrapati Sahakari Sakhar Karhhana Ltd. [2000] 245 ITR 498, this court on an examination of the bye-laws, came to the conclusion that fixation and payment of price of sugarcane form part of trading operations of the assessee. That was not so in the case before the Supreme Court. Secondly, in the present case, the Karkhana was required to purchase sugarcane from the growers by paying a price. Such payment constituted expenditure. The Karkhana claimed deduction for such expenditure. This expenditure was disallowed on the ground that it was an excess price charged in violation of the byelaws. We have held that for income-tax purposes, one has to go by the te ..... X X X X Extracts X X X X X X X X Extracts X X X X
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