ORDER
M.A. Bakshi, Vice President
1. The appellant is a co-operative society engaged in the manufacture of sugar and allied products. Assesses had filed the return of income for assessment year 93-94 on 27 Oct., 1993 declaring taxable income of Rs. 76,93,310. The return had been processed Under Section 143(1)(a). However, subsequently, notice Under Section 143(2) was issued and assessment made Under Section 143(3) at an income of Rs. 2,83,46,160/-. Assessee appealed to the CIT(A), Ludhiana against the additions made by the Assessing Officer and the latter vide order dated 16th March, 1995 allowed the appeal of the assessee in part. The assessee is in appeal before us against the decision of the CIT(A) of sustaining the addition of Rs. 2,53,23,741/- and computation of deduction Under Section 80I.
2. The main dispute involved in this appeal is relating to disallowance of Rs. 2,53,23,741 representing additional sugarcane price disallowed by the AO. The relevant facts relating to the issue have been discussed by the AO in the assessment order. In the course of inspection carried out by the Assessing Officer on 21.11.94 Under Section 131, it was observed that the assessee had made an entry to the tune of Rs. 2,53,23,741 in the share deduction account reflected in the general ledger and carried forward balance of Rs. 3,58,82,389 had been increased to which included the opening balance of Rs. 1,03,10,705 of the preceding year. Corresponding to the credit of Rs. 2,53,23,741 in the share deduction account, the assessee had made a debit entry in the sugarcane account to the tune of Rs. 2.53,28,438 with the narration “to amount of sugarcane purchases at Rs. 9 and others”. The debit comprised of two entries being Rs. 2,53,23,741 on account of additional price of sugarcane @ Rs. 9 per quintal and Rs. 4697.93 in respect of “burnt cane PNB 10240-4240”. On inquiry by the AO, it was pleaded on behalf of the assessee that sugarcane had been purchased during the previous year relevant to assessment year 93-94 at an ad-hoc price. However, the Board of Directors in their meeting held on 17.4.93 had decided to increase the sugarcane price by Rs. 9 per quintal with the condition that the same is credited to the share deduction account. It was also stated that subsequently the shares have been issued to the members in lieu of the additional cane price credited in the share deduction account. The relevant record relating to the Board’s meeting was produced before the revenue authorities and the relevant agenda, which was considered by the Board of Directors on 17.4.93, reads as under:-
“For the year 1992-93 of the mill, proposal for fixing price of sugarcane payable to the farmers and also regarding payment of the same.”
Following note/comments were given before item No. 6 of the Agenda:-
“According to the statistics and accounts of the nulls as on today likewise the last year, the mill has earned profits for the year also. Hence for the year 92-93, final decision may be taken regarding the price payable to the farmers for supplying sugarcane in this crushing season and also it may be decided as to by what way/mode the payment of the said price have to be made.”
In the meeting held by the Board of Directors on 17.4.93, it was decided to increase the sugarcane price by Rs. 9 per quintal retrospectively but the said additional cane price was to be credited to share deduction account. The assessee had accordingly passed on the entries in the books of account as on 31st March, 1993. Deduction to the tune of Rs. 2,53,23,741 was denied by the Assessing Officer on the following grounds:-
(i) That the assessee had been making regular payment of sugarcane to various farmers on day-to-day basis and it was only at the end of the accounting period on realizing that it had earned substantial taxable profits, a back date entry to the tune of the additional sugarcane price was shown to have been made on 31.3.93.
(ii) That as on 31.3.93, there was no such liability to pay the enhanced price of sugarcane.
(iii) That another small entry of Rs. 4697.93 regarding burnt sugarcane had been made to appear that the earlier entry was not backdated.
(iv) That the payment of additional sugarcane price had not actually been made to the farmers. The entire amount had been credited to the share deduction account.
(v) That share deduction account was not debited in order to make credit entries in the individual share capital a/c of various shareholders/sugarcane suppliers.
(vi) That the shareholders/sugarcane suppliers had not been informed regarding the credit to their account till then passing of the assessment order.
(vii) That in some of the farmers’ accounts, credit entries had been made after the issue had been raked up by the Department on 21.11.1994. According to the AO, t was evident that no corresponding entries were made in the share deduction account.
(viii) That on 5th Dec., 1994, the Managing Director of the Society in his statement had indicated the reasons for not issuing the shares in the name of sugarcane suppliers as the formalities had to be completed regarding the determination of full value of shares, addresses of the shareholders and, therefore, the entries could not be made as on 31.3.1993.
(ix) That till the date of inspection Under Section 131 and even till the date of finalization of the assessment proceedings, the assessee had not made specific book entries and no evidence had been produced for the dispatch of share certificates to the shareholders/farmers.
(x) That the main purpose of the assessee was to divert the taxable profits by making these theoretical book entries.
(xi) That the liability had crystallized only after 17.4.1993 after the close of the accounting period and that the entry was one-sided act on the part of the sugarcane mill without either informing the shareholders and without paying the same to them.
(xii) That the Board of Directors passed a resolution to enhance the sugarcane price merely because the mill had earned substantial profits and the assessee wanted to apply the income towards the enhancement of share capital and not making any payment to the cane growers.
3. On appeal, the CIT(A) confirmed the view of the Assessing Officer by holding that the assessee has acted in a unilateral manner to enhance the share capital and not making any payment of this amount to the cane growers. The CIT(A) was also of the view that the payment to the sugarcane growers had not been ratified as on 31st March, 1993. According to the CIT(A), even if the liability was allowable to the assessee, the same could be considered in the subsequent assessment years when the sugarcane price had actually been enhanced.
4. Against the disallowance, the assessee is in appeal before us. It may be pertinent to mention that the assessee had raised two additional grounds of appeal as under:-
“1. That the appellant was entitled to claim of deduction Under Section 80P(2)(a)(iii) of the Act being cooperative society engaged in marketing of agriculture produce of its members. Hence its total income was not liable to be taxed.
2. That in the alternative, the appellant was entitled to be allowed claim for deduction amounting to Rs. 17464478/- representing benefit earned under the Sampath Incentive Scheme, 1997 being the capital receipt in contra-distinction to revenue receipt as wrongly returned while computing the total income.”
Our predecessor Bench by a separate order dated 24th Sept., 2002 refused to admit the aforementioned additional grounds of appeal. That order has become final.
5. Reverting to the disallowance made by the AO of Rs. 2,53,23,741, the issue before us is as to whether the claim made by the assessee is allowable as a deduction in the year under appeal. The ld. Counsel for the assessee contended before us that the liability towards the members/growers had accrued during the previous year relevant to assessment year under appeal with the supply of sugarcane. Inviting our attention to the Bye-laws of the Society, it was pointed out that Clause 24A of the said bye-taws provides that the Board would fix an initial price for sugarcane/beet in accordance with the formula determined by the State Federation of Co-operative Sugar Mills in consultation with the sugar mills and Registrar. Final payment shall be made at the end of the crushing season. It was contended that immediately after the end of the previous year, a meeting of the Board of Directors was convened and a resolution passed. The said resolution was also ratified in the general meeting held on 26.7.1995. It was further contended that in the immediately preceding year, similar procedure was followed and deduction claimed by the assessee was allowed. It was contended that the said decision of the revenue authorities has become final. The ld. Counsel for the assessee pointed out that after the decision of the Board of Directors on 17.4.93, entries were made in the books of account as on 31.3.93 as the balance-sheet of the Society was signed subsequently i.e. on 29.10.93. The ld. Counsel for the assessee further contended that the assessee is following the mercantile system of accounting and, therefore, any liability towards the purchases made in the previous year accrued in the same year and provision was, therefore, necessarily to be made in the accounts pertaining to that year. It was further contended that in the assessment year 92-93 and even in the subsequent assessment years, the claim of the assessee has been allowed. The ld. Counsel for the assessee further contended that all the formalities authorizing payment of additional sugarcane price had been completed in accordance with law and there was thus no justification for making the disallowance. In support of the contention that when the liability accrues in the previous year, the mere fact that its quantification has been done subsequently, deduction is permissible in the year in which the liability has accrued, reliance has been placed on the following decisions:-
i) Metal Box Company of India Ltd. v. Their Workmen, 73 ITR 53 (SC);
ii) Kundan Sugar Mills v. CIT, 106 ITR 704 (All.)
iii) Mitilal Padampat Sugar Mills v. CIT, 106 ITR 988 (All.);
iv) Addl. CIT v. M.P. Sugar Mills P. Ltd., 148 ITR 203 (All.)
v) CIT v. Sarabhai Sons Ltd., 143 ITR 473 (Guj.);
vi) CIT v. Birla Gwalior (P) Ltd., 89 ITR 266 (SC)
Reliance is also placed on the decision of the Calcutta High Court in the case of CIT v. North West Coal Ltd., 167 ITR 419, in support of the contention that under the provisions of the Income-tax Act, the real profits are to be assessed and all the possible liabilities are to be taken into account. The ld. Counsel further contended that assessee has consistently followed the same procedure for fixation of sugarcane price and deduction has been allowed by the Department in earlier years as well as in the subsequent assessment years. It was accordingly pleaded that the disallowance made by the revenue may be deleted.
6. The ld. D.R., on the other hand, contended that the issue involved in this appeal is covered in favour of the revenue by the decision of the Punjab & Haryana High Court in the case of Shahabad Co-op., Sugar Mills Ltd. v. CIT, 226 ITR 582, and, therefore, there is no scope for any debate. Relying upon the findings of the AO as well as the CIT(A), the ld. D.R. highlighted the findings that the act of the assessee of crediting the share deduction account and debiting the sugarcane price account was to enhance the share capital at the cost of the revenue. It was contended that as on 31st March, 1993, there was no liability of the assessee to pay the additional sugarcane price to the growers. The assessee had made huge profits and in order to pay less taxes, it was decided to make a provision on account of additional sugarcane price without any payment to the sugarcane growers. Entries have been made in the books of account at the end of the previous year and no payments have been made to the sugarcane growers. The credit to the share deduction account was merely to enhance the share capital of the assessee. The growers had no knowledge of the increase in the prices. Even after the expiry of one and a half years, no entries had been made in the individual accounts of the farmers who had supplied sugarcane to the assessee. The ld. D.R. relied upon the statement of the Managing Director of the Society who had admitted that additional sugarcane price was paid as the Society had made huge profits. Our attention was also invited to the Agenda of the Board’s meeting held on 17.4.93 and the comments thereto. The ld. D.R. contended that since the claim of the assessee on account of additional sugarcane was not on account of business necessity/expediency but merely for the increase of the share capital, the disallowance made is justified. It was accordingly pleaded that the appeal of the assessee may be dismissed.
7. We have given our careful consideration to the rival contentions. The disallowance, as already pointed out, has been made for various reasons. The admissibility of the claim of the assessee on the basis of a provision made in the books of account is dependent on various factors. Assessee is maintaining books of account on mercantile basis and as per Clause 24A of the Bye-laws of the Society, the initial price payable to the sugarcane growers is fixed by the Board of Directors in accordance with the formula determined by the State Federation of Co-operative Mills in consultation with the sugar mills and Registrar. The said clause also provides that final payment shall be made at the end of the crushing season. The said clause reads as under:-
“24A The Board shall at the commencement of the crushing season fix an initial price for sugarcane/beet supplied to the mills, in accordance with a formula determined by the State Federation of Co-operative Sugar Mills in consultation with the Sugar Mills & Registrar. Final payment shall be made at the end of the crushing season.”
A plain reading of Clause 24A of the bye-laws clearly reveals that the price of the sugarcane has got to be fixed in accordance with the formula stated above. There is also a provision for making final payment at the end of the crushing season. It is not disputed that assessee had fixed the initial price for sugarcane/beet in accordance with the said formula. The Cane Commissioner had fixed the price of cane for crushing season 92-93 i.e. for the relevant assessment year as under:-
“Early variety at Rs. 50/- per quintal.”
It is also noteworthy that sugarcane prices are fixed by Cane Commissioner, Punjab. The prices for the crushing season 93-94 i.e. for subsequent year have been fixed vide Memo No. CC/F8/7377-7396 dated 28.10.93 as under:-
"1. Early variety: COJ-64, COJ-83, COP-211 Rs. 62/- per qtl
2. Mid Variety: COJ-79, COJ-84 Rs. 60/- per qtl
3. Late Variety: CO-1148 & COS 767 Rs. 58/- per qtl
4. The price of COJ-84 will be the same as that of COJ-64
From 1st February onwards and similarly the price of CO-1148 will also be same as of COJ-64 from 1st March onwards."
These prices are fixed in consultation with the Chief Minister, Punjab. We find a reference to this in the paper placed at page 117. The relevant portion is reproduced hereunder:-
"From: The Cane Commissioner, Punjab,
Chandigarh.
To
All the Managing Directors/General Managers
Of the Sugar Mills in the State.
No. CC/F-8/6650-71 dated 22.9.94.
Sub: Minutes of the meeting regarding sugarcane pricing
Held under the Chairmanship of Sardar Beant
Singh, Chief Minister, Punjab, on 8.9.94 at 7.00 P.M.
The minutes of the meeting held on 8.9.94 under the Chairmanship of Sardar Beant Singh, Chief Minister Punjab in which the State advised price of sugarcane for the year 1994-95 was approved are sent herewith for favour of information & necessary action please.
Sd/-
Encl: As above. Cane Commissioner, Punjab,
Chandigarh.
Ends. No. CC/F-8/6672 Dated: 22.9.94
Copy along with minutes of the meeting is sent to the Private Secretary to the worthy Chief Minister Punjab for kind information of the Chief Minister, Punjab."
In this case, the initial price has been fixed as per the rates fixed by the Cane Commissioner. However, after the end of the previous year, the assessee has enhanced the supply price of sugarcane @ Rs. 9/-per quintal. Had it been a simple case of determination of the sugarcane price after the end of the crushing season in accordance with the formula determined by the State Federation of Co-operative Mills in consultation with the sugar mills and Registrar and payment had been made to the sugarcane growers accordingly, perhaps there would not be any difficulty, on the basis of various decisions cited on behalf of the assesses, the deduction on account of the liability relating to the year under appeal could be allowed as a deduction notwithstanding the quantification of the price having been done in the subsequent year but before the finalization of the balance sheet.
8. So, however, there are several gray areas, which cloud the issue of deduction in respect of the additional sugarcane price fixed by the assessee after the end of the previous year. The thrust of the Revenue for disallowance of the claim is that no payment has been made to the sugarcane growers and the assessee has provided the liability by credit to the share deduction account in order to enhance its capital base. As per information available to us, the assessee has adopted this system of enhancing the sugarcane price and crediting the share deduction account for assessment year 92-93, 93-94, 94-95 and 95-96 and not in any other years. The issue before us, as already pointed out, is limited to the deduction permissible to the assessee for enhanced price on the basis of fixation of the sugarcane price in the subsequent year. In fact, the real issue involved in this appeal is as to whether deduction is permissible to the assessee on account of unilateral enhancement of sugarcane price by crediting to the share deduction account without making any payment to the sugarcane growers. Had it been a simple case of final fixation of rates for supply of sugarcane, then perhaps the assessee could not unilaterally impose the condition of not making the payments to the sugarcane growers and instead crediting the additional price to the share deduction account. The procedure for fixation of price as provided under Clause 24A of the bye-laws of the Society, reproduced elsewhere in this order, has also not been followed. In this case, it is not even the case of the assessee that the assessee that the fixation of the final price of sugarcane was also in accordance with the formula provided under Clause 24A of the bye-laws of the society or in pursuance to any order of the Govt. or any other authority. It is also noteworthy that when the assessee was running in losses, the sugarcane price had not been enhanced by fixing the final price after the end of the crushing season. The fixing of final price and creating of additional liability on account of additional sugarcane price has been only in the years in which the assessee earned huge profits. It is, therefore, evident that in effect, the assessee has enhanced its capital base at the cost of the exchequer by making a provision on account of additional sugarcane price without making such payments to the sugarcane growers. It may be pertinent to mention that the Bye-laws of the Society, copy of which is on record, provide that the authorized share capital of the mills shall be Rs. 5 crores and that value of each share shall be Rs. 500 payable in lump sum at the time of admission or by instalment as may be approved by the Board. It is also provided that no individual member shall hold shares exceeding the value of Rs. 10,000. The share capital collected form the grower-members would be linked to their acreage under Sugarcane as per decision of the Board from time to time. In this case, it is not known as to whether after the allotment of additional shares, each individual member was holding shares exceeding the value of Rs. 10,000/-. It is also provided as per the bye-laws that the application for allotment of shares shall be made to the Managing Director in the form prescribed by the mills. In the case of additional cane price, the grower members had not even been informed about the increase in price and allotment of shares and accordingly there could not be any applications from the members for allotment of additional shares.
9. In this case, it is not the case of the assessee that the sugarcane growers/members had requested for allotment of shares in respect of the additional sugarcane price. Letter of the Chairman of the assessee mills relating to assessment year 92-93 indicates that the increase in sugarcane price was intended to meet the increase in input cost of cane sowing. However, no cash payment has been made to the growers, which exposes the myth of the cause indicated in the said letter. The following chart will help to appreciate the conduct of the assessee:-
"Sr. No.
Particulars Asstt. year (Rs. in Lacs)
1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97
1) Share Capital (Lacs)
a) Individual 51.38 54.58 58.22 58.25 59.70 290.25 403.45 403.91
b) Government 448.00 448.00 458.93 453.90 453.93 453.93 453.93 453.90
c) Societies 39.37 393.37 39.37 39.37 39.37 39.33 39.33 39.33
d) Share Deduction 32.56 21.40 22.80 103.10 358.82 208.16 133.62 131.76
1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03
407.35 418.76 420.34 420.70 424.70 424.98
453.93 453.93 453.93 453.93 453.93 453.93
39.40 39.41 39.42 39.43 39.43 398.43
132.86 121.54 120.32 120.28 120.28 117.10
1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97
2) Rate of Additional ... ... ... 3 9 6 10 ...
Price (ACP)
(RS/Qtl)
1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03
... ... ... ... ... ...
1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97
3) Mode of payment of Rs. 2/- Nil Nil Credit Credit Cash @ Cash @ Nil
to to
ACP (Rs./Qtl.) per Share Share Rs. 3/- Rs. 7/- &
Qtl. Deduc- Deduc per qtl. credit to
tion tion
Deducted A/c @ A/c @ and share deduction
3/- 9/- credit
From cane per qtl. per qtl. to Share account @ 3/-
price
Deduction per qtl.
A/c @ 3/-
per Qtl.
1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03
NIL NIL NIL NIL NIL NIL
1992-93 1993-94 1994-95 1995-96
4) Amount of 80.32 253.24 129.79 43.13"
Additional Cane Price
It is evident from the above information that the share capital of the Govt. has remained static @ 453.93 lakhs since previous year 91-92.
The share capital of member societies has also remained static @ 39.37 lakhs. The share capital of individual member has increased from 58.22 in 91-92 to 424.98 lakhs in 2002-2003 (financial year).
10. In the share deduction a/c, there is a credit of Rs. 117.10 lakhs even as on 31.3.2003. As pointed out earlier share deduction a/c is accumulation of additional sugarcane prices deducted by the assessee in the four financial years. Clause 24A of the bye-laws to the extent of fixation of final price seems to have operative only for four years. When the requirement of enhancement of share capital of the assessee was satisfied, no need was felt to fix the final price of sugarcane after the end of every crushing season in accordance with Clause 24A of the bye-laws of the society.
11. From the Agenda of the meeting of Board of Directors and the Resolution passed by the Board of Directors, there is no doubt that the enhancement of sugarcane price braced with the condition of no cash payment was solely with the purpose of enhancing the capital base at the cost of exchequer without payment of taxes in respect of the related amount. The assessee also does not get support from the ratification of the Resolution in the General Body meeting as the purpose in the said ratification is also indicated to enhance the capital base. This is evident from the Resolution No. 6 reproduced hereunder:-
“Resolved: General Body unanimously approves the decision of the Board of Directors/Administrator of payment of additional cane price for the year 1992-93, 1993-94 & 1994-95 respectively in the order of Rs. 9/-, Rs. 6/- & Rs. 10/- per qtl. (i.e. in 1992-93 year in the form of Rs. 9/- as share deduction, for the year 1993-94 in the form of Rs. 3/- in cash & Rs. 3/- in the form as share deduction, for the year 1994-95 in the form of Rs. 3/- as share deduction and Rs. 7/- in the form of cash) because same is required to strengthen the share capital of the mills.”
12. The assessee has decided to enhance the sugarcane price but has also unilaterally decided to credit the sum to the share deduction account, which was subsequently utilized for allotment of shares to the members. This unilateral act of the Society is an indicator to the fact that the deduction claimed by the assessee was not purely a simple transaction of purchase of sugarcane and fixation of the price after the end of the previous year. The additional price is in excess of the price fixed by the Cane Commissioner for the crushing season In this case, price has been fixed for the supply made in the preceding year but the payment on account of additional price has not been made to the growers. It would have been perhaps a different matter, if the payments had been made to the members and they had applied for allotment of additional shares as per their wishes and requirements. The fixation of additional sugarcane price and the decision of not making payments to the sugarcane growers was unilateral and, therefore, it cannot be viewed as a simple fixation of actual price for supply of sugarcane in the previous year.
13. It may be relevant to refer to the powers and duties of the Board of Directors as per Bye-laws of the Society. One of the powers indicated under Clause 20(va) is as under:-
“20(va) – To recommend to the General Body any deductions from the cane price paid to members. Such deductions to be made on voluntary basis may be used for health, education, services and for the development of co-operatives for the benefit of the area falling within the area of operation of the mills”
Clause 26 also provides that the mill shall be competent to deduct any dues recoverable from the member on account of services rendered by it out of the sale proceeds of the sugarcane/beet supplied to it. There is no other Clause in the bye-laws authorizing the Board of Directors to make deductions from the cane price paid to the members for allotment of shares. Therefore, the act of non-payment of additional sugarcane price fixed by the Society demonstrated its real intention behind enhancing sugarcane price with a view to enhance the share capital without payment of taxes in respect of the said profits.
14. Reference to Clause 29 of the bye-laws would also be relevant. It provides for distribution of the profits as under:-
“29. Distribution of Profits:
The net profits of the Mills after making statutory provisions, shall be distributed by the General Body in its meeting as follows:-
(i) 25% shall be carried to reserve fund.
(ii) Remaining amount may be allocated to any one or more purposes detailed below:-
(a) Dividends on shares @ not exceeding 10% on the value of paid up shares.
(b) Price fluctuation fund.
(c) Common good fund.
(d) Contingent fund to meet any contingent liabilities arising out of taxes or otherwise.
(e) Building fund.
(f) Rebate to members in proportion to the purchase of sugarcane/beet made from them.
(g) Payment of incentive to the employees beside statutory bonus.
(h) Research and development Fund.
(i) Any surplus which remains un-distributed may be carried over to reserve fund or to the profits of the next year.
It is evident from Clause 29 of the bye-laws of the Society, quoted above, that a provision is to be made out of the profits of the Society for price fluctuation fund and for rebate to members in proportion to the purchase of sugarcane/beet. The assessee has fixed Rs. 9 per qtl. by way of additional sugarcane price in addition to the price fixed by the Cane Commissioner of Punjab in order to enhance its capital base and no payment has been made to the sugarcane growers.
15. In the case of Shahabad Co-operative Sugar Mills Ltd. v. CIT, 226 ITR 582, similar issue arose before the jurisdictional High Court of Punjab & Haryana. In the said case, assessee had decided to pay extra price of Rs. 20 per quintal of sugarcane but had paid Rs. 2 per quintal to cane growers and Rs. 18 per quintal had been taken to capital account of respective cane grower members. Assessee had claimed deduction @ Rs. 20 per quintal of sugarcane. Revenue had denied the claim. Income Tax Appellate Tribunal had allowed deduction @ Rs. 2 paid to the cane growers and disallowed Rs. 18 claimed by way of credit to capital account. The Tribunal held that the assessee had employed a device to increase its capital without paying taxes due to the exchequer and hence only allowed Rs. 2 paid to the cane growers and disallowed the claim by way of credit. Their Lordships of the Punjab & Haryana High Court held that no referable question of law arose out of the finding of the Tribunal. The facts of the instant case are similar to the facts in the case of Shahabad Sugar Mills Ltd, (supra). The view expressed by us thus gets support from the decision referred to above. We respectfully following the order of the Tribunal as. well as that of the Hon’ble Punjab & Haryana High Court (supra), uphold the order passed by the Revenue in disallowing the claim of the assessee in respect of the additional cane price not paid to the cane growers but credited to the share deduction account for the purpose of allotment of shares to the members. We accordingly confirm the disallowance of Rs. 2,53,23,741/- and dismiss this ground of appeal of the assessee.
16. The only other ground surviving for our consideration is relating to deduction Under Section 80I. Assessee had received interest from other cooperative societies. In computing deduction Under Section 80I, the Assessing Officer did not consider the said interest income to quantify for deduction. The ld. D.R. pointed out that the issue is covered against the assessee by the decision of the Chandigarh Bench of the Tribunal dated 15.12.2002 in ITA No. 194/Chandi/99 in the case of Punjab Tractors Ltd. v. DCIT for assessment year 95-96. Respectfully following the said decision of the Tribunal, which is in conformity with the decisions of the Hon’ble Supreme Court in the case of CIT v. Sterling Foods, 237 ITR 579, and in Pandian Chemicals Ltd. v. CIT, 262 ITR 278, we dismiss this ground of appeal of the assessee as well.
17. In the result, the appeal of the assessee is dismissed.