WALCHANDNAGAR INDUSTRIES LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) IN this reference under S. 66(2) of the Indian INCOME TAX ACT, 1922, similar questions of law in respect of five asst. yrs. viz., 1951 -52, 1953 -54, 1954 -55, 1955 -56 and 1956 -57, arise for decision. In connection with the question which relates to the claim for deduction of the entire managing agency commission and other overhead expenses in respect whereof one -third was disallowed as being attributable to agricultural income, the parties are now agreed that the answer will have to be in favour of the assessee -company in accordance with the decision of this Court in the case of CIT vs. Maharashtra Sugar Mills Ltd. (1968) 68 ITR 512 (Bom).

(2.) THE two other questions relate to (1) ascertainment of the true value of sugarcane grown by the assessee -company on its plantations and (2) ascertainment of the true value of closing stock of sugar. This second question arises only in the last three years of assessment mentioned above. The relevant facts appears in the statement of case. The facts on which reliance is placed and which require to be noticed are as follows :

(3.) IN connection with the above five years of assessment, the company claimed that its sugarcane production should be valued in accordance with the provision in the above rule and the market value of the produce was liable to be calculated at the following respective rates for each of the above five years, viz., Rs. 48, Rs. 58, Rs. 46 -4 -0, Rs. 51 -12 -0 and Rs. 51 -12 -0. The main case of the company in claiming valuation of its sugarcane produce at the above respective rates for the five years was that the above rate had been fixed as the proper rate and proper market value for the years in question by the circulars issued by the Deccans Sugar Factory Association for each of the above years. In connection with its case for the application of the above rates, the company relied upon the stocks of sugarcane it had purchased from outsiders and the average price at which the company paid for making the above purchases. The average price at which the company purchased sugarcane stock from outsiders for each of the above respective five years was stated by the company respectively at Rs. 48, Rs. 58, Rs. 46 -4 -0, Rs. 51 -12 -0 and Rs. 51 -12 -0. The company further submitted that the quality of the sugarcane grown by the company on its own farm was superior to the quality generally obtained in the market and hence 10 per cent weightage should be given in connection with the market value of the sugarcane produced by the company. These submissions of the company were negatived by him for the above five years.