In Brief
A cooperative sugar society paid sugarcane to its grower-members at rates above the Statutory Minimum Price fixed by the central government, but within the State Advisory Price. The assessing officer disallowed the excess as profit appropriation. The Supreme Court held that while the additional price under the Sugar Cane (Control) Order, 1966 contains a profit element (as it is determined post-season), the entire excess cannot be treated as profit distribution. Instead, assessing officers must undertake a detailed factual analysis to identify what component of the final price represents profit-sharing versus legitimate cost, allowing only the profit component to be added back to income and permitting the remainder as business expenditure.
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