Maharashtra cooperative sugar industry has appealed to the Centre to further amend the Income Tax Act whereby any expenditure incurred by sugar factories towards purchase of sugarcane be deemed to be incurred wholly and exclusively for the purpose of their business, reports Business Standard.
In a representation to the Union Finance Minister, the Federation of Cooperative Sugar Factories in Maharashtra has said following the proposed amendment the amount incurred by factories even if more than fair and remunerative price (FRP) will be accepted as a business expenditure by the income tax authorities and there will be no disallowance on account of purchase of sugarcane price.
Federations’ appeal is also important as the state cooperative sugar industry is currently fighting a legal battle in the Supreme Court for income tax demand of Rs 4,500 crore made by the tax authorities since 1992.
Federation official said the cooperative sugar industry’s plea comes close on the heels of the finance minister’s announcement made recently in the Lok Sabha that the amount of expenditure incurred by a cooperative society engaged in the business of manufacture of sugar or purchase of cane at a price which is equal to or less than the price fixed or approved by the Government. This will come into effect in the Income Tax from April 1, 2016
“Cooperative sugar factories actually pay farmers final price for their sugarcane based on realization of sugar sold. Sugar stocks are liquidated over 15 to 20 months and sometimes longer, resulting in deferred payment of cane price. Income tax department has taxed cane payment more than statutory minimum price (SMP) or FRP by cooperative sugar factories to farmers as distribution of their commercial profits”, federation officials said.
Meanwhile, the federation has also demanded that loan taken by the cooperative sugar factories last year Scheme for Extending Financial Assistance to Sugar Undertakings, 2014 (SEFASU) be waived. In Maharashtra, 127 factories availed loan of Rs 1,925.30 crore through various banks.