Clarification regarding Section 36(1)(xvii) of the Income-tax Act, 1961 inserted vide Finance Act, 2015

Last updated: 17 November 2021

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This circular provides clarification on Section 36(1)(xvii) of the Income-tax Act, 1961, which was introduced by the Finance Act, 2015. It concerns deductions for expenditure incurred by co-operative societies manufacturing sugar, specifically for purchasing sugarcane at or below the government-fixed price. The clarification confirms that 'price fixed or approved by the Government' includes prices set by State Governments, such as State Advised Prices, even if they exceed the Central Government's minimum prices.

Circular No.18/2021-Income Tax F.N0.173/146/2021/ITA-I Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes New Delhi, Dated 25thOctober, 2021 Subject: Clarification regarding Section 36(1)(xvii) of the Income-tax Act, 1961 inserted vide Finance Act, 2015 -reg. The Finance Act, 2015inserted the following clause (xvii) in sub-section (1) of section 36 of the Income-tax Act, 1961 (the Act) to provide for deduction on account of the amount of e

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FAQ :

Section 36(1)(xvii) allows for a deduction of expenditure incurred by a co-operative society engaged in sugar manufacturing, specifically for the purchase of sugarcane at a price equal to or less than the government-fixed price. This section became effective from 1st April 2016.

This phrase includes prices fixed by State Governments through their own Acts or Orders, such as the State Advised Price, even if these prices are higher than the Statutory Minimum Price or Fair and Remunerative Price set by the Central Government.

This clarification is relevant for co-operative societies engaged in the business of manufacturing sugar and their tax liabilities related to sugarcane purchases.

Section 36(1)(xvii) took effect from 1st April 2016, applying to the assessment year 2016-17 and subsequent assessment years.

Notification No : Circular No. 18/2021-Income Tax
Source : https://incometaxindia.gov.in/communications/circular/circular-no-18-2021.pdf

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