The Finance Act, 2015 inserted 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
expenditure incurred by a co-operative society engaged in the business of manufacture of
sugar -

"(xvii) the amount of expenditure incurred by a co-operative society engaged in
the business of manufacture of sugar for purchase of sugarcane at a price which
is equal to or less than the price fIXed or approved by the Govemment;"

This clause took effect from 01 .04 .2016 and according ly applied to assessment year
2016-17 and subsequent assessment years.

2. The issue of treatment of additional payment for sugarcane price by Cooperative sugar
mills as an income distribution to farmer members and the resultant tax liabilities has been
brought to the notice of the Central Board of Direct Taxes (the Board).

For for more information