VIKASRATNA VILASRAO DESHMUKH MANJARA SHETKARI SAH SAKHAR KARKHANA LIMITED,LATUR vs. ITO WARD 1 NANDED, NANDED

INCOME TAX APPELLATE TRIBUNAL,PUNE “B” BENCH BEFORE DR. MANISH BORAD, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER

ITA 65/PUN/2026 निर्धारणवर्ा/Asst. Year:2013-14) Permanent Account Number: AAAAM1527D VIKASRATNA VILASRAO ITO WARD 1 NANDED DESHMUKH MANJARA SHETKARI SAH SAKHAR PARMAR COMPLEX, KARKHANA LIMITED BAFNA ROAD, NANDED Vs. NANDED-413601, VILAS NAGAR, LATUR, MAHARASHTRA LATUR-413531, MAHARASHTRA (अपीलधर्थीAppellant) (प्रत्यर्थीRespondent)

निर्धारितीद्वधिध/Assessee represented by: Shri Girish Ladda.AR (Virtual) िधजस्‍वद्वधिध/Revenue represented by: Shri Amit Bobde-CIT-DR.

सुिवधईकीतधिीख/Date of conclusion of hearing: 09-06-2026 घोषणधकीतधिीख/Date of pronouncement: 16-06-2026 ORDER PER PAVAN KUMAR GADALE, JUDICIAL MEMBER: The assessee has filed the appeal against the order of the NFAC/CIT(A)passed u/sec 143(3) and u/sec250 of the I.T. Act. The assessee has raised the grounds of appeal challenging the order of the CIT(A) sustaining the disallowance made by the Assessing Officer. 2. The brief facts of the case are that, the assessee is a cooperative society engaged in business of manufacturing and sale of sugar and ethyl alcohol. The assessee has filed the return of income for the A.Y. 2013-14 electronically disclosing a total income of Rs.28,63,09,085/-.Subsequently the case was selected for scrutiny under the CASS and notice u/sec143(2) and u/sec 142(1) of the Act are issued. In compliance, Ld.AR of the assessee appeared from time to time and submitted the details and produce the books of accounts. The Assessing Officer (A.O) on perusal of the financial statements found that assessee has purchased sugarcane in excess price of notified a Fair & Remunerative Price(FRP) and the assessee asked to submit the complete details of excess FRP payment. The Ld.AR has filed the details and made submissions on23.03.2016 referred in the Assessment Order. Whereas, the AO has dealt on the submissions and the explanations on expenditure incurred on harvesting and transport of sugarcane and the assessee has relied on the CBDT circular and judicial decisions. The A.O observed that the Government of India has notified a fair & remunerative price (FRP) payable to farmers for sugarcane and this price includes reasonable margins towards their risks and profits, hence any payment in excess of FRP would be in the nature of distribution of profits of the Assessee society. Further the assessee could not establish the cane price paid for the season 2012-13 is a contractual liability which was incurred as business expenditure. Hence, the statutory liability viz. FRP is considered as allowable business expenditure and therefore excess claim is disallowed u/sec 37(1) of the Act of Rs.15,48,64,119/- and assessed the total income of Rs. 44,11,73,204/- and passed the order u/sec 143(3) of the Act dated 23.03.2016. 3. Aggrieved by the order, the assessee has filed the appeal before the CIT(A) whereas the CIT(A) has considered the grounds of appeal, statement of facts, finding of the A.O, and has issued notice of hearing and the assessee has filed detailed submissions but the CIT(A) has confirmed the action the of the Ld.AO and dismiss the assessee appeal. Aggrieved by the order of the CIT(A), the assessee has filed an appeal before the Hon'ble Tribunal.

4.At the time of hearing, the Ld. AR submitted that CIT(A) has erred in confirming the action of the Assessing Officer, overlooking the provisions of the Act and submissions in the proceedings. Further the CIT(A) has erred in confirming the disallowance made by the AO on account of alleged excess sugarcane price paid over and above Fair and Remunerative Price(FRP) ignoring detailed written submission of the assessee on the claim under Section 37(1) of the Act and commercial expediency. The Ld.AR emphasized that the CIT(A) has erred in not following the CBDT circular , which prescribed operating procedure to implement Section 155(19) of the Act, which is a beneficial provision and acknowledges the litigation and demands persisted for the years prior to A.Y. 2016-17, Further the CIT(A) has failed to consider the genuineness of the business expenditure and not a distribution of profits. The Ld AR substantiated the submissions with factual paper book and judicial decisions and prayed for allowing the appeal. Per contra, the Ld.DR supported the order of the CIT(A). 5. We have heard the rival submissions and perused the material available on record. The crux of the disputed issue envisaged by the Ld.AR that the CIT(A) has erred in sustaining the disallowance made by the AO on account of alleged excess sugarcane price paid over and above Fair and Remunerative Price(FRP) ignoring detailed written submission of the assessee on the claim under Section 37(1) of the Act . The CIT(A) without providing proper opportunity and has overlooked the facts and material evidences has wrongly observed that the claim is not allowable , as it is in nature of distribution of profits by the assessee, The assesse has filed all the details before the lower authorities and the CIT(A) has not considered the documents and information supporting the claim of the assesse and the CIT(A) has erred in not following the CBDT circular , which prescribed operating procedure to implement Section 155(19) of the Act, which is a beneficial provision and acknowledges the litigation and demands persisted for the years prior to A.Y. 2016-17, Prima-facie, the CIT(A) has dealt on the findings of the AO and there are no proper findings on the submissions/evidences of the assessee filed in the proceedings referred and has not allowed the grounds of appeal. Therefore, we considering the overall facts, circumstances and principles of natural justice shall provide with one more opportunity of hearing and accordingly restore the disputed issue to the file of the CIT(A) for afresh adjudication on merits and the A.O. shall provide adequate opportunity of being heard to the assessee and the assessee should also cooperate in submitting the information for early disposal of appeal.. And the grounds of appeal of the assessee are allowed for statistical purpose.

आिेश नुस र / BY ORDER,

Assistant Registrar, आयकरअिीिीयअतिकरण, / ITAT, Pune