PR. COMMISSIONER OF INCOME TAX - 1 vs. KOLHAPUR ZILLA SAHAKARI DOODH UPPADAK SANGH LIMITED

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ITXA/320/2019HC BombayHCBM07022821201810 June 2026Bench: HON'BLE SMT. JUSTICE VIBHA VASANT KANKANWADI,HON'BLE SHRI JUSTICE NANDESH SHANKARRAO DESHPANDE2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that no substantial question of law arises in the appeal. This decision was based on the prior judgment of the same High Court in CIT V/s. Kolhapur Zilla Sahakari Dudh Utpadak Sangh Ltd., which dealt with the assessee's own case for assessment years 2007-08 and 2008-09. Crucially, this High Court decision was affirmed by the Hon'ble Supreme Court in Commissioner of Income Tax (Central) Vs. Kolhapur Zilla Sahakari Dudh Utpadak Sangh Ltd. The Supreme Court had held that the amount paid to milk suppliers, which included non-members, could not be considered profit. Therefore, following these binding precedents, the High Court found no merit in the department's appeal.

What were the facts?

The Principal Commissioner of Income Tax - 1 (the appellant/department) filed an appeal before the Bombay High Court challenging an order passed by the Income Tax Appellate Tribunal (ITAT), Pune. The ITAT's order, dated 27.02.2018, pertained to Income Tax Appeals (ITAs) Nos. 578 to 580/PUN/2016, which arose from an assessment order dated 13.03.2013 passed by the Deputy Commissioner of Income Tax, Circle-1, Kolhapur. The assessee is Kolhapur Zilla Sahakari Doodh Uppadak Sangh Limited. The core of the dispute involves the deductibility of expenditure incurred by the assessee on account of additional price payments for milk purchases. The department's appeal is based on the premise that the ITAT and the authorities below erred in their decisions.

What were the issues?

1. Whether the additional price paid by the assessee for the purchase of milk, including from non-members, constitutes a deductible expenditure or a profit distribution. The assessee contended that as a Federal Society, the expenditure on additional price payments for milk purchases should be allowed as a deduction, arguing it was not a profit distribution. The revenue (appellant) relied on the decision of the Bombay High Court in CIT V/s. Kolhapur Zilla Sahakari Dudh Utpadak Sangh Ltd. and the subsequent affirmation by the Hon'ble Supreme Court in Commissioner of Income Tax (Central) Vs. Kolhapur Zilla Sahakari Dudh Utpadak Sangh Ltd. The revenue's argument, as understood from the judgment, is that the amounts paid to milk suppliers, including non-members, cannot be considered profit.

AI-generated summary — verify with the full judgment below

38-ITXA-320-2019 (C).doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIRCUIT BENCH AT KOLHAPUR CIVIL APPELLATE JURISDICTION INCOME TAX APPEAL(IT) NO. 320 OF 2019 The Pr. Commissioner of Income Tax - 1 VERSUS Kolhapur Zilla Sahakari Doodh Uppadak Sangh Limited ... Ms. Smita Thakur, Advocate for Appellant. ... CORAM : SMT. VIBHA KANKANWADI & NANDESH S. DESHPANDE, JJ. DATE : 10th JUNE, 2026. P. C. : 1. The present appeal has been filed by the department itself challenging the order of Income Tax Appellate Tribunal, Pune in I.T.A. Nos.578 to 580/PUN/2016 decided on 27.02.2018 arising out of the decision on assessment order by the Deputy Commissioner of Income Tax, Circle-1 Kolhapur on 13.03.2013. 2. The learned Advocate for the appellant fairly submits that both the authorities below relied on the decision of this Court in CIT V/s. Kolhapur Zilla Sahakari Dudh Utpadak Sangh Ltd1. wherein the point in respect of the assessee's own case relating to 1 315 ITR 304, SAJAKALI LIYAKAT JAMADAR Digitally signed by SAJAKALI LIYAKAT JAMADAR Date: 2026.06.11 10:28:27 +0530

38-ITXA-320-2019 (C).doc assessment years 2007-08, 2008-09 was found to be similar. The respondent – Dudh Utpadak Sangh contended that since it is the Federal Society, the expenditure made on account of payment of additional price for purchase of milk was allowed to be deducted or in other words, it was held to be not a profit that is distributed. However, she fairly submits that in Commissioner of Income Tax (Central) Vs. Kolhapur Zilla Sahakari Dudh Utpadak Sangh Ltd2. it has been held by the Hon’ble Supreme Court that the amount paid to the milk suppliers, which included non-members, cannot be said to be the profit. The order passed by this Court was confirmed by the Hon’ble Supreme Court. 3. In view of the decision of this Court earlier, which has been relied upon by both the authorities as well as then affirmed by the Hon’ble Supreme Court in the aforesaid case, we are of the opinion that no substantial question of law arises in this appeal and therefore, we dismissed the appeal. [NANDESH S. DESHPANDE, J.] [SMT. VIBHA KANKANWADI, J.] Sajakali 2 [2023] 152 taxmann.com 129 (SC)

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