THE COMMISSIONER OF INCOME TAX vs. SHIVSHAKTI SHETKARI SAHAKARI SAKHAR KARKHANA LTD

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TA/4/2011HC BombayHCBM03043981201002 March 2012Author: HON'BLE SHRI JUSTICE S.B.DESHMUKH,HON'BLE SHRI JUSTICE D. G. KARNIK2 pages
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What did the High Court hold?

The High Court decided the two issues as follows: Issue 2: The High Court held that this issue was covered by its previous decision in Tax Appeal No. 25 of 2008 (The Commissioner of Income Tax Vs Shetkari Sahakari Sakhar Karkhana Ltd.) dated 10.02.2012, wherein the decision was in favour of the assessee and against the revenue. The principle is that the difference in price for sugar sold to supplier members at concessional rates is not to be added to the assessee's income under Section 40A(2). Issue 1: The High Court noted that a similar issue was decided by the Supreme Court in Deputy Commissioner of Income-Tax Vs. Shri Satpuda Tapi Prarisar SSK Ltd. and others [(2010) 231 CTS (SC) 224], where the Supreme Court had remanded the matter back to the Commissioner of Income Tax (Appeals) for a fresh decision. Following this precedent, the High Court set aside the impugned order and remanded the matter to the Commissioner of Income Tax (Appeals) for deciding it afresh in light of the Supreme Court's observations. The specific finding on whether the payments were unreasonable or not deductible under Sections 40A(2) and 37(1) was left to be decided by the CIT(A).

What were the facts?

This case involves an appeal by the Commissioner of Income Tax (Revenue) against an order of the Income Tax Appellate Tribunal (Tribunal) concerning Shivshakari Shetkari Sahakari Sakhar Karkhana Ltd. (Assessee). The appeal concerns assessment years not explicitly stated in the provided text. The Revenue is challenging the Tribunal's decision on two specific issues. The procedural history indicates that the appeal was heard by the High Court of Judicature at Bombay, Bench at Aurangabad, and was taken up for final disposal by consent of both parties. The High Court referred to its own prior decision and a Supreme Court judgment in deciding the issues.

What were the issues?

The High Court was asked to decide two questions of law: 1. Whether, on the facts and circumstances and in law, the Tribunal was justified in holding that payments made by the respondent sugar factory in excess of the Statutory Minimum Price (SMP) were unreasonable and not deductible under Sections 40A(2) and 37(1) of the Income Tax Act, 1961? 2. Whether the difference between the market price and the sale price of a small quantity of sugar sold by the respondent sugar factory to its supplier members at a concessional rate can be added to the income of the assessee under Section 40A(2) of the Income Tax Act, 1961? Contentions: Assessee: Not recorded in the provided text. Revenue: Pressed the two issues mentioned above. For issue 1, it relied on Sections 40A(2) and 37(1). For issue 2, it relied on Section 40A(2). No specific case law was mentioned by the Revenue for either issue in the provided text.

Which sections of the Income-tax Act were involved?

Section 40A(2),Section 37(1)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF JUDICATURE OF BOMBAY BENCH AT AURANGABAD TAX APPEAL NO. 4 OF 2011 THE COMMISSIONER OF INCOME TAX VERSUS SHIVSHAKTI SHETKARI SAHAKARI SAKHAR KARKHANA LTD ASG for Appellant : Shri Alok Sharma AGP for Respondent : Shri S.S.Choudhary CORAM : D. G. KARNIK & S. B. DESHMUKH, JJ. Dated: March 02, 2012 PER COURT :- 1. Heard Shri Alok Sharma, learned ASG for the appellant and Shri Choudhary, learned Advocate for the respondent. By consent, the appeal is taken up for final disposal. 2. Two issues, which have been pressed by learned ASG Shri Sharma before us are:- "(1) Whether on the facts and circumstances of the case and in law, the Tribunal was justified in holding that the payments made by the respondent - sugar factory in excess of SMP (Statutory Minimum Price) were unreasonable and cannot be allowed as a deduction in view of the provisions of Section 40A(2) and 37(1) of the Income Tax Act, 1961 ? (2) Whether the difference in the market price and the sale price of a small quantity of sugar sold by the respondent sugar factory to its supplier members at concessional rate, can be added in the income of an assessee under Section 40A(2) of the Income Tax Act, 1961 ?".

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IN THE HIGH COURT OF JUDICATURE OF BOMBAY BENCH AT AURANGABAD TAX APPEAL NO. 4 OF 2011 3. So far as the issue No.2 is concerned, it is covered by our decision in Tax Appeal No.25 of 2008 (The Commissioner of Income Tax Vs Shetkari Sahakari Sakhar Karkhana Ltd.) dated 10.2.2012, wherein, we have held in favour of an assessee and against the revenue. 4. So far as the first issue is concerned, similar issue has been decided by the Supreme Court in the case of Deputy Commissioner of Income-Tax Vs. Shri Satpuda Tapi Prarisar SSK Ltd. and others [(2010) 231 CTS (SC) 224], wherein, the Supreme Court has remanded the matter back to the Commissioner of Income Tax (Appeals) for deciding it afresh in the light of the observations of the Supreme Court. In view thereof, it would be appropriate to remand the matter to Commissioner of Income Tax (Appeals) for deciding it afresh in the light of the observations of the Supreme Court in the case of Deputy Commissioner of Income-Tax Vs. Shri Satpuda Tapi Prarisar SSK Ltd. and others (supra).

5.

In the result, so far first issue is concerned, the impugned order is set aside and the matter is remanded back to the Commissioner of Income Tax (Appeals) for deciding it afresh in the light of the decision of the Supreme Court in the case of Deputy Commissioner of Income-Tax Vs. Shri Satpuda Tapi Prarisar SSK Ltd. and others (supra). ( S. B. DESHMUKH, J. ) ( D. G. KARNIK, J. ) akl

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