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

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TA/13/2011HC BombayHCBM03001515201102 March 2012Author: HON'BLE SHRI JUSTICE S.B.DESHMUKH,HON'BLE SHRI JUSTICE D. G. KARNIK2 pages
AI SummaryRemanded

What did the High Court hold?

Regarding the second issue, the High Court held that it 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, where the decision was in favour of the assessee and against the Revenue. For the first issue, 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], which remanded the matter for fresh consideration. Consequently, the High Court set aside the impugned order concerning the first issue and remanded the matter back to the Commissioner of Income Tax (Appeals) for a fresh decision in light of the Supreme Court's observations. The operative direction is a remand on the first issue.

What were the facts?

This case involves an appeal by the Commissioner of Income Tax, Aurangabad (Revenue) against an order of the Income Tax Appellate Tribunal (ITAT) concerning the assessment year(s) not specified. The assessee is Shetkari Sahakari Sakhar Karkhana Ltd., Latur. The appeal challenges the ITAT's decision on two specific issues. The High Court heard arguments from both sides. The procedural history indicates that the High Court is deciding the appeal based on prior decisions and Supreme Court pronouncements.

What were the issues?

The High Court was asked to decide two questions of law: 1. Whether 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 sale price of sugar sold at a concessional rate to its supplier members could be added to the assessee's income under Section 40A(2) of the Income Tax Act, 1961. The Revenue argued that excess payments over SMP were unreasonable and not deductible. The Revenue also contended that the difference in sugar sale price should be added to income. The judgment does not record specific arguments from the assessee for either issue, but implies the assessee's position was in line with the Tribunal's findings.

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. 13 OF 2011 THE COMMISSIONER OF INCOME TAX AURANGABAD VERSUS SHETKARI SAHAKARI SAKHAR KARKHANA LTD LATUR ASG for Appellant : Shri Alok Sharma Advocate for Respondent : Shri Siddharth R. Deshpande 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 Deshpande, 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. 13 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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