KISAN SAHKARI CHINI MILLS LTD.,SAHARANPUR vs. JCIT, RANGE- 3, SAHARANPUR

The grounds of appeal are as under:-

Assessee filed its Return of Income declaring total loss of Rs. 60,01,13,940/-. The Assessee is a co-operative society and main business of the assessee is manufacturing of sugar. During the year under consideration, the Assessing Officer made an addition of Rs. 3,77,368/- under the head Selling & Dispatching Expenses and of Rs. 30,90,610/- under the head Repair & Maintenance of Plant & Machinery. Thus, the Assessing Officer assessed total loss of Rs. 58,86,88,937/- as income of the assessee.

Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.

The Ld. AR submitted that the District Magistrate of the area is a Chairman of the society and any scrap can be sold with his approval and by tenders. Since scrap is generated in small quantity hence the same is accumulated and sold after two or three years by following the procedure laid down and as per the approval of District Magistrate. The Ld. AR also relied upon the order of the Tribunal for A.Y. 2012-13 in subsidiary of assessee’s case. [Kisan Sahkari Chinni Mills Ltd. Nanauta vs. DCIT (A.Y 2012-13) and The Kisan Cooperative Sugar vs. DCIT ITA No. 4606/Del/2016 (A.Y. 2012-13) order dated 20.09.2021]

The Ld. DR relied upon the assessment order and the order of the CIT(A).

We have heard both the parties and perused all the relevant materials available on record. It is pertinent to note that the Assessing Officer has disallowed these expenses only on the basis of estimated value of scrap at 10% without any proper finding and on proper basis. The addition is merely on a presumption basis. Therefore, the same is not sustainable in eyes of law. The CIT(A) also has observed that the District Magistrate’s approval/sanction is necessary for making sale of scrap. Thus, the Assessing Officer as well as the CIT(A) was not correct in making the addition on account of repair and maintenance of plant and machinery. The issue is already decided in favour of the assessee in A.Y. 2012-13 in subsidiary of assessee’s case. No distinguishing facts were pointed out by the Ld. DR. Hence, the appeal of the assessee is allowed.