SHREE SIDDHESHWAR SAHAKARI SAKHAR KARKHANA LTD,SOLAPUR vs. ASSISTANT COMMISSIONER OF INCOME TAX, SOLAPUR

आदेश / ORDER PER ANIL CHATURVEDI, AM :

Assessee is a Co-operative Society engaged in the business of manufacturing and sale of sugar and its by-products. Assessee electronically filed its return of income for A.Y. 2013-14 on 30.09.2013

declaring total income at Rs.3,07,36,948/-. The case was selected for

scrutiny and thereafter assessment was framed u/s 143(3) of the Act

vide order dt.04.03.2016 and the total income was determined at

Rs.84,40,17,570/-. Aggrieved by the order of AO, assessee carried the

matter before Ld.CIT(A), who vide order dt. 27.02.2017 (in appeal

No.PN/CIT(A)-7/Cir-1/75/2016-17) granted partial relief to the

assessee. Aggrieved by the order of Ld.CIT(A), assessee is now in appeal

before us and has raised various grounds.

reproduced. However, the sole grievance of the assessee is with respect

to the additions on account of alleged excess sugar cane purchase and

sale of sugar at concessional rate.

purchased, AO noticed that assessee had purchased sugar cane from

the farmers at price much higher than the Fair Remunerative Price

(FRP) notified by the Government. AO was of the view that any

payment in excess of FRP was in the nature of distribution of profits.

He was of the view that only statutory liability i.e., FRP price can be

considered as business expenditure. He accordingly worked out the

payment of excess sugar cane price as tabulated by him at Para 5 of the

assessment order and determined the excess price of Rs.77,74,28,228/-

that was allegedly paid by the assessee and disallowed the same.

sugar to its members as an average price of Rs.1,925/- per quintal,

whereas the average price of free sugar realized by the assessee was

Rs.2,444.55 per quintal. Assessee was asked as to why the difference

between average price of fee sugar sale and the concessional price

charged to the members should not be disallowed and added to the total

income as it was nothing but the distribution of profits. Assessee made

the submissions which were not found acceptable to the AO. He

therefore disallowed the difference of the amount paid between average

price of free sugar sale and concessional price charged by the assessee

amounting to Rs.84,19,604/- and made its addition. Aggrieved by the

order of AO, assessee carried the matter before Ld.CIT(A), who granted

partial relief to the assessee.

Aggrieved by the order of Ld.CIT(A), assessee is now in appeal

before us.

covered by the decision of group of cases decided by Pune Tribunal in

assessee’s own case and others being the lead case (in ITA

No.1210/PUN/1997 for A.Y. 1992-93 order dated 01.05.2019). He

pointed to the order of Tribunal and submitted that the issue in those

cases has been remitted to the file of AO with necessary directions. He

therefore submitted that since the facts of the present case are

identical to that of assessee’s own case, the issue be remitted back to

the file of AO with similar directions. Ld. D.R. did not controvert the

submission made by the Ld.A.R. but however supported the order of

lower authorities.

record. The issue in the present grounds is with respect to the

payment of excessive sugar cane price to the farmers on purchase of

sugar cane by the assessee and addition of differential price between

average free sale price and concessional price charged on sale of sugar.

We find that Co-ordinate Bench of the Tribunal on identical issue in

assessee’s own case and others (supra) after considering the order of

Hon’ble Apex Court in the case of CIT Vs. Tasgaon Taluka S.S.K. Ltd.,

has restored the matter to AO and directed the AO by observing as

under :

“22. However, after assessment year 2009-10, the scenario of payment of cane price to the farmers has undergone change and the distribution is on the basis of Fair and Remunerative Price, which was different from SMP. The Control Order, 1966 and the working of SAP under clause 5A of the said order does not govern the payment of cane price to the farmers after assessment year 2009-10. In such scenario, the Assessing Officer is directed to re-look into the claim of assessee as per amended guidelines issued in this regard and decide the allowability of said expenditure in the hands of S.S.K. group. Since the SMP factor is not the basis for allowing the said expenditure, it would be difficult to calculate the additional purchase price under clause 5A of Control Order, 1966. Accordingly, in the present bunch of appeals, we remit this issue of deductibility of excess cane price to the file of Assessing Officer with necessary directions to apply the ratio laid down by the Hon'ble Supreme Court in the years to which it is so applicable and for the balance years i.e. after the modification of the Rules from assessment year 2009-10, to consider the changed guidelines and decide the same after allowing reasonable opportunity of hearing to the assessee.

find that the Co-ordinate Bench of the Tribunal in assessee’s own case

and others had remitted the issue to the file of AO to apply the ratio of

the decision of Hon’ble Apex Court laid down in the case of Krishna

Sahakari Sakhar Kharkhana reported in (2012) 211 Taxmann. 109 (SC)

by observing as under :

“9. We have heard the rival submissions and perused the material on record. We find that on identical issue, in the case of Siddheshwar Sahakari Sakhar Karkhana Ltd. and others (supra) the Co-ordinate Bench of the Tribunal has remitted the issue to the file of AO to apply the ratio of the decision of Hon’ble Apex Court’s laid down in the case of CIT Vs. Krishna Sahakari Sakhar Karkhana Ltd. reported in (2012) 211 Taxmann 109 (SC), by observing as under : “24. Now, coming to the next issue i.e. sale of sugar at concessional rate to Members. In this bunch of appeals, this is the second issue which is mostly raised and different Counsels appearing before us have pointed out that the said issue has been decided by the Hon'ble Supreme Court in CIT Vs. Krishna Sahakari Sakhar Karkhana Ltd. (supra), but the appeals in the present bunch have been decided without taking into consideration the said decision, as the orders were passed by CIT(A) before the said decision. 25. We find that the Tribunal in Majalgaon Sahakari Sakhar Karkhana Ltd. Vs. ACIT (supra) have remitted the issue back to the file of Assessing Officer vide its deliberations in para 11 at pages 22 to 24 of order to apply the ratio laid down in CIT Vs. Krishna Sahakari Sakhar Karkhana Ltd. (supra) and determine whether difference between average price of sugar sold in the market and that sold to the Members at concessional rate was the appropriation of profits or not. Following the same parity of reasoning, this issue is also remitted back to the Assessing Officer to decide in line with same directions.”

feature in the facts of the present case and to the assessee’s own case

and others (supra) nor has placed any material on record to

demonstrate that the order of the Tribunal in assessee’s own case and

others (supra) has been set aside / stayed / over-ruled by the higher

Judicial Forum. We, therefore following the decision of the Co-ordinate

Bench of the Tribunal in assessee’s own case and others (supra) and for

similar reasons, restore the issue to the file of AO to decide the issue on

merits. Needless to state that AO shall grant adequate opportunity of

hearing to the assessee. Assessee is also directed to promptly furnish

all the details called for by the authorities. Thus, the grounds of assessee are allowed for statistical purposes.

Order pronounced on 11th day of September, 2019.

Sd/- Sd/- (SUSHMA CHOWLA) (ANIL CHATURVEDI) �या�यक सद�य / JUDICIAL MEMBER लेखा सद�य / ACCOUNTANT MEMBER

पुणे Pune; �दनांक Dated : 11th September, 2019. Yamini

आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent 3. CIT(A)-7, Pune. 4. Pr. CIT-6, Pune. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “बी” / DR, 5 ITAT, “B” Pune; गाड� फाईल / Guard file. 6.

आदेशानुसार/ BY ORDER

// True Copy // व�र�ठ �नजी स�चव / Sr. Private Secretary आयकर अपील�य अ�धकरण ,पुणे / ITAT, Pune.