VITHALRAO SHINDE SSK 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 26.09.2013

declaring total income at Rs.5,09,80,335/-. The case was selected for

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

vide order dt.01.03.2016 and the total income was determined at

Rs.1,36,08,84,618/-. Aggrieved by the order of AO, assessee carried

the matter before Ld.CIT(A), who vide order dt. 31.01.2017 (in appeal

No.PN/CIT(A)-7/Cir-1/363/2015-16) 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.

and 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.130,07,39,570/- and disallowed the same.

sugar to its members as an average price of Rs.2,102/- per quintal,

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

Rs.2,738.50 per quintal. Assessee was asked as to why the difference

between average free sale price and the concessional price 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 free sale price and concessional price

amounting to Rs.91,64,713/- 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.

present ground is covered by the decision of group of cases decided by

Pune Tribunal, the lead case being of Siddheshwar Sahakari Sakhar

Karkhana Ltd., and others (in ITA No.1210/PUN/1997 for A.Y. 1992-93

order dated 01.05.2019). She 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. She submitted that since the facts of the

present case are identical to that of Siddheshwar Sahakari Sakhar

Karkhana Ltd., and others (supra), the issue be remitted back to the file

of AO with similar directions. Ld. D.R. on the other hand did not

controvert the submissions 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 the

case of Siddheshwar Sahakari Sakhar Karkhana Ltd., 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 the case of

Siddheswar Sahakari Sakhar Karkhana Ltd., 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.

feature in the facts of the present case and that Siddheshwar Sahakari

Sakhar Karkhana Ltd., and others (supra) nor has placed any material

on record to demonstrate that the order of the Tribunal in the case of

Siddheshwar Sahakari Sakhar Karkhana Ltd., 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 the case of Siddheshwar Sahakari Sakhar Karkhana Ltd., 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.