AGASTI SAHAKARI SAKHAR KARKHANA LTD,AHMEDNAGAR vs. DEPUTY COMMISSIONER OF INCOME TAX, AHMEDNAGAR

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ITA 1075/PUN/2017Status: DisposedITAT Pune17 July 2019AY 2012-134 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the issue of excess cane price is covered by a previous Tribunal order which remitted the matter to the Assessing Officer. The Assessing Officer is directed to re-examine the claim based on Supreme Court guidelines and amended rules.

What were the facts?

The assessee, a sugar factory, claimed additional cane price paid over the Fair Remunerative Price (FRP) as business expenditure. The CIT(A) disallowed this entire additional amount, allowing only the FRP.

What were the issues?

Whether the additional amount paid towards cane price over and above the Fair Remunerative Price is allowable as business expenditure.

Which sections of the Income-tax Act were involved?

Section 37(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE

For Appellant: Shri K. Srinivasan
Hearing: 08.07.2019Pronounced: 17.07.2019

PER SUSHMA CHOWLA, JM:

The appeal filed by assessee is against order of CIT(A)-2, Pune, dated 07.11.2016 relating to assessment year 2012-13 against order passed under section 143(3) of the Income-tax Act, 1961 (in short ‘the Act’).

2.

The assessee has raised the following grounds of appeal:- I. On the facts and circumstances of the case CIT (Appeals) erred in  Holding that the entire additional amount paid towards cane price over and above The Fair Remunerative Price to both members and non members of the society was not allowable as business expenditure under section 37(1) of the IT Act. 2

 Directing the A.O. to allow only the deduction for the Fair Remunerative Price (FRP) prescribed by the Central Govt. as the expenditure incurred for cane purchase.  Holding there was no question of applicability of Sec.40A(2) and at the same time not deleting the addition made by A.O. II. The order of the CIT(A) may be vacated and appropriate direction given as in other Sugar factory cases regarding allowability of cane price paid in full as business expenditure. III. The appellant craves leave to add/alter/amend any grounds of appeal and adduce additional evidence at the time of hearing of appeal.

3.

The learned Authorized Representative for the assessee pointed out that the only issue raised in the present appeal is against addition made on account of Excess Cane Price, wherein the aspect of Fair Remunerative Price was not considered in its entirety. The learned Authorized Representative for the assessee pointed out that the issue stands covered by the order of Tribunal in bunch of appeals with lead order in the case of Siddheshwar Sahakari Sakhar Karkhana Ltd. Vs. DCIT in ITA No.1210/PUN/1997, relating to assessment year 1992-93, order dated 01.05.2019 and following the same parity of reasoning, the matter may be sent back to the file of Assessing Officer.

4.

The learned Departmental Representative for the Revenue fairly admitted to the same.

5.

We have heard the rival contentions and perused the record. We find that the said issue is squarely covered by order of Tribunal in bunch of appeals with lead order in the case of Siddheshwar Sahakari Sakhar Karkhana Ltd. Vs. DCIT (supra). The Tribunal has set aside the issue of Excess Cane Price to the file of Assessing Officer to follow the guidelines issued by the Hon’ble Apex No.8890 of 2012, judgment dated 05.03.2019. Further in respect of Fair and Remunerative Price (FRP) it was held as under:- 3

“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.

23.

It is contended by the learned Counsels before us that in addition to the issue before the Hon'ble Supreme Court in respect of excess cane price, there are in some cases, sugarcane was purchased on contracted rates / price out of area of operations. It was pointed out by them that this issue was not considered by the Hon'ble Supreme Court but the said deduction is to be allowed in the hands of assessee, which admittedly, is not covered by SMP price. Since the matter has been set aside to the file of Assessing Officer, then in the hands of relevant assessee, this issue may be looked into by the Assessing Officer. It was pointed out that in such cases, SMP would not have any role to pay. Consequently, such appeals are not governed by the ratio laid down by the Hon'ble Supreme Court in CIT Vs. Tasgaon Taluka S.S.K. Ltd. and others (supra). The Assessing Officer is directed to decide the issue after allowing reasonable opportunity of hearing to assessee.”

6.

Following the same parity of reasoning, the issue is set aside to the file of Assessing Officer. Thus, the grounds of appeal are allowed.

7.

In the result, the appeal of assessee is allowed.

Order pronounced on this 17th day of July, 2019. (ANIL CHATURVEDI) (SUSHMA CHOWLA) ऱेखा सदस्य / ACCOUNTANT MEMBER न्याययक सदस्य / JUDICIAL MEMBER ऩुणे / Pune; ददनाांक Dated : 17th July, 2019. GCVSR 4

आदेश की प्रयतलऱपप अग्रेपषत/Copy of the Order is forwarded to : अऩीऱाथी / The Appellant; 1. प्रत्यथी / The Respondent; 2. आयकर आयुक्त(अऩीऱ) / The CIT(A)-2, Pune;

3.4.

The Pr.CIT-1, Pune; ववबागीय प्रतततनधध, आयकर अऩीऱीय अधधकरण, ऩुणे “फी” / DR 5. ‘B’, ITAT, Pune; 6. गार्ड पाईऱ / Guard file. आदेशािुसार/ BY ORDER, सत्यावऩत प्रतत //// वररष्ठ तनजी सधिव / Sr. Private Secretary आयकर अऩीऱीय अधधकरण ,ऩुणे/ ITAT, Pune

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