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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI SHAMIM YAHYA, AM & SHRI AMARJIT SINGH, JM
O R D E R
PER AMARJIT SINGH, JM:
The assessee has filed the present appeal against the order dated 20.03.2018 passed by the Commissioner of Income Tax (Appeals) -08, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Ys. 2013-14.
The assessee has raised the following grounds: - “
I . The Ld. Commissioner of income Tax (Appeals) - 8, Mumbai (hereinafter referred to as "the Ld. CIT (A)") erred in law and on facts in upholding the disallowance of Rs.4,25,53,711/- on account of society commission by treating the same as prior period expenditure.
2. The Ld. CIT (A) erred in law and on facts in not allowing Society Commission of Rs.4,25,53,711/- in the assessment year under appeal even though the liability for the same /M/2018 A.Y. 2013-14 was crystalized in financial year 2012 - 13 vide order dated June 19, 2012, passed by the Collector & District Magistrate, Bijnor, Uttar Pradesh and was paid in the assessment year under appeal.
3. The 14. CIT (A) erred in law and on facts in not appreciating the fact that the societies commission payable to a Cane - growers' Co-operative Society is a statutory liability u/s 18 (1) (a) of the UP Sugarcane (Regulation of Supply and Purchase) Act, 1953 and allowable u/s. 43 B (a) of the 1. T. Act on payment basis in the assessment year under appeal.
4. The Ld. CIT(A) erred in law and on facts in not considering the submission of the appellant to the effect that the proviso to Section 40(a)(i) of the I. T. Act, 1961 makes it clear that if the tax has been deducted in respect of expenditure in subsequent year and duly paid, deduction would be allowed in that subsequent year. The above grounds are independent and without prejudice to each other. The appellant prays that reliefs on the aforesaid grounds be allowed and appellate order be modified accordingly. The appellant craves leave to add to, alter amplify or delete any of the aforesaid grounds of appeal at or before the hearing.”
3. The brief facts of the case are that the assessee company filed the return of income on 28.09.2014 declaring total income to the tune of Rs. Nil as per normal provision of the I. T. Act and Book Profit u/s 115JB of the Act of Rs.49,39,072/-. Subsequently, the assessee filed the revised return of income declaring the same income. The case was selected for scrutiny. Notices u/s 143(2) & 142(1) of the Act were issued and served upon the assesse. The assessee company is engaged in the business of manufacture and sale of white crystal sugar, generation and distribution of power and ancillary products. On appraisal of tax report, it was observed that the assessee qualified an amount of Rs.4,25,53,711/- towards prior A.Y. 2013-14 period expenses. The same was on account of society commission on purchase of sugar cane for the period February and March 2012. The same was not liable to be allowable, therefore, the AO issued the notice. After the reply of the assessee, the AO rejected the claim of the assessee and raised the addition in sum of Rs.4,25,53,711/-. The total income of the assessee was assessed in sum of Rs. Nil and Book Profit u/s 115JB of the Act in sum of Rs.4,74,92,783/-. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who confirmed the order of the AO, therefore, the assessee has filed the present appeal before us.
4. All the issues are in connection with the disallowance of the societies commission of Rs.4,25,53,711/- paid to the cane growers Co- operative society. It is argued that the commission was legally payable to the society as per order dated 19.06.2012 passed by the Collector & District Magistrate, Bijnor, Uttar Pradesh, therefore, the claim of the assessee is liable to be allowable. It is argued that the commission paid to the society, was mandatory under the provisions of UP Sugarcane (Regulation of Supply and Purchase) Act, 1953 during the relevant year in view of the order dated 19.06.2012 passed by Collector & District Magistrate, Bijnor, Uttar Pradesh. In the said circumstances, the claim even if, after the order is liable to be allowable in view of the decision (i) ITC Ltd. Vs. CIT (Calcutta High Court 365 ITR 532) (ii) CIT Vs. Associated Stone Industries (Kotah) Ltd. (Rajasthan High Court 266 ITR 414 (iii) CIT Vs. Appollo Textiles Agency (Allahabad High Court 283 ITR 591) & (iv) CIT Vs. Mahanagar Gas Ltd. (Bombay High Court (2014) 42 taxmann.com 40). However, on the other hand, the Ld. Representative of the Department has refuted the said contentions. It is not in dispute that an amount in question was paid to the commission growers Co-operative Society which was under Statutory A.Y. 2013-14 liability under UP Sugarcane (Regulation of Supply and Purchase) Act, 1953 during the relevant assessment year according to the order dated 19.06.2012 passed by Collector & District Magistrate, Bijnor, Uttar Pradesh. The commission was paid under the statutory provision in view of the UP Sugarcane (Regulation of Supply and Purchase) Act, which was crystalized under order dated 19.06.2012 passed by Collector & District Magistrate, Bijnor, Uttar Pradesh. This type of commission can be said to be paid under statutory obligation. In the case of ITC Ltd. Vs. CIT, it has been held:- “Excise duty liability pertaining to earlier year is allowable in subsequent year when the same is adjudicated and paid as per the provisions of Section 43B of the I. T. Act, 1961. Further, even before the introduction of Section 43B such liability pertaining to earlier year is allowable in subsequent year when the same is adjudicated and paid.” In the case of CIT Vs. Associated Stone Industries (Kotah) Ltd. which has been held:- “Sales tax pertaining to earlier year is allowed in the year under appeal as the demand pertaining to earlier year is raised in the year under appeal.” In the case of CIT Vs. Appollo Textiles Agency which has been held:- “Demand for payment of penalty and interest for earlier years created by sales tax authorities in the year under appeal is allowable in the year under appeal.”