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Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE
Before: SHRI R.S. SYAL & SHRI S.S. GODARA
Assessee by Shri J.P. Chandekar Revenue by Shri M.G. Jasnani Date of hearing 02-06-2022 Date of pronouncement 06-06-2022 आदेश / ORDER
PER S.S. GODARA, JM :
This assessee‟s appeal for AY 2016-17 arises against the CIT(A)-1, Kolhapur‟s order dated 16-12-2019 passed in case No. SLI/10283/2018-19 involving proceedings under Section 143(3) of the Income Tax Act, 1961, in short „the Act‟. Heard both the parties. Case file perused.
2. The assessee pleads the following substantive grounds in the instant appeal: 1. On the facts and in the circumstances of the case and in law the Ld. CIT is erred in confirming the addition of Rs.1,70,69,654/- on account of sale of sugar to the members at concessional rate.
The Ld. CIT did not take into consideration that the above mentioned practice of selling sugar at concessional rate is a custom in the co-operative sugar industry in the State of Maharashtra, with an intention to induce the sugar cane producer member to give all the sugar cane produced by him to the sugar factory, for crushing. When the discount coupons are issued by industries in private sector to its shareholders, no such addition is made, treating the same as business expenditure.
On the facts and in the circumstances of the case and in law the Ld. CIT (A) is not justified in confirming the addition made by the learned A.O., on account of sale of sugar at concessional rate to its members, in the A.Y. 2016-17, amounting to Rs.1,70,69,654/- be deleted in full.
Both the learned Representatives reiterated their respective stands during the course of hearing. We proceed in this factual backdrop that the assessee‟s sole substantive grievance canvassed in the instant appeal seeks to reverse both the learned lower authorities disallowing / adding sale of sugar amounting to Rs.1,70,69,654/- made to its members at concessional rates. This tribunal‟s latest co-ordinate bench‟s order Sant Tukaram Sahakari Sakhar Karkhana Ltd vs. ITO in & 2046/PUN/2019 dated 01.06.2022 has restored the similar issue back to the Assessing Officer as follows: “7. We have heard the rival contentions and perused the relevant material on record. It is observed that the issue of sale of sugar at concessional rate and the consequential making of addition has been considered by the Hon’ble Supreme Court in the case of CIT Vs. Krishna Sahakari Sakhar Karkhana Limited (2012) 27 taxmann.com 162 (SC). Vide judgment dated 25-09-2012, the Hon’ble Supreme Court noticed that the difference between the average price of sugar sold in the market and the price of sugar sold by the assessee to its members at concessional rate was taxed by the Department under the head “Appropriation of profit”. The Hon’ble Summit Court remitted the matter to the CIT(A) for considering, inter alia,: “whether the abovementioned practice of selling sugar at concessional rate has become the practice or custom in the Co-operative sugar industry?; and whether any Resolution has been passed by the State Government supporting the practice?; The CIT(A) would also consider on what basis the quantity of the final product, i.e. sugar, is being fixed for sale to farmers/cane growers/Members each year on month-to-month basis, apart from others from Diwali?” The issue under consideration can be decided by an appropriate lower authority only on the touchstone of the relevant factors noted in the above judgment. In our considered opinion, it would be just and fair if the impugned order on this score is set aside and the matter is restored to the file of the AO for fresh consideration as to whether the difference between the average price of sugar sold in the market and that sold to members at concessional rate is appropriation of profit or not, in the light of the directions given by the Hon’ble Supreme Court in the case of Krishna Sahakari Sakhar Karkhana Limited (supra). We order accordingly. Needless to say, the assessee will be allowed proper opportunity of hearing by the AO.”
We adopt the foregoing detailed discussion mutatis mutandis to restore instant the assessee‟s sole issue as well to the Assessing Officer in very terms. Ordered accordingly. 5. This assessee‟s appeal is allowed for statistical purposes in above terms.