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Income Tax Appellate Tribunal, “A” BENCH, PUNE
Before: SHRI S.S.GODARA, JM & SHRI DR. DIPAK P. RIPOTE, AM
आदेश / ORDER PER S. S. GODARA, JM :
This Revenue’s appeal for A.Y. 2017-18 is directed against the CIT(A) - 7, Pune’s order dated 12/03/2020 passed in case No. PN/CIT(A) - 7/Cir- 14/10514/2019-20, involving proceedings u/s. 143 (3) of the Income Tax Act, 1961 ; in short “the Act”. Heard both the parties. Case file perused.
Coming to the Revenue’s sole substantive grievance that the CIT(A) has erred in law and on facts in reversing the assessment finding disallowing the assessee’s deduction claim of Rs.4,40,99,230/- on account of milk rate difference, we note the impugned lower appellate discussion to this effect reads as under. “3. The assessee is a Cooperative Society and engaged in the business of processing cow milk procured from the members of primary milk co- operative societies. During the year under consideration has filed its return of income for the Assessment Year 2017-18 on 29.10.2017 and declaring the total Income of Rs. 3,84,81,010/- and the total income was assessed u/s 143(3) to Rs. 8,25,80,240/- by Assessing Officer (AO) on 17.12.2019. The AO has disallowed an amount of Rs. 4,40,99,230/- out of the purchase expenditure of milk as this amount represents the provision for payment of 50 Paisa per litre payable to the milk societies. The appellant had made a provision @50 Paise per litre based on the Board resolution passed on 15/03/2017. The appellant also claimed before the AO that this provision amount of Rs. 4,40,99,230/- was actually paid in the subsequent year. It was submitted before the AO that this additional payment is higher than the rate prescribed by the Government of Maharashtra for the purchase of milk. The resolution for payment of this additional amount is claimed to be in view of the demand of the primary milk societies for additional payment. It is seen that this is a recurring issue and the disallowance is being made on the following premises.
(a) This additional expenditure is not linked to the price paid by the Government or other co-operative societies, (b) It is made out of accrued profits of the year and hence amounted to distribution of profits (c) It is made to members of the societies and not to other suppliers and (d) it is not linked to the quality of the milk like fat content. Though this issue has been decided in favour of the appellant by the Bombay High Court in the appellant’s own case in the A.Y. 1997-98, the AO has made this disallowance for the year on the ground that a special leave petition No. 21046 of 2010 has been filed before the Supreme Court against the decision of the Bombay High Court and to keep the issue alive.
4. In response to the notice of hearing, Sh. Pramod Shingate, CA, Authorized Representative of the appellant, attended and the return submissions filed are placed on record. The assessment order, the grounds of appeal and the decisions in this regard have been perused. The appeal is disposed as under
5. Ground no. 1 of the appeal relates to making the disallowance of Rs. 4,40,99,230/- by the AO on account of milk rate difference.
5.1 During the appellate proceedings the appellant submitted as under:
“Appellant is a federal co-operative society and engaged in the business of processing cow milk procured from member-primary milk co-op. societies, the process involves standardization and pasteurization of milk, processing of toned milk, carrying milk to Mumbai, Pune, Baramati, Aurangabad and sale to consumers through dealers at these places and also bulk sale of milk to Mahananda Dairy Mumbai, Shreiber Dynamics Ltd., Baramati. Beside these activities appellant society is also engaged in Production and sale of cattle feed; purchase and sale of veterinary medicines, purchase and sale of dairy equipments, running of petrol pump.
Appellant society has filed its return of income by declaring total income at Rs.3,84,81,010/-. Said return has been selected for scrutiny and assessment order u/s 143(3) dated 17.12.2019. In the said order learned Assessing Officer has made an addition of Rs. 4,40,99,230/- on account of milk rate difference.
It is most humbly submitted that the issue has been decided in favor of appellant by Hon’ble Bombay High court in preceding years and no addition is warranted, Copy of order of Hon’ble Bombay High court in the case of appellant, however in the opinion of learned Assessing Officer, since against the judgment of Hon’ble Bombay High Court department has preferred Special leave petition before Hon’ble Supreme Court and therefore, to keep the issue alive learned Assessing Officer has made the addition.
It is further pointed out that your predecessor has already followed the Hon’ble tribunals order in appellants own case, the ratio of which is upheld by Bombay High court, in earlier years cases of A.Y. 1994-95, 1995-96, 1996-97, 1998-99.
It is also brought to your honors attention that for AY 2013-14 & 2014-15, your honors have decided the appeals in favor of appellant, we enclose herewith copy of the order for your reference as Annexure no. 1.
In view of this, it is most humbly prayed before your honor, appeal may kindly be allowed, and addition made by Learned Assessing officer may kindly be deleted.”
5.3 I have carefully considered the facts of the case and law apparent from records. The assessee has e-filed return of income on 29.10.2017 declaring total income of Rs.3,84,81,010/-. The assessee/appellant has claimed 4,40,99,230/- being the milk rate difference payable to primary milk societies. The identical issue has already been decided in appellant's own case by my predecessor for A.Y. 2013-14 & 14-15 vide, appeal No. PN/CIT(A)-7/Wd 6(2)HQ/10679 & 10868/2016-17 order dated 31/08/2017 following the decision of the Bombay High Court in the appellant’s own case in ITA(L) No. 1457 of 2008, wherein the Hon’ble Court held as under: - Learned counsel for appellant fairly states that the issue sought to be raised in this appeal is squarely covered by the judgment of this court decided on 18th March, 2009 income tax appeal No. 997 of 2008 in CIT Vs. Solapur District Coop., Milk Producers and Process Union Ltd. In this view of the matter, the appeal is dismissed for want of substantial question of flaw.
5.4 The issue of rate difference paid to primary cooperative milk societies has already been considered by the ITAT, Pune and Bombay High Court. Respectfully following the decision of the Hon'ble Bombay High Court in appellant’s own case, the disallowance on account of milk rate difference a sum of Rs. 4,40,99,230/- made by the AO cannot be upheld and Ground No.1 of the appeal is allowed.”
Suffice to say it has come on record that not only the assessee has succeeded on the very issue before hon’ble jurisdictional high court in it’s own case (supra) in preceding assessment years but also the Revenue’s special leave petition filed in hon’ble apex court stands declined. That being the case, we are of the opinion that there is hardly any need for us to adopt a different approach in the impugned assessment year in absence of any distinction pinpointed in all these assessment years. The CIT(A)’s (lower appellate ) conclusion granting the impugned relief to the assessee is upheld therefore.
4. This Revenue’s appeal is dismissed in above terms.
Order pronounced in the Open Court on this 11th day of August, 2022.
Sd/- Sd/- (DR.DIPAK P.RIPOTE) (S.S. GODARA) लेखध सदस्य/ ACCOUNTANT MEMBER न्यधनयक सदस्य/JUDICIAL MEMBER पपणे / Pune; ददनधांक / Dated : 11th August, 2022. Ashwini आदेश की प्रनतनलनप अग्रेनषत / Copy of the Order forwarded to : अपऩलधथी / The Appellant. 1. प्रत्यथी / The Respondent. 2.
3. The CIT(A)-7, Pune.
The Pr.CIT-6, Pune. 5. नवभधगऩय प्रनतनननध, आयकर अपऩलऩय अनधकरण, “ए” बेंच, पपणे / DR, ITAT, “A” Bench, Pune. गधर्ा फ़धइल / Guard File. 6. आदेशधनपसधर / BY ORDER, // True Copy // Senior Private Secretary आयकर अपऩलऩय अनधकरण, पपणे / ITAT, Pune.
S.No. Details Date Initials 1 Draft dictated on 22.06.2022 2 Draft placed before author 11.08.2022 Draft proposed & placed before the Second 3 Member 4 Draft discussed/approved by Second Member 5 Approved Draft comes to the Sr. PS/PS 6 Kept for pronouncement on 7 Date of uploading of Order 8 File sent to Bench Clerk 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R. 11 Date of Dispatch of order