MAROLI VIBHAG KHAND UDYOG SAHAKARI MANDALI LTD,.,NA vs. ARIVS.ACIT, NAVSARI CIRCLE, , NAVSARI

ITA 17/SRT/2021Status: DisposedITAT Surat25 November 2025AY 2012-1367 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the legal position is governed by the Supreme Court's ratio in CIT vs. Tasgaon Taluka SSK Ltd., which mandates segregating business-based cane price from cooperative surplus allocation or membership incentives. The CIT(A) correctly concluded that while the major portion of the cane purchase price is allowable business expenditure under section 37(1), the differential element paid exclusively to registered members and certain cane development expenditures not extended to nominal suppliers indicated member-linked benefits. The CIT(A) quantified this differential based on actual price variations and invoices. For AYs 2013-14 and 2014-15, the CIT(A) found no price distinction and deleted the entire disallowance, a finding the Revenue did not rebut. The assessee failed to provide further evidence to demonstrate that the retained disallowance in AYs 2011-12 and 2012-13 was incorrect or to validate the differential pricing. Therefore, the Tribunal found the CIT(A)'s conclusions well-reasoned, factually supported, and legally sustainable, warranting no interference. All grounds raised in the appeals were dismissed.

What were the facts?

This judgment consolidates sixteen appeals, including cross-appeals, concerning three cooperative sugar manufacturing societies: Shree Khedut Sahakari Knand Udhyog Mandli Ltd., Sahakari Khand Udhyog Mandal Ltd., and Maroli Vibhag Khand Udhyog Sahakari Mandali Ltd. The appeals span assessment years from 2011-12 to 2016-17 and challenge orders passed by the Commissioner of Income-tax (Appeals) [CIT(A)], which arose from assessment orders passed by the Assessing Officer (AO) under section 143(3) of the Income-tax Act, 1961. The core dispute revolves around the allowability of the Final Cane Price (FCP) or additional sugarcane price paid by the assessees over and above the statutory Fair and Remunerative Price (FRP).

What were the issues?

1. Whether the CIT(A) erred in upholding the AO's order without following the directions of the ITAT and violating principles of natural justice, rendering the order without jurisdiction and bad in law? (Assessee's contention: Yes, the lower authorities acted arbitrarily and prejudicially). 2. Whether the CIT(A) failed to appreciate the detailed explanations and evidence provided by the assessee to prove the FCP as business expenditure under section 37(1), in light of the Supreme Court's decision in CIT vs. Tasgaon Taluka SSK Ltd.? (Assessee's contention: Yes, the CIT(A) upheld the AO's order based on mere allegations). 3. Whether the CIT(A) erred in upholding the disallowance of the portion of cane price paid to cane growers/members, treating it as inflated purchases or distribution of profit, without establishing an element of profit as directed by the Supreme Court in Tasgaon's case? (Assessee's contention: Yes, the AO's order was a replica without proper inquiry, and the disallowance was unwarranted and prejudicial). 4. Whether the CIT(A) erred in upholding the assessment order without granting a sufficient opportunity of being heard, violating principles of natural justice? (Assessee's contention: Yes, the assessment proceedings were carried out in violation of natural justice). Revenue's contention: The assessee failed to furnish contemporaneous supporting documents, and the disallowance retained by the CIT(A) was justified as it was linked to member-specific benefits or profit-sharing elements as mandated by the Supreme Court in Tasgaon Taluka.

Which sections of the Income-tax Act were involved?

Section 37(1),Section 143(3),Section 142(1),Section 144B(8),Section 36(1)(xvii)

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Cases cited in this judgment(1)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

IN THE INCOME-TAX APPELLATE BEFORE SHRI DINESH MOHAN

TRIBUNAL, SURAT BENCH, SURAT SINHA, JUDICIAL MEMBER AND SHRI BUYANANDA PRUSETH, ACCOUNTANT MEMBER ITA Nos. 738/SRT/2023 and 209/SRT/2024 AYs: (2012-13 and 2016-17)

(Physica

| Hearing)

Shree Khedut Sahakari Knand Udhyog Mandli Ltd., Baben, Bardoli, Surat - 394601, Gujarat

vs. | ITO, Ward 1,

Bardoli

RTA AAT. /S STE SIVA. /PAN/GIR No:

AAAAS4554N

(Appellant)

(Respondent)

ITA Nos, 211 to 214/SRT/2020 (AYs:

2011-12 to 2014-15)

Sahakari Khand Udhyog Mandal Ltd. Gandevi Sugar, Gandevi, Tal. Gandevi, Navsari - 396360, Gujarat.

vs. | ACIT, Navsari Circle,

Navsari

carder are. /sh3rs31TA./PAN/GIR No: AAAAS3791B

(Appellant)

(Respondent)

ITA Nos. 218 to 221/SRT/20

20 (AYs: 2011-12 to 2014-15) Navsari - 396360, Gujarat

earererare. /sharsarta./PA

N/GIR No: AAAAS3791B

(Appellant)

(Respondent)

ITA Nos. 222 to 225/SRT/20

20 (AYs: 2011-12 to 2014-15)

ACIT, Navsari Circle,

vs.

M/s Maroli Vibhag Khand Udyog Sahakari Mandali Ltd.

Navsari Kalyan Nagar, PO- Maroli Bazar, Taluka- Jalalpore, Dist. Navsari — 396436, Guj

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