ASSISTANT COMMISSIONER OF INCOME-TAX vs. KOLHAPUR ZILLA SAHAKARI DUDH UTPADAK SANGH LTD.,, KOLHAPUR

All the appeals filed by the Revenue relating to the same assessee on similar issues were heard together and are being disposed of by this consolidated order for the sake of convenience. In order to adjudicate the

The Revenue in ITA No.578/PUN/2016, relating to assessment year 2009- 10 has raised the following grounds of appeal:- 1. On the facts and in the circumstances of the case and in law, whether the learned CIT(A) was justified in deleting the addition of Rs.18,71,98,281/- made on account of distribution of profit in the garb of payment of additional price for purchase of milk? 2. On the facts and in the circumstances of the case and in law, whether the Ld. CIT(A) was correct in appreciating the fact that additional purchase price was paid only to the members of the society after determination of profit earned by the assessee society at the end of the financial year, which amounts to distribution of profits in terms of bye-laws of the assessee society. 3. On the facts and in the circumstances of the case and in law, whether the learned CIT(A) was right in ignoring the provisions of section 43(1) of the I.T. Act, 1961 which lays down that the actual cost of the assets to the assessee is the cost as reduced by that portion of the cost, which has been met directly or indirectly by any other person or authority?

The learned Authorized Representative for the assessee at the outset pointed out that the issue raised in the present appeal is squarely covered by the orders of Tribunal in assessee’s own case and also by the orders of Hon’ble Bombay High Court in assessee’s own case. Our attention was drawn to the orders of Tribunal and the Hon’ble Bombay High Court as under:- i) ITA Nos.401/PN/2005 to 405/PN/2005, relating to assessment years 1996-97 to 2001-02, order dated 26.09.2005 ii) CIT Vs. (1) Solapur Dist. Co-op. Milk Producers and Process Union Ltd. (2) Kolhapur Zilla Sahakari Dudh Utpadak Sangh Ltd. (2009) 315 ITR 304 (Bom) iii) CIT Vs. Kolhapur Zilla Sahakari Dudh Utpadak Sangh Ltd. in Income Tax Appeal No.1156 of 2014 with Income Tax Appeal No.1157 of 2014, judgment dated 27.10.2016

The learned Departmental Representative for the Revenue on the other hand, placed reliance on the order of Assessing Officer.

We have heard the rival contentions and perused the record. Briefly, in the facts of the case, the assessee was Co-operative society engaged in the business of processing of milk and milk products. The assessee was collecting milk from primary milk societies spread over Kolhapur and adjoining districts. The assessee claimed deduction under section 80P of the Act. The issue which is raised by the Revenue vide ground of appeal No.1 is on account of distribution of profit after the closure of accounting year in the garb of payment of additional price for purchase of milk. The Revenue is aggrieved by deletion of addition of ₹ 18,71,98,281/- in assessment year 2009-10. The said issue has been raised vide grounds of appeal No.1 and 2. The next issue which has been raised is against the order of CIT(A) in ignoring the provisions of section 43(1) of the Act.

We find that the Hon’ble Bombay High Court in CIT Vs. Kolhapur Zilla Sahakari Dudh Utpadak Sangh Ltd. (supra) had decided similar issue raised by the Revenue. The issues which were raised before the Hon’ble High Court read as under:- “(a) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in law in holding that the payment of rate difference after the closure of the accounting year do not amount to distribution of profit, as the amount to be paid was not out of the profit ascertained at the annual general meeting? (b) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in law in holding that the Explanation 10 to Section 43(1) was prospective being substantive law in nature and content de hors the decision of Hon'ble Supreme Court reported in 224 ITR 557?”

The decision on question No.(a) was as under:- “3. Reg. Question (a):- (a) The impugned order of the Tribunal dismissed the Revenue’s Appeal before it on the issue raised herein by following the decision of this Court in CIT v/s. Kolahpur Zilla Sahakari Dudh Utpadak Sangh Ltd. 315 ITR 304.

Regarding question (b), the Hon’ble High Court held as under:- “4. Reg. Question (b):- (a) The impugned order of the Tribunal dismissed the Revenue’s Appeal on the issue raised herein by following its own order in the Respondent- Assessee’s own case in respect of the Assessment Years 1999-2000, 2001-02, 2005-06 and 2006-07. (b) Mr. Singh, learned Counsel appearing for the Revenue is unable to points out whether or not any appeal on the issue raised herein, has been filed by the Revenue. In fact, the order of this Court in Kolhapur Zilla Sahakari Dudh Utpadak Sangh Ltd. (supra), appears to be an appeal by the Revenue in respect of the very orders which are being relied upon by the impugned order (as evident from paragraph 14 of the order of the CIT(A)). However, the issue raised herein was not even an issue raised therein. (c) In the above view, the question as framed does not give rise to any substantial question of law as the impugned order of the Tribunal has merely followed its own orders for the earlier Assessment Years, which have been accepted by the Revenue. Thus, not entertained.”

The first issue which arises in the present appeal is squarely covered by the order of Hon’ble Bombay High Court in CIT Vs. (1) Solapur Dist. Co-op. Milk Producers and Process Union Ltd. (2) Kolhapur Zilla Sahakari Dudh Utpadak Sangh Ltd. (supra), which has been applied in assessment years 2007-08 and 2008-09. The year under appeal before us is assessment year 2009-10 and following the same parity of reasoning, we uphold the order of CIT(A) in this regard and dismiss the grounds of appeal No.1 and 2 raised by the Revenue.

Similarly, the issue raised vide ground of appeal No.3 is squarely covered by the orders of Hon’ble High Court in assessee’s own case relating to assessment years 2007-08 and 2008-09, wherein the Hon’ble High Court has observed that the relief was given to assessee in earlier years, against which the

The facts and issues in ITA Nos.579/PUN/2016 & 580/PUN/2016 are identical to the facts and issues in ITA No.578/PUN/2016 and our decision in ITA No.578/PUN/2016 shall apply mutatis mutandis to ITA Nos.579/PUN/2016 & 580/PUN/2016.

In the result, all the appeals of Revenue are dismissed.