VITTHAL SAHAKAR SAKHAR KARKHANA LTD,SOLAPUR vs. ASSISTANT COMISSIONER OF INCOME TAX CIRCLE-1, SOLAPUR

2.2 Aggrieved by the same the assessee filed appeal before the Ld.CIT(A). Ld.CIT(A) confirmed the addition as assessee failed to file any submission before the Ld.CIT(A). Aggrieved by the order of CIT(A) the assessee filed appeal before this Tribunal.

It is observed that Section 36 has been amended wef 2016. Sub clause (xvii) has been added to Section 36(1) of the Act. The said sub clause is reproduced here as under :

36 (1)(xvii) the amount of expenditure incurred by a co-operative society engaged in the business of manufacture of sugar for purchase of sugarcane at a price which is equal to or less than the price fixed or approved by the Government..

Thus as per section 36(1)(xvii) the sugar cane price fixed by Government is allowed as deduction . In this case admittedly the assessee has paid more price than the Price fixed by government. Therefore, as per section 36(1)(xvii) only the amount paid as per the price fixed by the government is allowed as deduction . Therefore, the AO was right in making the disallowance of the excess price paid above the price fixed by Government. Accordingly, we uphold the addition made by the AO. Accordingly, the Ground Number 1 is dismissed.

ITA/1540/PUN/2024 3.1. The Hon’ble Supreme Court in the case of CIT vs Krishna SSK had directed the Assessing Officer to verify follwong :

3.2whether the practice of selling sugar at concessional rate has become practice or customs in the sugar industry or not! 3.3 Whether any resolution passed by the State Government supporting the practice! 3.4 What was the basis for deciding the quantity of sugar to be sold to members.

3.5 On perusal of the Assessment order it is observed that the Assessing Officer as per the directions of Hon’ble Supreme Court has noted in the Assessment order that it is a customary practice to sale sugar at concessional rate , the Government of Maharashtra has directed that 5 kg sugar per month can be sold at concessional rate per member. The AO has noted in the assessment order that Assessee has sold 5 kg per month to its members. However, the AO noted that the Assessee has also sold 5 kg per month sugar at concessional rate to non-members. Therefore, the AO added Rs.41,17,967/-which was on account of sugar sold at concessional rate to Non-Members. However, AO has not given any reason for ITA/1540/PUN/2024 making such addition as admittedly the sale was to non-members. The AO has added the impugned amount u/s 37 of the Act. Section 37 of the Act is about expenses claimed by the assessee. However, the impugned amount is not an expenditure. The amount has not been debited to P&L account. Therefore, the AO had no jurisdiction to added the said amount u/s 37 of the Act. Hence, we direct the AO to delete the addition of Rs. 41, 17,967/-. Accordingly, the ground number 2 is allowed.

4 Ground Number 3:VSI Contribution :

In this case the AO in the assessment order has held that it is an allowable expenditure u/s 35(1) of the Act. The AO observed that Assessee has not submitted any evidence of actual payment .In these facts and circumstances , we direct the assessee to file the evidence of payment before the AO. The AO shall verify and if found paid then it shall be allowed as deduction. Accordingly, the ground number 3 is allowed for statistical purpose.

Order pronounced in the open Court on 31st December, 2024.

Sd/- Sd/- Sd/- Sd/- (MS.ASTHA CHANDRA) (DR. DIPAK P. RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER ु / Pune; द / Dated : 31st Dec, 2024/ SGR*

ITA/1540/PUN/2024