ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE -1, KOLHAPUR, KOLHAPUR V. SHREE TATYASAHEB KORE WARANA SAHAKAR SAKHAR KARKHANA LTD., MAHARASHTRA

ITA 1175/PUN/2024

AI Insights

The case involves multiple appeals by the Revenue against the orders of the CIT(A) concerning the assessment years 2007-08 to 2014-15, related to the sale of sugar at concessional rates by Shree Tatyasaheb Kore Warana Sahakari Sakhar Karkhana Ltd. The primary legal issue revolves around whether the income derived from the sale of sugar at concessional rates to members constitutes an appropriation of profit and should be added back to the business income of the assessee. The ITAT noted that the CIT(A) had not adequately addressed the specific directions from the Supreme Court regarding the verification of the customary practice of selling sugar at concessional rates and the regulatory framework governing such sales.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 39195 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2025
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Other Referred Cases: CIT Vs. Krishna SSK [2012] 211 Taxmann 109 (SC), Shri Adinath SSK Vs. ACIT, ACIT Vs. Shri Shankar SSK Ltd., Chhatrapati Shahu SSK, CIT Vs. Terana SSK
• Laws Referred To: Income Tax Act, 1961, Maharashtra Co-operative Societies Act, 1960
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AJAY KUMAR KESHARI
• Assessee Lawyers: PRAMOD SHINGTE
• Keywords: Set aside; Business income; Opportunity of being heard; Revised return
• Section: 143(3); 250; 22

Judgement Text

" आयकर अपीलीय अिधकरण ”बी” Ɋायपीठ पुणेमŐ। IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “B” :: PUNE BEFORE DR.DIPAK P. RIPOTE, ACCOUNTANT MEMBER AND SHRI VINAY BHAMORE, JUDICIAL MEMBER ITA No. A.Y. Appellant Respondent 1155/PUN/2024 2007-08 The Assistant Commissioner of Income Tax, Circle-1, Kolhapur. Shree Tatyasaheb Kore Warana Sahakari Sakhar Karkhana Ltd., Gat No.1102, At post Warananagar, Kolhapur, Maharashtra–416113. PAN:AAAAT3108M 1156/PUN/2024 2008-09 1170/PUN/2024 2009-10 1171/PUN/2024 2010-11 1172/PUN/2024 2011-12 1173/PUN/2024 2012-13 1174/PUN/2024 2013-14 1175/PUN/2024 2014-15 Assessee by Shri Pramod Shingte – AR Revenue by Shri Ajay Kumar Keshari – CIT(DR) Date of hearing 17/12/2024 & 26/12/2024 Date of pronouncement 31/01/2025 आदेश/ ORDER PER DR. DIPAK P. RIPOTE, AM : This bunch of Eight(08) appeals filed by the Revenue directed against the separate orders of ld.Commissioner of ITA Nos.1155, 1156, 1170 to 1175/PUN/2024 – 08 Appeals [R] 2 Income Tax(Appeals)[NFAC] under section 250 of the Income Tax Act, 1961; for the assessment years referred above.Revenue has filed identical grounds for all these years. Since the issue involved is common, all these appeals were heard together and decided by the common order. We treat Appeal for Assessment Year 2007-08 as lead case : 1.1 The Revenue has raised the following grounds of appeal : “1. On facts and in the circumstances of the case and in law, the ld.CIT(A) erred in deleting the addition on account of sale of sugar on concessional rate and ignoring the fact that the Hon’ble ITAT vide various decisions has restored the issue to the file of the AO. 2. On facts and in the circumstances of the case and in law, the ld.CIT(A) erred in not appreciating the fact that in assessee’s own case for AY 2015-16, the Hon’ble ITAT has restored the issue to the file of AO by following the Coordinate Bench of Pune Tribunal’s decision in the case of Shri Adinath SSK Vs. ACIT, which in turn has relied on the coordinate bench of Tribunal in the case of ACIT Vs. Shri Shankar SSK Ltd. 3. On facts and in the circumstances of the case and in law, the ld.CIT(A) erred in not appreciating the fact that, coordinate Bench of Tribunal in the case of ACIT Vs. Shri Shankar SSK Ltd. has duly considered both the cases as relied upon by the CIT(A) viz. the decision of Hon. ITAT in the case of Chhatrapati Shahu SSK and decision of Hon. Bombay HC in the case of CIT Vs. Terana SSK ITA Nos.1155, 1156, 1170 to 1175/PUN/2024 – 08 Appeals [R] 3 and then only restored the issue of sale of sugar to members at concessional rate to the file of the AO. 4. The appellant craves leave to add, alter, amend and modify any of the above or all grounds raised at time of proceedings before the Hon‘ble Tribunal which may please be granted.” Submission of ld.DR: 2. The ld.DR for the Revenue relied on the order of the Assessing Officer. Ld.DR submitted that since A.Y.2015-16 has been set-aside by ITAT to Assessing Officer(AO) for denovo adjudication following the principles laid down by Hon’ble Supreme Court in the case of CIT Vs. Krishna SSK [2012] 211 Taxmann 109 (SC), the A.Y.2007-08 to A.Y.2014- 15 may also be set-aside. Ld.DR also relied on the decision of Co-ordinate Bench of the ITAT Pune in the case of Shree Adinath SSK Ltd., in ITA No.485/PUN/2019 for A.Y.2013-14 dated 11.05.2022. ITA Nos.1155, 1156, 1170 to 1175/PUN/2024 – 08 Appeals [R] 4 2.1 Mr.Ajay Kumar Keshari -ld.CIT(DR) in the written submission submitted that it is evident that the sale of sugar by the sugar factories to their members is not a discretionary decision of the factory, but is regulated under section 79(A) of the Maharashtra Co-operative Societies Act, 1960. In accordance with this provision, the Sugar Commissioner, Pune has issued a circular to regulate the sale of sugar to members. As stated above, the sale of sugar to a member should not exceed 5 kg per month at a concessional/subsidized rate. Hence, there is no ambiguity regarding the regulation of sugar sales to members. Furthermore, it is important to highlight that the Assessing Officer(AO) took note of this regulation and the circular and incorporated the same into the assessment orders for A.Y.2017-18 and A.Y.2018-19. The AO carefully examined the matter based on the practices adopted by the State Government ITA Nos.1155, 1156, 1170 to 1175/PUN/2024 – 08 Appeals [R] 5 as per its Policy and made an addition for the Differential Amount between the Market Price and the Concessional Rate. 2.2 It is evident that the State Government has already enacted legislation under section 79(A) of the Maharashtra Co-operative Societies Act, 1960 to discourage the practice of selling sugar at concessional rates. Additionally, the Hon’ble Supreme Court’s decision in CIT Vs. Krishna SSK [2012] 211 Taxmann 109 (SC), along with the provisions of the Maharashtra Co-operative Societies Act, 1960 and the circular dated 01.03.2006 issued by the Sugar Commissioner, Pune have provided clear guidelines on the matter. Submission of ld.AR : 3. The ld.Authorised Representative(ld.AR) for the assessee filed a paper book. Ld.AR submitted that this issue is already covered by the decision of Hon’ble Jurisdictional High Court in ITA Nos.1155, 1156, 1170 to 1175/PUN/2024 – 08 Appeals [R] 6 the case of Assessee in Income Tax Appeal(Lodg.) No.2726 of 2009, dated 01.02.2010. 3.1 Ld.AR submitted that the issue had attained finality by Hon’ble Bombay High Court’s order in assessee’s own case in Income Tax Appeal(Lodg.) No.2726 of 2009, dated 01.02.2010 vide which Hon’ble Bombay High Court dismissed the appeal of the Revenue. Ld.AR further submitted that Revenue has not filed any SLP against the decision of Hon’ble Bombay High Court regarding sale of sugar at concessional rate. Therefore, ld.AR pleaded that this issue has attained finality for the assessee. Findings & Analysis : 4. We have heard both the parties and perused the records.With the consent of both the parties, these appeals were heard together as the issue involved is same, grounds of appeal ITA Nos.1155, 1156, 1170 to 1175/PUN/2024 – 08 Appeals [R] 7 raised are same. We took appeal for A.Y.2007-08 as lead appeal. 4.1 Assessee is a Co-operative Society. Assessee filed Return of Income on 30.10.2007 disclosing total income at Rs.NIL and claiming carry forward losses of earlier years of Rs.7,64,55,198/-. Then, assessee filed a revised Return of Income on 26.03.2009 increasing the losses to Rs.7,82,30,508/-. The Assessee’s case was selected for scrutiny. The assessment order under section 143(3) was passed on 30.10.2009 making an addition of Rs.43,56,64,963/- on account of excessive cane price paid to the Farmers over the admissible price and Rs.2,76,65,568/- on account of sale of sugar at concessional rate to its members and non-members. Aggrieved by the assessment order, Assessee filed appeal before the ld.CIT(A). The ld.CIT(A) partly confirmed the addition. Appeal was filed ITA Nos.1155, 1156, 1170 to 1175/PUN/2024 – 08 Appeals [R] 8 before the ITAT by Revenue as well as Assessee. The appeals Number are as under : A.Y.2007-08 i. For A.Y.2007-08 / DCIT Vs. Shri Tatyasaheb Kore Warana SSK Ltd., / ITA No.205/PUN/2012. ii. For A.Y.2007-08 / Shri Tatyasaheb Kore Warana SSK Ltd., Vs. DCIT / ITA No.251/PUN/2012. A.Y.2008-09 i. For A.Y.2008-09 / DCIT Vs. Shri Tatyasaheb Kore Warana SSK Ltd., / ITA No.599/PUN/2012. ii. For A.Y.2008-09 / Shri Tatyasaheb Kore Warana SSK Ltd., Vs. DCIT / ITA No.252/PUN/2012. A.Y.2009-10 i. For A.Y.2009-10 / DCIT Vs. Shri Tatyasaheb Kore Warana SSK Ltd., / ITA No.2141/PUN/2012. ITA Nos.1155, 1156, 1170 to 1175/PUN/2024 – 08 Appeals [R] 9 ii. For A.Y.2009-10 / Shri Tatyasaheb Kore Warana SSK Ltd., Vs. DCIT / ITA No.2145/PUN/2012. A.Y.2010-11 i. Shri Tatyasaheb Kore Warana SSK Ltd., Vs. DCIT / ITA No.827/PUN/2017 /A.Y.2010-11 A.Y.2011-12 i. Shri Tatyasaheb Kore Warana SSK Ltd., Vs. DCIT / ITA No.828/PUN/2017 / A.Y.2011-12 A.Y.2012-13 i. Shri Tatyasaheb Kore Warana SSK Ltd., Vs. DCIT / ITA No.829/PUN/2017 / A.Y.2012-13 A.Y.2013-14 i. Shri Tatyasaheb Kore Warana SSK Ltd., Vs. DCIT / ITA No.830/PUN/2017 / A.Y.2013-14 ITA Nos.1155, 1156, 1170 to 1175/PUN/2024 – 08 Appeals [R] 10 A.Y.2014-15 i. Shri Tatyasaheb Kore Warana SSK Ltd., Vs. DCIT / ITA No.1756/PUN/2017 / A.Y.2014-15 4.2 The appeal in ITA No.251/PUN/2012 and ITA No.252/PUN/2012 were heard on 19.03.2019 and order was pronounced on 01.05.2019by ITAT Pune “A” Bench. In these group of appeals, total 120 appeals were decided together by a common order. 4.3 The appeal in ITA No.205/PUN/2012, ITA No.599/PUN/2012, ITA No.2141/PUN/2012 and ITA No.2145/PUN/2012 were heard on 12.03.2019 by ITAT Pune “B” Bench and the same order was pronounced on 14.03.2019. In this group of appeals, total 162 cases were heard and decided together by a common order. ITA Nos.1155, 1156, 1170 to 1175/PUN/2024 – 08 Appeals [R] 11 4.3.1 The appeal in ITA No.827/PUN/2017, 828/PUN/2017 and ITA No.829/PUN/2017, ITA No.830/PUN/2017 and ITA No.1756/PUN/2017 were heard by ITAT on 25.09.2019 and decided vide order dated 01.10.2019 by a common order consisting of 75 appeals. 4.4 All these appeals were decided by ITAT Pune by a common order along with other cases. The Assessing Officer in assessment order for A.Y.2007-08 dated 28.09.2021 has referred wrong ITA Appeal Numbers. The ITAT vide its common order 14.03.2019, 01.05.2019 and 01.10.2019set-aside the issue to the Assessing Officer, following the decision of Hon’ble Supreme Court in the case of CIT Vs. Krishna Sahakari Karkhana Limited [2012] 27 taxmann.com 162 (SC) order dated 25.09.2012. The ITAT directed Assessing Officer to verify following aspects : ITA Nos.1155, 1156, 1170 to 1175/PUN/2024 – 08 Appeals [R] 12  Whether practice of selling sugar at concessional rate is a custom in the Co-operative Sugar Industry!  Whether any resolution has been passed by State Government supporting the practice!  What is the basis of quantity fixed for sale at concessional rate? 4.5 The ld.Assessing Officer in his order dated 28.09.2021 for A.Y.2007-08 has reproduced the above mentioned directions, however, ignored to follow the direction. The Assessing Officer has not bothered to give finding on any issue mentioned by ITAT for which it was set-aside. The relevant paragraph 6 of the Assessing Officer is reproduced here as under : “6. Disallowance on account of sale of sugar at concessional rate During the year, assessee society had sold sugar to its members on concessional rate. The figure of which are as below:- (a) Quantity of total sugar supplied to cane growers at concessional rate in Quintals 19201 Quintals (b) Sugar levy price of above Quantity Rs.1658.27 (c) Price recovered from cane growers Rs.217.43 (d) Difference between (b) & (c) Rs.1440.84 (e) Disallowance (a) x (d) above Rs.27,66,55,68/- ITA Nos.1155, 1156, 1170 to 1175/PUN/2024 – 08 Appeals [R] 13 As per above chart, the assessee had sold sugar to its members at a very nominal price. This is nothing else but an appropriation of profit and application of income in the nature. Therefore, difference between Sugar levy price of quantity distributed and actual amount realized from members, which comes to Rs.27,66,55,68/-is disallowed and added back to the Business Income of the assessee) (Addition in Business income – Rs.27,66,55,68/-)” 4.6 Ld.CIT(A) has also ignored the directions of the ITAT in its order dated 27.03.2024. The relevant paragraph of ld.CIT(A)’s order is reproduced here as under : “In ground No.2, the Appellant has contested the action of the AO of making an addition of Rs.2,76,65,568/- on account of sale of sugar to members at concessional rate. It is observed that the Appellant had sold sugar to its members at a very nominal price and the AO added the difference between sugar levy price of quantity distributed and actual amount realized from members amounting to Rs.2,76,65,568/- This issue has been decided by the Hon'ble ITAT, Pune Bench in the case of Chhatrapati Shahu SSK Ltd. Kagal and by the Hon'ble High Court of Mumbai in the case of Terana S.S.K. Ltd. Dhoki in favour of the Sugar factories. In view of the decisions of the Jurisdictional High Court and the ITAT, the addition made by the AO is hereby deleted. This ground is allowed. ITA Nos.1155, 1156, 1170 to 1175/PUN/2024 – 08 Appeals [R] 14 In the result, the appeal is allowed.” 4.6.1 However, ld.CIT(A) deleted the addition following the decision of Hon’ble Jurisdictional High Court in the case of Terana SSK Ltd. 4.7 Now the Revenue is in appeal before this Tribunal. 4.8 Revenue has merely pleaded that the case may be set-aside as the appeal for A.Y.2015-16 has been set aside. Revenue relied on the Circular of the Maharashtra Sugar Commissioner who has laid down specific criteria and also fixed the rate and quantity which can be given to members. Revenue has referred certain case laws in the grounds of appeal without quoting citation. 4.9 It is noted that ld.AR submitted that it is a customary practiceto sale sugar at concessional rate to the Farmers who sell ITA Nos.1155, 1156, 1170 to 1175/PUN/2024 – 08 Appeals [R] 15 sugar cane to Assessee. Ld.AR further submitted that this is a practice followed by all sugar factories. Ld.AR also submitted that Assessee has passed a resolution to that effect. Ld.AR filed copy of the resolution dated 14.02.1990 in paper book. As per the said resolution of the Assessee-Factory, concessional sugar is given only to the members. Therefore, Assessee has not explained how concessional sugar has been provided to non- members. Ld.AR also submitted that even State Government has approved the said practice. Ld.DR has not rebutted these submissions of the ld.AR. We have observed that indeed it is a customary practice among all sugar factoriesin this belt to sale sugar at concessional rate to Farmers. However, nowhere the exact number of members to whom sugar has been sold at concessional rate is mentioned by the Assessee. The said fact has not been mentioned by the Assessee even in the paper book filed before us. Also, Assessee has not mentioned to how many ITA Nos.1155, 1156, 1170 to 1175/PUN/2024 – 08 Appeals [R] 16 non-members sugar was sold at concessional rate and how concessional sugar was provided to non-members when the resolution, dated 14.02.1990 only allows concessional sugar to members. 4.10 The Hon’ble Supreme Court in the case CIT Vs. Krishna Sahakari Karkhana Limited [2012] 27 taxmann.com 162 (SC)(supra) vide order dated 25.09.2012 had given specific directions, the relevant paragraph as under : Quote “The assessee(s) is a Co-operative Society engaged in the business of production of sugar from sugarcane and sale thereof. Assessee(s) buys sugarcane from its Members. Every month and on Diwali, assessee(s) sells certain quantity of sugar (final product) at concessional rate to farmers/cane growers/Members. The difference between the average price of sugar sold in the market and the price of sugar sold by the assessee(s) to its Members at concessional rate is sought to be taxed by the Department under the Head 'Appropriation of Profit'. ITA Nos.1155, 1156, 1170 to 1175/PUN/2024 – 08 Appeals [R] 17 The question, whether the above difference between the fair market price and the concessional price should or should not be added to the total income of the assessee(s) Society, needs to be re-looked by Commissioner of Income Tax (Appeals) [for short, 'CIT(A)']. Apart from the afore-stated question, CIT(A) would take into account, whether the above-mentioned 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 Diwali? These are some of the questions which have not been addressed by the Authorities below in the impugned orders. The CIT(A) would be entitled to look into the Accounts and verify the basis for sale of sugar at concessional price on month-to-month basis. We, therefore, keep all questions of law and facts open. Needless to add, the CIT(A) would give liberty to both sides to produce relevant documents. ITA Nos.1155, 1156, 1170 to 1175/PUN/2024 – 08 Appeals [R] 18 For the above reasons, we remit the cases to CIT(A) to de-novo consider the matter.”Unquote 4.11 In this context, it is important to refer to the circular of the Sugar Commissioner – Maharashtra State vide Circular No:“Outward No:CS/Admin-1/Circular/05 dated 01.03.2006”. The Sugar Commissioner Maharashtra State has elaborately discussed the sale of sugar at concessional rate and given directions. The said circular is reproduced as under : “Commissioner of Sugar Maharashtra Rajya SakharSankul, Shivaji Nagar, Pune-5 Outward No:CS/Admin-1/Circular/05 Date:01st Date March, 2006 CIRCULAR Sub: Sale of Sugar at concessional rate to members and employees of sugar factories of State To give directions as per section 79A of the Maharashtra Co-operative Societies Rules, 1960 Ref: Govt. Letter SSK1005/25859/Letter No. 345/25S dated 14th February, 2006 ITA Nos.1155, 1156, 1170 to 1175/PUN/2024 – 08 Appeals [R] 19 Terms and conditions and procedure to be followed for sale of sugar at concession rate was fixed through Circular from this office dated 13th April, 2005 and 27th May, 2005. However, some of the factories have informed to this office that they have passed the resolution at their Annual General Meeting/ Extra Ordinary General Meeting regarding not to adopt the provisions contained in this circular on sale of sugar factories are informed that Circular was issued u/s 79A of the Maha. State Co-op Act 1960 pursuant to the decision taken at the meetings of Hon'ble Committee of Ministers on 1st September, 2005 and 30th September, 2005 on sale of sugar at concession rate to the members and employees. Since the provisions of the Act prevail over the Bye-Laws of the Society, sugar factories should sell the sugar at concession rate to their members and employees as per the directions given by the State Government. It may be noted that, action can be taken against Board of Directors of the factories not obeying these directions under Section 88 of the Maharashtra State Co-operative Societies Act, 1960. Following are the directions as per the Section 79(A) of Maharashtra Co-operative Societies Act, 1960: 1. The factories should stop the current practice of selling the sugar at concession rate to their members. Instead, sugar at concession rate can be made available through following method. 2. The rate for concession sugar sale by a Co-op sugar factory to its members shall be at the rate of levy sugar plus excise duty on free sugar. 3. A Co-op sugar factory shall sell maximum 5 kg sugar per month at concession rate to its member. ITA Nos.1155, 1156, 1170 to 1175/PUN/2024 – 08 Appeals [R] 20 4. This concession will be limited only to the members and employees. 5. If a factory has crushed less than 50% in the previous season, then it will not be eligible for concession sale of sugar. 6. The sale of sugar at concession rate shall be applicable only to those members who have supplied their cane to factory as per the rules of the factory. After detailed discussion, following directions are given under Section 79 (A) of Maharashtra Co- operative Societies Act, 1960 DIRECTIONS 1. The factories should stop the current practice of selling the sugar at concession rate to their members. Instead, sugar at concession rate can be made available as per following method. 2. The rate for concession sugar sale by a Co-op sugar factory to its members shall be at the rate of levy sugar plus excise duty on free sugar. 3. A Co-op sugar factory shall sell maximum 5 kg sugar per month at concession rate to its member. 4. This concession will be limited only to the members and employees. 5. If a factory has crushed less than 50% in the previous season, then it will not be eligible for concession sale of sugar. ITA Nos.1155, 1156, 1170 to 1175/PUN/2024 – 08 Appeals [R] 21 6. The sale of sugar at concession shall be applicable only to those members who have supplied their cane to factory as per the rules of the factory.” 4.12 The Sugar Commissioner Maharashtra Government gave the directions to all sugar factories as per Section 79(A) of Maharashtra Co-operative Societies Act, 1960. The Sugar Commissioner gave the direction that Sugar Factories shall sale maximum 5 kgs of sugar per month at concessional rate to its members only. The rate shall be @ levy sugar (+) excise duty. The sale of sugar at concessional rate shall be applicable only to those members who have supplied their Sugar Cane to the factory. 4.13 The Hon’ble Supreme Court in the case of Krishna SSK Ltd.,(supra) had set-aside the issue with specific direction. Accordingly, ITAT had directed Assessing Officer to verify the issue as per the directions of Hon’ble Supreme Court. One of the Directions of Hon’ble Supreme Court(supra) was to find out ITA Nos.1155, 1156, 1170 to 1175/PUN/2024 – 08 Appeals [R] 22 whether any resolution passed by State Government. Therefore, the Circular issued by Sugar Commissioner, Maharashtra State in 2006 needs to be considered as directed by Hon’ble Supreme Court(supra). In 2006, the Sugar Commissioner gave specific directions under section 79(A) of the Maharashtra Co-operative Societies Act, 1960. We have already reproduced the relevant paragraphs of the Assessment Order and ld.CIT(A)’s order. Nowhere Assessing Officer has referred to the Sugar Commissioner’s directions. The Assessing Officer has not answered following questions - How many members have been provided sugar at concessional rate? Had those members supplied sugar cane to the factory? Had assessee factory crushed more than 50% in the previous season? What is the Rate at which the sugar was sold at concessional rate and What was the levy sugar rate for that year? All these questions are relevant to decide the issue of sale of sugar at concessional rate. ITA Nos.1155, 1156, 1170 to 1175/PUN/2024 – 08 Appeals [R] 23 Ld.AR during the submission submitted that Assessee has sold Sugar @ Rs.2 per kg to its members. However, levy sugar rate and excise duty has not been brought on record. 4.13.1 Section-79A of the Maharashtra Co-operative Societies Act, 1960 is reproduced here as under : “79- A. Government's powers to give directions in the public interest, etc.- (1) If the State Government, on receipt of a report from the Registrar or otherwise, it satisfied thatin the public interest or for the purposes of securing proper implementation of co- operativeproduction and other development programs approved or undertaken by Government, or tosecure the proper management of the business of the society generally, or for preventing theaffairs of the society being conducted in a manner detrimental to the interests of themembers, or of the depositors or the creditors thereof, it is necessary to issue directions toany class of societies generally or to any society or societies in particular, the State Government may issue directions to them from time to time, and all societies or the societiesconcerned, as the case may be, shall be bound to comply with such directions. (2) The State Government may modify or cancel any directions issued under sub-section (1), andin modifying or canceling such directions may impose such conditions as it may deem fit. ITA Nos.1155, 1156, 1170 to 1175/PUN/2024 – 08 Appeals [R] 24 (3) Where the Registrar is satisfied that any person was responsible for complying with anydirections or modified directions issued to a society under sub-sections (1) and (2) and he hasfailed without any good reason or justification, to comply with the directions, the Registrar mayby order — (a) if the person is a member of the committee of the society, remove the member fromthe committee and appoint any other person as a member of the committee for theremainder of the term of his office and declare him to be disqualified to be suchmember for a period of six years from the date of the order, (b) if the person is an employee of the society, direct the committee to remove suchperson from employment of the society forthwith, and if any member or members ofthe committee, without any good reason or justification, fail to comply with this order,remove the members, appoint other persons as members and declare themdisqualified as provided in clause (a) above: Provided that, before making any order under this sub-section, the Registrar shall give areasonable opportunity of being heard to the person or persons concerned and consult thefederal society to which the society is affiliated, Any order made by the Registrar under this section shall be final.” ITA Nos.1155, 1156, 1170 to 1175/PUN/2024 – 08 Appeals [R] 25 4.14 Thus, the Commissioner of Sugar had issued Circular dated 01.03.2006 in public interest. One arm of the Law cannot be used to defeat purpose of another arm of the Law. In this case, the Assessing Officer has not analysed and brought on record all the above details, which was mandatory in the light of decision of Hon’ble Supreme Court in the case of Krishna SSK Ltd.(supra). 4.15 The ld.CIT(A) has also not brought on record any details. Ld.CIT(A) has not followed the directions of Hon’ble Supreme Court in Krishna SSK Ltd.,(supra). However, ld.CIT(A) has relied on the decision of Hon’ble Bombay High Court in the case Terana Sahakari Sakhar Karkhana Ltd. We have perused the order of Hon’ble High Court in the case of Terana Sahakari Sakhar Karkhana Limited, [2008] 301 ITR 222 (Bombay), dated 22.10.2007. The Assessment Year involved in Terana Sahakari ITA Nos.1155, 1156, 1170 to 1175/PUN/2024 – 08 Appeals [R] 26 Sakhar Karkahana Limtied is A.Y.1992-93, emanating from ITAT’s order in ITA No.256/PN/05, dated 17-02-2006. Thus, the Hon’ble Bombay High Court in the case of Terana Sahakari Sakhar Karkhana Limited decided the appeal for A.Y.1992-93 based on ITAT’s Decision dated 17.02.2006. The Hon’ble Bombay High Court in the said decision held as under : Quote “4. As regards question No. 4 is concerned, learned counsel for the revenue states that in view of the CBDTCircular No. 117, dated 22-8-1973, he is not pressing the fourth question. Hence the only question to be decided in this appeal in question No.5.”Unquote 4.16 The CBDT Circular No.117, dated 22.08.1973 is regarding “Rebate allowed to members by consumer co-operative stores – Whether allowable as business deduction.” The entire circular is reproduced here as under : “117 : Circular No. 117, dated 22-08-1973 22 August 1973 ITA Nos.1155, 1156, 1170 to 1175/PUN/2024 – 08 Appeals [R] 27 357. Rebate allowed to members by consumer co-operative stores - Whether allowable as business deduction 1. I am directed to say that an instance has come to the notice of the Board wherein the Income-tax Officer in the case of consumer co-operative store had disallowed the claim of deduction on account of rebate allowed on the purchases made by the members of the store. 2. The Board in consultation with the Department of Community Development and Co-operation has decided that rebate or bonus (which is in the nature of deferred discount) passed on by the consumer co-operative stores to their members on the value of the purchases made by them during a year should be allowed as a deduction in computing the business income of such a society.” 4.17 Thus, the Circular dated 22.08.1973 is regarding consumer co-operatives stores, granting certain rebates on purchases, whereas in the case of assessee, the issue is sale of sugar at concessional rate. ITA Nos.1155, 1156, 1170 to 1175/PUN/2024 – 08 Appeals [R] 28 4.18 Also, the Hon’ble Bombay High Court in the case of Terana Sahakari Sakhar Karkhana Ltd(supra) decided the appeal in February, 2006 when this circular of Commissioner of Sugar Maharashtra State, dated 01.03.2006 was not applicable. Therefore, the Hon’ble Bombay High Court’s decision in the case of Terana SSK Ltd.,(supra) is distinguishable on facts and hence not applicable in the case of assessee. Therefore, ld.CIT(A) has erred in deciding the appeal following Hon’ble Bombay High Court’s decision in Terana SSK Ltd and not referring to the decision of Hon’ble Supreme Court in the case of Krishna SSK Ltd.,(supra). Ld.CIT(A) erred in not appreciating the fact that this was the Assessment Order in consequence to ITAT Decision in the case of Assessee, wherein ITAT had given certain specific directions following the Hon’ble Supreme Court’s decision in the case of Krishna SSK ITA Nos.1155, 1156, 1170 to 1175/PUN/2024 – 08 Appeals [R] 29 Ltd.,(supra). Therefore, ld.CIT(A) should have restricted to the ITAT’s order only. 4.19 The ld.AR relied on the order of Hon’ble Bombay High Court in the case of CIT Vs. Tatyasaheb Kore Warana Sahakari Sakhar Karkhana Ltd., in Income Tax Appeal(Lodg.) No.2726 of 2009, dated 01.02.2010.The Hon’ble Bombay High Court in the case of CIT Vs. Tatyasaheb Kore Warana Sahakari Sakhar Karkhana Ltd., in Income Tax Appeal(Lodg.) No.2726 of 2009(supra), has relied on the decision of Hon’ble Bombay High Court in CIT Vs. Kisanveer Satara Sahakari Sakhar Karkhana Limited in ITA 930/2008. In the case of Kisanveer Satara SSK Ltd.(supra), Hon’ble High Court followed the decision of CIT Vs. Terna Shetkari Sahakari Sakhar Karkhana Ltd. reported in [2008] 301 ITR 222(Bom). We have already discussed the decision of Hon’ble High Court in the case of ITA Nos.1155, 1156, 1170 to 1175/PUN/2024 – 08 Appeals [R] 30 Terana SSK Ltd(supra) and distinguished it on facts. The most important fact is that after the decision of Hon’ble Supreme Court in the case of Krishna SSK Ltd., dated 25.09.2012, the decision of Hon’ble Bombay High Court will not be applicable.“Also, Revenue failed to bring it to the notice of Hon’ble High Court the Circular of the Sugar Commissioner Maharashtra State”. Therefore, the decision relied by ld.AR is not applicable in the case of assessee for assessment year 2007- 08 onwards. 4.20 For all these elaborate reasons, we set-aside the order of ld.CIT(A), qua sale of sugar at concessional rate to the ld.CIT(A) for denovo adjudication. The ld.CIT(A) shall bring on record the specific facts mentioned by us in earlier paragraphs. Ld.CIT(A) shall also bring on record the specific facts mentioned by Hon’ble Supreme Court in the Krishna SSK ITA Nos.1155, 1156, 1170 to 1175/PUN/2024 – 08 Appeals [R] 31 Ltd.,(supra). The Assessee shall file all necessary details before the ld.CIT(A). Accordingly, grounds of appeal raised by the Revenue are allowed for statistical purpose. 5. In the result, appeal of the Revenue in ITA No.1155/PUN/2024 for A.Y.2007-08 is allowed for statistical purpose. ITA Nos.1156 & 1170, 1171, 1172, 1173, 1174 & 1175/PUN/2024 (07 Appeals) : 6. Since we have already decided the appeal of the Revenue for A.Y.2007-08 in ITA No.1155/PUN/2024 at length. The facts of A.Y.2007-08 are identical to ITA Nos.1156 & 1170, 1171, 1172, 1173, 1174 & 1175/PUN/2024, the grounds of appeal raised by the Revenue of these appeals are also identical. Therefore, the decision of A.Y.2007-08 shall apply mutatis- mutandis to these appeals i.e.ITA Nos.1156 & 1170, 1171, ITA Nos.1155, 1156, 1170 to 1175/PUN/2024 – 08 Appeals [R] 32 1172, 1173, 1174 & 1175/PUN/2024 also. Accordingly, grounds of appeal raised by the Revenue in these seven appeals are allowed for statistical purpose. 7. In the result, appeal of the Revenue in ITA Nos.1156 & 1170, 1171, 1172, 1173, 1174 & 1175/PUN/2024 are Allowed for statistical purpose. 8. To sum up, all appeals raised by the Revenue are allowed for statistical purpose. Order pronounced in the open Court on 31st January, 2025. Sd/- Sd/- (VINAY BHAMORE) (DR. DIPAK P. RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 31st Jan, 2025/ SGR* ITA Nos.1155, 1156, 1170 to 1175/PUN/2024 – 08 Appeals [R] 33 आदेशकᳱᮧितिलिपअᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A), concerned. 4. The Pr. CIT, concerned. 5. िवभागीयᮧितिनिध, आयकर अपीलीय अिधकरण, “बी” बᱶच, पुणे / DR, ITAT, “B” Bench, Pune. 6. गाडᭅफ़ाइल / Guard File. आदेशानुसार / BY ORDER, // TRUE COPY // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे/ITAT, Pune. "