Asstt.CIT Satara Circle, Satara V. Sahyadri SSK Ltd., Satara

ITA 1030/PUN/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3163 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 27-08-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MITHALI MADHUSMITA
• Keywords: Business expenditure
• Section: 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO. 1030/PN/2009 ASSESSMENT YEAR: 2006-07 ASSTT. COMMISSIONER OF INCOME-TAX, APPELLANT SATARA CIRCLE, SATARA, DIST. SATARA. VS. SAHYADRI SAH. SAKHAR KARKHANA LTD., RESPONDENT YASHWANTNAGAR, TAL. KARAD, DIST. SATARA (PAN AAAAJ4070K) APPELLANT BY : MR. MITHALI MADHUSMITA RESPONDENT BY : MR. M.K. KULKARNI ORDER PER G.S. PANNU, A.M.: THIS APPEAL FILED BY THE REVENUE PERTAINING TO THE ASSESSMENT YEAR 2006-07 IS DIRECTED AGAINST THE ORD ER OF CIT(A) DATED 24/06/09, WHICH IN TURN, HAD ARISEN FROM AN O RDER DATED 26/12/2008 PASSED BY THE ASSESSING OFFICER U/S 143( 3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. BEFORE US, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- .2. THE LEARNED CIT(A) GROSSLY ERRED IN DELETING TH E ADDITION OF RS. 44,78,86,195/- MADE IN THE ASSESSMENT BY WAY OF DISALLOWANCE OF EXCESS SUGAR CANE PRICE PAID BY THE ITA NO. 1030/PN/09 SAHYADRI SAH. SAKHAR KARKHANA LTD. 2 ASSESSEE TO THE MEMBES AND THE NON-MEMBERS U/S 37 & 40A(2)(A)(B) OF THE I.T. ACT, 1961, INSTEAD OF CONF IRMING THE SAME. 3. THE LEARNED CIT(A) GROSSLY ERRED IN FAILING TO A PPRECIATE THAT THE EXCESS CANE PAYMENTS WERE IN THE NATURE OF APPROPRIATION OF PROFITS AND THEREFORE, COULD NOT C ONSTITUTE CHARGE ON PROFITS. THE DECISION OF THE LD. CIT(A) I N THIS MATTER IS CONTRARY TO THE RATIO OF THE JUDGMENT OF THE HON. SUPREME COURT IN THE CASE OF SHRI MALAPRABHA CO.OP. SUGAR FACTORY LTD. VS. UNION OF INDIA AND OR. {1994] 1 SC 648. 4. THE LEARNED CIT(A) GROSSLY ERRED IN NOT CONSIDER ING IN ANY MANNER THE ASSESSING OFFICERS ARGUMENT THAT THE EX CESS PAYMENTS WERE IN THE NATURE OF BONUS AS PER THE MAHARASHTRA CO-OPERATIVE SOCIETIES ACT, 1960 AND T HAT BONUS IS APPROPRIATION OF PROFIT AS CONFIRMED IN PRAWARA SSK LTD. (ITAT, C-BENCH BOMBAY DATED 16.05.1968 IN ITA NO. 16939 WHICH HAD BEEN LATER AFFIRMED BY THE HON BLE SUPREME COURT AS REPORTED IN 94 ITR 321.) 5. THE LEARNED CIT(A) GROSSLY ERRED IN DELETING THE ADDITION OF RS. 4,53,30,066/- MADE IN THE ASSESSMENT WITH RE FERENCE TO SALE OF SUGAR AT CONCESSIONAL RATES TO THE MEMBE RS AND SHAREHOLDERS OF THE SOCIETY INSTEAD OF CONFIRMING S UCH ADDITION. 6. THE LEARNED CIT(A) GROSSLY ERRED IN FAILING TO A PPRECIATE THAT THE DIFFERENCE BETWEEN THE MARKET PRICE AND CONCESSIONAL PRICE OF SUGAR WAS NOT AT ALL IN THE N ATURE OF BUSINESS EXPENDITURE, AND, ON THE CONTRARY, REPRESE NTED DISTRIBUTION OF PROFITS: AND, THEREFORE, THE DIFFER ENCE HAD BEEN RIGHTLY TREATED AS PROFITS AND ASSESSED TO TAX . THE DEPARTMENT HAS FILED FURTHER APPEAL BEFORE THE HON BLE HIGH COURT, MUMBAI IN THIS ISSUE IN VARIOUS CASES. 3. AT THE TIME OF HEARING, BOTH THE PARTIES SUBMITT ED THAT IN VIEW OF THE JUDGMENT OF THE HONBLE SUPREME COURT I N THE CASE OF SHRI SATPUDA TAPI PARISAR SSK LTD. AND OTHERS IN CI VIL APPEAL NO. 617 OF 2010 AND OTHERS DATED 20/01/10, THE ISSU ES BE REMANDED BACK TO THE CIT(A) FOR ADJUDICATION AFRESH ON THE LINES INDICATED BY THE HONBLE SUPREME COURT. ITA NO. 1030/PN/09 SAHYADRI SAH. SAKHAR KARKHANA LTD. 3 4. IN VIEW OF THE AFORESAID, THE IMPUGNED ORDER OF THE CIT(A) IS SET ASIDE AND THE MATTER IS REMANDED BACK TO THE F ILE OF CIT(A) TO BE ADJUDICATED AFRESH IN TERMS OF THE JUDGMENT O F THE HONBLE SUPREME COURT IN THE CASE OF SHRI SATPUDA TAPI PARI SAR SSK LTD. (SUPRA). 5. ACCORDINGLY, APPEAL OF THE REVENUE IS ALLOWED FO R STATISTICAL PURPOSES. 6. DECISION WAS PRONOUNCED IN THE OPEN COURT AT THE CONCLUSION OF THE HEARING IN THE PRESENCE OF BOTH T HE PARTIES ON 24/11/10. SD/- SD/- (SHAILENDRA KUMAR YADAV) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT M EMBER PUNE, DATED: 24 TH NOVEMBER, 2010 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, A BENCH, I.T .A.T., MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., PUNE KV