Agasti Sahakari Sakhar Karkhana Ltd, Ahmednagar V. Deputy Commissioner of Income tax, Ahmednagar

ITA 1075/PUN/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8434 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 28-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS NANDITA KANCHAN
• Assessee Lawyers: K SRINIVASAN
• Keywords: Business expenditure; Additional evidence; Set aside
• Section: 143(3); 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 1075 /P U N/201 7 / ASSESSMENT YEAR : 20 1 2 - 1 3 AGASTI SAHAKARI SAKHAR KARKHANA LTD., AGASTI NAGAR, TALUKA AKOLE, DIST. AHMEDNAGAR 422601 . / APPELLANT PAN: AA A AA1262B VS. THE DY. COMMISSIONER OF INCOME TAX, AHME DNAGAR CIRCLE, AHMEDNAGAR . / RESPONDENT / APPELLANT BY : SHRI K. SRINIVASAN / RESPONDENT BY : MRS. NANDITA KANCHAN / DATE OF HEARING : 0 8 . 0 7 .201 9 / DATE O F PRONOUNCEMENT: 17 . 0 7 .201 9 / ORDER PER SUSHMA CHOWLA, J M : THE APPEAL FILED BY ASSESSEE IS AGAINST ORDER OF CIT (A) - 2 , PUNE , DATED 07 . 11 .201 6 RELATING TO ASSESSMENT YEAR 20 1 2 - 1 3 AGAINST ORDER PASSED UNDER SECTION 143(3) OF THE INCOME - TAX ACT , 1 961 (IN SHORT THE ACT) . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - I. ON THE FACTS AND CIRCUMSTANCES OF THE CASE C I T (APPEALS) ERRED IN HOLDING THAT THE ENTIRE ADDITIONAL AMOUNT PAID TOWARDS CANE PRICE OVER AND ABOVE THE FAIR REMUNER ATIVE PRICE TO BOTH MEMBERS AND NON MEMBERS OF THE SOCIETY WAS NOT ALLOWABLE AS BUSINESS EXPENDITURE UNDER SECTION 37(1) OF THE IT ACT. ITA NO. 1075 /P U N/20 1 7 AGASTI SAHAKARI SAKHAR KHARKHANA LTD. 2 DIRECTING THE A. O . TO ALLOW ONLY THE DEDUCTION FOR THE FAIR REMUNERATIVE P RI CE (FRP) PRESCRIBED BY THE CENTRAL GOVT. AS THE EXPENDITURE INCURRED FOR CANE PURCHASE. HOLDING THERE WAS NO QUESTION OF APPLICABILITY OF SEC.40A(2) AND AT THE SAME TIME NOT DELETING THE ADDITION MADE BY A .O. II . THE ORDER OF THE CIT(A) MAY BE VACATED AND APPROPRIATE DIRECTION GIVEN AS IN OTHER SU GAR FACTORY CASES REGARDING ALLOWABILITY OF CANE PRICE PAID IN FULL AS BUSINESS EXPENDITURE . III. THE APPELLANT CRAVES LEAVE TO ADD/ALTER/AMEND ANY GROUNDS OF APPEAL AND ADDUCE ADDITIONAL EVIDENCE AT THE TIME OF HEARING OF APPEAL . 3. THE LEARNED AUTHORIZ ED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS AGAINST ADDITION MADE ON ACCOUNT OF EXCESS CANE PRICE, WHEREIN THE ASPECT OF FAIR REMUNERATIVE PRICE WAS NOT CONSIDERED IN ITS ENTIRETY. THE LEARNED AUTHORI ZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ISSUE STANDS COVERED BY THE ORDER OF TRIBUNAL IN BUNCH OF APPEALS WITH LEAD ORDER IN THE CASE OF SIDDHESHWAR SAHAKARI SAKHAR KARKHANA LTD. VS. DCIT IN ITA NO.1210/PUN/1997, RELATING TO ASSESSMENT YEA R 1992 - 93, ORDER DATED 01.05.2019 AND FOLLOWING THE SAME PARITY OF REASONING, THE MATTER MAY BE SENT BACK TO THE FILE OF ASSESSING OFFICER. 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE FAIRLY ADMITTED TO THE SAME. 5 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. WE FIND THAT THE SAID ISSUE IS SQUARELY COVERED BY ORDER OF TRIBUNAL IN BUNCH OF APPEALS WITH LEAD ORDER IN THE CASE OF SIDDHESHWAR SAHAKARI SAKHAR KARKHANA LTD. VS. DCIT (SUPRA) . THE TRIBUNAL HAS SET ASIDE THE ISSUE OF EXCESS CANE PRICE TO THE FILE OF ASSESSING OFFICER TO FOLLOW THE GUIDELINES ISSUED BY THE HONBLE APEX COURT IN CIT VS. TASGAON TALUKA S.S.K. LTD. AND OTHERS IN CIVIL APPEAL NO.8890 OF 2012, JUDGMENT DATED 05.03.2019. FURTHER IN RESPECT OF FAIR AND REM UNERATIVE PRICE (FRP) IT WAS HELD AS UNDER: - ITA NO. 1075 /P U N/20 1 7 AGASTI SAHAKARI SAKHAR KHARKHANA LTD. 3 22. HOWEVER, AFTER ASSESSMENT YEAR 2009 - 10, THE SCENARIO OF PAYMENT OF CANE PRICE TO THE FARMERS HAS UNDERGONE CHANGE AND THE DISTRIBUTION IS ON THE BASIS OF FAIR AND REMUNERATIVE PRICE, WHICH WAS DIFFERENT FRO M SMP. THE CONTROL ORDER, 1966 AND THE WORKING OF SAP UNDER CLAUSE 5A OF THE SAID ORDER DOES NOT GOVERN THE PAYMENT OF CANE PRICE TO THE FARMERS AFTER ASSESSMENT YEAR 2009 - 10. IN SUCH SCENARIO, THE ASSESSING OFFICER IS DIRECTED TO RE - LOOK INTO THE CLAIM OF ASSESSEE AS PER AMENDED GUIDELINES ISSUED IN THIS REGARD AND DECIDE THE ALLOWABILITY OF SAID EXPENDITURE IN THE HANDS OF S.S.K. GROUP. SINCE THE SMP FACTOR IS NOT THE BASIS FOR ALLOWING THE SAID EXPENDITURE, IT WOULD BE DIFFICULT TO CALCULATE THE ADDIT IONAL PURCHASE PRICE UNDER CLAUSE 5A OF CONTROL ORDER, 1966. ACCORDINGLY, IN THE PRESENT BUNCH OF APPEALS, WE REMIT THIS ISSUE OF DEDUCTIBILITY OF EXCESS CANE PRICE TO THE FILE OF ASSESSING OFFICER WITH NECESSARY DIRECTIONS TO APPLY THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN THE YEARS TO WHICH IT IS SO APPLICABLE AND FOR THE BALANCE YEARS I.E. AFTER THE MODIFICATION OF THE RULES FROM ASSESSMENT YEAR 2009 - 10, TO CONSIDER THE CHANGED GUIDELINES AND DECIDE THE SAME AFTER ALLOWING REASONABLE OPPORTUNI TY OF HEARING TO THE ASSESSEE. 23. IT IS CONTENDED BY THE LEARNED COUNSELS BEFORE US THAT IN ADDITION TO THE ISSUE BEFORE THE HON'BLE SUPREME COURT IN RESPECT OF EXCESS CANE PRICE, THERE ARE IN SOME CASES, SUGARCANE WAS PURCHASED ON CONTRACTED RATES / P RICE OUT OF AREA OF OPERATIONS. IT WAS POINTED OUT BY THEM THAT THIS ISSUE WAS NOT CONSIDERED BY THE HON'BLE SUPREME COURT BUT THE SAID DEDUCTION IS TO BE ALLOWED IN THE HANDS OF ASSESSEE, WHICH ADMITTEDLY, IS NOT COVERED BY SMP PRICE. SINCE THE MATTER H AS BEEN SET ASIDE TO THE FILE OF ASSESSING OFFICER, THEN IN THE HANDS OF RELEVANT ASSESSEE, THIS ISSUE MAY BE LOOKED INTO BY THE ASSESSING OFFICER. IT WAS POINTED OUT THAT IN SUCH CASES, SMP WOULD NOT HAVE ANY ROLE TO PAY. CONSEQUENTLY, SUCH APPEALS ARE NOT GOVERNED BY THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN CIT VS. TASGAON TALUKA S.S.K. LTD. AND OTHERS (SUPRA). THE ASSESSING OFFICER IS DIRECTED TO DECIDE THE ISSUE AFTER ALLOWING REASONABLE OPPORTUNITY OF HEARING TO ASSESSEE. 6. FOLLOWING T HE SAME PARITY OF REASONING, TH E ISSUE IS SET ASIDE TO THE FILE OF ASSESSING OFFICER. THUS, THE GROUND S OF APPEAL ARE ALLOWED. 7 . IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 17 TH DAY OF JU LY , 201 9 . SD/ - SD/ - (ANIL CHATURVEDI) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 17 TH JULY , 201 9 . GCVSR ITA NO. 1075 /P U N/20 1 7 AGASTI SAHAKARI SAKHAR KHARKHANA LTD. 4 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - 2 , PUNE ; 4. THE PR. CIT - 1 , PUNE ; 5. 6. , , / DR B , ITAT, PUNE ; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE