ACIT, Solapur V. Shri Shankar Sahakari Sakhar Karkhana Ltd., Solapur

ITA 1180/PUN/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 72440 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-12-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 19-12-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 07-06-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Assessee Lawyers: PRASANN A L JOSHI

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.1180/PN/2012 (A.Y.2007-08) ASST. CIT, CIRCLE-I, SOLAPUR APPELLANT VS. SHRI SHANKAR SSK LTD., SADASHIVNAGAR, TAL. MALSHIRAS, DIST. SOLAPUR PAN: AAAAS3735M RESPONDENT ITA NO.1181/PN/2012 (A.Y.2007-08) ADDL. CIT, RANGE-I, SOLAPUR APPELLANT VS. SAHAKAR MAHARSHI SHANKARRAO MOHITE PATIL SSK LTD., YASHWANTNAGAR, AKLUJ, TAL-MALSHIRAS, DIST. SOLAPUR PAN: AAAAS3736J RESPONDENT ITA NO.1678/PN/2012 (A.Y.2008-09) DY. CIT, SATARA CIRCLE, SATARA APPELLANT VS. LOKNETE BALASAHEB DESAI SSK LTD., A/P DAULATNAGAR (MARALI), TAL. PATAN, DIST. SATARA. PAN: AAAAB0362K RESPONDENT 2 ASSESSEE BY : SHRI PRASANN A L. JOSHI DEPARTMENT BY : SHRI P.L. PATHADE DATE OF HEARING : 20.12.2013 DATE OF ORDER : 24.12.2013 ORDER PER BENCH: ALL THE APPEALS FILED BY REVENUE INVOLVED COMMON I SSUES. SO THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF F BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. IN ITA NO.1180/PN/2012, THE REVENUE RAISED THE F OLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SALE O F SUGAR AT CONCESSIONAL RATE AT RS.15,08,719/- TO ITS MEMBE RS AND NON MEMBERS. 2. THE ORDER OF THE CIT(A) BE VACATED AND THAT OF TH E AO BE RESTORED. 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER ANY OF THE ABOVE GROUNDS OF APPEAL. 3. AT THE OUTSET OF HEARING, IT WAS POINTED OUT TH AT THESE ISSUES ARE COVERED BY THE DECISION OF HONBLE SUPREME COUR T IN THE CASE OF CIT VS. KRISHNA SAHAKARI SAKHAR KARKHANA LTD., (201 2) 27 TAXMANN.COM 162 (SC), WHEREIN, THE ORDER HAS BEEN R ESTORED TO THE CIT(A) BY OBSERVING AS UNDER: 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 MEMBER S. EVERY MONTH AND ON DIWALI, ASSESSEE(S) SELLS CERTAIN QUAN TITY OF SUGAR 3 (FINAL PRODUCT) AT CONCESSIONAL RATE TO FARMERS/CAN E GROWERS/MEMBERS. THE DIFFERENCE BETWEEN THE AVERAGE PRICE OF SUGAR SOLD IN THE MARKET AND THE PRICE OF SUGAR SOL D BY THE ASSESSEE (S) TO ITS MEMBERS AT CONCESSIONAL RATE IS SOUGHT TO BE TAXED BY THE DEPARTMENT UNDER THE HEAD 'APPROPRIATI ON OF PROFIT 1 . THE QUESTION, WHETHER THE ABOVE DIFFERENCE BETWEEN THE FAIR MARKET PRICE AND THE CONCESSIONAL PRICE SHOULD OR S HOULD NOT BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE(S) SOC IETY, NEEDS TO BE RE-LOOKED BY COMMISSIONER OF INCOME TAX (APPEALS ) [FOR SHORT, 'CIT(A)']. APART FROM THE AFORE-STATED QUEST ION, CIT(A) WOULD TAKE INTO ACCOUNT, WHETHER THE ABOVE-MENTIONE D PRACTICE OF SELLING SUGAR AT CONCESSIONAL RATE HAS BECOME TH E PRACTICE OR CUSTOM IN THE CO-OPERATIVE 'SUGAR INDUSTRY?; AND WH ETHER ANY RESOLUTION HAS BEEN PASSED BY THE STATE GOVERNMENT SUPPORTING THE PRACTICE? THE CIT(A) WOULD ALSO CONS IDER 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. T HE CIT(A) WOULD BE ENTITLED TO LOOK INTO THE ACCOUNTS AND VER IFY 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 B OTH SIDES TO PRODUCE RELEVANT DOCUMENTS. FOR THE ABOVE REASONS, WE REMIT THE CASES TO CIT(A) TO DE-NOVO CONSIDER THE MATTER. 4. NOTHING CONTRARY WAS BROUGHT TO OUR KNOWLEDGE. FACTS BEING SIMILAR, SO FOLLOWING THE SAME REASONING, WE FIND T HAT ISSUE BEFORE US IS WHETHER DIFFERENCE BETWEEN FAIR MARKET PRICE AND CONCESSIONAL PRICE SHOULD OR SHOULD NOT BE ADDED TO THE TOTAL IN COME OF THE ASSESSEE(S) SOCIETIES. IT NEEDS TO BE RE-LOOKED IN TO BY CIT(A). CIT(A) WOULD TAKE INTO ACCOUNT, WHETHER THE ABOVE-MENTIONE D PRACTICE OF SELLING SUGAR AT CONCESSIONAL RATE HAS BECOME THE P RACTICE OR CUSTOM IN THE CO-OPERATIVE 'SUGAR INDUSTRY?; AND WHETHER A NY RESOLUTION HAS BEEN PASSED BY THE STATE GOVERNMENT SUPPORTING THE PRACTICE? THE CIT(A) WOULD ALSO CONSIDER ON WHAT BASIS THE QU ANTITY OF THE FINAL PRODUCT, I.E., SUGAR, IS BEING FIXED FOR SALE TO FARMERS/CANE GROWERS/MEMBERS EACH YEAR ON MONTH-TO-MONTH BASIS A PART FROM DIWALI. THE CIT(A) WOULD BE ENTITLED TO LOOK INTO THE ACCOUNTS AND 4 VERIFY THE BASIS FOR SALE OF SUGAR AT CONCESSIONAL PRICE ON MONTH-TO- MONTH BASIS. ACCORDINGLY, ALL THESE QUESTIONS OF L AW AND FACTS ARE TO BE RE-LOOKED BY CIT(A). THE CIT(A) WOULD GIVE LIBE RTY TO DECIDE THE ISSUE BY GIVING THE OPPORTUNITY OF HEARING BEFORE H IM. SO, THE MATTER IS REMITTED BACK TO THE CIT(A) TO DECIDE THE ISSUE DE-NOVO IN THE LIGHT OF ABOVE DISCUSSION. AS A RESULT, THE APPEAL OF RE VENUE IN ITA NO.1180/PN/2012 FOR A.Y. 2007-08 IS ALLOWED FOR STA TISTICAL PURPOSES. SIMILAR ISSUE AROSE IN OTHER APPEALS I.E . 1181/PN/2012 AND 1678/PN/2012. FACTS BEING SIMILAR, SO THESE AR E ALSO REMITTED BACK TO THE CIT(A) WITH SIMILAR DIRECTION AS DISCUS SED ABOVE. 5. IN THE RESULT, ALL THE APPEALS FILED BY REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THE DAY OF 24 TH DECEMBER 2013. SD/- SD/- (G.S. PANNU) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 24 TH DECEMBER, 2013 SUJEET / GCVSR COPY TO:- 1. DEPARTMENT 2. ASSESSEE 3. THE CIT(A)-III, PUNE 4. THE CIT-III, PUNE 5. THE DR, A BENCH, I.T.A.T., PUNE. 6. GUARD FILE //TRUE COPY// BY ORDER SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE