The Sanjivani (Takli) Sahakari Sakhar Karkhana Ltd., Ahmednagar V. Assistant Commissioner of Income-tax, Ahmednagar

ITA 1236/PUN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5300 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 07-06-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MUKESH JHA
• Section: 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO . 1501 /P U N/201 6 / ASSESSMENT YEAR : 20 05 - 06 ASSISTANT COMMISSIONER OF INCOME TAX, AHMEDNAGAR CIRCLE, AHMEDNAGAR ....... / APPELLANT / V/S. SANJIVANI TAKLI SAHAKARI SAKHAR KARKHANA LTD., A/P SHAHAJANAND NAGAR, TAL. - KOPERGAON, DISTT. - AHMEDNAGAR 423603 PAN : AAAAT3291R / RESPONDENT . / ITA NO .1236/PUN/2016 / ASSESSMENT YEAR : 2005 - 06 THE SANJIVANI TAKLI SAHAKARI SAKHAR KARKHANA LTD., A/P SHAHAJANAND NAGAR, TAL. - KOPERGAON, DISTT. - AHMEDNAGAR 423603 PAN : AAAAT3291R ....... / APPELLANT / V/S. ASSISTANT COMMISSIONER OF INCOME TAX, AHMEDNAGAR CIRCLE, AHMEDNAGAR / RESPONDENT ASSESSEE BY : S HRI PRASANNA JOSHI REVENUE BY : SHRI MUKESH JHA / DATE OF HEARING : 2 3 - 07 - 201 8 / DATE OF PRONOUNCEMENT : 25 - 0 7 - 201 8 2 ITA NO S. 1501 & 1236/PUN/2016, A.Y. 2005 - 06 / ORDER PER VIKAS AWASTHY, JM : TH IS CROSS APPEALS BY THE REVENUE AND THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF COMMI SSIONER OF INCOME TAX (APPEALS) - 2, PUNE DATED 07 - 03 - 2016 FOR THE ASSESSMENT YEAR 2005 - 06. 2. SHRI PRASANNA JOSHI APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED AT THE OUTSET THAT THIS IS SECOND ROUND OF LITIGATION BEFORE THE TRIBUNAL. EARLIER, THE TRIBUNAL IN ITA NO. 1120/PN/2008 FOR ASSESSMENT YEAR 2005 - 06 DECIDED ON 30 - 12 - 2008 HAD DISMISSED THE APPEAL FILED BY THE REVENUE. THE REVENUE CARRIED THE MATTER IN APPEAL BEFORE THE HONBLE HIGH COURT. THE HONBLE HIGH COURT WHILE DECIDING THE BUNCH OF APPEALS INCLUDING THE APPEAL FILED BY THE REVENUE AGAINST THE ASSESSEE IN TAX APPEAL NO. 46 OF 2009 RE MITTED THE ISSUE BACK TO THE FILE OF COMMISSIONER OF INCOME TAX (APPEALS) WITH RESPECT TO PAYMENT OF EXCESS CAN PRICE PAID TO THE MEMBERS AND NON - MEMBERS. THE COMMISSIONER OF INCOME TAX (APPEALS) IN REMAND PROCEEDINGS WHILE DECIDING THE ISSUE AFRESH HAS W RONGLY RECORDED THE FACTS AND HAS ALSO GONE BEYOND THE DIRECTIONS OF THE HONBLE HIGH COURT. THE ASSESSEE HAS FILED RECTIFICATION APPLICATION U/S. 154 ON 29 - 05 - 2016 BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE SAID APPLICATION IS STILL PENDING FO R FINAL DISPOSAL. 2.1 THE LD. AR FURTHER SUBMITTED THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN ADJUDICATING THE ISSUE WITH RESPECT TO ADDING BACK OF DIFFERENCE BETWEEN MARKET PRICE OF SALE OF SUGAR IN THE OPEN MARKET AND CONCESSIONAL RATE CHARGED FROM THE MEMBERS . THE SAID ISSUE RAISED IN APPEAL BEFORE THE HONBLE HIGH COURT WAS DISMISSED AND HENCE , THE COMMISSIONER OF INCOME TAX (APPEALS) IN REMAND PROCEEDINGS WAS NOT 3 ITA NO S. 1501 & 1236/PUN/2016, A.Y. 2005 - 06 JUSTIFIED TO TAKE UP THE ISSUE AGAIN FOR RE - ADJUDICATION. THE LD. AR PLACED ON RECORD COPY OF THE ORDER OF HONBLE BOMBAY HIGH COURT IN TAX APPEAL NO. 46 OF 2009 DATED 10 - 07 - 2012. 3. ON THE OTHER HAND SHRI MUKESH JHA REPRESENTING THE DEPARTMENT VEHEMENTLY DEFENDED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS). THE LD. DR SUBMITTED THAT SUBSEQUENT TO THE ORDER OF HONBLE BOMBAY HIGH COURT , THE HONBLE SUPREME COURT OF INDIA HAS DECIDED THE SIMILAR ISSUE IN BUNCH OF APPEALS LEAD CASE BEING COMMISSIONER OF INCOME TAX VS. KRISHNA SSK LTD. AND ORS. REPORTED AS 27 TAXMANN.CO M 162. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS RE - ADJUDICATED THE ISSUES IN THE LIGHT OF THE LATTER JUDGMENT OF HONBLE APEX COURT. 4. W E HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW . THE ASSESSEE IN APPEAL HAS ASSAILED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) BY RAISING FOLLOWING GROUNDS : 1. BY JUDGEMENT DATED 10 TH JULY 2012 THE HON'BLE BOMBAY HIGH COURT IN TAX APPEAL NO. 46 OF 2009 REMITTED BACK QUESTIO N 'A' TO RESPECTIVE CIT AS PER DIRECTIONS CONTAINED IN PARAGRAPH 6 OF JUDGEMENT DELIVERED IN TAX APPEAL NO. 29 OF 2008, HOWEVER IN THE IMPUGNED ORDER THE LD. CIT(A) HAS NOT OBEYED THESE DIRECTIONS AND AS SUCH THE IMPUGNED ORDER PASSED BY HIM IS AB - INIT IO NULL AND VOID. 2. WITHOUT PREJUDICE TO THE ABOVE, THE LD. CIT(A) OUGHT TO HAVE FOLLOWED EXPRESS DIRECTIONS OF HON'BLE BOMBAY HIGH COURT ON THE BASIS OF WHICH THE APPEAL WAS SET ASIDE TO HIM AND .OUGHT NOT TO HAVE DECIDED THE APPEAL FOLLOWING THE BAS IS OF DIRECTIONS GIVEN BY HON'BLE SUPREME COURT IN ANOTHER CASE. 3. WITHOUT PREJUDICE TO BOTH OF THE ABOVE, PAGES 6 TO 79 OF THE IMPUGNED ORDER DO NOT DEAL WITH THE FACTS OF THE APPELLANT AND THE CIT(A) IS WRONG IN ARRIVING AT HIS CONCLUSION AT PARA 3.4.5 ON PAGE 80 WITHOUT CONSIDERING ANY FACTS OF THE APPELLANT WHATSOEVER. 4. BY JUDGEMENT DATED 10 TH JULY 2012 BOMBAY HIGH COURT IN TAX APPEAL NO. 46 OF 2009 THE HON'BLE HIGH COURT DISMISSED QUESTIO N 'B' FOLLOWING ITS JUDGEMENT IN TAX APPEAL NO. 99 OF 2008 EVEN THEN THE LD. CIT(A) IN THE IMPUGNED ORDER WENT AHEAD AND DECIDED A MATTER WHICH WAS NOT REMITTED BACK TO HIM BY THE HON'BLE COURT. 4 ITA NO S. 1501 & 1236/PUN/2016, A.Y. 2005 - 06 5. THE REVENUE IN APPEAL HAS RAISED FOLLOWING GROUNDS AGAIN ST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS): 1. THE ORDER OF THE COMMISSIONER OF INCOME - TAX (APPEALS) IS CONTRARY TO LAW AND TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED COMMISSIONER OF INCOME - TAX(APPEALS) GROSSLY ERRED IN HOLDING THAT THE ADDITIONAL PAYMENT ON ACCOUNT OF CANE PRICE UNDER CLAUSE 5A OF THE SUGAR CONTROL ORDER CANNOT BE ASSESSED IN THE ASSESSEE'S HANDS AS SUCH PAYMENT REPRESENTS DIVERSION OF PROFIT BY OVERRIDING TITLE. 3. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEA LS) GROSSLY ERRED IN HOLDING AS ABOVE AND IN DIRECTING THE ASSESSING OFFICER TO COMPUTE THE AMOUNT ADMISSIBLE AS DEDUCTION NOTWITHSTANDING THAT AT PARA 20 OF THE SOURCE ORDER (IN THE CASE OF SHRI DNYANESHWAR SSK LTD) IT WAS ADMITTED BY THE APPELLATE AUTHOR ITY THAT EVEN THE AMOUNT PAYABLE TO THE CANE GROWER UNDER CLAUSE 5A OF THE SUGAR CONTROL ORDER AMOUNTS TO APPLICATION OF INCOME AND IS A PROFIT SHARING NATURE. 4. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) GROSSLY ERRED IN FAILING TO APPRECIATE THAT CLAUSE 5A OF THE SUGAR CONTROL ORDER DOES NOT FASTEN ANY OBLIGATION TO THE SOURCE OF INCOME IN THE ASSESSEE'S HANDS WHICH IS MANUFACTURE AND MARKETING OF SUGAR AND, IN THE CIRCUMSTANCES, IT COULD BY NO MEANS BE SAID THAT THE AMOUNT PAID UNDER THE AFORESAI D CLAUSE REPRESENTS DIVERSION OF PROFIT AT SOURCE BY VIRTUE OF OVERRIDING TITLE. 5. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) GROSSLY ERRED IN FAILING TO APPRECIATE THAT THE PAYMENTS MADE BY THE ASSESSEE OVER AND ABOVE THE STATUTORY MINIMUM PRICE (SMP) ARE IN THE NATURE OF DISTRIBUTION OF PROFIT, HENCE NOT ADMISSIBLE AS DEDUCTION. 6. FOR THESE AND SUCH OTHER GROUNDS AS MAY BE URGED AT THE TIME OF HEARING, THE ORDER OF THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 7. THE APPELLANT CRAVES TO ADD, AMEND, ALTER OR DELETE AN Y OF THE ABOVE GROUND OF APPEAL DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE THE HON'BLE TRIBUNAL. 6. WE OBSERVE THAT GROUND NOS. 1, 2 AND 3 RAISED IN THE APPEAL BY ASSESSEE AND GROUND NOS. 1 TO 6 OF THE APPEAL BY REVENUE ARE ON THE SAME ISSUE. THE LD. AR HAS POINTED THAT THE COMMISSIONER OF INCOME TAX (APPEALS) WHILE ADJUDICATING THE ISSUE RELATING TO EXCESS CANE PRICE PAID TO THE MEMBERS AND NON - MEMBERS HAS RECORDED WRONG FACTS. THE ASSESSEE HAS FILED APPLICATION U/S. 154 FOR RECTIFICATION OF THE MISTAKE. THE RECTIFICATION APPLICATION FILED BY THE ASSESSEE BEFORE THE COMMISSIONER OF 5 ITA NO S. 1501 & 1236/PUN/2016, A.Y. 2005 - 06 INCOME TAX (APPEALS) IS AT PAGES 25 TO 27 OF THE PAPER BOOK. WE ARE OF CONSIDERED VIEW THAT THE OUTCOME OF THE RECTIFICATION APPLICATION FILED U/S. 154 BEFORE THE FIRST APPELLATE AUTHORITY W I LL HAVE BEARING ON GROUND NOS. 1 TO 3 RAISED IN THE APPEAL BY ASSESSEE AND THE CORRESPONDING GROUNDS I.E. GROUND NOS. 1 TO 6 RAISED IN APPEAL BY THE REVENUE . ACCORDINGLY, WE DEEM IT APPROPRIATE TO REMIT THIS ISSUE BACK TO T HE FILE OF COMMISSIONER OF INCOME TAX (APPEALS) . THE COMMISSIONER OF INCOME TAX (APPEALS) IS DIRECTED TO DISPOSE OF THE RECTIFICATION APPLICATION OF THE ASSESSEE DATED 29 - 05 - 2016 AT THE EARLIEST , PREFERABLY WITHIN A PERIOD OF 3 MONTHS FROM THE DATE OF COMMUNICATION OF THIS ORDER AND THEREAFTER RE - ADJUDICATE THE ISSUE AFRESH. ACCORDINGLY, GROUND NOS. 1, 2 AND 3 RAISED IN THE APPEAL BY THE ASSESSEE AND GROUND NOS. 1 TO 6 OF APPEAL BY THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSE. 7. IN GROUND NO. 4 OF THE APPEAL BY THE ASSESSEE, THE ASSESSEE HAS ASSAILED THE ACTION OF COMMISSIONER OF INCOME TAX (APPEALS) IN ADJUDICATING THE MATTER WHICH HAS ALREADY BEEN DISPOSED OF BY THE HONBLE HIGH COURT. WE FIND THAT ONE OF THE ISSUE BEFORE THE HONBLE HIGH COURT IN TAX APPEAL NO. 46 OF 2009 BY THE REVENUE IS : (B) WHETHER THE DIFFERENCE BETWEEN THE MARKET PRICE OF SALE OF SUGAR AND PRICE OF THE SALE OF A SMALL QUANTITY OF SUGAR MADE BY THE ASSESSEE (A SUGAR FACTORY) TO ITS SUGARCANE PRODUCER MEMBERS AT A CONCES SIONAL RATE, CAN BE ADDED IN THE INCOME OF AN ASSESSEE UNDER SECTION 40A OF THE INCOME TAX ACT, 1961? THE HONBLE HIGH COURT DECIDED THIS ISSUE AGAINST THE REVENUE BY OBSERVING AS UNDER : 7. AS REGARDS QUESTION B, RELATING TO SUPPLY OF SUGAR AT CONCE SSIONAL RATE TO SUGARCANE GROWERS IS CONCERNED, THE SAME IS ANSWERED IN NEGATIVE VIDE JUDGMENT AND ORDER DELIVERED IN TAX APPEAL NO. 99/2008 AND CONNECTED APPEALS. TAX APPEAL NO. 45/2009 AND TAX APPEAL NO. 46/2009 ARE ACCORDINGLY PARTLY ALLOWED. 8 . ONCE THE ISSUE HAS BEEN ADJUDICATED BY THE HONBLE HIGH COURT , THE COMMISSIONER OF INCOME TAX (APPEALS) HAS NO JURISDICTION TO INTERFERE WITH 6 ITA NO S. 1501 & 1236/PUN/2016, A.Y. 2005 - 06 THE FINDINGS OF SUPERIOR A PPELLATE A UTHORITY. THE REVENUE HAS NOT PLACED ON RECORD ANY DOCUMENT TO SHOW THAT THE REVENUE HAS FILED APPEAL AGAINST THE ORDER OF HONBLE BOMBAY HIGH COURT AND THERE IS DIRECTION OF THE HONBLE SUPREME COURT OF INDIA REVERSING / MODIFYING THE FINDING OF HONBLE HI GH COURT. UNDER SUCH CIRCUMSTANCES WE ARE OF CONSIDERED VIEW THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS TRAVELLED BEYOND THE SCOPE OF DIRECTIONS OF HONBLE HIGH COURT IN TAKING UP THE ISSUE WHICH HAS ALREADY BEEN DECIDED BY THE HONBLE HIGH COURT I N THE CASE OF ASSESSEE. ACCORDINGLY, THE GROUND NO. 4 RAISED IN THE APPEAL BY THE ASSESSEE IS ALLOWED. 9 . IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED AND THE APPEAL OF REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON WEDNESD AY, THE 25 TH DAY OF JU LY , 201 8 . SD/ - SD/ - ( . /D. KARUNAKARA RAO ) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 25 TH JU LY , 2018 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 2, PUNE 4. THE PR. COMMISSIONER OF INCOME TAX - 1, PUNE 5. , , , / DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. / / // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE