ITO, Satara V. Sahayadri Sahakari Sakhar Karkhana Ltd., Satara

ITA 1677/PUN/2012

• Counselvise Citation: 167724514 RSA 2012
• Duration Of Justice: 1 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 13-08-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: J S NAURATH
• Keywords: Business expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE: SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO . 1677 / P N/ 20 1 2 ASSESSMENT YEAR : 2008 - 09 INCOME TAX OFFICER, WARD - 1, SATARA V S. SAHYADRI SAHAKARI SAKHAR KARKHANA LTD., YASHWANTNAGAR, KARAD, DISTT. - SATARA (APPELLANT) (RESPONDENT) PAN NO. AAAAS 4070K APPELLANT BY: SHRI J.S. NAURATH RESPONDENT BY: SHRI M.K. KULKARNI DATE OF HEARING : 2 3 - 12 - 2013 DATE OF PRONOUNCEMENT : 30 - 12 - 2013 ORDER P ER R.S. PADVEKAR , JM : - TH IS APPEAL IS BY THE R EVENUE CHALLENGING THE IMPUGNED ORDER S OF THE LD. CIT(A) - I II , PUNE DATED 09 - 03 - 2012 FOR THE A.Y . 2008 - 09 . THE REVENUE HAS TAKEN FOLLOWING EFFECTIVE GROUNDS IN THE APPEAL: 1. (2). THE C OMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DELETING THE ADDITION OF RS.1,95,92,828/ - MADE IN THE ASSESSMENT WITH REFERENCE TO SALE OF SUGAR AT CONCESSIONAL RATES TO THE MEMBERS AND SHARE HOLDERS OF THE SOCIETY INSTEAD OF CONFIRMING SUCH ADDITION. 2. (3). T HE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN FAILING TO APPRECIATE THAT THE DIFFERENCE BETWEEN THE MARKET PRICE AND CONCESSIONAL PRICE OF SUGAR WAS NOT AT ALL IN THE NATURE OF BUSINESS EXPENDITURE, AND, ON THE CONTRARY, REPRESENTED DISTRIBUTION OF PROF ITS; AND, THEREFORE, THE DIFFERENCE HAD BEEN RIGHTLY TREATED AS PROFITS AND ASSESSED TO TAX. 2. WE HAVE HEARD THE PARTIES. THE ISSUE IN CONTROVERSY IS IN RESPECT OF THE ADDITION OF RS. 1,95,92,828/ - MADE BY THE ASSESSING OFFICER WITH REFERENCE TO SALE OF SUGAR AT CONCESSIONAL RATES TO ITS MEMBERS AND SHARE 2 ITA NO . 1677/PN/2012, SAHYADRI SAHAKARI SAKHAR KARKHANA LTD., SATARA HOLDERS. THE LD. CIT(A) DELETED THE ADDITION. NOW THE REVENUE IS IN APPEAL BEFORE US. 3. THE LD. COUNSEL SUBMITS THAT THE ISSUE IS TO GO BACK TO THE FILE OF THE CIT(A) FOR FRESH ADJUDICATION IN T HE LIGHT OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. KRISHNA SSK LTD. AND OTHERS (2012 ) 27 TAXMANN.COM 162 (SC). WE FIND THAT SIMILAR ISSUE HAS COME UP FOR CONSIDERATION BEFORE THE HON'BLE SUPREME COURT IN THE CASE OF KRISHNA SSK L TD. (SUPRA) AND THE HON'BLE SUPREME COURT REMITTED THE MATTER TO THE FILE OF THE CIT(A) WITH THE DIRECTION TO RE - CONSIDER THE MATTER IN THE LIGHT OF THE FOLLOWING DIRECTIONS. THE QUESTION, WHETHER THE ABOVE DIFFERENCE BETWEEN THE FAIR MARKET PRICE AND TH E CONCESSIONAL PRICE SHOULD OR SHOULD NSOT BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE SOCIETY, NEEDS TO BE RE - LOOKED BY CIT(A). APART FROM THE AFORESAID QUESTION, CIT(A) WOULD TAKE INTO ACCOUNT, WHETHER THE ABOVE MENTIONED PRACTICE OF SELLING SUGAR AT C ONCESSIONAL RATE HAS BECOME THE PRACTICE OR CUSTOM IN THE 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 FINA L PRODUCT, I.E. SUGAR, IS BEING FIXED FOR SALE OF FARMERS/CANE GROWERS/MEMBERS EACH YEAR ON MONTH TO - MONTH BASIS, APART FROM DIWALI? THERE 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 THE SIDES TO PRODUCE RELEVANT DOCUMENTS. FOR THE ABOVE REASONS, WE REMIT THE CASES TO CIT(A) TO DE - NOVO CONSIDER THE MATTER. 3 ITA NO . 1677/PN/2012, SAHYADRI SAHAKARI SAKHAR KARKHANA LTD., SATARA 4 . WE, ACCORDINGLY, RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HON'BLE SUPREME COURT , RESTORE THE ISSUE TO THE FILE OF THE CIT(A) FOR FRESH A DJUDICATI ON WITH DIRECTION TO DECIDE SAME IN THE LIGHT OF THE DIRECTIONS OF THE HON'BLE SUPREME COURT IN THE CASE OF KRISHNA SSK LTD. AND OTHERS (SUPRA). ACCORDINGLY, THE ORDER OF THE CIT(A) ON THIS ISSUE IS SET ASIDE AND GROUNDS TAKEN BY THE REVENUE ARE ALLOWED FOR THE STATISTICAL PURPOSES. 5. IN THE RESULT, THE REVENUES APPEAL IS ALLOWED FOR THE STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 30 - 12 - 2013 SD/ - SD/ - ( R.K. PANDA ) ( R.S. PADVEKAR ) ACCOUNTANT MEMBER JUDICIAL MEMBER RK /PS PUNE , DATED : 30 TH DECEMBER, 20 1 3 COPY TO 1 DEPARTMENT 2 ASSESSEE 3 THE CIT(A) - I II , PUNE 4 THE CIT - III, PUNE 5 THE DR, ITAT, B BENCH, PUNE . 6 GUARD FILE. //TRUE COPY// BY ORDER PRI VATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE