ITO, Ward 1(1), Kolhapur V. Bhogawati Sahakari Sakhar Karkhana Ltd., Kolhapur

ITA 2138/PUN/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 5294 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 30-10-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Assessee Lawyers: PRANJAL S PHADNIS
• Keywords: Business expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.2137/PN/2012 (ASST. YEAR: 2007-08) DY.CIT, CIRCLE-1, KOLHAPUR APPELLANT VS. BHOGAWATI SAHAKARI SAKHAR KARKHANA LTD., SHAHUNAGAR, PARITE, TAL-KAGAL, DIST. KOLHAPUR PAN:AAAAB3731R RESPONDENT ITA NO.2138/PN/2012 (ASST. YEAR: 2008-09) ITO, WARD 1(1), KOLHAPUR APPELLANT VS. BHOGAWATI SAHAKARI SAKHAR KARKHANA LTD., SHAHUNAGAR, PARITE, TAL-KAGAL, DIST. KOLHAPUR PAN:AAAAB3731R RESPONDENT APPELLANT BY : SHRI S.P. WALIMBE RESPONDENT BY : SHRI PRANJAL S. PHADNIS DATE OF HEARING : 11-11-2013 DATE OF PRONOUNCEMENT : 13-11-2013 ORDER PER R.S. PADVEKAR, JM: IN THESE APPEALS, THE REVENUE HAS CHALLENGED THE I MPUGNED ORDER OF THE LD. CIT(A), KOLHAPUR DATED 13-08-2012 FOR TH E A.YS. 2007-08 AND 2 2008-09. IN BOTH THE APPEALS, THE REVENUE HAS TAKE N THE FOLLOWING GROUNDS; 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE CIT(A) ERRED IN DELETING THE ADDITION M ADE ON ACCOUNT OF SALE OF SUGAR AT CONCESSIONAL RATE TO THE MEMBER S RELYING UPON THE DECISION OF HONBLE ITAT, PUNE IN THE CASE OF SHRI. CHHATRAPATI SHAHU SSK LTD., KAGAL, DIST-KOLHAPUR, I N ITA NO.1925/PN/90 AND ON CIRCULAR NO.117 OF CBDT? 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) FAILED TO APPRECIATE THAT TH E DECISION RENDERED BY THE HONBLE ITAT IN THE CASE OF SHRI CH HATRAPATI SHAHU SSK LTD., KAGAL, DIST.-KOLHAPUR HAS NOT BEEN ACCEPTED BY THE DEPT AND ON THE ISSUE SLP IS PENDING BEFORE THE HONBLE S.C.? 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN RELYING UPON CIRCUL AR NO.117 OF CBDT WHICH IS ISSUED IN THE CASE OF A CONSUMER CO-O P. STORE IN RESPECT OF CLAIM OF DEDUCTION ON REBATE ALLOWED TO THE CUSTOMERS ON PURCHASE MADE FROM STORES, WHEREAS THE INSTANT CASE INVOLVES CONCESSION ON SALE PRICE OF SUGAR MAN UFACTURED BY THE ASSESSEE, WHICH WOULD LEAD TO INCURRING OF L OSSES BY THE ASSESSEE AS AGAINST INCREASE OF SALE IN THE CASE OF CONSUMER CO-OPERATIVE SOCIETY? 2. THE BRIEFLY STATED FACTS ARE AS UNDER. THE ASSE SSEE IS A CO- OPERATIVE SOCIETY WHICH IS IN THE MANUFACTURE AND S ALE OF SUGAR AND ITS BY-PRODUCTS. THE ASSESSEES CASE WAS SELECTED FOR SCRUTINY AND ASSESSMENTS HAVE BEEN COMPLETED U/S.143(3) OF THE I .T ACT. THE ASSESSING OFFICER MADE THE ADDITIONS AS UNDER WHICH WAS ON ACCOUNT OF SALE OF SUGAR AT CONCESSIONAL RATES. ASST. YEAR AMOUNT 2007-08 RS.2,55,56,881/- 2008-09 RS.1,65,02,424/- THE ASSESSEE CHALLENGED THE ADDITIONS BEFORE THE LD . CIT(A). THE LD. CIT(A) DELETED THE ADDITIONS IN BOTH THE ASSESS MENT YEARS. 3 3. WE HAVE HEARD THE PARTIES AND PERUSED THE RECOR D. THE AO HAD MADE THE SAID ADDITIONS IN RESPECT OF DIFFERENCE BE TWEEN FAIR MARKET PRICE AND THE CONCESSIONAL PRICE AT WHICH SUGAR WAS SOLD TO ASSESSEES MEMBERS TO BE DISTRIBUTION OF PROFITS OF THE KARKHA NA. BEFORE THE LD. CIT(A), THE DECISION OF THE HONBLE HIGH COURT, MUM BAI IN THE CASE OF TERANA SHETKARI SAHAKARI SAKHAR KARKHANA LTD., DHOK I VS. CIT WAS CITED STATING THAT THE DEPARTMENT HAD NOT PRESSED THIS IS SUE AT THE TIME OF HEARING WHICH IMPLIED THAT IT HAD BEEN ACCEPTED THE DECISION OF THE LOWER AUTHORITY. THE AO REJECTED THE CONTENTION BY NOTIN G THAT IN THE CASE OF TERANA SHETKARI SAHAKARI SAKHAR KARKHANA LTD., DHOK I VS. CIT NON- BUSINESS EXPENSES DISALLOWED BY THE AO WAS ALLOWED AS BUSINESS EXPENSES BY THE TRIBUNAL, WHEREAS, IN THE ASSESSEE S CASE THE CONCESSIONAL RATES WAS NOTHING BUT ITS APPROPRIATIO N OF PROFITS. THE LD. CIT(A) RELIED ON THE DECISION OF ITAT, PUNE IN THE CASE OF SHRI. CHHATRAPATI SHAHU SSK LTD., KAGAL, DIST-KOLHAPUR (I TA NO.1925/PN/90) AND THE CIRCULAR OF THE CBDT NO.117 (1974) 094 ITR (STAT)0001A AND ALLOWED THE CLAIM OF THE ASSESSEE. THE LD. COUNSEL WAS FAIR ENOUGH TO SUBMIT THAT IN THE CASE OF CIT VS. KRISHNA SAHAKARI SAKHAR KARKHANA LTD. & OTHERS (2012) 80 DTR 298 (SC), ON AN IDENTIC AL ISSUE THE MATTER BEEN SET ASIDE WITH A DIRECTION TO ASCERTAIN WHETHE R THE AFORESAID PRACTICE OF SELLING THE SUGAR AT CONCESSIONAL RATES TO THE MEMBERS HAS BECOME A PRACTICE AND CUSTOM IN THE CO-OPERATIVE SO CIETY INDUSTRY AND WHETHER ANY RESOLUTION HAS BEEN PASSED BY THE STATE GOVERNMENT SUPPORTING THIS PRACTICE AND TO CONSIDER ON WHAT BA SIS THE QUANTITY OF SUGAR IS BEING FIXED FOR SALE TO FARMERS / CANE GRO WERS / MEMBERS EACH YEAR ON MONTH TO MONTH BASIS APART FROM THE VALUE. 4. AS THE ISSUE BEFORE US IS AN IDENTICAL EVEN ON F ACTS WHICH WAS BEFORE THE HONBLE SUPREME COURT IN THE CASE OF KRI SHNA SAHAKARI SAKHAR KARKHANA LTD. & OTHERS (SUPRA), WE THEREFORE , CONSIDER IT FIT TO RESTORE THE ISSUE TO THE FILE OF THE LD. CIT(A) TO DECIDE THE SAME IN DE NOVO AFTER CONSIDERING THE DECISION OF THE HONBLE SUPR EME COURT IN THE CASE OF KRISHNA SAHAKARI SAKHAR KARKHANA LTD. & OTH ERS (SUPRA). NEEDLESS TO SAY LD. CIT(A) SHOULD GIVE AN OPPORTUNI TY OF BEING HEARD TO 4 THE ASSESSEE. ACCORDINGLY, WE SET ASIDE THE ORDERS OF LD. CIT(A) IN BOTH THE ASSESSMENT YEARS AND RESTORE THE MATTERS BACK T O THE FILE OF THE CIT(A) IN THE LIGHT OF ABOVE DIRECTIONS. 5. IN THE RESULT, REVENUES APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS THE 13 TH DAY OF NOVEMBER, 2013. SD/- SD/- (G.S. PANNU) (R.S. PADVEKAR) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED 13 TH NOVEMBER, 2013 GCVSR COPY TO:- 1) DEPARTMENT, 2) ASSESSEE 3) THE CIT(A), KOLHAPUR 4) THE DR, B BENCH, I.T.A.T., PUNE 5) GUARD FILE //TRUE COPY// BY ORDER SR. PRIVATE SECRETARY ITAT PUNE BENCHES, PUNE