DCIT, Ichalkaranji Circle, Ichalkaranji V. Deshbhakta Ratnappana Kumbhar Panchaganga SSK Ltd., Ichalkaranji

ITA 2160/PUN/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 72442 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-12-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 01-11-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Assessee Lawyers: BABASAHEB A DESAI
• 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. 2 160 / P N/ 20 12 ASSESSMENT YEAR : 200 7 - 08 DY. COMMISSIONER OF INCOME TAX, ICH ALKARANJI CIRCLE , ICHALKARANJI, DIST. - KOLHAPUR VS. DESHBHAKTA RATNAPPANA KUMBHAR PANCHAGANGA SAHAKARI SAKHAR KHARKHANA LTD., A/P GANGANAGAR, ICHALKARANJI, TAL - HATKANANGLE, DIST. - KOLHAPUR (APPELLANT) (RESPONDENT) PAN NO. AAAAD0725G APPELLANT BY: SH RI S.P. WALIMBE RESPONDENT BY: SHRI BABASAHEB A. DESAI DATE OF HEARING : 0 3 - 12 - 2013 DATE OF PRONOUNCEMENT : 24 - 12 - 2013 ORDER P ER R.S. PADVEKAR , JM : - IN THIS APPEAL, THE REVENUE HAS CHALLENGED THE IMPUGNED ORDER OF THE LD. CIT(A) , KOLHAPUR DATE D 01 - 08 - 2012 FOR THE A.Y. 200 7 - 08. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) KOLHAPUR ERRED IN DELETING THE ADDITION OF RS.56,94,400/ - ON ACC OUNT OF SATE OF SUGAR AT CONCESSIONAL RATE TO ITS MEMBERS, AS IT IS NOTHING BUT AN APPROPRIATION OF PROFIT AND IN THE NATURE OF APPLICATION OF INCOME. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE & IN LAW, THE LD. CIT(A) KOLHAPUR HAS ERRED IN APPLYING THE DECISION OF BOMBAY HIGH COURT IN THE CASE OF CIT VS. KISANVIR SHETKARI SAHAKARI SAKHAR KARKHANA LTD. AND THE CBDT'S CIRCULAR NO. 117 DT. 22 - 08 - 1973 IS APPLICABLE TO THE ASSESSEE'S CASE AND ISSUE RAISED, WHEREAS THE CIRCULAR ISSUED IS REGARDING REBATE OR BONUS PASSED BY THE CONSUMER CO - OP STORES TO THEIR MEMBERS. THE ASSESSEE IS A SUGAR MILL AND NOT A CONSUMER STORE. 2. THE BRIEFLY STATED FACTS ARE AS UNDER. THE ASSESSEE IS A CO - OPERATIVE SOCIETY WHICH IS ENGAGED IN THE MANUFACTURING AND SALE OF SUGA R AND ITS BY - PRODUCTS. IT WAS NOTICED BY THE ASSESSING OFFICER THAT 2 ITA NO. 2160/PN/2012, DESHBHAKTA RATNAPPANA KUMBHAR PANCHAGANGA SAHAKARI SAKHAR KHARKHANA LTD., KOLHAPUR THE ASSESSEE HAS SOLD/ SUPPLIED SUGAR TO CANE GROWERS AT CONCESSIONAL RATE. IN THE OPINION OF THE ASSESSING OFFICER SUPPLY OF SUGAR AT CONCESSIONAL RATE AS AGAINST THE PREVALENT MARKET PR ICE IS NOTHING BUT AS APPROPRIATION OF PROFIT AND IN THE NATURE OF APPLICATION OF INCOME. THE ASSESSEE RELIED ON THE CBDT CIRCULAR NO. 117 DATED 22 - 08 - 1973 WHICH WAS ALSO EXAMINED BY THE ASSESSING OFFICER AND HE HAS NOTED THAT THE SAID CIRCULAR IS IN CONN ECTION WITH ALLOWANCE OF REBATE TO MEMBER BY A CONSUMER CO - OPERATIVE STORES LTD., AS BUSINESS EXPENDITURE AND HENCE, THE SAID CIRCULAR IS NOT APPLICABLE TO THE ASSESSEES SOCIETY. THE ASSESSING OFFICER WORKED OUT THE DIFFERENCE AFTER CONSIDERING THE FAIR MARKET PRICE AND THE PRICE WHICH WAS RECOVERED FROM THE CANE GROWERS PER QUINTAL AND DIFFERENCE WAS WORKED OUT TO RS.56,94,400/ - . THE ASSESSING OFFICER MADE THE ADDITION TO THAT EXTENT TO THE TOTAL INCOME OF THE ASSESSEE. THE LD. CIT(A) DELETED THE SAID ADDITION FOLLOWING THE DECISION OF THE JURISDICTIONAL HIGH COURT IN APPEAL IN THE ASSESSEE OWN CASE BEING ITA NO. 998 OF 2009. THE REVENUE HAS CHALLENGED THE ACTION OF THE LD. CIT(A) DELETING THE ADDITION BEFORE THE TRIBUNAL. 3. WE HAVE HEARD THE PARTI ES. WE FIND THAT THE IDENTICAL ISSUE HAS COME FOR THE CONSIDERATION BEFORE THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. KRISHNA SSK LTD. AND ORS. IN CIVIL APPEAL NO. 6950 OF 2012 ETC. JUDGMENT DATED 25 - 09 - 2012. THE HON'BLE SUPREME COURT HAS REMITTED THE MATTER TO THE FILE OF THE CIT(A) WITH DIRECTION TO RECONSIDER THE MATTER IN THE LIGHT OF THE FOLLOWING DIRECTIONS: THE QUESTION, WHETHER THE ABOVE DIFFERENCE BETWEEN THE FAIR MARKET PRICE AND THE CONCESSIONAL PRICE SHOULD OR SHOULD NSOT BE ADDED TO TH E 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 CONCESSIONAL 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 FINAL PRODUCT, I.E. SUGAR, IS BEING FIXED FOR SALE OF FARMERS /CANE 3 ITA NO. 2160/PN/2012, DESHBHAKTA RATNAPPANA KUMBHAR PANCHAGANGA SAHAKARI SAKHAR KHARKHANA LTD., KOLHAPUR 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 T HE 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 R EMIT THE CASES TO CIT(A) TO DE - NOVO CONSIDER THE MATTER. 4. WE, THEREFORE, FOLLOWING THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. KRISHNA SSK LTD. (SUPRA) SET ASIDE THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND RESTORE THE ISSUE TO TH E FILE OF THE CIT(A) TO DECIDE THE SAME DE NOVO IN THE LIGHT OF DIRECTIONS GIVEN BY THE HON'BLE SUPREME COURT (SUPRA) . ACCORDINGLY, THE GROUNDS TAKEN BY THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. 5 . IN THE RESULT, THE REVENUES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 24 - 12 - 20 1 3 SD/ - SD/ - ( R.K. PANDA ) ( R.S. PADVEKAR ) ACCOUNTANT MEMBER JUDICIAL MEMBER RK /PS PUNE , DATED : 24 TH DECEMBER, 20 1 3 COPY TO 1 DEPAR TMENT 2 ASSESSEE 3 THE CIT(A ), KOLHAPUR 4 THE CIT, KOLHAPUR 5 THE DR, ITAT, B BENCH, PUNE . 6 GUARD FILE. //TRUE COPY// BY ORDER PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL , PUNE