Assistant Commissioner of Income-tax, V. Shri Warana Sahakari Dudh Utpadak Prakriya Sangh Ltd., Kolhapur

ITA 2170/PUN/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8670 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 9 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 26-06-2019
• Assessment Year: 2012-2013
• Appeal Filed On: 16-09-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VISHWAS MUNDHE
• Keywords: Opportunity of being heard
• Section: 143(3); 37(1)

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI ANIL CHATURVEDI, AM AND SHRI PARTHA SARATHI CHAUDHURY, JM . / ITA NO.2170/PUN/2016 / ASSESSMENT YEAR : 2012-13 THE ASST.COMMISSIONER OF INCOME TAX, CIRCLE 1, KOLHAPUR. . / APPELLANT V/S SHRI WARANA SAHAKARI DUDH UTPADAK PRAKRIYA SANGH LTD., 942/B, TATYASAHEB, KORENAGAR, A/P, WARNANAGAR, TAL PANHALA, KOLHAPUR. PAN : AAABS0290E. . / RESPONDENT ASSESSEE BY : SHRI M.K. KULKARNI REVENUE BY : SHRI VISHWAS MUNDHE. / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY THE REVENUE IS EMANATING OUT OF THE O RDER OF COMMISSIONER OF INCOME TAX (A) 1, KOLHAPUR DATED 14.07 .2016 FOR THE ASSESSMENT YEAR 2012-13. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- ASSESSEE IS A CO-OPERATIVE SOCIETY REGISTERED UNDER TH E PROVISIONS OF THE MAHARASHTRA CO-OPERATIVE SOCIETIES ACT, 1960 AND / DATE OF HEARING : 26.06.2019 / DATE OF PRONOUNCEMENT: 12.07.2019 2 ENGAGED IN THE BUSINESS OF PROCUREMENT OF MILK AND MANUF ACTURING OF MILK PRODUCTS. ASSESSEE ELECTRONICALLY FILED ITS RETURN OF INC OME FOR A.Y. 2012-13 ON 29.09.2012 DECLARING LOSS OF RS.4,04,70,349/-. TH E CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER DT.09.03.2015 AND THE TOTAL INCOME WAS DETERMINED AT RS.1,39,56,190/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO VIDE ORD ER DT.14.07.2016 (IN APPEAL NO.KOP/12/15-16) DECIDED THE AP PEAL IN FAVOUR OF ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), R EVENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, WHETHER THE LEARNED CIT (APPEALS) WAS JUSTIFIED IN DELETING THE ADDITION OF RS. 2,35,60,695/- MADE ON ACCOUNT OF DISTRIBUTION OF PR OFIT IN THE GRAB OF PAYMENT OF ADDITIONAL PRICE FOR PURCHASE OF MILK? 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, WHETHER THE LEARNED CIT (APPEALS) WAS CORRECT IN APPRECIATI NG THE FACT THAT ADDITIONAL PURCHASE PRICE WAS PAID ONLY TO THE MEMB ERS OF THE SOCIETY AFTER DETERMINATION OF PROFIT EARNED BY THE ASSESSE E SOCIETY AT THE END OF THE FINANCIAL YEAR, WHICH AMOUNTS TO DISTRIBUTION OF PR OFITS IN TERMS OF BYE- LAWS OF THE ASSESSEE SOCIETY ? 3. BOTH THE GROUNDS BEING INTER-CONNECTED ARE CONSIDERED TOGE THER. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO NOTIC ED THAT ASSESSEE HAD DEBITED RS.2,35,60,695/- ON ACCOUNT OF MILK RATE DIFFERENCE THE ASSESSEE WAS ASKED TO EXPLAIN THE CLAIM OF IT S ALLOWABILITY. TO THE QUERY OF AO, ASSESSEE SUBMITTED THAT IT HAD PAID TO THE MEMBERS OF THE ASSESSEE SOCIETY EXCESS PRICE TO IND UCE THEM TO SUPPLY THE MAXIMUM MILK TO THE ASSESSEE SOCIETY FOR THE PURPOSE OF ITS BUSINESS. IT WAS FURTHER SUBMITTED THAT THE ISSUE HAS B EEN DECIDED IN ASSESSEES FAVOUR BY THE HONBLE BOMBAY HIGH COURT. TH E SUBMISSIONS OF THE ASSESSEE WERE NOT FOUND ACCEPTABLE TO THE AO IN VIEW OF THE FACT 3 THAT AGAINST THE ORDER OF HONBLE MUMBAI HIGH COURT, DEPA RTMENT HAD FILED SPECIAL LEAVE PETITION BEFORE THE HONBLE APEX COURT. AO THEREFORE DISALLOWED EXCESS MILK PRICE OF RS.2,35,60,695/- U /S 37(1) OF THE ACT AND MADE ITS ADDITION. AGGRIEVED BY THE ORDER O F AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO DECIDED THE ISSUE IN ASSESSEES FAVOUR BY OBSERVING AS UNDER : 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E ASSESSING OFFICER NOTICED THAT THE APPELLANT HAD DEBITED AN AMOU NT OF RS. 2,35,60,695/- AS MILK RATE DIFFERENCE IN ITS PROFIT A ND LOSS ACCOUNT. IN THIS CONNECTION THE APPELLANT EXPLAINED BEFO RE THE ASSESSING OFFICER THAT THE SAID SUM WAS PAID TO MEMBE RS OF THE APPELLANT SOCIETY TO INDUCE THEM TO SUPPLY THE MAXIMU M MILK TO THE APPELLANT AND THEREFORE, THE ABOVE AMOUNT WAS F OR THE PURPOSES OF ITS BUSINESS. NOT ACCEPTING THE CONTENTION S OF THE APPELLANT, THE ASSESSING OFFICER PROCEEDED TO DISALLOW THE SUM OF RS.2,35,60,695/ - AS EXCESS MILK PRICE. 5. BEFORE ME, THE APPELLANT CONTENDED THAT THE SOCIET Y FIXED A RATE FOR PURCHASE OF MILK IN LEAN PERIOD AND FLUSH PERI OD WHICH IS PAID TO MILK SUPPLIERS AT INTERVAL OF 10 DAYS. A HIG HER RATE PER LITER IS FIXED AND PAID AT THE END OF THE YEAR TAKING IN TO CONSIDERATION THE RATES GIVEN BY OTHER SOCIETY AND P RIVATE DAIRIES. THE AMOUNT OF MILK RATE DIFFERENCE WAS FIXED BY THE BOARD OF DIRECTORS AND A PROVISION FOR THE SAME WAS MADE IN THE BOOKS AS ON 31 ST MARCH BY DEBITING THE SAME TO MILK PURCHASE ACCOUNT AND CREDITING IT TO MILK BILLS PAYABLE A CCOUNT. THEREFORE, IT WAS CONTENDED THAT SINCE MILK RATE DIF FERENCE WAS PAID AS A PART OF PURCHASE OF MILK IT WAS PURELY BUSIN ESS EXPENDITURE. 6. I HAVE CONSIDERED THE APPELLANT'S SUBMISSION. I FIN D THAT THIS GROUND IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE HONOURABLE BOMBAY HIGH COURT IN THE CASE OF CIT V/S SOLAPUR DIST. CO-OP. MILK PRODUCERS AND PROCESS UNION LTD. REPORTED IN (2009) 180 TAXMAN 533 (BOM) AND ALSO IN THE APPELLANT'S OWN CASE FOR ASSESSMENT YEAR 2004- 05 AND EARLIER ASSESSMENT YEARS. THUS, RESPECTFULLY FOLLOWING THE ABOVE DECIS IONS, THE ADDITION MADE ON ACCOUNT OF MILK RATE DIFFERENCE IS DELETED FOR THE YEAR UNDER APPEAL. IN VIEW OF THE ABOVE, THE GROUND OF APPEAL IS ALLOWED. 8. IT IS PERTINENT TO NOTE THAT THE ASSESSING OFFIC ER HAS MENTIONED IN THE ASSESSMENT ORDER THAT HE WAS NOT FOLLOWING T HE DECISION OF HONOURABLE BOMBAY HIGH COURT JUDGMENT (SUPRA) ON THE GROUND THAT THE DECISION OF HON'BLE BOMBAY HIGH COURT (SUPR A) HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND SLP HAS BEEN FILE D BEFORE HONBLE SUPREME COURT, WHICH IS PENDING. IN OTHER WO RDS, THE ADDITION HAS BEEN MADE SIMPLY TO KEEP THE ISSUE ALIVE . AGGRIEVED BY THE ORDER OF LD.CIT(A), REVENUE IS NOW IN APPEAL BEFORE US. 4 5. BEFORE US, LD. D.R. SUPPORTED THE ORDER OF AO. LD. A.R . ON THE OTHER HAND, REITERATED THE SUBMISSIONS MADE BEFORE AO AN D LD.CIT(A) AND FURTHER SUBMITTED THAT IDENTICAL ISSUE WAS RAISED BY T HE DEPARTMENT IN ASSESSEES OWN CASE IN A.YS. 2007-08, 2009 -10 AND 2011-12 IN ITA NOS.1094 TO 1096/PUN/2016 ORDER DT.17.08 .2018 WHEREIN THE CO-ORDINATE BENCH OF THE TRIBUNAL HAS REMITT ED THE ISSUE BACK TO THE FILE OF LD.CIT(A) TO EXAMINE THE ISSUE IN THE LIGHT OF THE RATIO OF THE HONBLE APEX COURT IN ASSESSEES OWN CASE. HE P OINTED TO THE RELEVANT FINDINGS. HE ALSO PLACED ON RECORD THE COPY OF T HE AFORESAID DECISION. HE THUS SUPPORTED THE ORDER OF LD.CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT T O THE ADDITION ON ACCOUNT OF HIGHER MILK PRICE PAID BY THE ASSESSEE. WE FIND THAT IDENTICAL ISSUE WAS RAISED BY THE DEPARTMENT IN ASSESSEE S OWN CASE IN A.YS. 2007-08, 2009-10 AND 2011-12 IN ITA NOS.1094 TO 1096/PUN/2016 ORDER DT.17.08.2018 WHEREIN THE CO-ORDINA TE BENCH OF THE TRIBUNAL HAS REMITTED THE ISSUE BACK TO THE FILE OF LD .CIT(A) TO DECIDE THE ISSUE WITH THE DIRECTIONS CONTAINED THEREIN. T HE RELEVANT OBSERVATIONS OF ITAT ARE AS UNDER : 5. WE HEARD BOTH THE SIDES AND PERUSED THE ORDERS OF THE REVENUE AND THE JUDGMENT OF HONBLE SUPREME COURT DATED 23-08-2 011 IN THE ASSESSEES OWN CASE REMANDING THE ISSUE TO THE FILE OF CIT(A). ON PERUSING THE FACTS OF THE CASE, WE FIND THE SAID JU DGMENT OF HONBLE APEX COURT DATED 23-08-2011 WAS NOT REFERRED BY THE ASSE SSEE WHILE ADJUDICATION OF THE ISSUE BEFORE THE CIT(A). CIT(A) PASSED THE ORDER ON 07- 03-2016. CONSIDERING THE JUDGMENT OF HONBLE APEX C OURT IN ASSESSEES OWN CASE, WHICH WAS NOT CONSIDERED AT ALL, WE ARE O F THE OPINION THAT THE ISSUE SHOULD BE REFERRED BACK TO THE FILE OF CIT(A) AS REQUESTED BY THE LD. COUNSEL FOR THE ASSESSEE. CIT(A) IS DIRECTED TO EXA MINE THE ISSUE AND THE PECULIAR FACTS OF THE PRESENT CASE AND APPLY THE RA TIO LAID DOWN BY THE HONBLE APEX COURT DATED 23-08-2011 IN THE ASSESSEE OWN CASE AS WELL AS THE JURISDICTIONAL HIGH COURT JUDGMENT IN THE CA SE OF CIT VS. SOLAPUR 5 DISTRICT CO-OP. MILK PRODUCERS & PROCESS UNION LTD. (SUPRA). CIT(A) SHALL GRANT REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE WHILE ADJUDICATING THE 3 APPEALS FILED BY THE REVENUE. AC CORDINGLY, THE GROUNDS/ADDITIONAL GROUNDS RAISED BY THE REVENUE AR E ALLOWED FOR STATISTICAL PURPOSES. 7. BEFORE US, SINCE BOTH THE PARTIES HAVE ADMITTED THAT THE FACTS IN THE YEAR UNDER APPEAL ARE IDENTICAL TO THE FACTS IN THE CASE OF ITA NOS.1094 TO 1096/PUN/2016 IN A.YS. 2007-08, 2009-10 AND 2011-12 (SUPRA) FILED BY THE REVENUE IN ASSESSEES OWN CASE, WE TH EREFORE FOLLOWING THE ORDER OF CO-ORDINATE BENCH OF THE TRIBUNAL IN A SSESSEES OWN CASE IN ITA NOS.1094 TO 1096/PUN/2016 (SUPRA) AND FOR SIMILAR REASONS, RESTORE THE ISSUE BACK TO THE FILE OF LD.CIT(A) WIT H SIMILAR DIRECTIONS. NEEDLESS TO STATE THAT LD.CIT(A) SHALL GRANT AD EQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. ASSESSEE IS ALS O DIRECTED TO PROMPTLY FURNISH ALL THE DETAILS CALLED FOR BY THE LOWER AUTH ORITIES. IN VIEW OF OUR DECISION TO RESTORE THE ISSUE TO LD.CIT(A), WE A RE NOT ADJUDICATING ON MERITS THE GROUNDS OF THE APPEAL RAISED BY THE REVEN UE. THUS, THE GROUNDS OF THE REVENUE ARE ALLOWED FOR ST ATISTICAL PURPOSES. 8. IN THE RESULT, THE APPEAL OF REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THE 12 TH DAY OF JULY, 2019. SD/- SD/- ( PARTHA SARATHI CHAUDHURY ) ( ANIL CHATURVEDI ) ! / JUDICIAL MEMBER '! / ACCOUNTANT MEMBER PUNE; DATED : 12 TH JULY, 2019. YAMINI 6 #$%&'('% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-1, KOLHAPUR. CIT-1, KOLHAPUR. '#$ %%&',) &', / DR, ITAT, A PUNE; $,-./ GUARD FILE. / BY ORDER // TRUE COPY // /01%2&3 / SR. PRIVATE SECRETARY ) &' , / ITAT, PUNE.