ACIT, Satara V. Ajinkyatara SSK Ltd, Satara

ITA 2418/PUN/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6756 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 06-12-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Keywords: Business expenditure

Judgement Text

INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO. 2418/PN/2012 (ASSESSMENT YEAR : 2009-10) ACIT, CIRCLE, SATARA .. APPELLANT VS. AJINKYATARA SAHAKARI SAHKAR KARKHANA LTD., A/P. SHAHUNAGAR, SHENDRE, TAL :SATARA, DIST : SATARA PAN NO.AAAAA0510E .. RESPONDENT ASSESSEE BY : SHRI PRAMOD SHINGTE DEPARTMENT BY : SHRI S.P. WALIMBE DATE OF HEARING : 11-06-2014 DATE OF PRONOUNCEMENT : 23-06-2014 ORDER PER R.S. PADVEKAR, JM : THIS APPEAL IS FILED BY THE REVENUE CHALLENGING THE IMPUGNED ORDER OF THE LD. CIT(A)-III, PUNE DATED 30-08-2012 FOR THE ASSESSMENT YEAR 2009-10. 2. THE REVENUE HAS TAKEN THE FOLLOWING EFFECTIVE GR OUNDS : 1. THE CIT(A) ERRED IN DELETING THE ADDITION OF RS .98,20,468/- MADE IN THE ASSESSMENT WITH REFERENCE TO SALE OF SU GAR AT CONCESSIONAL RATES TO THE MEMBERS AND SHAREHOLDERS OF THE SOCIETY INSTEAD OF CONFIRMING SUCH ADDITION. 2. THE CIT(A) 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 PROFITS; AND, THEREFORE , THE DIFFERENCE HAD BEEN RIGHTLY TESTED AS PROFITS AND ASSESSED TO TAX. 3. THE SOLITARY ISSUE WHICH ARISES FOR OUR CONSIDE RATION IS THE SALE OF SUGAR AT CONCESSIONAL RATES TO THE MEMBERS AND S HAREHOLDERS. 2 4. THE ASSESSEE IS A COOPERATIVE SOCIETY ENGAGED IN THE MANUFACTURE AND SALE OF SUGAR AND ITS BYE PRODUCT. THE RETURN FILED BY THE ASSESSEE WAS SELECTED FOR SCRUTINY AND ASSES SMENT HAS BEEN COMPLETED U/S.143(3) OF THE ACT. AS OBSERVED BY TH E ASSESSING OFFICER THE ASSESSEE HAS SOLD SUGAR AT CONCESSIONAL RATE TO THE FARMERS/CANE GROWERS. AS NOTED BY THE ASSESSING OF FICER, THE TOTAL SUGAR SOLD TO THE MEMBERS WAS TO THE EXTENT OF 1509 1 QUINTALS WHICH MARKET VALUE WAS RS.2,34,40,397/- BUT ACTUAL AMOUNT REALISED FROM THE MEMBERS AND NON-MEMBERS WAS TO THE EXTENT OF RS.1,36,19,929/- AND IN THE OPINION OF THE ASSESSIN G OFFICER THE ASSESSEE GAVE THE CONCESSION TO THE EXTENT OF RS.98 ,20,468/-. THE ASSESSING OFFICER MADE THE ADDITION TO THE TOTAL IN COME OF THE ASSESSEE BY OBSERVING THAT THE SAID CONCESSION WAS IN THE NATURE OF DISTRIBUTION OF THE PROFIT TO THE FARMERS/CANE GROW ERS. 5. MATTER WAS CARRIED BEFORE THE LD.CIT(A) AND THE LD.CIT(A) DELETED THE ADDITION. NOW THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD THE PARTIES. WE FIND THAT AN IDEN TICAL ISSUE HAS BEEN CONSIDERED BY THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. KRISHNA SSK LTD. AND OTHERS (2012) 27 TAXMANN.COM 1 62 (SC). THE HON'BLE SUPREME COURT HAS REMITTED THE MATTER TO TH E FILE OF THE CIT(A) WITH 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 THE CONCESSIONAL PRICE SHOULD OR S HOULD NSOT BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE SOCIET Y, NEEDS TO BE RE-LOOKED BY CIT(A). APART FROM THE AFORESAID QUESTION, CIT(A) WOULD TAK E INTO ACCOUNT, WHETHER THE ABOVE MENTIONED PRACTICE OF SE LLING SUGAR AT CONCESSIONAL RATE HAS BECOME THE PRACTICE OR CUS TOM 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 B ASIS THE QUANTITY OF THE FINAL 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 ACCOU NTS AND 3 VERIFY THE BASIS FOR SALE OF SUGAR AT CONCESSIONAL PRICE ON MONTH-TO-MONTH BASIS WE THEREFORE, KEEP ALL QUESTI ONS OF LAW AND FACTS OPEN. NEEDLESS TO ADD, THE CIT(A) WOULD GIVE LIBERTY TO B OTH THE SIDES TO PRODUCE RELEVANT DOCUMENTS. FOR THE ABOVE REASONS, WE REMIT THE CASES TO CIT(A) TO DE-NOVO CONSIDER THE MATTER. 7. WE, THEREFORE, RESPECTFULLY FOLLOWING THE AFORES AID JUDGMENT OF THE HON'BLE SUPREME COURT, RESTORE THE ISSUE TO THE FILE OF THE CIT(A) WITH DIRECTION TO DECIDE THE ISSUE IN ACCORDANCE WI TH THE ABOVE DIRECTIONS OF THE HON'BLE SUPREME COURT. IN THE RE SULT, THE RELEVANT GROUNDS ON THIS ISSUE ARE ALLOWED FOR THE STATISTIC AL PURPOSES. 8. IN THE RESULT, REVENUES APPEAL IS ALLOWED FOR S TATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 23-06-2014. SD/- SD/- (G.S. PANNU) (R.S. PAD VEKAR) ACCOUNTANT MEMBER JUDICIAL MEM BER PUNE DATED: 23 RD JUNE 2014 SATISH COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. CIT(A)-III, PUNE 4. CIT-III, PUNE 5. THE D.R, B PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY ITAT, PUNE BENCHES, PUNE