DCIT, Ahmednagar Circle, Ahmednagar V. Kopergaon SSK Ltd., Ahmednagar

ITA 2592/PUN/2012

• Counselvise Citation: 259224514 RSA 2012
• Duration Of Justice: 1 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-01-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 28-12-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Assessee Lawyers: K SRINIVASAN
• 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 S. 2592 & 2593 / P N/ 20 1 2 ASSESSMENT YEAR S : 200 8 - 09 & 2009 - 10 ASSTT. COMMISSI ONER OF INCOME TAX, AHMEDNAGAR CIRCLE, AHMEDNAGAR VS. KOPERGAON SAHAKARI SAKHAR KARKHANA LTD., GAUTAMNAGAR, AT - KOLPEWADI, TAL. - KOPERGAON, DISTT. - AHMEDNAGAR (APPELLANT) (RESPONDENT) PAN NO. AAATT3070H APPELLANT BY: SHRI S.P. WALIMBE RESPONDENT BY: SHRI K . SRINIVASAN DATE OF HEARING : 15 - 01 - 2014 DATE OF PRONOUNCEMENT : 27 - 01 - 2014 ORDER P ER R.S. PADVEKAR , JM : - TH ESE TWO A PPEAL S ARE FILED BY THE R EVENUE CHALLENGING THE IMPUGNED ORDER OF THE LD. CIT(A) - I, PUNE DATED 16 - 10 - 2012 FOR THE A.Y S . 200 8 - 09 & 2009 - 10. THE ISSUES AND FACTS ARE IDENTICAL IN BOTH THE ASSESSMENT YEARS HENCE, THESE APPEALS ARE DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. THE FIRST ISSUE IS IN RESPECT OF THE ADDITION MADE BY THE ASSESSING OFFICER T OWARDS THE KHODKI CHARGES OF RS.2,96,58,861/ - AND RS.2,04,78,433/ - IN THE A.YS. 2008 - 09 AND 2009 - 10 WHICH WAS DELETED BY THE LD. CIT(A). 2. AS NOTED BY THE ASSESSING OFFICER , THE ASSESSEES SOCIETY HAS PAID KHODKI CHARGES TO ITS MEMBERS AND NON - MEMBERS @ RS.50 PER M . T . FOR THE TOTAL QUANTITY OF CANE PURCHASED OF 593177.22 M.T. IN THE A.Y. 2008 - 09 AND 409569 M.T. IN THE A.Y. 2009 - 10. IN THE OPINION OF THE ASSESSING OFFICER , THE PAYMENT OF KHODKI CHARGES IS HIT BY SEC. 40A(2) OF THE ACT AS 2 ITA NO S. 2592 & 2593/PN/2012, KOPERGAON SAHAKARI SAKHAR KARKHANA LTD., AHMEDNAGAR IT IS EXCESSIVE AND UNREASONABLE PRICE PAID BY THE ASSESSEE TO ITS MEMBERS AND NON - MEMBERS FOR THE PURCHASES OF THE CANE. THE ASSESSING OFFICER MADE THE ADDITIONS DISALLOWING THE CLAIM OF THE KHODKI CHARGES MADE BY THE ASSESSEE. THE ASSESSEE CARRIED THE ISSUE BEFORE TH E LD. CIT(A) AND LD. CIT(A) DELETED THE ADDITION. NOW THE REVENUE IS IN APPEAL BEFORE US. 3. WE HAVE HEARD THE PARTIES. WE FIND THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HON'BLE HIGH COURT OF BOMBAY IN THE CA SE OF CIT VS. MANJARA SHETKARI S.S.K LTD. 301 ITR 191 (BOM.). WE, THEREFORE, CONFIRM THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND DISMISS THE RELEVANT GROUNDS TAKEN BY THE REVENUE. 4. THE NEXT ISSUE IS THE DISALLOWANCE MADE BY THE ASSESSING OFFICER OF R S.12,27,186/ - AND RS.66,05,464/ - IN THE A.YS. 2008 - 09 AND 2009 - 10 ON ACCOUNT OF DIFFERENCE BETWEEN THE MARKET PRICE OF SUGAR AND THE CONCESSIONAL PRICE AT WHICH SU GAR WAS SOLD/SUPPLIED TO THE CANE GROWERS WHICH HAS BEEN DELETED BY THE LD. CIT(A) , ALLOWING THE CLAIM OF THE ASSESSEE AS A BUSINESS EXPENDITURE. 5. WE HAVE HEARD THE PARTIES. BOTH THE PARTIES AGREED THAT THIS ISSUE HAS TO BE REMITTED TO THE FILE OF THE LD . CIT(A) FOR DE NOVO ADJUDICATION AFTER CONSIDERING THE DIRECTIONS OF THE HON'BLE SUPREME C OURT IN THE CASE OF CIT VS. KRISHNA SSK LTD. AND OTHERS IN CIVIL APPEAL NO. 6950 OF 2012 ETC. JUDGMENT DATED 25 - 09 - 2012 AS RELEVANT FACTS ARE NOT ON RECORD . THE IDENTICAL ISSUE HAS COME FOR CONSIDERATION BEFORE THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. KRISHNA SSK LTD. (SUPRA) AND THE HON'BLE SUPREME COURT HAS REMITTED THE ISSUE TO THE CIT(A) FOR FRESH ADJUDICATION AND THE DIRECTIONS OF THE HON'BLE SUPREME COURT ARE AS UNDER: 3 ITA NO S. 2592 & 2593/PN/2012, KOPERGAON SAHAKARI SAKHAR KARKHANA LTD., AHMEDNAGAR THE QUESTION, WHETHER THE ABOVE DIFFERENCE BETWEEN THE FAIR MARKET PRICE AND THE 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 SUG AR 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 T HE 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 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 S IDES TO PRODUCE RELEVANT DOCUMENTS. FOR THE ABOVE REASONS, WE REMIT THE CASES TO CIT(A) TO DE - NOVO CONSIDER THE MATTER. 6. W E, THEREFORE, RESPECTFULLY FOLLOWING THE DIRECTIONS OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. KRISHNA SSK LTD. (SUPRA) RESTORE THE ISSUE OF THE SALE OF SUGAR CANE AT THE CONCESSIONAL RATE TO THE FILE OF THE CIT(A) WITH DIRECTION TO RECONSIDER THE MATTER AFRESH AS PER THE DIRECTIONS GIVEN BY THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. KRISHNA SSK LTD. (SUPRA). WE, AC CORDINGLY, SET ASIDE THE ORDER OF THE LD. CIT(A) IN BOTH THE ASSESSMENT YEARS ON THIS ISSUE AND RELEVANT GROUNDS TAKEN BY THE REVENUE ARE ALLOWED FOR THE STATISTICAL PURPOSES. 4 ITA NO S. 2592 & 2593/PN/2012, KOPERGAON SAHAKARI SAKHAR KARKHANA LTD., AHMEDNAGAR 7. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE PARTLY ALLOWED FOR STATI STICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 27 - 01 - 2014 SD/ - SD/ - ( G.S. PANNU ) ( R.S. PADVEKAR ) ACCOUNTANT MEMBER JUDICIAL MEMBER RK /PS PUNE , DATED : 27 TH JANUARY, 2014 1 DEPARTMENT 2 ASSESSEE 3 THE CIT(A) - I, PUNE 4 THE CIT (A) , PUNE 5 THE DR, ITAT, B BENCH, PUNE . 6 GUARD FILE. //TRUE COPY// BY ORDER PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE