Eco Cane Sugar Energy Limited, Kolhapur V. Assistant Commissioner of Income-tax, Circle - 2, Kolhapur

ITA 2982/PUN/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2709 (ITAT-PUNE)
• Duration Of Justice: 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 14-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJAY DHOKE
• Assessee Lawyers: PRASANN A L JOSHI
• Keywords: Commercial expediency

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT . / ITA NO.2982/PUN/2017 / ASSESSMENT YEAR : 2011-12 ECO CANE SUGAR ENERGY LTD., A/P. MHALUNGE, TAL. CHANDGAD, DIST. KOLHAPUR 416502 PAN : AABCN7682D /APPELLANT VS. ACIT, CIRCLE-2, KOLHAPUR . /RESPONDENT ASSESSEE BY : SHRI PRASANNA L. JOSHI REVENUE BY : SHRI AJAY DHOKE / DATE OF HEARING : 08.11.2018 / DATE OF PRONOUNCEMENT: 08.11.2018 / ORDER PER R.S.SYAL, VP : THIS APPEAL BY THE ASSESSEE IS ARISING OUT OF ORDER PASSE D BY THE CIT(A)-2, KOLHAPUR, DATED 01-09-2017 IN RELATION TO TH E A.Y. 2011-12. 2. THIS APPEAL IS TIME-BARRED BY 6 DAYS. THE ASSESSEE HAS FILED AN AFFIDAVIT EXPLAINING THE REASONS FOR THE DELAY, WITH WHICH I AM SATISFIED. THE LD. DR DID NOT RAISE ANY OBJECTION SERIOUSLY. I, THEREFORE, CONDONE THE DELAY AND ADMIT THE APPEAL FOR DISP OSAL ON MERITS. 3. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAINST THE CONFIRMATION OF DISALLOWANCE OF RS.1,21,56,000/- OUT OF PAYMENT MADE FOR SUGARCANE PURCHASES. ITA NO.2982/PUN/2017 ECO CANE SUGAR ENERGY LIMITED 2 4. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASS ESSEE IS A PUBLIC LIMITED COMPANY ENGAGED IN THE BUSINESS OF PRODUCT ION OF WHITE CRYSTAL SUGAR. THE ASSESSEE FILED THE RETURN DECLA RING LOSS OF RS.4.43 CRORE (ROUNDED OFF) AS AGAINST THE GROSS TURNOVER OF RS.61.21 CRORE (ROUNDED OFF). THE AO OBSERVED DURING THE COURSE OF ASSESSMENT PROCEEDINGS THAT THE ASSESSEE CRUSHED 219 106 MT OF SUGARCANE FOR THE SUGAR SEASON DURING THE YEAR UNDER CONSIDERA TION. THE SUGARCANE WAS PURCHASED @ RS.1800/- PER MT. THE AO FOUND FAIR & REMUNERATIVE PRICE (FRP) PER MT OF SUGARCANE AT RS.1744.52. IN ADDITION, THE ASSESSEE INCURRED SUGARCANE HARVESTING AND TRANSPORTATION EXPENSES DURING THE YEAR AT RS.10.98 CRO RE AND ODD, WHICH TRANSLATED INTO A SUM OF RS.501.25 PER MT. THE AO O PINED THAT SUCH AMOUNT OF HARVESTING AND TRANSPORTATION WAS LIABLE TO BE REDUCED FROM THE FRP. HE, THEREFORE, WORKED OUT FRP MINU S HARVESTING AND TRANSPORTATION EXPENSES AT RS.1243.27 PE R MT. THE DIFFERENCE BETWEEN THE TWO PRICES NAMELY, THE ACTUAL PRICE PAID AND FRP (AFTER ADJUSTMENT OF HARVESTING AND TRANSPORTATION E XPENSES) OF CANE AT RS.55.48/- PER MT WAS MULTIPLIED WITH TOTAL QUANTITY OF CANE CRUSHED DURING THE YEAR AT 219106 PER MT TO FIND OUT T HE ALLEGED EXCESS CANE PRICE PAID BY THE ASSESSEE AT RS.12,16,96,081 /-. ON BEING CALLED UPON TO EXPLAIN AS TO WHY THE EXCESS PRICE B E NOT DISALLOWED, THE ASSESSEE SUBMITTED THAT IT WAS FOLLOWING A TRANSPARENT PROCEDURE FOR PAYMENT OF SUGARCANE PURCHA SE PRICE WHICH WAS DIRECTLY GOING INTO THE BANK ACCOUNT OF THE FAR MERS. THE ASSESSEE FURNISHED THE DETAILS OF SUGARCANE PURCHASES. N OT CONVINCED WITH THE ASSESSEES SUBMISSION AND RELYING ON AN ORDER BY DEPARTMENT OF FOOD AND PUBLIC DISTRIBUTION, MINISTRY OF CONSUMER AFFAIRS, FOOD AND PUBLIC DISTRIBUTION, THE AO MADE AN ADDITION OF RS.12,16,96,081/-. THE LD. CIT(A) GOT CONVINCED W ITH ITA NO.2982/PUN/2017 ECO CANE SUGAR ENERGY LIMITED 3 THE ASSESSEES CONTENTION THAT THE AMOUNT OF HARVESTI NG AND TRANSPORTATION EXPENSES INCURRED BY THE ASSESSEE WAS ELIGIBLE FOR SEPARATE DEDUCTION, BUT HE DID NOT ACCEPT THE ACTUAL PR ICE AS GENUINE AND WENT THE FRP. THAT IS HOW, HE SUSTAINED ADD ITION OF RS.1,21,56,000/- BEING THE DIFFERENCE BETWEEN FRP AT RS.1744 .52 PER MT AND THE ACTUAL PURCHASE PRICE OF SUGARCANE AT R S.1800/- PER MT. THE ASSESSEE IS AGGRIEVED BY THE CONFIRMATION OF ADDIT ION OF RS.1,21,56,000/-. 5. I HAVE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH T HE RELEVANT MATERIAL ON RECORD. IT IS NOTED THAT THE LD. CI T(A) REDUCED THE ADDITION. THE LD. DEPARTMENTAL REPRESENTATIVE HAS NOT BROUGHT TO MY NOTICE THE FACTUM OF THE REVENUE HAVING FILED ANY AP PEAL AGAINST THE RELIEF ALLOWED IN THE FIRST APPEAL. THE ONLY CON TROVERSY WHICH, THUS, SURVIVES IS AGAINST THE DIFFERENCE IN CANE PRIC E PAID BY THE ASSESSEE AT RS.1800/- PER MT AND FRP OF RS.1744.52 PER MT. THE AO HELD THAT THE ASSESSEE OUGHT TO HAVE PURCHASE D SUGARCANE FROM FARMERS @ RS.1744.52 PER MT. THE ASSESSEE SUBMITTED THAT FRP FIXED BY THE GOVERNMENT IS THE MINIMUM PRICE AND THE RE IS NO EMBARGO ON PAYING A HIGHER PRICE TO THE CANE GROWERS. IN THIS CONNECTION, THE LD. DR HAS DRAWN MY ATTENTION TOWARDS T HE SUGARCANE (CONTROL) ORDER 1966, DATED 16-07-1966 ISSUED BY MINISTRY OF AGRICULTURAL & IRRIGATION, DEPARTMENT OF FOOD. PA RA 3 OF SUCH ORDER DEFINES FAIR AND REMUNERATIVE PRICE OF SUGAR CANE PAYABLE BY PURCHASE OF SUGAR CANE. SUB-PARA 2 OF THE PARA NO.3 PROVIDES THAT NO PERSON SHALL SELL OR AGREE TO SELL SUGARCANE TO A PRODUCER OF SUGAR OR HIS AGENT AND NO SUCH PRODUCER O R AGENT SHALL PURCHASE OR AGREE TO PURCHASE SUGARCANE, AT A PRICE LOWE R THAN THAT FIXED UNDER THE SUB-CLAUSE (1). IT, ERGO, TRANSPIRES THAT THE FRP ITA NO.2982/PUN/2017 ECO CANE SUGAR ENERGY LIMITED 4 FIXED UNDER THE SUGARCANE (CONTROL) ORDER IS THE MINIMUM PRICE AND THERE IS NO IMPEDIMENT IN PAYING A PRICE HIGHER THAN THE F RP, IF COMMERCIAL EXPEDIENCY SO WARRANTS. 6. ADVERTING TO THE FACTS OF THE INSTANT CASE, I FIND THAT THE ASSESSEE CATEGORICALLY STATED BEFORE THE AO THAT IT WAS SITUATED IN A REMOTE PLACE, BECAUSE OF WHICH IT HAD TO PAY A LITTLE HIGHE R PRICE TO THE FARMERS. NOT ONLY THIS, THE AMOUNT WAS GOING DIRECT LY TO THE BANK ACCOUNT OF FARMERS. THE ASSESSEE FURNISHED PAYMENT DETAI LS OF SUGARCANE PURCHASED DURING THE PERIOD 19-11-2010 TO 3 0-11-2010 AND ALSO GAVE BANK-WISE LIST OF TOTAL SUGAR CANE PAYMENT S. THUS, IT IS CRYSTAL CLEAR THAT THOUGH THE ASSESSEE MADE PURCHAS ES OF SUGARCANE AT A PRICE LITTLE HIGHER THAN THE FRP, BUT IT WA S A GENUINE PAYMENT MADE FOR PURCHASE OF SUGARCANE WHICH WAS GOING DIRECTLY TO THE BANK ACCOUNTS OF THE FARMERS. DESPITE THE SUBMIS SION OF DETAILS TO THE AO, NO IRREGULARITY HAS BEEN POINTED OUT FRO M SUCH DETAILS IN THE ASSESSMENT OR THE IMPUGNED ORDER. IN THE GIVEN CIRCUMSTANCES, I AM SATISFIED THAT THE ASSESSEE MADE PUR CHASES OF SUGARCANE AT A GENUINE PRICE OF RS.1800/- PER MT WHICH O UGHT NOT TO HAVE BEEN DISTURBED BY THE AUTHORITIES BELOW. I, THER EFORE, OVERTURN THE IMPUGNED ORDER AND DIRECT TO DELETE THE A DDITION OF RS.1,21,56,000/-. 7. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 08 TH NOVEMBER, 2018. SD/- (R.S.SYAL) / VICE PRESIDENT PUNE; DATED : 08 TH NOVEMBER, 2018 ITA NO.2982/PUN/2017 ECO CANE SUGAR ENERGY LIMITED 5 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT (APPEALS)-2, KOLHAPUR 4. / THE PR. CIT-2, KOLHAPUR 5. , , SMC / DR SMC, ITAT, PUNE; 6. / GUARD FILE. // TRUE COPY // / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE *