ITO, Ward 4, Ichalkaranji V. Jawahar Shetkari Sahakari Sakhar Karkhana Ltd., Kolhapur

ITA 393/PUN/2013

• Counselvise Citation: 39324514 RSA 2013
• Duration Of Justice: 1 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2000-2001
• Appeal Filed On: 08-02-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Assessee Lawyers: MRS S A KO PPA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO.390/PN/2013 (A.Y: 1997-98) JT. CIT, SPECIAL RANGE-4, PUNE APPELLANT VS. JAWAHAR SHETKARI SAHAKARI SAKHAR KARKHANA LTD., SHRI KALLAPPANNA AWADE NAGAR, HUPARI, DIST. KOLHAPUR. PAN: AAAAJ0571C RESPONDENT ITA NO.392/PN/2013 (A.Y: 1999-2000) DY. CIT, CIRCLE-1, KOLHAPUR APPELLANT VS. JAWAHAR SHETKARI SAHAKARI SAKHAR KARKHANA LTD., SHRI KALLAPPANNA AWADE NAGAR, HUPARI, DIST. KOLHAPUR. PAN: AAAAJ0571C RESPONDENT ITA NO.393/PN/2013 (A.Y: 2000-01) ITO, WARD-4, ICHALKARANJI APPELLANT VS. JAWAHAR SHETKARI SAHAKARI SAKHAR KARKHANA LTD., SHRI KALLAPPANNA AWADE NAGAR, HUPARI, DIST. KOLHAPUR. PAN: AAAAJ0571C RESPONDENT 2 ASSESSEE BY : MRS. S.A. KO PPA DEPARTMENT BY : SHRI S.P. WALIMBE DATE OF HEARING : 13.03.2014 DATE OF ORDER : 20.03.2014 ORDER PER SHAILENDRA KUMAR YADAV, J.M: ALL THESE APPEALS FILED BY THE REVENUE PERTAIN TO THE SAME ASSESSEE FOR DIFFERENT YEARS. SO THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR T HE SAKE OF CONVENIENCE. 2. IN ITA NO.390/PN/2013, THE REVENUE HAS FILED THE APPEAL ON THE FOLLOWING GROUNDS: 1. A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E & IN LAW, THE CIT(A) KOLHAPUR IS NOT JUSTIFIED IN DELETI NG THE ADDITION OF RS.2,03,58,562/- ON ACCOUNT OF SALE OF SUGAR AT CONCESSIONAL RATE TO ITS MEMBERS, AS IT IS NOTHING BUT AN APPROPRIATION OF PROFIT AND IN THE NATURE OF APPLIC ATION OF INCOME. B) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE & IN LAW, THE CIT(A), KOLHAPUR IS NOT JUSTIFIED IN APPLY ING THE DECISION OF SHRI TATYASAHEB KORE WARANA SSK LTD. AN D CHHTRAPATI SHAHU SSK LTD AND CBDT'S CIRCULAR NO.117 DATED 22-08-1973 TO THE ASSESSEE'S CASE AND ISSUE R AISED. IN FACT, THE CIRCULAR NO.117 IS CONCERNING WITH THE REBATE OR BONUS PASSED BY THE CONSUMERS CO.OP. STORES TO T HEIR MEMBERS FOR PURCHASES, WHICH IS NOT APPLICABLE TO T HE CASE OF THE ASSESSEE. THE ASSESSEE IS A SUGAR MILL AND NOT A CONSUMER'S STORE. C) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE HON.CIT(A) KOLHAPUR IS NOT JUSTIFIED IN NO T TAKING INTO CONSIDERATION THE RATIO OF THE DECISION OF THE HON. SUPREME COURT DELIVERED IN THE CASE OF KRISHNA SAH. SAKHAR KARKHANA LTD & ORS{(2012) 80 DTR(SC) 298}, WHEREIN THE MATTER HAS BEEN REVERTED BACK TO THE FI LE OF THE CIT(A) WITH DIRECTIONS TO CONSIDER SPECIFIC POI NTS WHILE DECIDING THE ISSUE OF SALE OF SUGAR AT CONCESSIONAL RATE. 3 2. THE ORDER OF THE CIT(A) BE VACATED, AND THAT OF THE AO BE RESTORED. 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER A NY GROUNDS OF APPEAL. 3. THE ONLY ISSUE BEFORE US IS WITH REGARD TO ADDIT ION ON ACCOUNT OF SALE OF SUGAR AT CONCESSIONAL RATES. THE ADDITI ON WAS MADE HOLDING THE DIFFERENCE BETWEEN FAIR MARKET AND CONC ESSIONAL RATE AT WHICH SUGAR WAS SOLD TO THE ASSESSEES MEMBERS TO B E DISTRIBUTION OF PROFITS OF KARKHANA. WE FIND THAT THE HONBLE SUPR EME COURT HAD OCCASION TO DECIDE A SIMILAR ISSUE IN THE CASE OF C IT, BOMBAY VS. KRISHNA SAHAKARI SAKHAR KARKHANA LTD. (2012) 27 TAX MANN.COM 162 (SC), WHEREIN THE ASSESSEE COOPERATIVE SOCIETY WAS ENGAGED IN THE BUSINESS OF PRODUCTION OF SUGAR FROM SUGARCANE AND SALE THEREOF. THE ASSESSEE BUYS SUGARCANE FROM ITS MEMBERS. EVER Y MONTH AND ON DIWALI, THE ASSESSEE SELLS CERTAIN QUANTITY OF S UGAR (FINAL PRODUCT) AT CONCESSIONAL RATE TO FARMERS/CANE GROWERS/MEMBER S. THE DIFFERENCE BETWEEN THE AVERAGE PRICE OF SUGAR SOLD IN THE MARKET AND THE PRICE OF SUGAR SOLD BY THE ASSESSEE TO ITS MEMB ERS AT A CONCESSIONAL RATE WAS SOUGHT TO BE TAXED BY THE DEP ARTMENT UNDER THE HEAD APPROPRIATION OF PROFIT. THE QUESTION A ROSE WHETHER THE ABOVE DIFFERENCE BETWEEN FAIR MARKET PRICE AND CONC ESSIONAL PRICE SHOULD OR SHOULD NOT BE ADDED TO THE TOTAL INCOME O F ASSESSEES SOCIETY, NEEDS TO BE RELOOKED BY THE CIT(A). APART FROM THE AFORESTATED QUESTION, CIT(A) WAS ALSO DIRECTED TO T AKE INTO ACCOUNT WHETHER ABOVE MENTIONED PRACTICE OF SELLING SUGAR A T CONCESSIONAL RATES HAS BECOME PRACTICE OR CUSTOM IN COOPERATIVE SUGAR INDUSTRY AND WHETHER ANY RESOLUTION HAS BEEN PASSED BY THE S TATE GOVERNMENT SUPPORTING THE PRACTICE. THE CIT(A) WAS ALSO DIRECTED TO CONSIDER ON WHAT BASIS THE QUANTITY OF FINAL SUGAR PRODUCT IS BEING FIXED FOR SALE TO FARMERS/CANE GROWERS/ MEMBERS EAC H YEAR ON MONTH TO MONTH BASIS, APART FROM DIWALI? THE HONB LE SUPREME COURT OBSERVED THAT THESE ARE SOME OF THE QUESTIONS WHICH HAVE NOT BEEN ADDRESSED BY THE AUTHORITIES BELOW IN THE IMPU GNED ORDERS. THE HONBLE SUPREME COURT ALSO HELD THAT CIT(A) WOU LD BE ENTITLED TO 4 LOOK INTO THE ACCOUNTS AND VERIFY THE BASIS FOR SAL E OF SUGAR AT CONCESSIONAL PRICE ON MONTH TO MONTH BASIS. ACCORD INGLY, ALL QUESTIONS OF LAW AND FACTS WERE KEPT OPEN. IN THIS BACKGROUND, THE MATTER WAS REMITTED TO THE CIT(A) WITH A DIRECTION TO DECIDE IN DE- NOVO AFTER PROVIDING DUE OPPORTUNITY OF HEARING TO BOTH THE PARTIES. FACTS BEING SIMILAR, SO FOLLOWING THE SAME REASONIN G, WE REMIT THE MATTER TO THE CIT(A) WITH A SIMILAR DIRECTION AS DI SCUSSED ABOVE. AS A RESULT, THE APPEAL OF REVENUE IS ALLOWED FOR STAT ISTICAL PURPOSES. 4. A SIMILAR ISSUE AROSE IN ITA NOS.392 AND 393/PN/ 2013 FOR A.YS. 1999-2000 AND 2000-01 RESPECTIVELY. FACTS BE ING SIMILAR, SO FOLLOWING THE SAME REASONING, WE REMIT THESE MATTER S TO THE CIT(A) WITH A SIMILAR DIRECTION. 5. IN THE RESULT, ALL REVENUES APPEALS ARE ALLOWED FOR STATISTICAL PURPOSE. PRONOUNCED IN THE OPEN COURT ON THIS THE 20 TH DAY OF MARCH, 2014. SD/- SD/- (G.S. PANNU) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 20 TH MARCH, 2014 GCVSR COPY TO:- 1. DEPARTMENT 2. ASSESSEE 3. THE CIT(A)-KOLHAPUR 4. THE CIT-KOLHAPUR 5. THE DR, B BENCH, I.T.A.T., PUNE. 6. GUARD FILE BY ORDER //TRUE COPY// SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE