Dy. CIT, Ichalkaranji V. Deshbhakat Ratnappanna Kumbhar Panchaganga Sahakari Sakhar Karkhana Ltd., Ichalkaranji

ITA 593/PUN/2013

• Counselvise Citation: 59324514 RSA 2013
• Duration Of Justice: 1 year(s) 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 07-07-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 04-03-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Assessee Lawyers: N O N E

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE: SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 593 / P N/ 20 1 3 ASSESSMENT YEAR : 200 9 - 10 DY. COMMISSIONER OF INCOME TAX, ICH ALKARANJI CIRCLE , ICHALKARANJI, DIST. - KOLHAPUR VS. DESHBHAKTA RATNAPPANA KUMBHAR PANCHAGANGA SAHAKARI SAKHAR KHARKHANA LTD., GANGANAGAR, ICHALKARANJI (APPELLANT) (RESPONDENT) PAN NO. AAAAD0725G APPELLANT BY: SHRI S.P. WALIMBE RESPONDENT BY: N O N E DATE OF HEARING : 0 7 - 07 - 201 4 DATE OF PRONOUNCEMENT : 09 - 07 - 2014 ORDER P ER R.S. PADVEKAR , JM : - IN THIS APPEAL, THE REVENUE HAS CHALLENGED THE IMPUGNED ORDER OF THE LD. CIT(A) , KOLHAPUR DATED 03 - 12 - 2012 FOR THE A.Y. 200 9 - 10 . THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A), KOLHAPUR IS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.5 8,68,706/ - ON ACCOUNT OF SA L E OF SUGAR AT CONCESSIONAL RATE TO ITS MEMBERS, AS IT IS NOTHING BU T AN APPROPRIATION OF PROFIT AND IN THE NATURE OF APPLICATION OF INCOME. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , AND I N LAW, THE HON. CIT(A) , KOLHAPUR IS NOT JUSTIFIED IN NOT 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 FILE OF THE CIT(A) WITH DIRECTIONS TO CONSIDER SPECIFIC POINTS WHILE DECIDING THE ISSUE OF SALE OF SUGAR AT CONCESSIONAL RATE. 2 ITA NO. 593/PN/201 3, DESHBHAKTA RATNAPPANA KUMBHAR PANCHAGANGA SAHAKARI SAKHAR KHARKHANA LTD., KOLHAPUR 2. THE BRIEFLY STATED FACTS ARE AS UNDER. THE ASSESSEE IS A CO - OPERATIVE SOCIETY WHICH IS ENGAGED IN THE MANUFACTURING AND SALE OF SUGAR AND ITS BY - PRODUCTS. IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS SOLD/ SUPPLIED SUGAR TO CANE GROWERS /MEMBERS AT CONCESSIONAL RATE. IN THE OPINION OF THE ASSESSING OFFICER SUPPLY OF SUGAR AT CONCESSIONAL RATE AS AGAINST THE PREVALENT MARKET PRICE IS NOTHING BUT AN APPROPRIATION OF PROFIT AND IN THE NATURE OF APPLICATION OF INCOME. THE ASSESSEE RELIED ON THE CBDT CIRCULAR NO. 117 DATED 22 - 08 - 1973 WHICH WAS ALSO EXAMINED BY THE ASSESSING OFFICER AND HE HAS NOTED THAT THE SAID CIRCULAR IS IN CONNECTION WITH ALLOWANCE OF REBATE TO MEMBER BY A CONSUMER CO - OPERATIVE STORES LTD., AS BUSINE SS EXPENDITURE AND HENCE, THE SAID CIRCULAR IS NOT APPLICABLE TO THE ASSESSEES SOCIETY. THE ASSESSING OFFICER WORKED OUT THE DIFFERENCE , AFTER CONSIDERING THE FAIR MARKET PRICE AND THE PRICE WHICH WAS RECOVERED FROM THE CANE GROWERS /MEMBERS PER QUINTAL A ND DIFFERENCE WAS WORKED OUT TO RS.5 8,68,706/ - . THE ASSESSING OFFICER MADE THE ADDITION TO THAT EXTENT TO THE TOTAL INCOME OF THE ASSESSEE. THE LD. CIT(A) DELETED THE SAID ADDITION FOLLOWING THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE ASSESSEE S OWN CASE BEING ITA NO. 998 OF 2009. THE REVENUE HAS CHALLENGED THE ACTION OF THE LD. CIT(A) DELETING THE ADDITION BEFORE THE TRIBUNAL. 3. WE HAVE HEARD THE LD. DR, SHRI S.P. WALIMBE. THE ASSESSEE HAS FILED THE WRITTEN SUBMISSION. IN THE WRITTEN SUBMI SSION, THE ASSESSEE ADMITS THAT NOW AFTER THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. KRISHNA SSK LTD. AND ORS. 254 CTR 638 , THERE IS A CHANGE IN THE LEGAL POSITION E VEN THOUGH IN THE PRECEDING YEAR , THE HON'BLE JURISDICTIONAL HIGH COU RT HAS DECIDED THE ISSUE IN THE ASSESSEES FAVOUR. THE IDENTICAL ISSUE HAS COME FOR THE CONSIDERATION BEFORE THE 3 ITA NO. 593/PN/201 3, DESHBHAKTA RATNAPPANA KUMBHAR PANCHAGANGA SAHAKARI SAKHAR KHARKHANA LTD., KOLHAPUR HON'BLE SUPREME COURT IN THE CASE OF KRISHNA SSK LTD. AND ORS. (SUPRA) , INCLUDING THE ASSESSEE, AND THE APEX COURT HAS REMITTED THE MATTER TO THE FILE OF THE CIT(A) FOR FRESH ADJUDICATION IN THE LIGHT OF THE FOLLOWING DIRECTIONS: THE QUESTION, WHETHER THE ABOVE DIFFERENCE BETWEEN THE FAIR MARKET PRICE AND THE CONCESSIONAL PRICE SHOULD OR SHOULD NOT 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 SUGAR AT CONCESSIONAL RATE HAS BECOME THE PRACTICE OR CUSTOM IN THE IN THE CO - OPERATIVE SUGAR INDU STRY? 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 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 ACCOUNTS AND VERIFY THE BASIS FOR SALE OF SUGAR AT C ONCESSIONAL 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 SIDES TO PRODUCE RELEVANT DOCUMENTS. FOR THE ABOVE REASONS, WE REMIT THE CASES TO CIT(A) TO DE - NOVO CONSIDER THE MATTER. 4. WE, THEREFORE, FOLLOWING THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. KRISHNA SSK LTD. (SUPRA) SET ASIDE THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND RESTORE THE ISSUE TO THE FILE OF THE CIT(A) TO DECIDE THE SAME DE NOVO IN THE LIGHT OF DIRECTIONS GIVEN BY THE HON'BLE 4 ITA NO. 593/PN/201 3, DESHBHAKTA RATNAPPANA KUMBHAR PANCHAGANGA SAHAKARI SAKHAR KHARKHANA LTD., KOLHAPUR SUPREME COURT . ACCORDINGLY, THE GROUND TAKEN BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 5 . IN THE RESULT, THE REVENUES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED I N THE OPEN COURT ON 09 - 07 - 2014 SD/ - SD/ - ( R.K. PANDA ) ( R.S. PADVEKAR ) ACCOUNTANT MEMBER JUDICIAL MEMBER RK /PS PUNE , DATED : 09 TH JULY, 2014 COPY TO 1 DEPARTMENT 2 ASSESSEE 3 THE CIT(A ), KOLHAPUR 4 THE CIT - II , KOLHAPUR 5 THE DR, ITAT, B BENCH, PUNE . 6 GUARD FILE. //TRUE COPY// BY ORDER PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL , PUNE