Dy. Commissioner of Income Tax, Bareilly V. M/s Bisalpur Kisan Sahkari Chini Mills Ltd., Pilibhit

ITA 647/LKW/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4804 (ITAT-LUCKNOW)
• Duration Of Justice: 2 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 05-04-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 14-10-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K ARORA

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NOS.647 & 648/LKW/2015 ASSESSMENT YEARS 2009-10 & 2010-11 M/S BISALPUR KISAN SAHKARI CHINI MILLS LTD. BISALPUR, DISTT.- PILIBHIT PAN AAAAB 6708 P VS. DY. COMMISSIONER OF INCOME - TAX, CIRCLE-2, BAREILLY (RESPONDENT) (APPELLANT) SHRI A.K. SINGH, CIT DR APPELLANT BY SHRI S.K. ARORA, CA RESPONDENT BY 16 . 12 .201 5 DATE OF HEARING 13.01.2016 DATE OF PRONOUNCEMENT O R D E R PER SUNIL KUMAR YADAV, JM. 1. THESE APPEALS ARE PREFERRED BY THE REVENUE AGAIN ST THE RESPECTIVE ORDERS OF THE CIT(A) SUBJECT TO DIFFERENCE IN QUANT UM. THE MAIN ISSUE IN THESE APPEALS RELATE TO THE DELETION OF ADDITIONS M ADE ON ACCOUNT OF LOW YIELD OF BAGGASSE AND LOW YIELD OF SUGAR. SINCE THE APPEALS WERE HEARD TOGETHER AND THESE ARE BEING DISPOSED OF THROUGH TH IS CONSOLIDATED ORDER. 2. IN THE AY 2009-10 IN ITA NO. 647/LKW/2015, THE A DDITION ON ACCOUNT OF BAGGASSE WAS MADE OF RS.83,40,643/- AND IN ITA NO.648/LKW/2015 FOR AY 2010-11, THE ADDITION ON ACC OUNT OF LOW YIELD OF BAGGASSE WAS MADE OF RS.35,19,591/-. SIMILARLY IN T HE CASE OF LOW YIELD OF SUGAR, ADDITION WAS MADE IN AY 2009-10 AT RS.3,00,7 3,793/- AND IN AY 2 2010-11, AT RS.3,25,65,271/-. AGAINST THESE ADDITIO NS, THE ASSESSEE PREFERRED THE RESPECTIVE APPEALS BEFORE THE CIT(A) AND THE CIT(A) HAS PLACED RELIANCE UPON THE ORDER IN THE CASE OF PRESE NT ASSESSEE FOR AY 2007-08 AND IN THE CASE OF KISAN SAHAKARI CHINI MIL LS LTD. FOR AY 1992-93. 3. AGGRIEVED, REVENUE HAS PREFERRED AN APPEAL BEFO RE THE TRIBUNAL AND PLACED RELIANCE UPON THE ASSESSMENT ORDER. LD. DR FURTHER CONTENDED THAT THE CIT(A) HAS NOT TAKEN INTO ACCOUNT THE PAST RECORD OF THE ASSESSEE FOR THE AYS 2007-08, 2008-09 AND 2009-10. IN THE AY 2007-08, THE BAGGASSE WAS ESTIMATED AT 33.21% AND AY 2006-07 IT WAS AT 34.01% AND AY 2008-09 IT WAS AT 34.93%. IN THE LIGHT OF TH ESE FACTS, THE CIT(A) SHOULD HAVE ESTIMATED THE BAGGASSE INSTEAD OF ACCEP TING THE BAGGASSE DECLARED BY THE ASSESSEE AT 33.06%. LD. DR FURTHER INVITED OUR ATTENTION TO THE IMPUGNED ASSESSMENT ORDER WITH THE SUBMISSIO N THAT THERE WAS A TREND OF DECLINE IN THE PRODUCTION OF SUGAR AS WELL AS THE BAGGASSE. THE JUSTIFICATION GIVEN BY THE ASSESSEE IN THIS REGARD IS ON ACCOUNT OF LOW QUALITY OF SUGARCANE AND THE BRAKE DOWN IN THE PROD UCTION. 4. THE CONTENTION OF THE ASSESSEE CANNOT BE ACCEPTE D, IN THE LIGHT OF THE FACT THAT IF THE YIELD OF SUGAR IS REDUCED THER E WOULD INCREASE IN THE PRODUCTION OF BAGGASSE AND IF THE PRODUCTION OF BAG GASSE IS REDUCED THERE WOULD BE INCREASED IN PRODUCTION OF SUGAR. IN THE MANUFACTURING ACTIVITY, THE SUGAR IS A YIELD PRODUCT WHEREAS THE BAGGASSE IS A BY- PRODUCT. IN ANY MANUFACTURING ACTIVITY, THE PRODUCT ION OF MAIN PRODUCT OR THE BY-PRODUCT CANNOT BE DECREASED. ONCE THE PRODUC TION OF YIELD PRODUCT IS DECREASED THE PRODUCTION OF BY-PRODUCT WOULD BE INCREASED. BUT IN THE INSTANT CASE, THERE IS A DECLINE IN THE PRODUCTION OF YIELD OF SUGAR AS WELL AS BAGGASSE, WHICH IS NOT POSSIBLE UNDER ANY CIRCUM STANCES. 3 5. LD. COUNSEL FOR THE ASSESSEE BESIDES PLACED RELI ANCE UPON THE ORDER OF THE CIT(A) HAS CONTENDED THAT THE PRODUCTION OF SUGAR AS WELL AS BAGGASSE HAS GONE DOWN ON ACCOUNT OF LOW QUALITY OF SUGARCANE AND ALSO ON ACCOUNT OF BREAKDOWN IN THE PRODUCTION. 6. HAVING CAREFULLY EXAMINED THE ORDER OF THE AUTHO RITIES BELOW IN THE LIGHT OF RIVAL SUBMISSIONS, WE FIND THAT THE ASSESS EE HAS SHOWN THE PRODUCTION OF BAGGASSE AT 33.06% WHEREAS IN OTHER A SSESSMENT YEAR I.E. 2007-08, IT WAS SHOWN AT 33.21% AND IN AY 2006-07 I T WAS AT 34.01% AND IN AY 2008-09 THE PRODUCTION OF BAGGASSE WAS AT 34.93%. IN THE AY 2007-08, THE PRODUCTION OF BAGGASSE AT 33.21% WAS E STIMATED BY THE TRIBUNAL. ONCE THE PRODUCTION OF BAGGASSE AT 33.21% IS ACCEPTED THE ASSESSING OFFICER SHOULD NOT HAVE ESTIMATED THE PRO DUCTION OF BAGGASSE MORE THAN THAT IN THE IMPUGNED ASSESSMENT YEAR. IN THE LIGHT OF THESE FACTS, WE DO NOT AGREE WITH THE ORDERS OF CIT(A) WH EREAS THE CIT(A) HAS ACCEPTED THE PRODUCTION OF BAGGASSE AT 33.06% WITHO UT TAKING INTO ACCOUNT THE PRODUCTION OF BAGGASSE IN EVERY ASSESSM ENT YEAR. WE, THEREFORE, SET ASIDE THE ORDERS OF CIT(A) AND DIREC TED THE ASSESSING OFFICER TO ESTIMATE THE BAGGASSE AT 33.21%. IN THE AY 2009-10 WHERE THE BAGGASSE WAS DECLARED AT 33.06%. BUT, IN THE AY 201 0-11, THE ASSESSEE ITSELF HAS DECLARED THE PRODUCTION OF BAGGASSE AT 3 4.52% WHICH IS HIGHER THAN THE ACCEPTED PRODUCTION OF BAGGASSE IN AY 2007 -08, THEREFORE, NO ADDITION IS IN THAT YEAR IS CALLED FOR. WE, ACCORDINGLY, CONFIRM THE ORDERS OF CIT(A) WHO HAS RIGHTLY DELETED THE ADDITION. 7. SO FAR AS THE ADDITION ON ACCOUNT OF LOW YIELD O F SUGAR IS CONCERNED, WE FIND THAT THE ASSESSEE HAS DECLARED THE PRODUCTI ON OF YIELD OF SUGAR IN AY 2009-10 AT 6.97% BUT ASSESSING OFFICER HAS ADOPT ED IT TO BE AT 9% HAVING COMPARED THE YIELD OF SUGAR WITH PRODUCTION OF SUGAR OF ANOTHER FACTORY I.E. KISAN SAHAKARI CHINI MILLS LTD. SITUAT ED IN THE SAME LOCALITY. 4 THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) WITH THE SUBMISSION THAT THE ASSESSEE HAS DECLARED THE YIELD OF SUGAR A T 7.25% BUT ASSESSING OFFICER HAS TAKEN IT TO BE 6.97%. IT WAS ALSO CONTE NDED BY THE CIT(A) THAT IN THE AY 2011-12, THE YIELD OF SUGAR WAS AT 7 .82% AND IN AY 2012- 13, IT WAS AT 7.63%. BEING CONVINCED WITH THE EXPLA NATION OF THE ASSESSEE AND HAVING TAKEN INTO ACCOUNT THE ORDER OF THE TRIB UNAL FOR AY 2007-08 THE CIT(A) HAS ACCEPTED THE RESULT DECLARED BY THE ASSESSEE AND DELETED THE ADDITION. SIMILARLY IN THE AY 2010-11, YIELD OF SUGAR WAS DECLARED AT 7.58% AND THE ASSESSING OFFICER HAS ESTIMATED IT TO BE 9% HAVING RELIED UPON THE YIELD OF SUGAR DECLARED IN THE CASE OF M/S KISAN SAHAKARI CHINI MILLS LTD., PURANPUR. ACCORDINGLY, THE ADDITION WAS MADE. AGAINST WHICH THE ASSESSEE WAS PREFERRED AN APPEAL BEFORE THE CIT (A) AND THE CIT(A) RELYING UPON THE TRIBUNALS ORDER ON THE AYS 2007-0 8 AND 2008-09 HAS DELETED THE ADDITION. 8. HAVING CAREFULLY EXAMINED THE ORDERS OF AUTHORIT IES BELOW IN BOTH THE YEARS, WE FIND THAT IN AY 2009-10, THE ASSESSEE HAS DECLARED THE YIELD OF SUGAR AT 7.25% AND IN AY 2010-11 IT DECLARED YIE LD OF SUGAR AT 7.58%. IT IS ALSO NOTICED THAT IN THESE YEARS THE PRODUCTI ON OF SUGAR AS WELL AS THE BAGGASSE HAS GONE DOWN WHICH IS NOT POSSIBLE IN THE MANUFACTURING ACTIVITIES OF ANY PRODUCT. AS AND WHEN PRODUCTION O F MAIN PRODUCT IS INCREASED THERE MAY BE POSSIBILITY OF DECLINE IN TH E PRODUCTION OF BY- PRODUCT. SIMILARLY, WHEREVER THE PRODUCTION OF BY-P RODUCT IS INCREASED THE PRODUCTION OF BY-PRODUCT IS BOUND TO GO DOWN. BUT I N THE INSTANT CASE, THE ASSESSEE HAS TRIED TO SHOW DECLINE IN THE PRODUCTIO N OF MAIN PRODUCT AS WELL AS THE BY-PRODUCT. THEREFORE, WE HAVE TO ESTIM ATE THE PRODUCTION OF THE MAIN PRODUCT AS WELL AS THE BY-PRODUCT I.E. BAG GASSE. WE ACCORDINGLY ESTIMATE THE YIELD OF SUGAR IN BOTH THE ASSESSMENT YEARS, KEEPING IN VIEW THE PAST AND FUTURE RECORDS OF THE ASSESSEE ITSELF. IN THE AY 2007-08, THE 5 YIELD OF SUGAR WAS DISCLOSED BY THE ASSESSEE AT 8.7 4% AND IN THE AY 2006-07, IT WAS SHOWN AT 8.37% AND IN THE FUTURE AY 2011-12, IT WAS SHOWN AT 7.82% AND IN THE AY 2012-13 IT WAS SHOWN A T 7.63%. THEREFORE, KEEPING IN VIEW THE RESULTS DECLARED BY THE ASSESSEE, WE ESTIMATE THE YIELD OF SUGAR AT 8% IN THE IMPUGNED A SSESSMENT YEARS. WE ACCORDINGLY SET ASIDE THE ORDER OF CIT(A) AND DIREC T THE ASSESSING OFFICER TO ESTIMATE THE YIELD OF SUGAR AT 8% IN BOTH THE AS SESSMENT YEARS. ACCORDINGLY, THESE APPEALS OF THE REVENUE ARE DISPO SED OF. 9. IN THE RESULT, APPEALS OF THE REVENUE ARE PARTLY ALLOWED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DAT E MENTIONED ON THE CAPTION PAGE) SD/- SD/- (A.K. GARODIA ) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 13/01/2016 AKS COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGIST RAR