ACIT Cir -II, Solapur V. Solapur District Co-operative Milk Producers, Solapur

ITA 74/PUN/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4346 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-05-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 13-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K SINGH
• Assessee Lawyers: SUNIL PATHAK

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 74/PN/2012 AND ITA NO.75/PN/2012 (ASSTT.YEARS : 2007-08 AND 2008-09) ACIT, CIRCLE-II, SOLAPUR .. APPELLANT VS. SOLAPUR DISTRICT CO-OPERATIVE MILK PRODUCERS & PROCESS UNION LTD., 24/1A, MURARJI PETH, SOLAPUR .. RESPONDENT PAN NO. AAUFS 9294C APPELLANT BY : SRI S.K. SINGH RESPONDENT BY : SRI SUNIL PATHAK DATE OF HEARING : 09-05-2013 DATE OF PRONOUNCEMENT : 14-05-2013 ORDER PER R.K. PANDA, AM : THE ABOVE 2 APPEALS FILED BY THE REVENUE ARE DIREC TED AGAINST THE SEPARATE ORDERS DATED 29-07-2011 AND 31-08-2011 OF THE CIT(A)-III, PUNE RELATING TO ASSESSMENT YEARS 2007-08 AND 2008-09 RE SPECTIVELY. SINCE IDENTICAL GROUNDS HAVE BEEN TAKEN BY THE REVENUE IN BOTH THE APPEALS, THEREFORE, THESE WERE HEARD AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. ITA NO.74/PN/2012 (A.Y. 2007-08) : 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A FEDERAL CO- OPERATIVE MILK SOCIETY REGISTERED UNDER THE COOPERA TIVE SOCIETY ACT 1960 AND ITS MEMBERS ARE STATED TO BE PRIMARY MILK COOPE RATIVE SOCIETIES. THE 2 APEX SOCIETY COLLECTS MILK FROM THE MEMBER SOCIETIE S AS WELL AS NON- MEMBER SOCIETIES, SUPPLIED BY MILK PRODUCERS AND SE LLS THE SAME AFTER PROCESSING. THE PAYMENT FOR MILK PROCURED IS MADE T O THE MEMBER/NON- MEMBER MILK SOCIETIES INDIVIDUALLY ON THE BASIS OF QUALITY OF FAT AND SNF CONTENTS. THE ASSESSING OFFICER NOTED THAT THE ASS ESSEE DURING THE IMPUGNED ASSESSMENT YEAR HAD COLLECTED 12,15,34,579 LITRES OF MILK IN RESPECT OF WHICH PAYMENT OF RS.139,17,00,987/- WAS PAID TO MILK CO- OPERATIVE SOCIETIES. HE OBSERVED THAT BY A RESOLUT ION PASSED BY THE BOARD OF DIRECTORS UNDER RESOLUTION NO.20 DATED 31-03-200 7 IT WAS DECIDED TO PAY AN ADDITIONAL PRICE OF 0.40 PS. PER LITRE OUT O F WHICH 0.10 PS. PER LITRE WAS DECIDED TO BE PAID AFTER THE END OF THE FINANCI AL YEAR. THE LIABILITY WORKED OUT ON ACCOUNT OF ADDITIONAL PRICE PAID AMOU NTING TO RS.1,21,53,458/- WAS ACCOUNTED IN THE BOOKS BY DEBI TING THE MILK PURCHASE ACCOUNT AND BY CREDITING THE MILK PURCHASE BILLS PAYABLE ACCOUNT. THE ASSESSING OFFICER WAS OF THE OPINION THAT THE ADDITIONAL MILK PRICE, WHICH WAS UNIFORMLY CREDITED AFTER THE FINALISATION OF THE ACCOUNTS, WITHOUT TAKING INTO ACCOUNT THE FAT AS WE LL AS SNF CONTENT AMOUNTED TO DISTRIBUTION OF PROFIT BEFORE SUBJECTIN G TO TAX AND THEREFORE THE SAME REQUIRED TO BE DISALLOWED. REJECTING THE VARIOUS EXPLANATIONS GIVEN BY THE ASSESSEE AND RELYING ON VARIOUS DECISI ONS THE ASSESSING OFFICER DISALLOWED THE FINAL MILK RATE DIFFERENCE O F RS.1,21,53,458/- TO THE TOTAL INCOME OF THE ASSESSEE ON THE GROUND THAT SUC H PAYMENT IN THE FORM OF FINAL MILK RATE DIFFERENCE WAS MADE OUT OF PROFI T AND THEREFORE IT IS NOTHING BUT A DISTRIBUTION OF PROFIT. WHILE DOING S O, HE ALSO DID NOT FOLLOW THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COU RT IN ASSESSEES OWN CASE ON THE GROUND THAT THE REVENUE HAS FILED APPEA L BEFORE THE HONBLE SUPREME COURT. 3 3. IN APPEAL THE LD. CIT(A) FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE WHICH HAS BEEN UPHELD BY THE HO NBLE HIGH COURT IN THE PRECEDING ASSESSMENT YEARS ALLOWED THE CLAIM OF THE ASSESSEE. 3.1 AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REV ENUE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE CIT(A) ERRED IN DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFF ICER OF RS.1,21,53,458/- ON ACCOUNT OF DIFFERENCE IN FINAL MILK RATE PAID BY TH E ASSESSEE TO ITS MEMBERS AND NON-MEMBERS BY WAY OF DISTRIBUTION OF PROFIT. 2. THE ORDER OF THE CIT(A) BE VACATED AND THAT OF T HE ASSESSING OFFICER BE RESTORED. 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTE R ANY OF THE ABOVE GROUNDS OF APPEAL. 4. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET S UBMITTED THAT THE ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE BY T HE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN ASSESSEES OWN CASE WHERE IT HAS BEEN HELD THAT PRICE DIFFERENCE PAID BY ASSESSEE CO OPERATIVE SOCIETY TO MILK SUPPLIERS BY A RESOLUTION PASSED BEFORE THE EN D OF ACCOUNTING YEAR BASED ON QUALITY AND QUANTITY OF MILK BEFORE DETERM INATION OF PROFITS AS PER RELEVANT COOPERATIVE LAW CANNOT BE SAID TO BE D ISTRIBUTION OF PROFITS. ACCORDINGLY, THE DECISION OF THE TRIBUNAL HAS BEEN UPHELD. SINCE THE DEPARTMENT HAS APPEALED BEFORE THE HONBLE SUPREME COURT THE REVENUE HAS FILED THIS APPEAL TO KEEP THE MATTER ALIVE. HO WEVER, THIS BEING A COVERED MATTER IN FAVOUR OF THE ASSESSEE BY THE DEC ISION OF THE JURISDICTIONAL HIGH COURT, THEREFORE, THE GROUNDS R AISED BY THE REVENUE SHOULD BE DISMISSED. 5. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND FAIRLY CONCEDED THAT THE ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE AND 4 AGAINST THE REVENUE BY THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN ASSESSEES OWN CASE IN THE PRECEDING YEARS . HOWEVER, SINCE THE DEPARTMENT HAS FILED APPEAL BEFORE THE HONBLE SUPR EME COURT AGAINST THE ORDER OF THE JURISDICTIONAL HIGH COURT, THEREFORE, TO KEEP THE MATTER ALIVE THE REVENUE HAS FILED THIS APPEAL. 6. AFTER HEARING BOTH THE SIDES WE FIND THE LD. CIT (A) WHILE ALLOWING THE CLAIM OF THE ASSESSEE HAS FOLLOWED THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE IN THE PRECEDING YEARS WHICH HA S BEEN UPHELD BY THE HONBLE JURISDICTIONAL HIGH COURT. NOTHING CONTRAR Y WAS BROUGHT TO OUR NOTICE AGAINST THE ORDER OF THE JURISDICTIONAL HIGH COURT IN ASSESSEES OWN CASE IN THE PRECEDING ASSESSMENT YEARS. MERELY BEC AUSE THE REVENUE HAS NOT ACCEPTED THE DECISION OF THE HONBLE JURISDICTI ONAL HIGH COURT FOR WHICH AN APPEAL HAS BEEN FILED BEFORE THE HONBLE S UPREME COURT, SAME IN OUR OPINION CANNOT BE A GROUND TO TAKE A CONTRAR Y VIEW THAN THE VIEW TAKEN BY THE HONBLE HIGH COURT. WE, THEREFORE, RE SPECTFULLY FOLLOWING THE DECISION OF THE JURISDICTIONAL HIGH COURT IN AS SESSEES OWN CASE DISMISS THE GROUNDS RAISED BY THE REVENUE. ACCORDI NGLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. ITA NO.75/PN/2012 (AY. 2008-09) : 7. AFTER HEARING BOTH THE SIDES WE FIND THE ABOVE G ROUNDS ARE IDENTICAL TO THE GROUNDS OF APPEAL BY REVENUE IN ITA NO.74/PN /2012. WE HAVE ALREADY DECIDED THE ISSUE AND THE GROUNDS RAISED BY THE REVENUE HAVE BEEN DISMISSED. FOLLOWING THE SAME RATIO THE GROUN DS RAISED BY THE REVENUE ARE DISMISSED. 5 8. IN THE RESULT, BOTH THE APPEALS FILED BY THE REV ENUE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 14 TH DAY OF MAY, 2013. SD/- SD/- (SHAILENDRA KUMAR YADAV) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED THE 14 TH MAY 2013 SATISH COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT(A)-III, PUNE 4. THE CIT-III, PUNE 5. D.R. B BENCH, PUNE 6. GUARD FILE BY ORDER // TRUE COPY // PRIVA TE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE