NAKODAR COOP SUGAR MILLS LTD. V. CIT JALANDHAR

ITR/110/1999

AI Insights

The case involves The Nakodar Co-op. Sugar Mills Ltd. as the appellant and The Commissioner of Income Tax (Central), Ludhiana as the respondent. The core issue revolves around the eligibility of the appellant to claim deductions under Section 80-P(2)(a)(iii) of the Income Tax Act, 1961, concerning the manufacture of sugar from sugarcane purchased from its members. The Income Tax Appellate Tribunal, Amritsar, had previously held that the manufacture of sugar was not part of the marketing process of agricultural produce, thus denying the deduction. The High Court's decision to remit the matter to the Commissioner of Income Tax (Appeals) was influenced by a pending similar adjudication before the Commissioner and a Supreme Court directive in a related case.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 746322 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 26-11-2013
• Assessment Year: misc
• Other Referred Cases: Morinda Cooperative Sugar Mills Ltd. v. Commissioner of Income Tax, Chandigarh
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: VIVEK SETHI
• Assessee Lawyers: M R SHARMA
• Keywords: Commissioner of Income Tax; Deduction; Income Tax; Income tax appellate tribunal; Manufacture of sugar; Marketing of Agriculture Produce
• Section: 80-P(2)(a)(iii)

Judgement Text

"ITR No.110 of 1999 -: 1 :- IN THE HIGH COURT FOR THE STATES OF PUNJAB AND HARYANA AT CHANDIGARH ITR No.110 of 1999 Date of decision: November 26, 2013. The Nakodar Co-op. Sugar Mills Ltd. ... Appellant v. The Commissioner of Income Tax (Central), Ludhiana ... Respondent CORAM: HON'BLE MR. JUSTICE RAJIVE BHALLA HON'BLE MR. JUSTICE DR. BHARAT BHUSHAN PARSOON Present: Shri M.R. Sharma, Advocate, for the appellant. Shri Vivek Sethi, Advocate for the respondent. Rajive Bhalla , J. (Oral): The Income Tax Appellate Tribunal, Amritsar has forwarded a reference which raises the following questions of law:- “(i) Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that manufacture of sugar by the assessee from the sugarcane purchased from its members was not a part of the process of marketing of the agriculture produce of its members and as such the assessee was not entitled to deduction under section 80-P(2)(a)(iii) of the Income Tax Act, 1961? Kadyan Vinod Kumar 2013.12.12 10:10 I attest to the accuracy and integrity of this document Chandigarh ITR No.110 of 1999 -: 2 :- (ii) Whether on the facts and in the circumstances of the case, the Tribunal's finding that the assessee was purchasing sugarcane from non members is not contrary to the material on record? (iii) Whether on the facts and in the circumstances of the case, there was any material before the Tribunal to hold that the assessee had purchased sugarcane from non members during the year relevant to the assessment year: 1994-95?” Counsel for the parties are ad idem that as the first question of law is pending adjudication before the Commissioner of Income Tax (Appeals), Jalandhar pursuant to order passed by the Hon'ble Supreme Court in Civil Appeal No.2445 of 2005 (Morinda Cooperative Sugar Mills Ltd. v. Commissioner of Income Tax, Chandigarh), therefore, the matter may be remitted to the jurisdictional Commissioner, namely, the Commissioner of Income Tax (Appeals), Jalandhar for adjudication. As regards questions No.2 and 3, counsel for the assessee submits that even if it is accepted that deduction under Section 80-P(2)(a) (iii) of the Income Tax Act, 1961 is not to be allowed as the assessee purchased sugarcane from non-members, the Income Tax Appellate Tribunal should have remitted the matter to the Assessing Officer or the Commissioner of Income Tax (Appeals) to re-assess the quantum of deduction after excluding the expenses incurred on purchase of sugarcane from non-members. Counsel for the revenue does not contest the correctness of the aforesaid assertion. We have heard counsel for the parties and perused the Kadyan Vinod Kumar 2013.12.12 10:10 I attest to the accuracy and integrity of this document Chandigarh ITR No.110 of 1999 -: 3 :- reference. In view of agreement between the parties, the matter is remitted to the Commissioner of Income Tax (Appeals), Jalandhar to decide question No.1 afresh and in accordance with law after taking into consideration directions issued by the Hon'ble Supreme Court in Civil Appeal No.2445 of 2005 (Morinda Cooperative Sugar Mills Ltd. v. Commissioner of Income Tax, Chandigarh) and while doing so, to also decide the quantum of deduction allowable to the appellant under Section 80-P(2)(a)(iii) of the Income Tax Act, 1961 after considering purchase from members by excluding purchase from non-members. The order passed by the Income Tax Appellate Tribunal shall stand modified accordingly. Disposed of. [ Rajive Bhalla ] Judge [Dr. Bharat Bhushan Parsoon] November 26, 2013. Judge kadyan Kadyan Vinod Kumar 2013.12.12 10:10 I attest to the accuracy and integrity of this document Chandigarh "