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2019 (9) TMI 730 - AT - Income TaxDisallowance on account of excess cane price paid to sugarcane suppliers - deduction u/s 37 - HELD THAT:- As referred to TASGAON TALUKA S.S.K. LTD. [2019 (3) TMI 321 - SUPREME COURT] we set-aside the impugned order on this score and remit the matter to the file of A.O for deciding it afresh as per law in consonance with the articulation of law by the Hon’ble Supreme Court in the aforenoted judgment. AO would allow deduction for the price paid under clause 3 of the Sugar Cane (Control) Order, 1966 and then determine the component of distribution of profit embedded in the price paid under clause 5A, by considering the statement of accounts, balance sheet and other relevant material supplied to the State Government for the purpose of deciding/fixing the final price/additional purchase price/SAP under this clause. The amount relatable to the profit component or sharing of profit/distribution of profit paid by the assessee, which would be appropriation of income, will not be allowed as deduction, while the remaining amount, being a charge against the income, will be considered as deductible expenditure. The distribution of profits can only be qua the payments made to the members. In so far as the non-members are concerned, the case will be considered afresh by the AO by applying the provisions of section 40A(2). Disallowance on account of sugar sold to members at concessional price - HELD THAT:- It would be just and fair if the impugned order on this score is set aside and the matter is restored to the file of AO, instead of to the CIT(A), for fresh consideration as to whether the difference between the average price of sugar sold in the market and that sold to members at concessional rate is appropriation of profit or not, in the light of the directions given by the Hon’ble Supreme Court in the case of Krishna Sahakari Sakhar Karkhana Limited [2012 (11) TMI 669 - SUPREME COURT] . Restoration to the AO is necessitated because, following the judgment of Tasgaon Taluka S.S.K. Ltd. [2019 (3) TMI 321 - SUPREME COURT] we have remitted the issue of payment of excessive price to the file of AO, and as such, the instant issue cannot be sent to CIT(A) as it would amount to simultaneously sending one part of the same assessment order to the AO and other to the CIT(A), which is not appropriate. TDS u/s 194C - Disallowance on account of disallowance u/s.40(a)(ia) - HELD THAT:- In the case of CIT Vs. Dwarkadheesh Sakhar Karkhana Ltd. [2018 (1) TMI 751 - BOMBAY HIGH COURT] has held that the provisions of section 194C are not attracted in respect of payments made by the assessee, a sakhar karkhana as is the assessee also under consideration, to Mukadams and Transporters. As the assessee made payment to group labourers and such annual payments did not exceed ₹ 50,000/- per individual, which at the material time was the threshold for invocation of section 194C, respectfully following the judgment in the case of CIT Vs. Dwarkadheesh Sakhar Karkhana Ltd. (supra), we hold that the disallowance u/s. 40(a)(ia) has been wrongly sustained. We, therefore, order to delete the disallowance.
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