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2020 (4) TMI 486 - AT - Income TaxExcess Cane Price Paid to Sugarcane Suppliers - price over and above the Statutory Minimum Price (SMP) fixed by State Government for purchase of cane - HELD THAT:- As decided in MAJALGAON SAHAKARI, SAKHAR KARKHANA LTD. VERSUS ACIT, SHRI CHHATRAPATI SHAHU, DCIT, ITO [2019 (3) TMI 906 - ITAT PUNE] set aside the impugned orders on this score and remit the matter to the file of the respective A.Os. for deciding it afresh as per law in consonance with the articulation of law by the Hon’ble Supreme Court in TASGAON TALUKA S.S.K. LTD. [2019 (3) TMI 321 - SUPREME COURT] 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. At this stage, it is made clear that 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). Sale of Sugar at Concessional to the Members/Shareholders - HELD THAT:- As decided in MAJALGAON SAHAKARI, SAKHAR KARKHANA LTD. [2019 (3) TMI 906 - ITAT PUNE] it would be just and fair if the impugned orders on this score are set aside and the matter is restored to the file of AOs, 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] Government Guarantee Fees - disallowance u/s. 43B - authorities below have held that Government Guarantee Fee is akin to tax, cess or fee and hence, non-payment of same would result in disallowance u/s. 43B - HELD THAT:- In the present case, payments made by the assessees on account of Government Guarantee Fees to the Maharashtra Government are in respect of pre seasonal loans. It is neither emanating from the records, nor the Revenue has brought before us any material to show that the assessee is under obligation to pay Government Guarantee Fee on account of statutory requirement as ‘revenue’ to the State. In the case of Commissioner of Income Tax Vs. Udaipur Distillery Co. Ltd. [2003 (9) TMI 23 - RAJASTHAN HIGH COURT] has held that ‘tax’, ‘duty’, ‘cess’ or ‘fee’ constituting a class, denotes various kinds of imposts by State in its sovereign power of taxation to raise revenue for the State. Within the expression of each specie each expression denotes different kind of impost depending on the purpose for which they are levied - merely levy of charge as tax or fee is not conclusive of its character. It is only if any amount becomes payable by way of tax, duty, cess or fee, it falls within the purview of section 43B - Government Guarantee Fees cannot be put in same bracket as tax, cess or duty and hence, no disallowance u/s. 43B of the Act in respect of non-payment of such fee can be made. Accordingly, this issue is decided in favour of the assessee. Ceremony Expenses Disallowance - HELD THAT:- Commissioner of Income Tax (Appeals) has allowed 1/4th of the expenditure by following the order of Tribunal in the case of Shivamrut Maryadit vs. DCIT [1998 (12) TMI 120 - ITAT PUNE] and restricted the addition to ₹ 65,627/-. We do not find any infirmity in the findings of Commissioner of Income Tax (Appeals). Accordingly, this issue is dismissed.
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