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2021 (8) TMI 23 - AT - Income TaxAllowability of sugarcane price paid over and above FRP price - AO disallowed the excess price so paid by holding it to be the appropriation of profits - HELD THAT:- It is bounding duty of the Assessing Officer to examine the facts and circumstances under which the harvesting and transport expenses was paid to the farmers whether the payments were made over and above FRP exclusively for the purpose of business. The Assessing Officer cannot jump to a conclusion that the payments are in the nature of appropriation of profits without examining the facts and circumstances under which the said excess payments were made. The Hon'ble Bombay High Court in the case of CIT vs. Manjara Shetkari Sahakari Sakar Karkhana Ltd. [2007 (8) TMI 260 - BOMBAY HIGH COURT] held that the differential price cannot be disallowed merely on the ground that it is appropriation of profits without giving a finding as to whether there is any resolution passed authoring the society to pay such excess price. Also in the case of CIT vs. Aruna Sunrise Hotels Ltd., [2018 (5) TMI 156 - MADRAS HIGH COURT] held that the excess price determined under sugarcane control is to be treated as allowable expenditure exclusively and for the purpose of business. Therefore, the finding of the lower authorities cannot be sustained. In our considered opinion, the matter should be remanded back to the file of the Assessing Officer in order to meet the ends of justice to give a finding whether the excess price paid over and above FRP is out of the business expediency or appropriation of profit. If it is found that the excess payment was paid only out of business expediency consideration and the same should be allowed as deduction. Thus, this ground of appeal is remanded to the file of the Assessing Officer for fresh adjudication on the lines indicated above. Accordingly, this ground of appeal stands partly allowed for statistical purposes. Disallowance of sale of sugar at concession rates to the members - The issue of disallowance on account of sale of sugar at concession rate to the members is covered by the decision of the Hon'ble Apex Court in the case of Krishna Sahakari Sakhar Karkhana [2012 (11) TMI 669 - SUPREME COURT] wherein the issue was remanded back to the file of the Ld. CIT(A) with a direction to address the question raised by the Hon'ble Supreme Court. The Ld. CIT(A) though adverted to the decision of the Hon'ble Apex Court in the case of Krishna Sahakari Sakhar Karkhana (supra) had not addressed the question raised therein with reference to material on record. Therefore, this issue also requires to be remanded to the file of the Assessing Officer with a direction to address the question raised by the Hon'ble Apex Court in the case of Krishna Sahakari Sakhar Karkhana (supra) after calling for requisite information from assessee society. Thus, this ground appeal also stands partly allowed for statistical purposes.
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