TMI Blog2016 (5) TMI 363X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in judgment cited as Commissioner of Income-tax, West Bengal vs. Calcutta Discount Company Ltd. reported in (1973 (4) TMI 6 - SUPREME Court ) decided the identical issue to the effect that where a trader transfers his goods to another trader at a price less than the market price, and the transaction is a bona fide one, the taxing authority cannot take into account the market price of those goods, ignoring the real price fetched, to ascertain the profit from the transaction. An assessee can so arrange his affairs as to minimize his tax burden - Decided against revenue Addition on account of interest accrued and due but not paid - AO invoked the provisions contained u/s 43B(d) - Held that:- Shakkar Vishesh Nidhi, State Govt. Loan and UP Cooperative Sugar Factories Federation Ltd. do not fall under the definition of financial institution so as to attract the provisions contained u/s 43B(d) by any stretch of imagination - Decided against revenue Addition on account of old creditors - Held that:- Even in the remand report the AO himself admitted that he has not obtained any confirmation of the creditors from the assessee. On the face of the admitted fact that the books of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be set aside and that of the A.O. restored. 2. Briefly stated facts of this case are : assessee s case was subject to scrutiny and consequently notices under section 143 (2) and 142 (1) of the Income-tax Act, 1961 (hereinafter the Act ) were issued and consequently, Shri Premjeet Kashyap CA and Shri Ajay Kumar, CA attended the proceedings, produced books of accounts and case was also discussed with them. Assessee is into the business of production and trading of sugar. The AO taking note of the average selling low rate and low yield of the sugar of the assessee in comparison to Ramala Sahakari Chini Mills Ltd. called upon the assessee to explain as to why the average selling rate and average yield of Ramala Sahakari Chini Mills Ltd. and SBEC Sugar Ltd. should not be applied. The AR of the assessee relied upon his account books and has not preferred to furnish any additional explanation. The AO by applying the average selling rate and yield of sugar of Ramala Sahakari Chini Mills Ltd. came to the conclusion that if the fixed price of the sugar and the price of the sugar taken into account, the average sale price of the sugar sold by the assessee should have been similar to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but have not disputed the same on any ground whatsoever. So far as the question of making comparison by the AO recording different rate of sale of sugar by the assessee as well as Ramala Sahakari Chini Mills Ltd. is concerned, the AO has lost sight of the undisputed fact that when the rate of levy sugar (rate fixed by the Government for distinction of the sugar through Public Distribution System (PDS) and the assessee was identical) but the average rate to the free sugar sale of assessee as well as Ramala Sahakari Chini Mills Ltd. were different (assessee s average sugar rate was 1702.50 per quintal whereas average rate of sale of Ramala Sahakari Chini Mills Ltd. was 1725.175 per quintal) showing a minor variation between the average sale price of the two units. 7. So far as the question of cost of production is concerned, the numerous factors like interest on money borrowed for the purpose of business certainly affects the average cost of production. When the books of accounts are found to have been correctly maintained and audited in the regular course of business, exact comparability of the two entities for the purpose of profitability is not possible. Moreover, when the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT (A), ground nos.1 2 are determined against the revenue. GROUND NO.3 11. The AO by invoking the provisions contained u/s 43B(d) of the Act made an addition of ₹ 8,50,94,998/- on account of interest accrued and due but not paid by rejecting the contention of the assessee that the lender concerns are institutions controlled by the Government and not financial institutions. However, CIT (A) in the impugned order, by relying upon the finding returned by the CIT (A), Noida vide order dated 26.08.2013 in assessee s own case qua the assessment year 2008-09, held that the institution of Uttar Pradesh Government are not covered in the definition of public financial institution and thereby deleted the addition made by the AO. 12. Undisputedly, the assessee in Schedule C of the balance sheet has shown the interest accrued and due but not paid as under:- Shakkar Vishesh Nidhi Rs.1,18,29,590/- State Govt. Loan Rs.5,65,34,280/- UP Cooperative Sugar Factories Federation Ltd. Rs.1,67,31,128/- Total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the aforesaid dues have not been paid on the ground that when the assessee has been making payment to all regular farmers who are selling their crops, the old creditors appeared to be not in existence. However, on the other hand, the CIT (A) deleted the addition. 17. A bare perusal of the order passed by the AO goes to prove that he has passed the assessment order without making any investigation and without providing an opportunity of being heard to the assessee. The AO has not even called the confirmation letters from the aforesaid old creditors to return the findings against the assessee but proceeded summarily to hold that the said creditors are not genuine merely on the basis of the fact that the assessee has been making payment to the current creditors regularly as required under the Act. 18. Even in the remand report dated 31.12.2013, the AO himself admitted that he has not obtained any confirmation of the creditors from the assessee. On the face of the admitted fact that the books of account of the assessee has never been disputed by the AO and the assessee is an Uttar Pradesh Government Undertaking and all the purchases are being made against the bills making addit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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