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2016 (5) TMI 363 - ITAT DELHI

2016 (5) TMI 363 - ITAT DELHI - TMI - Addition on account of difference in the sales price of sugar between the assessee and of another entity located in the same area - adoption of average rate of sugar sold by that entity for determining the sale value of sugar sold by the assessee - Held that:- We are of the considered view that yield of any crop of one farmer cannot be compared with the yield of another farmer though adjoining to each other because it may depend on numerous factors, like, qu .....

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de by the AO is not sustainable in the eyes of law and CIT (A) has rightly deleted the same.

Hon’ble Supreme 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 ma .....

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t 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 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 th .....

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missioner of Income-tax, Circle - 2, Meerut (hereinafter referred to as the revenue ), by filing the present appeal sought to set aside the impugned order dated 31.12.2013 passed by the Commissioner of Income-tax (Appeals), Meerut qua the assessment year 2009-10 on the grounds, inter alia, that :- 1. Whether in the facts and circumstances of the case, the Ld. Commissioner of Income tax (Appeals) is justified in deleting the addition of ₹ 2,24,90,645/- made on account of difference in the s .....

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come tax (Appeals) is justified in deleting the addition of interest accrued and due on loans from the public financial institutions, to the tune of ₹ 8,50,94,998/-, that was not paid before the due date for filing of return, u/s 43B(d) of the I.T. Act, 1961. 4. Whether in the facts and circumstances of the case, the Ld. Commissioner of Income tax (Appeals) is justified in deleting the addition of ₹ 14,39,583/- made on account of outstanding old sundry creditors. 5. That the appellan .....

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ttended 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 u .....

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fference of sale price. Similarly, the AO made the comparison of per quintal yield of the sugarcane of the assessee with Ramala Sahakari Chini Mills Ltd. and noticed the difference of yield to the extent of 0.33% and observed that the assessee has shown sugar production less by 12,229 quintal and consequently made an addition of ₹ 2,11,04,197/-. 3. Assessee in Schedule - C of the balance sheet shown the interest accrued and due but not paid to the tune of ₹ 8,50,94,998/-. The AO find .....

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and for sugar production; that sugarcane is regularly required from the farmers; and that the payment is required to be made regularly and moreover, in other cases, assessee has been making the payment to other farmers on regular basis within 15 days or a month. Since the assessee has not taken any coercive action in case of those creditors, it shows that there is no existence of any such creditors and moreover, there is no confirmation on record filed by them, consequently made an addition of .....

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s relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. GROUNDS NO.1 & 2 6. Undisputedly, during the assessment proceedings, audited books of account have been produced and perused by the AO 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 l .....

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rage 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 assessee has duly produced sales record, sales .....

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ned, the same has again been made by the AO on the basis of assumptions and estimation without taking into consideration the actual and factual position of both the entities i.e. assessee s sugar mill and Ramala Sahakari Chini Mills Ltd.. The AO brought on record the fact that the assessee has shown the yield at 8.3% from 34.48 quintal of sugarcane as against yield of 8.33% from crushing of 50.03 quintal of sugarcane. 9. We are of the considered view that yield of any crop of one farmer cannot b .....

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iness which have been duly audited and have not been disputed by the AO. So, the addition on account of yield comparability made by the AO is not sustainable in the eyes of law and CIT (A) has rightly deleted the same. 10. Hon ble Supreme Court in judgment cited as Commissioner of Income-tax, West Bengal vs. Calcutta Discount Company Ltd. reported in 91 ITR 8 (SC) decided the identical issue to the effect that where a trader transfers his goods to another trader at a price less than the market p .....

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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 def .....

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of public financial institution empowering the AO to invoke the provisions contained u/s 43(d)? Identical issue has come up before the coordinate Bench of ITAT, Delhi Bench H , New Delhi in ACIT vs. Baghpat Cooperative Sugar Mills Ltd., ITA No.6157/Del/2012, in assessee s own case qua the assessment year 2007-08. 14. The coordinate Bench proceeded to decide the issue in controversy as under:- 6. The second issue is disallowance of interest paid to federation. The AO disallowed the amount on the .....

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as it is hit by the provisions of section 43 B(d) of the Act. 7. Section 438(d) of the Act reads as follows :- d) "any sum payable by the assessee as interest on any loan or borrowing from any public financial institution (or a State financial corporation or a State industrial investment 'corporation), in accordance with the term and conditions of the agreement governing such loan or borrowing. As the interest in question is payable to Govt. of India and the statement of UP Government, .....

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