TMI Blog2007 (10) TMI 231X X X X Extracts X X X X X X X X Extracts X X X X ..... J.- 1. This appeal is filed by the Commissioner of Income Tax, Aurangabad under section 260A of the Income Tax Act, 1961 against the order passed by the I.T.A.T., Pune, Bench-A, Pune bearing ITA No.256/PN/05 dated 17/2/2006 for AY 1992-93. 2. Although several questions are raised in the appeal, the appeal is admitted on the following reframed questions of law and the appeal is taken up for final hearing by consent of both the parties:- 1. Whether the Appellate Tribunal was right in law in holding that provisions of Section 40A(2) (a) are not applicable to a co-operative Society ? 2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the additional payment over and above the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the revenue states that in view of the C.B.D.T. Circular No.117 dated 22/8/1973, he is not pressing the fourth question. Hence the only question to be decided in this appeal is question No.5. 5. The facts relevant for deciding the 5 th question are that the respondent ('assessee' for short) is engaged in the manufacture of sugar. Sugarcane is the raw material required for manufacture of sugar and the same is purchased by the assessee from its members as well as non members. 6. Sugar being a controlled commodity, minimum price payable to the sugarcane growers by the producer of sugar like the assessee is fixed by the Central Government under the Sugarcane (Control) Order, 1966 as modified from time to time. 7. Clause 3A of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing. " 8. Thus, under the sugarcane (Control) order, the sugar factories are allowed to deduct from the sugarcane price rebate towards the binding material not exceeding 1 kg. per quintal of sugarcane i.e. 0.01% if the sugarcane is brought bound in bundles. It is the case of the assessee that most of the time sugarcane is brought to the factory in bullock carts / tractors - trailors in unbound condition, that is without using any binding material. However, few farmers bring the sugarcane to the factories bound in bundles. The sugar factories prefer to pay the cane price to such farmers on the gross weight without deducting the costs of binding material at 0.01% permitted under the Sugarcane Control order. 9. In the assessment year i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as justified in making disallowance of the said amount. He submitted that irrespective of the fact that the binding material could be used as a fuel, the directions given by the Central Government regarding binding material was binding on the assessee and as the assessee failed to deduct the cost of the binding material, the assessing officer was justified in making the disallowance to that extent. He submitted that it is not open to the assessee to contend on the one hand that the directions given by the Government regarding the payment of sugarcane price is binding on them and at the same time refuse to follow the directions regarding the deduction of the cost of the binding materials from the total sugarcane price payable to the members ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the revenue and the same is liable to be dismissed. 14. We have carefully considered the rival submissions. 15. At the outset, it may be noted that the object of Sugarcane (Control) Order is to ensure that the sugarcane growers gets the minimum price for the sugarcane grown by them. The said order inter alia empowers the Central Government or other authorities named therein to allow rebate from the minimum price not exceeding 0.01% towards the cost of the binding material. According to the revenue, the directions given in the Sugarcane (Control) Order to deduct the cost of the binding materials @ 0.01% of the total sugarcane price is mandatory, whereas, according to the assessee it is directory. 16. On a plain reading of clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowance under section 40A(2) in the case of the assessee cooperative society. 18. As regards the deletion of the addition of Rs.2,07,038/- is concerned, in the present case, the assessee has paid to the non-members the sugarcane price as per the State Advise Price (SAP) fixed by the State Government. As held by this Court in the case of Manjara SSK Ltd . (supra) the SAP fixed by the State Government is binding on the assessee. The State Advise Price fixed by the State Government does not contain any direction to deduct the cost of the binding materials from the SAP. It is not in dispute that the assessee has made payments to the members and non members as per the SAP fixed by the State Government. Therefore, in the facts of the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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