TMI Blog2019 (4) TMI 857X X X X Extracts X X X X X X X X Extracts X X X X ..... cent judgment of Hon’ble Supreme Court in CIT Vs. Tasgaon Taluka S.S.K. Ltd. (2019 (3) TMI 321 - SUPREME COURT) - we 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 the aforenoted judgment. The AO would allow deduction for the price paid under clause 3 of the Sugar Cane (Control) Order, 1966 and then determine the component of distribution of profit embedded in the price paid under clause 5A, by considering the statement of accounts, balance sheet and other relevant material supplied to the State Government for the purpose of deciding/fixing the final price/additional purchase price/SAP under this clause. 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. Distribution of profits can only be qua the payments made to the members. In so far as the non-members are concerned, the case w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Under these circumstances and considering the totality of facts and circumstances of the case we are of the considered opinion that the ld. CIT(A) has taken a reasonable view. Thus, we countenance the view taken by the ld. CIT(A) on this score. Appeals are fully/partly allowed for statistical purposes. - ITA No. 2126/PUN/2012, 2127/PUN/2012, 2128/PUN/2012, 2129/PUN/2012, 2130/PUN/2012, 2351/PUN/2012, 948/PUN/2012, 949/PUN/2012, 661/PUN/2016, 491/PUN/2014, 492/PUN/2014, 2370/PUN/2012, 2371/PUN/2012, 485/PUN/2014, 486/PUN/2014, 487/PUN/2014 - - - Dated:- 12-4-2019 - ITA No. 595/PUN/2012, 596/PUN/2012, 2162/PUN/2012, 1028/PUN/2012 And 1029/PUN/2012 Justice P.P. Bhatt, President And Shri R.S. Syal, Vice President For the Assessee : Shri Prasanna L. Joshi, Shri M.K. Kulkarni, Shri Pramod Shingte And Smt. Deepa Khare For the Revenue : Shri Pankag Garg ORDER PER P.P. BHATT, PRESIDENT This batch comprising of certain appeals by the assessees and the others by the Revenue relate to different assessment years captioned above. Since most of the appeals have at least one common issue, we are, therefore, disposing them off by this consolidated order for the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee in that case purchased and crushed sugarcane and paid price for the purchase during crushing seasons 1996-97 and 1997- 98, firstly, at the time of purchase of sugarcane and then, later, as per the Mantri Committee advice. It further noted that the production of sugar is covered by the Essential Commodities Act, 1955 and the Government issued Sugar Cane (Control) Order, 1966, which deals with all aspects of production of sugarcane and sales thereof including the price to be paid to the cane growers. Clause 3 of the Sugar Cane (Control) Order, 1966 authorizes the Government to fix minimum sugarcane price. In addition, the additional sugarcane price is also payable as per clause 5A of the Control Order, 1966. The AO in that case concluded that the difference between the price paid as per clause 3 of the Control Order, 1966 determined by the Central Government and the price determined by the State Government under clause 5A of the Control Order, 1966, was in the nature of `distribution of profits and hence not deductible as expenditure. He, therefore, made an addition for such sum paid to members as well as non-members. When the matter finally came up before the Hon b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the material supplied to the State Government for the purpose of deciding/fixing the final price/additional purchase price/SAP under Clause 5A of the Control Order, 1966. Merely because the higher price is paid to both, members and nonmembers, qua the members, still the question would remain with respect to the distribution of profit/sharing of the profit. So far as the non-members are concerned, the same can be dealt with and/or considered applying Section 40A (2) of the Act, i.e., the assessing officer on the material on record has to determine whether the amount paid is excessive or unreasonable or not........ 9.5 Therefore, the assessing officer will have to take into account the manner in which the business works, the modalities and manner in which SAP/additional purchase price/final price are decided and to determine what amount would form part of the profit and after undertaking such an exercise whatever is the profit component is to be considered as sharing of profit/distribution of profit and the rest of the amount is to be considered as deductible as expenditure. 5. Both the sides are unanimously agreeable that the extant issue of deduction for payment of e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of CIT Vs. Krishna Sahakari Sakhar Karkhana Limited (2012) 27 taxmann.com 162 (SC). Vide judgment dated 25-09-2012, the Hon ble Supreme Court noticed that the difference between the average price of sugar sold in the market and the price of sugar sold by the assessee to its members at concessional rate was taxed by the Department under the head Appropriation of profit . The Hon ble Summit Court remitted the matter to the CIT(A) for considering, inter alia ,: whether the abovementioned practice of selling sugar at concessional rate has become the practice or custom in the Cooperative sugar industry?; and whether any Resolution has been passed by the State Government supporting the practice?; The CIT(A) would also consider on what basis the quantity of the final product, i.e. sugar, is being fixed for sale to farmers/cane growers/Members each year on month-to-month basis, apart from others from Diwali? The issue under consideration can be decided by an appropriate lower authority only on the touchstone of the relevant factors noted in the above judgment. In our considered opinion, it would be just and fair if the impugned orders on this score are set aside and the m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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