TMI Blog2019 (6) TMI 1295X X X X Extracts X X X X X X X X Extracts X X X X ..... ment 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. At this stage, it is made clear that the distribution of profits can only be qua the payments made to the members. In so far as the non-members are concerned, the case will be considered afresh by the AO by applying the provisions of section 40A(2) of the Act, as has been held by the Hon ble Supreme Court supra. Needless to say, the assessee will be allowed a reasonable opportunity of hearing by the AO in such fresh determination of the issue. It is further made clear that the assessee will be at liberty to raise any other argument concerning the issue before the AO. Addition understatement of sale - HELD THAT:- Assessee admittedly sold sugar to JJSD at a concessional rate of ₹ 1,080/- per bag on the understanding that the same was meant for export by the latter. JJSD did n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also filed Cross Objection for the said later year. Since certain issues involved in these appeals are common, we are, therefore, proceeding to dispose them off by this consolidated order for the sake of convenience. A.Y. 2002-03 : 2. The first issue raised by the Revenue is against the deletion of disallowance of ₹ 1,66,31,744/- made by the Assessing Officer (AO) on account of excess price of sugarcane. 3. Briefly stated, the facts of the case are that the assessee is a Co-operative Society manufacturing white sugar and byproducts. The AO made addition of ₹ 1.66 crore and odd on account of excess cane price paid, which came to be deleted in the first appeal. 4. We have heard both the sides and gone through the relevant material on record. It is an agreed position between the rival parties that the issue of payment of excessive price on purchase of sugarcane by the assesses is no more res integra in view of the recent judgment of Hon ble Supreme Court in CIT Vs. Tasgaon Taluka S.S.K. Ltd. (2019) 103 taxmann.com 57 (SC) . The Hon ble Apex Court, vide its judgment dated 05-03- 2019 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and manner in which SAP/additional purchase price/final price is decided. He has been directed to carry out an exercise of considering accounts/balance sheet 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 and thereafter determine as to what amount would form part of the distribution of profit and the other as deductible expenditure. The relevant findings of the Hon ble Apex Court are reproduced as under:- 9.4. ..... Therefore, to the extent of the component of profit which will be a part of the final determination of SAP and/or the final price/additional purchase price fixed under Clause 5A would certainly be and/or said to be an appropriation of profit. However, at the same time, the entire/whole amount of difference between the SMP and the SAP per se cannot be said to be an appropriation of profit. As observed hereinabove, only that part/component of profit, while determining the final price worked out/SAP/additional purchase price would be and/or can be said to be an appropriation of profit and for that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income, will be considered as deductible expenditure. At this stage, it is made clear that the distribution of profits can only be qua the payments made to the members. In so far as the non-members are concerned, the case will be considered afresh by the AO by applying the provisions of section 40A(2) of the Act, as has been held by the Hon ble Supreme Court supra. Needless to say, the assessee will be allowed a reasonable opportunity of hearing by the AO in such fresh determination of the issue. It is further made clear that the assessee will be at liberty to raise any other argument concerning the issue before the AO. 6. The only other issue which arises in the appeal is against the deletion of addition of ₹ 3,22,58,450/- made by the AO on account of understatement of sale. 7. The facts apropos this ground are that the assessee made sale of certain quantities of sugar to M/s. Jai Jagdish Sugar Export/Import, Dhule (JJSD) under quota at the rate of ₹ 1,080/- per bag. The sugar was delivered by the assessee to JJSD, a merchant, against the release order dated 06-11-2001 from the Director, Krishi Bhawan, New Delhi fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon ble Bombay High Court has cancelled the award directing the payment of some compensation to the assessee. Be that as it may, in our considered opinion, compensation, if any, which the assessee eventually receives from JJSD will be subjected to tax in its hand when it acquires the right to receive the same. In sofaras the year under consideration is concerned, the assessee has neither recovered excess over quota price from JJSD nor acquired right to receive any compensation. We, therefore, hold that the ld. CIT(A) was justified in deleting the addition. 9. In the appeal is partly allowed for statistical purposes. A.Y. 2012-13 : 10. The only grievance projected by the Revenue in its appeal is against entitling the assessee to deduction on account of expenditure claimed on salaries and wages amounting to ₹ 2,72,51,072/-. 11. Briefly stated, the facts of the case are that the assessee raised an additional ground before the ld. CIT(A) that it incurred liability for salary arrears amounting to ₹ 2,72,51,072/- as per the registered agreement dated 23-11-2011 which was omitted to be debited to the Profi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order dated 14-03-2019 reads as under : 11. Having heard both the sides and gone through the relevant material on record, it is observed that the AO made addition of the difference between the market price and the concessional price at which sugar (final product) was given to farmers and cane growers. In this regard, it is observed that this issue has been considered by the Hon ble Supreme Court 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 Co-operative 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 fin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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