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TMI Blog2019 (6) TMI 1399X X X X Extracts X X X X X X X X Extracts X X X X ..... dheshwar Sahakari Sakhar Karkhana Ltd., Shri Pandurang Sahakari Sakhar Karkhana Ltd., The Shrigonda Sahakari Sakhar Karkhana Ltd., Shri Vithal Sahakari Sakhar Karkhana Ltd., Vithalrao Sinde Patil Sahakari Sakhar Karkhana Ltd., Yeshwant Sahakari Sakhar Karkhana Ltd., The Sanjivani (Takli) Sahakari Sakhar Karkhana Ltd., Jai Bhavani Sahakari Sakhar Karkhana Ltd., Rajgad Sahakari Sakhar Karkhana Ltd., Shri Sant Nath Sahakari Sakhar Karkhana Ltd., Bhima Sahakari Sakhar Karkhana Ltd., Jai Bhawani Sahakari Sakhar Karkhana ltd., The Malegaon Sahakari Sakhar Karkhana Ltd., Raosahebdada Pawar Ghadganga Sahakari Sakhar Karkhana Ltd., Ajinkyatara Sahakari Sakhar Karkhana Ltd., Ajinkyatara Sahakari Sakhar Karkhana Ltd., Shree Adinath Sahakari Sakhar Karkhana Ltd., Sahakar Maharshi Bhausaheb Thorat Sahakari Sakhar Karkhana Ltd., Shri Pandurang Sahakari Sakhar Karkhana Ltd., The Shrigonda Sahakari Sakhar Karkhana Ltd. Versus ACIT, DCIT, ITO, Pune. For the Appellant : Shri Pramod Shingte, Shri Prasanna Joshi, Shri K. Srinivasan, Shri Pratik Sandbhor For the Respondent : Smt. Nandita Kanchan, Shri Pankaj Garg, Shri Sudhendu Das ORDER PER BENCH : These bunch of 44 appeals by the assessee and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the sugarcane season on a 50:50 profit-sharing basis between growers and factories, to be worked out in accordance with the Second Schedule to the Order. The additional price is determined under clause 5A at the end of the season. The assessees purchase sugarcane from growers who are their members, as well as from non-members and use the same for manufacturing of sugar. For the purchase of sugarcane, the assessee paid to members and non-members a final price which was in excess of that payable under clause 3 and 5A of the Sugarcane (Control) Order, 1966. The Assessing Officer took a view that the difference between the price paid by the assessees and in terms of clause 3 of the Order, determined by the Central Government, and the price determined by the State Government under clause 5A of the Order (and consequently paid by the assessee to the cane growers) was a distribution of profits and not deductible as expenditure. Alternatively, the Assessing Officer also held that the excess cane price paid to the cane growers over the statutory minimum price was disallowable under section 40A(2)(a) as excessive and unreasonable. The CIT(A) held that the price actually paid for the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, 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‟ble Apex Court, it noted that clause 5A was inserted in the year 1974 on the basis of the recommendations made by the Bhargava Commission, which recommended payment of additional price at the end of the season on 50:50 profit sharing basis between the growers and factories, to be worked out in accordance with the Second Schedule to the Control Order, 1966. Their Lordships noted that at the time when additional purchase price is determined/fixed under clause 5A, the accounts are settled and the particulars are provided by the concerned Co-operative Society as to what will be the expenditure and what will be the profit etc. Considering the fact that Statutory Minimum Price (SMP), determined under clause 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anner 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." 6. Both the sides are unanimously agreeable that the extant issue of deduction for payment of excessive price for purchase of sugarcane, raised in most of the appeals under consideration, is squarely covered by the aforesaid judgment of the Hon‟ble Supreme Court. Respectfully following the precedent, 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, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... growers by the assessee towards purchase of sugarcane post October, 2009 should be made independent of the directions in the case of CIT Vs. Tasgaon Taluka S.S.K. Ltd. (supra). The ld. AR contended that in the changed scenario, w.e.f. assessment year 2009-10 it would be difficult to give effect to the decision of Hon‟ble Apex Court. The ld. AR further pointed that the Co-ordinate Bench of Tribunal in the case of bunch of appeals lead case being Siddheshwar Sahakari Sakhar Karkhana Ltd. Vs. DCIT in ITAT No. 1210/PUN/1997 decided on 01-05-2019 has dealt with this issue. We have considered the submissions of ld. AR, the appeals are restored back to the file of Assessing Officer leaving the question open for consideration and examination by the Assessing Officer. The assessees are at liberty to raise all their contentions before Assessing Officer. 8. Thus, in view of the assertions made by both the sides that the facts in the present set of appeals being identical to the issue relating to excess sugarcane price paid by the assessee the issue is restored to the file of Assessing Officer with similar directions as above in the cases of M/s. Vasant Rao Dada Patil SSK Ltd. (supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adjudicate the issues under consideration raised by the appellants/department. In the above background, both, the counsels for the assessees and the Revenue fairly submitted that there is requirement of clear finding of fact and law on the directions by the Hon‟ble Supreme Court of India. Thus, the includibility of such concessional sugar price in the total income of the assessee assumes great significance and the same is conspicuously missing in the impugned orders of the respective CIT(A). 11. In the light of above, the ld. AR for the assessee furnished following written submissions raising the issues for consideration of the CIT(A) in respective cases :- "1. Hon‟ble ITAT, Pune, in Chh. Shahu SSK ITA No. 1924-26/PN/90 vide order dated 8/8/1996, at paras 32-39, following ratio of A. Raman & CO, 67 ITR 11 (SC), held that no income accrued to the assessee on sale of sugar at concession rate to its members. 2. Hon‟ble Bombay High Court, in CIT v. Terna SSSK, 301 ITR 222, has noted that Counsel for the Dept, in view of Circular No. 117 dt. 22/8/1973 did not press this ground in appeal. 3. Hon‟ble Supreme Court, in CIT v. Krishna SSK, (2012) 211 Taxman 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y assessee is not taxable in its hands. c) In most of the appeals, CIT(A)s have held that supplying sugar at a concession price to members and cane suppliers has become a trade practice and custom of the industry. CIT(A)s have noted that State Govt. has now brought strict uniformity in this practice by issuing an order dt. 1/3/2006 u/s 79A of MCS Act, stating the eligibility for society to sell such sugar, its price and monthly quantum. d) Most CIT(A)s, having noted the aforesaid order dt. 1/3/2006, held that sugar sold at prices lower than levy sugar as provided of in the said order, would be taxable in assessee‟s hands at the difference between levy price and concessional price charged for infringement of the order. e) Some CIT(A)s held that concession sugar sold in excess of quantum permitted by order dt. 1/3/2006, would be taxable in the hands of the assessee society for infringement of the order. f) Some CIT(A)s held that concession sugar sold to cane growers who were not members was not permitted by order dt. 1/3/2006 and as such was its infringement and therefore, the concession given was taxable in the hands of the assessee society. g) Some assessee societie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d (d) sales during Diwali" 12. In the light of the above, it is the submissions of AR for the assessee and the ld. DR that all these bunch of appeals need to be remanded to the file of Assessing Officer for fresh adjudication for the purpose of giving effect to the directions of Hon‟ble Apex Court in proper perspective. 13. On hearing both the sides, we find there is merit in the submissions of the AR. In all these appeals, the CIT(A) has failed to decide the appeals of the assessees in consonance with the above discussed direction of Hon‟ble Apex Court in the case of Krishna SSK Ltd. (supra). Accordingly, in these bunch of appeals the issue of sale of sugar at concessional price to the members should be ideally remanded to the file of Assessing Officer for fresh consideration and adjudication of the issue on merits and law. In fact, the Hon‟ble Supreme Court remanded the issue to the file of the CIT(A) for complying its direction in the case of Krishna SSK Ltd. (supra). However, in order to avoid multiplicity of the proceeding before different officers, and to be in tune with our findings given in para 7 of this order, we find, remanding to the file of the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the title. We find that this issue is consequential to the core issues of excessive cane price and sale of sugar at concessional rate. The outcome of the findings on the core issues will have bearing on the allowability of unabsorbed depreciation and carried forward business loss. Consequently, we deem it appropriate to restore this issue back to the file of Assessing Officer for reconsideration along with the core issues mentioned above. Accordingly, the ground of appeal relating to allowability of unabsorbed depreciation and carried forward business loss raised in the appeals is allowed for statistical purpose. Provision for Vasantdada Sugar Institute (VSI) Contribution. 17. The ld. AR submitted that the issue of provision for VSI contribution has been decided by the Tribunal while adjudicating bunch of SSK appeals in Majalgaon SSK Ltd. Vs. ACIT in ITA No. 308/PUN/2018 for assessment year 2013-14 decided on 14-03-2019. The Co-ordinate Bench followed the decision rendered in the case of Bhima S.S.K. Ltd. in ITA No. 1414/PUN/2000. The ld. DR fairly admitted that this issue has already been considered by the Tribunal. We observe that the Co-ordinate Bench has decided this issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een wrongly mentioned as Rs. 1,97,575/- in the grounds of appeal as against Rs. 24,294/-. The Commissioner of Income Tax (Appeals) disallowed prior period expenditure on the ground that the assessee has failed to show the period to which these expenses pertain. The ld. AR submitted that if an opportunity is granted, the assessee would furnish necessary documents before the Commissioner of Income Tax (Appeals) in support of his contentions. In view of the prayer made by the assessee, this ground of appeal is restored to the file of Assessing Officer. The assessee shall furnish relevant documentary evidence to support its contentions and the Assessing Officer after considering the same shall decide this issue afresh after affording reasonable opportunity of hearing to the assessee, in accordance with law. Consequently, this ground is allowed for statistical purpose. Sale of bio-compost at concessional rate. 20. The issue of sale of bio-compost at concessional rate emerges from the appeal by the assessee in ITA No. 591/PUN/2014 for the assessment year 2010-11 (at Sr. No. 29). A perusal of the assessment order shows that the assessee has sold bio-compost to its members at a rate less ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in favour of the assessee. Disallowance of Sabha Samarambh expenses. 22. The expenditure claimed by the assessees under the head Sabha Samarambh are in nature of vehicle charges. The ld. AR submitted that the expenditure is incurred on transportation of numerous SSK shareholders to the events organised by SSK. The expenditure is incurred for spreading goodwill among shareholders and to make shareholders aware of latest development in cultivation of sugarcane. The Assessing Officer has made adhoc disallowance of 10% of such expenditure and the Commissioner of Income Tax (Appeals) has confirmed the same. 22.1 We have examined the impugned order. The assessee in First Appellate proceedings has placed reliance on the decision rendered in the case of Shankar SSK Ltd. Vs. DCIT wherein such expenditure is allowed to the extent of 75%. In the instant case the authorities below in the absence of complete set of documents has disallowed 10% of such expenditure. We are of considered view that disallowance of 10% is fair and reasonable. We find no reason to interfere with the impugned findings. Thus, ground of appeal by assessee is dismissed. Disallowance of late payment of Provident Fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arashtra Government are in respect of pre seasonal loans. It is neither emanating from the records, nor the Revenue has brought before us any material to show that the assessee is under obligation to pay Government Guarantee Fee on account of statutory requirement as "revenue‟ to the State. The Hon‟ble Rajasthan High Court in the case of Commissioner of Income Tax Vs. Udaipur Distillery Co. Ltd. reported as 268 ITR 305 has held that "tax‟, "duty‟, "cess‟ or "fee‟ constituting a class, denotes various kinds of imposts by State in its sovereign power of taxation to raise revenue for the State. Within the expression of each specie each expression denotes different kind of impost depending on the purpose for which they are levied. "The Hon‟ble High Court further clarified that merely levy of charge as tax or fee is not conclusive of its character. It is only if any amount becomes payable by way of tax, duty, cess or fee, it falls within the purview of section 43B of the Act. Thus, in the light of above, we hold that the Government Guarantee Fee cannot be put in same bracket as tax, cess or duty and hence, no disallowance u/s. 43B in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer, the assessee cannot be granted liberty to assail the same addition before the Second Appellate Authority. It is not the case of assessee that the concession was wrongly recorded. We find no reason to interfere with the findings of lower authorities. Accordingly, the addition made on account of loan refund fund is upheld. Disallowance of unpaid professional tax u/s. 43B. 27. One of the ground raised by the Department in its appeal ITA No. 1667/PUN/2016 (at Sr. No. 32) is against deleting of disallowance made by the Assessing Officer in respect of Unpaid Professional Tax u/s. 43B of the Act. A perusal of impugned order shows that the Commissioner of Income Tax (Appeals) has granted relief to the assessee on the ground that the assessee has not claimed any amount as deduction in respect of Unpaid Professional Tax. If the amount has not been claimed by the assessee as deduction, no disallowance can be made. We do not find any infirmity in the impugned order. Accordingly, the findings of Commissioner of Income Tax (Appeals) on this issue are confirmed. Disallowance of VAT. 28. The Revenue in ITA No. 1667/PUN/2016 (at Sr. No. 32) has raised grounds assailing deleting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng. This issue had came up for consideration before the Special Bench of Tribunal in DCIT Vs. Manjara Shetkari SSK Ltd. (2004) 85 TTJ (Mum.)(SB) 369. The Special Bench granted deduction for the aforesaid expenses. On further appeal by the Revenue, the Hon‟ble Bombay High Court approved the view taken by the Tribunal in allowing deduction for payment of Khodki Charges. The ld. CIT(A) has recorded that the SLP filed by the Department in the case of Jadamba SSK Ltd., on similar issue, has been dismissed by the Hon‟ble Supreme Court on 23-03-2009. In view of the fact that Khodki charges have been held as deductible by the Hon‟ble Jurisdictional High Court, this issue has to be decided in favour of the assessee. We hold and direct accordingly. Disallowance of contribution towards Area Development Fund. 30. We find that the Co-ordinate Bench has considered this issue and has restored the same to the file of Assessing Officer by observing as under : "13. Having heard both the sides and gone through the relevant material on record, it is seen that similar issue came up for consideration before the Hon‟ble Supreme Court in the case of Siddheshwar Sahakari S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer disallowed assessee‟s claim of deduction u/s. 35(1) in respect of contribution made to Sakhar Sangh. The Commissioner of Income Tax (Appeals) in appellate proceedings restored the issue back to the file of Assessing Officer to verify whether the deduction claimed by the assessee u/s. 35(1) is by virtue of any notification by Central Government, if so the same should be allowed to the assessee. We do not find any infirmity in the directions given by the Commissioner of Income Tax (Appeals) in allowing the claim of assessee u/s. 35(1) subject to verification. We further observe that in view of directions given by the Commissioner of Income Tax (Appeals) the ground raised by the assessee assailing disallowance and adding back of contribution on account of Sakhar Sangh is misconceived. The same is dismissed, accordingly. Disallowance of vehicle and repair expenditure. 32. Another issue raised in the appeal ITA No. 280/PUN/2017 (at Sr. No. 42) by the assessee is against disallowance of vehicle, repair and fuel expenditure. The assessee has claimed expenditure to the tune of Rs. 23,84,981/- towards vehicle fuel expenditure. The Assessing Officer in the absence ..... X X X X Extracts X X X X X X X X Extracts X X X X
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