TMI Blog2021 (7) TMI 286X X X X Extracts X X X X X X X X Extracts X X X X ..... ovo adjudication in similar terms. Provision for Vasantdada Sugar Institute (VSI) Contribution - HELD THAT:- As provision for VSI contribution has been decided by the Tribunal while adjudicating bunch of SSK appeals in Majalgaon SSK Ltd. Vs. ACIT [ 2019 (3) TMI 906 - ITAT PUNE]. We observe that the Co-ordinate Bench has decided this issue in favour of assessee. Disallowance on account of Chief Minister Relief Fund - CIT(Appeals) on this issue held that this amount was not incurred for the purpose of business and hence, not allowable u/s.37 of the Act and the same is allowable u/s.80G - HELD THAT:- As the amount has not been paid in the previous year as donation to the Chief Minister Relief Fund, the same was not allowable, as the requirement of law is that it should be paid. The action of the AO was upheld - once it is decided that the amount is allowable u/s.80G of the Act as donation to the Chief Minister Relief Fund, therefore, deduction allowed has to be calculated according to the provisions of the Act and also it has to be verified whether the said donation was made in the previous year or not, relevant to the assessment year. This exercise has to be done by the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s is sugarcane. The assessee filed its return of income for the assessment year 2013-14 on 27.09.2013 declaring total income at ₹ 4,00,21,160/- after claiming deduction at ₹ 6,88,55,044/- u/s.80IA(4)(iv)(a) of the Income Tax Act, 1961 (hereinafter referred to as the Act‟). The Assessing Officer completed assessment u/s.143(3) of the Act on 16.03.2016 determining the total income at ₹ 68,63,16,705/-. The Assessing Officer disallowed the amount of ₹ 63,25,58,221/- on account of disallowance u/s.37(1) of the Act for excessive cane price paid to members non-members, ₹ 1,12,38,600/- on account of sugar sale at concessional rate, ₹ 12,61,374/- on account of VSI contribution and ₹ 12,37,350/- on account of Chief Minister Relief Fund respectively. 4. The Ld. DR for the Revenue submitted that the issues raised in Ground No.1, 2 and 3 are covered by the decision of Co-Ordinate Bench of the Tribunal dated 14-03-2019 vide which bunch of 162 appeals were disposed of by the Co-ordinate Bench, the lead case being Majalgaon Sahakari Sakhar Karkhana Ltd. Vs. ACIT in ITA No. 308/PUN/2018 for the assessment year 2013-14 and also by the order of Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 of the Control Order, 1966, which is paid at the beginning of the season, is deductible in the entirety and the difference between SMP determined under clause 3 and SAP/additional purchase price de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, 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 compo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on record to show that this order of the Tribunal has been reversed or modified in any manner by the Hon ble High Court. Respectfully following the precedent, we decide this issue in favour of the assessee. Thus, in view of the above findings of the Tribunal, this ground is decided in favour of the assessee. Hence, Ground No.3 raised in appeal by the assessee is allowed. D. Ground No. 4 : Disallowance on account of Chief Minister Relief Fund : 11. The assessee debited an amount of ₹ 12,37,530/- under the head Chief Minister Relief Fund to the P L account. The Assessing Officer observed that the same was not paid during the year under consideration and therefore, was disallowed. 12. It was submitted by the assessee before the Ld. CIT(Appeals) that the amount was debited as per the Government of Maharashtra order and the amount was transferred to profit and loss account. The assessee also submitted that society could not avoid making this payment and the said expenditure was solely and exclusively for the purpose of business. This amount was also paid to the Government of Maharashtra. The assessee relied on the decision in the case of Siddheshwar Sahakar ..... 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