TMI Blog2022 (5) TMI 600X X X X Extracts X X X X X X X X Extracts X X X X ..... Koppa Respondent by : Shri B. K. Rao ORDER PER PARTHA SARATHI CHAUDHURY , JUDICIAL MEMBER Both these appeals preferred by the assessee emanate from a consolidated order of the ld. Commissioner of Income Tax (Appeals)-1, Kolhapur dated 03-12-2018 for the Assessment Years 2014-15 2015-16 as per the grounds of appeal on record. 2. At the very outset, the ld. Counsel for the assessee referring to the Grounds of appeal submitted that broadly there are two issues for adjudication in the appeals of assessee for A.Y. 2014-15 and 2015-16; viz. (i) excess sugar cane price paid to the Members and Non-members; (ii) sale of sugar cane at concessional rate to the Members. 3. We find that the same issues have been adjudicated by the Pune Bench of Tribunal in ITA No. 2061/PUN/2017 for A.Y. 2014-15 in the case of Karmaveer Shankarrao Kale Sahakari Sakhar Karkhana Ltd., dated 22-12-2020. The relevant part of the judgment is extracted as follows: Ground Nos. 1 to 14 pertains to Excess sugarcane price paid to the members non-members: 5. On this issue, the Co-ordinate Bench of the Tribunal in the case of ACIT Vs. Shri Shankar SSK Ltd. (supra.) has held and observed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 procurement of sugarcane was to be allowed as business expenditure, and that the excess payment of cane price as fixed by the State Government over and above the statutory minimum price for sugarcane to members and non-members could not be disallowed under section 40A(2)(b) of the Act, despite the fact that profit was one of the components in the price. 4. Referring to the facts and issues, the Ld. Authorised Representatives appearing on behalf of the assessees and Ld. Departmental Representatives representing the Department, submitted, at the outset, that the issue of excess sugarcane price raised in present set of appeals by the assessees/Revenue have already been considered and adjudicated by the Co-ordinate Bench of Tribunal in bunch of appeals with the lead case i.e. DCIT vs. Vasant Rao Dada Patil SSK Ltd. vide ITA Nos. 50 to 52/PUN/2012 for the assessment years 1992-93, 1994-95 1996-97 respectively dated 20.03.2019. 5. The Co-ordinate Bench (supra) after co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... articulars are provided by the concerned Cooperative 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 determined under clause 5A, has an element of distribution of profit which cannot be allowed as deduction, the Hon'ble Supreme Court remitted the matter to the file of the AO for considering the modalities 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice 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. 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. 7. It is noted that in some of the appeals, the assessees have ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) and also consider the contentions of assessee with respect to SMP vis- -vis FRP regime, where ever raised. The Assessing Officer shall decide the issue, after affording reasonable opportunity of hearing to the respective assessees, in accordance with law. Thus, the issue of excess cane price paid to sugarcane suppliers is allowed for statistical purposes in the aforesaid terms. Respectfully following the decision referred hereinabove, 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) and also consider the contentions of assessee with respect to SMP vis- -vis FRP regime, where ever raised. The Assessing Officer shall decide the issue, after affording reasonable opportunity of hearing to the respective assessees, in accordance with law. Thus, Ground No. 1 to 14 relating to the issue of excess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration 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 includability 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 109 (SC), has not referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds. 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 societies have not sold conce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Assessing Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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