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TMI Blog2022 (8) TMI 518X X X X Extracts X X X X X X X X Extracts X X X X ..... /- made by the AO on account of entire difference between sugarcane price paid at the rate of SAP and price payable at the rate of SMP considering it as excessive and unresponciable and as distribution of profit ignoring the decision dated 05.03.2019 of the decision dated 05.03.2019 of the Hon. Supreme Court in the less case of Tasgaon Tal. SSK Ltd in Appeal No.8890 of 2012 along with other appeals in which the Hon. Supreme Court (Civil appellate Jurisdiction) has specifically held that there is certainly element of profit in SAP however, entire difference between price paid at SAP and price payable at SMP cannot be even element of profit. The additional made, at Rs.3,88,87,750/- may therefore kindly be deleted." 2. The ld ld.Departmental ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, has elaborately dealt with this issue. It recorded the factual matrix that 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 gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill 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." 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 setaside t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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