×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.
02-07-2019,Ganesh Sahakari Sakhar, Section 40A(2), 80P, Tribunal Pune
These two appeals by the assessee are directed against the order of Commissioner of Income Tax (Appeals)-2, Pune. Since, the issues raised in both the appeals are identical, the appeals are taken up together for adjudication and are disposed of vide this common order.
ITA No. 953/PUN/2017, (A.Y. 2009-10)
2. In this appeal, the assessee has assailed the order of Commissioner of Income Tax (Appeals) dated 30-08-2016 for the assessment year 2009-10. The assessee has raised solitary issue of disallowance of Rs.2,96,28,039/- on account of excess cane price paid to sugarcane supplier.
3. None has appeared on behalf of the assessee. The notice of appeal for 06-05-2019 was sent to the assessee on 10-04-2019 through RPAD on the address mentioned in Form No. 36. Despite service, none appeared to represent the assessee. Therefore, the appeal is taken up for adjudication with the assistance of ld. DR and the material available on record.
4. Shri Pankaj Garg representing the Department submitted that the issue raised in appeal is identical to the one already decided by the Tribunal in the case of Majalgaon SSK Ltd. Vs. ACIT in ITA No. 308/PUN/2018 for a sessment year 2013-14 decided on 14-03-2019. The ld. DR submitted that the Tribunal while deciding bunch of appeals has restored this issue to the file of Assessing Officer to decide the issue in light of decision of Hon’ble Supreme Court of India in the case of Commissioner of Income Tax Vs. Tasgaon Taluka S.S.K. Ltd. reported as 412 ITR 420. This case may also be restored to the Assessing Officer with similar directions.
5. The assessee in appeal has assailed the order of Commissioner of Income Tax (Appeals) in disallowing excess cane price paid to the cane growers. The assessee is a sugar factory engaged in manufacturing of white sugar from sugar cane. The issue of payment of excess sugar cane price paid to the cane growers has been dealt with by the Co-ordinate Bench of Tribunal in bunch of appeals viz. 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 decided on 20.03.2019 and in the case of ACIT Vs. Shri Shankar SSK Ltd. in ITA No. 382/PUN/2014 for assessment year 2010-11 decided on 13-06-2019. In above set of appeals the Tribunal has restored the issue to the file of Assessing Officer to decide this issue in line with the directions of Hon’ble Supreme Court of India in the case of Commissioner of Income Tax Vs. Tasgaon Taluka S.S.K. Ltd. (supra). In the present appeal the assessee has tried to distinguished the decision of Hon’ble Apex Court in the case of Commissioner of Income Tax Vs. Tasgaon Taluka S.S.K. Ltd. (supra). The Co-ordinate Bench in the case of ACIT Vs. Shri Shankar SSK Ltd (supra) after considering the binding judgment of Hon’ble Supreme Court in the case of CIT Vs. Tasgaon Taluka S.S.K. Ltd. (supra) has restored the issue back to the file of Assessing Officer with liberty to raise all contentions before the Assessing Officer. The relevant extract of the order reads as under :
“5. The Co-ordinate Bench (supra) after considering the binding judgment of Hon’ble Supreme Court in the case of CIT Vs. Tasgaon Taluka S.S.K. Ltd. reported as 103 taxmann.com 57, has decided this issue as under :
“5. We have heard both the sides and gone through the relevant material on record. There is consensus ad idem 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, 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 growers. Clause 3 of the Sugar Cane (Control) Order, 1966 authorizes the Government to fix minimum sugarcane price. In addition, the additional sugarcane price is also payable as per clause 5A of the Control Order, 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 ecommendations 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 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 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