Case Law Details
Shri Vithal Sahakari Sakhar Karkhana Ltd. Vs ITO (ITAT Pune)
The assessee, engaged in the business of manufacturing and sale of sugar, appealed against the order of the Commissioner of Income Tax (Appeals) for Assessment Year 2014-15, raising issues relating to disallowance of sale of sugar at a concessional rate, VSI contribution, and disallowance under Section 80P(2)(d). At the outset, both parties submitted that the issues had already been decided by the Co-ordinate Bench in the batch of appeals led by Majalgaon Sahakari Sakhar Karkhana Ltd. v. ACIT. On the issue of concessional sale of sugar, the Tribunal noted that the Co-ordinate Bench had relied on the Supreme Court’s decision in CIT v. Krishna Sahakari Sakhar Karkhana Ltd., which required examination of whether the practice of selling sugar to members at concessional rates constituted appropriation of profit in light of specified factors. Following the earlier decision, the Tribunal restored the issue to the Assessing Officer for fresh adjudication after providing the assessee a reasonable opportunity of hearing. Regarding VSI contribution, the Tribunal observed that the Co-ordinate Bench had consistently allowed the claim by following Bhima S.S.K. Ltd., and as no material was placed to show that the decision had been reversed or modified by the High Court, it decided the issue in favour of the assessee. As regards the deduction under Section 80P(2)(d), the Tribunal noted that the assessee had claimed deduction in respect of interest received from Bank of India, which was not allowable under the provision, and that the ground had not been pursued before the CIT(A). Finding no infirmity in the Assessing Officer’s order, it upheld the disallowance. The assessee also chose not to press another ground, which was dismissed accordingly. The appeal was partly allowed.
FULL TEXT OF THE ORDER OF ITAT PUNE
This appeal by the assessee against the order dated 20-10-2017 passed by the Commissioner of Income Tax (Appeals)-7, Pune [‘CIT(A)’] for assessment year 2014-15.
2. The assessee in the present appeal is engaged in the business of manufacturing and sale of sugar. The issues raised in this appeal are :
i. Disallowance of sale of sugar at concessional rate.
ii. VSI Contribution.
iii. Disallowance made on account of section 80P(2)(d).
3. The ld. AR, Shri Hanmat Dattatry Dhavle and the ld. DR, Shri S.P. Walimbe submitted at the outset that the issues raised in present appeal has already been considered and adjudicated by the Co-ordinate Bench of Tribunal in batch of appeals vide order dated 14-03-2019 out of which the lead case being Majalgaon Sahakari Sakhar Karkhana Ltd. Vs. ACIT in ITA No. 308/PUN/2018 for the assessment year 2013-14.
4. After hearing both the sides and after considering the order of Coordinate Bench in the case of Majalgaon Sahakari Sakhar Karkhana Ltd. Vs. ACIT (supra) etc., we observe that the issues raised in the present appeal has already been considered and decided by the Co-ordinate Bench.
(i) Sale of Sugar at Concessional rate
5. We find that the issue of sale of sugar at concessional rate has also been considered by the Co-ordinate Bench in the case of Majalgaon Sahakari Sakhar Karkhana Ltd. Vs. ACIT (supra) and has held as under :
“11. Having heard both the sides and gone through the relevant material on record, it is observed that the AO made addition of the difference between the market price and the concessional price at which 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 the relevant factors noted in the above judgment. In our considered opinion, it would be just and fair if the impugned orders on this score are set aside and the matter is restored to the file of AOs, instead of to the CITs(A), for fresh consideration as to whether the difference between the average price of sugar sold in the market and that sold to members at concessional rate is appropriation of profit or not, in the light of the directions given by the Hon’ble Supreme Court in the case of Krishna Sahakari Sakhar Karkhana Limited (supra). Restoration to the AO is necessitated because, following the judgment of the Hon’ble Apex Court in the case of Tasgaon Taluka S.S.K. Ltd. (supra), we have remitted the issue of payment of excessive price to the file of AO, and as such, the instant issue cannot be sent to ld. CIT(A) as it would amount to simultaneously sending one part of the same assessment order to the AO and other to the CIT(A), which is not appropriate. We order accordingly.”
6. Both the sides have stated at the Bar that the issue raised in present appeal is identical to the one already decided by the Co-ordinate Bench. Thus, in view of the above order by Co-ordinate Bench this issue is restored back to the file of Assessing Officer for de-novo adjudication in similar terms. The Assessing Officer shall grant reasonable opportunity of hearing to the assessee, in accordance with law.
(ii) VSI Contribution
7. The ld. AR submitted that the issue of provision for VSI contribution has been decided by the Co-ordinate Bench in favour of the assessee by following the order of Tribunal in the case of Bhima S.S.K. Ltd. in ITA No. 1414/PUN/2000. The ld. DR fairly admitted that this issue has been considered by the Co-ordinate Bench. The Co-ordinate Bench while deciding this issue in favour of assessee has observed as under :
“18. We have heard both the sides and gone through the relevant material on record. It is found that the ld. CIT(A) has determined this issue in favour of the assessee by following the order passed by the Pune Benches of the Tribunal in the case of Bhima S.S.K. Ltd. (supra). No material has been placed 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.”
8. Thus, in view of the above findings of the Tribunal and submissions of both the sides, the issue is decided in favour of the assessee.
(iii) Disallowance on section 80P(2)(d)
9. The assessee claimed deduction of Rs.1,08,638/- u/s. 80P(2)(d) of the Act, but, however, the AO denied the same as the interest received from Bank of India which is not allowable u/s. 80P(2)(d) of the Act. As it appears from the impugned order that the assessee did not prosecute the said ground before the CIT(A) as it was dismissed as not pressed. Since, the interest derived from Bank of India as it is not allowable u/s. 80P(2)(d) of the Act, thus, we find no infirmity in the order of AO. Accordingly, ground No. 4 is dismissed.
10. The ld. AR submits that the assessee is not interested to prosecute the ground No. 3. Accordingly, the same is dismissed as not pressed.
11. In the result, the appeal of the assessee is partly allowed.
Order pronounced in the open court on 15th July, 2022.
Author Bio
