SUPREME COURT OF INDIA
Commissioner of Income-tax, Bombay
Krishna Sahakari Sakhar Karkhana Ltd.
SPECIAL LEAVE PETITION (CIVIL)
APPEAL NO. 8590 OF 2010 AND OTHERS
CIVIL APPEAL NO. 6949 OF 2012 & OTHERS
SEPTEMBER 25, 2012
Heard learned counsel on both sides.
The assessee(s) is a Co-operative Society engaged in the business of production of sugar from sugarcane and sale thereof. Assessee(s) buys sugarcane from its Members. Every month and on Diwali, assessee(s) sells certain quantity of sugar (final product) at concessional rate to farmers/cane growers/Members. The difference between the average price of sugar sold in the market and the price of sugar sold by the assessee(s) to its Members at concessional rate is sought to be taxed by the Department under the Head ‘Appropriation of Profit’.
The question, whether the above difference between the fair market price and the concessional price should or should not be added to the total income of the assessee(s) Society, needs to be re-looked by Commissioner of Income Tax (Appeals) [for short, ‘CIT(A)’]. Apart from the afore-stated question, CIT(A) would take into account, whether the above-mentioned 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 Diwali?
These are some of the questions which have not been addressed by the Authorities below in the impugned orders. The CIT(A) would be entitled to look into the Accounts and verify the basis for sale of sugar at concessional price on month-to-month basis. We, therefore, keep all questions of law and facts open.
Needless to add, the CIT(A) would give liberty to both sides to produce relevant documents.
For the above reasons, we remit the cases to CIT(A) to de-novo consider the matter.
Accordingly, these civil appeals filed by the Department are disposed of with no order as to costs.