2020 (12) TMI 1330 - AT - Income Tax

Excess sugarcane price paid to the members non members - HELD THAT - 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. 2019 (3) TMI 1637 - ITAT PUNE and also consider the contentions of assessee with respect to SMP vis-a-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 - Ground relating to the issue of excess cane price paid to members non members is allowed for statistical purposes in the aforesaid terms. Sale of Sugar at Concessional rate to members - HELD THAT - As relying on SHRI SHANKAR SSK LTD 2019 (6) TMI 1399 - ITAT PUNE the issue sale of sugar at concessional rate to member is remanded to the file of Assessing Officer for fresh adjudication for the purpose of giving effect to the directions of Hon ble Apex Court KRISHNA SAHAKARI SAKHAR KARKHANA LTD. 2012 (11) TMI 669 - SUPREME COURT in proper perspective. Beneficiary Membership Capital C Class membership capital - HELD THAT - As relying on KARMAVEER SHANKARRAO KALE SSK LTD. VERSUS ACIT, AHMEDNAGAR 2019 (9) TMI 1475 - ITAT PUNE we are of the considered view that the issue relates to the C-class membership fee is required to be remanded to the file of the Assessing Officer for fresh adjudication. Assessing Officer shall grant reasonable opportunity of being heard to the assessee and pass a speaking order. Accordingly, the relevant grounds raised by the assessee on this issue are allowed for statistical purposes. Contribution towards Area Development fund - HELD THAT - As relying on SHRI SHANKAR SSK LTD 2019 (6) TMI 1399 - ITAT PUNE we are of the considered view that the issue relates to the contribution towards Area Development Fund is required to be remanded to the file of the Assessing Officer for fresh adjudication. The Assessing Officer shall grant reasonable opportunity of being heard to the assessee and pass a speaking order on this issue. Accordingly, the relevant grounds raised by the assessee on this issue are allowed for statistical purposes. Appeal of the assessee is allowed for statistical purposes.

Summary

Issues Involved:
1. Excess sugarcane price paid to members and non-members.
2. Sale of sugar at concessional rate to members.
3. Beneficiary Membership Capital and C Class membership capital.
4. Contribution towards Area Development Fund.

Issue-wise Detailed Analysis:

1. Excess Sugarcane Price Paid to Members and Non-Members:
The Tribunal noted that the production of sugar is regulated by the Essential Commodities Act, 1955, and the Sugarcane (Control) Order, 1966. The Central Government fixes the minimum price of sugarcane, and any price paid above this statutory minimum price (SMP) is considered. Clause 5A allows for an additional price based on a profit-sharing basis. The Tribunal referred to the Supreme Court judgment in CIT Vs. Tasgaon Taluka S.S.K. Ltd., which held that the difference between the SMP and the price paid under Clause 5A should be examined to determine the component of profit distribution, which is not deductible as expenditure. The Tribunal remitted the issue to the Assessing Officer (AO) to carry out this exercise and determine the allowable deduction.

2. Sale of Sugar at Concessional Rate to Members:
The Tribunal referred to the Supreme Court's directions in CIT vs. Krishna SSK Ltd., which required the CIT(A) to consider whether the difference between market price and concessional price should be added to the assessee's income. The Tribunal found that the CIT(A) had failed to address this crucial issue and remanded the matter to the AO for fresh adjudication, ensuring compliance with the Supreme Court's directions and considering the custom and trade practice, State's policy, and the basis for monthly and Diwali sales.

3. Beneficiary Membership Capital and C Class Membership Capital:
The Tribunal referred to its decision in Karmaveer Shankarrao Kale SSK Ltd. Vs. ACIT, where it was held that the C-class membership fee is a capital receipt and not taxable. The Tribunal remanded the issue to the AO for fresh adjudication, directing the AO to examine precedents and the assessee's conduct in treating the fee as capital in earlier and later assessment years.

4. Contribution towards Area Development Fund:
The Tribunal referred to the Supreme Court's decision in Siddheshwar Sahakari Sakhar Karkhana Limited Vs. CIT, which required the AO to consider whether the Area Development Fund, which remained with the assessee, was impressed with a specific legal obligation to spend for specified purposes unrelated to the business. The Tribunal remanded the issue to the AO for fresh determination in conformity with the Supreme Court's guidelines.

Conclusion:
The Tribunal allowed the appeal for statistical purposes, remanding all issues to the AO for fresh adjudication, ensuring reasonable opportunity of hearing to the assessee and compliance with relevant judicial precedents.