2022 (7) TMI 852 - AT - Income Tax

Disallowance of Excess cane price - Disallowance of sale of sugar at concessional rate - HELD THAT - In view of the statement made by both the sides that the facts in the present appeal is identical, the issue relating to excess sugarcane price paid by the assessee is restored to the file of Assessing Officer with similar directions as above in the case of Majalgaon Sahakari Sakhar Karkhana Ltd. 2019 (3) TMI 906 - ITAT PUNE - AO shall decide the issue after affording reasonable opportunity of hearing to the assessee, in accordance with law. Appeal of the assessee is allowed for statistical purpose.

Summary

Issues involved:
1. Disallowance of Excess cane price.
2. Disallowance of sale of sugar at concessional rate.

Issue 1: Disallowance of Excess cane price:
The appellant, engaged in sugar and ethyl alcohol business, appealed against separate orders by the Commissioner of Income Tax for assessment years 2012-13, 2013-14, and 2014-15. The Tribunal noted that the issues raised were previously adjudicated by a Co-ordinate Bench in a related case. Regarding the excess cane price, the Tribunal referenced the judgment of the Supreme Court in CIT Vs. Tasgaon Taluka S.S.K. Ltd., emphasizing the distinction between the Statutory Minimum Price (SMP) and the additional purchase price under clause 5A of the Control Order, 1966. The Tribunal directed the Assessing Officer to allow deduction for the price paid under clause 3 of the Sugar Cane (Control) Order, 1966, and determine the profit component embedded in the price paid under clause 5A. The Tribunal remitted the issue to the Assessing Officer for fresh consideration, ensuring a reasonable opportunity for the appellant.

Issue 2: Disallowance of sale of sugar at concessional rate:
The Tribunal also addressed the disallowance of the sale of sugar at a concessional rate. Referring to the judgment in CIT Vs. Krishna Sahakari Sakhar Karkhana Limited, the Tribunal highlighted the need to assess whether selling sugar at a concessional rate had become a practice in the cooperative sugar industry. The matter was remitted to the Assessing Officer for fresh consideration, aligning with the directions of the Supreme Court. The Tribunal emphasized the importance of assessing whether the price difference between market sugar and concessional sugar was an appropriation of profit. The issue was sent back to the Assessing Officer for de novo adjudication, ensuring a fair opportunity for the appellant.

In conclusion, the Appellate Tribunal ITAT Pune allowed all three appeals of the assessee for statistical purposes, remitting both issues of excess cane price disallowance and sale of sugar at a concessional rate back to the Assessing Officer for fresh consideration in accordance with the law and relevant judicial precedents.