2022 (8) TMI 1273 - AT - Income Tax

Disallowance of payment of excess cane price and sale of sugar at concessional rate (both to members) - To be treated as distribution of profit or not - HELD THAT - These twin issues of excess cane price payment as well as sugar at concessional rate are no more res integra as the tribunal s various co-ordinate benches and more particularly in The Malegaon Sahakari Sakhar Karkhana Limited 2021 (10) TMI 1357 - ITAT PUNE has set aside the concerned taxpayer s substantive grounds back to the assessing authority for its afresh appropriate adjudication as per law. We order accordingly in absence of any distinction on facts or law in all these cases. Assessee appeals are allowed for statistical purposes.

Summary

Issues:
1. Delay in filing appeals by the assessee for assessment years 2013-14 and 2015-16.
2. Disallowance of excess cane price payment and sale of sugar at concessional rates.
3. Interpretation of the law regarding the payment of reasonable margins to cane growers.
4. Application of income in the case of payment over and above Fair Remunerative Price (FRP).
5. Justification of levy of interest under sections 234A, 234B, and 234C.

Analysis:
1. Delay in Filing Appeals: The ITAT Pune considered the delay in filing the appeals by the assessee for assessment years 2013-14 and 2015-16. Referring to the Collector, Land Acquisition case, the tribunal emphasized the importance of substantial justice over technical aspects. The delay of 515 days and 71 days for the respective assessment years was condoned, as it was deemed unintentional and not deliberate.

2. Disallowance of Excess Cane Price Payment and Sale of Sugar: The appeals raised substantive grounds regarding the disallowance of excess cane price payment and sale of sugar at concessional rates. The tribunal noted that similar issues were under consideration by other benches, directing the matters back to the assessing authority for fresh adjudication in line with the law. The appeals were allowed for statistical purposes due to the absence of distinctions on facts or law.

3. Interpretation of Law on Reasonable Margins: The appeals contested the CIT(A)'s decision on the payment of excess cane price over FRP and the sale of sugar at concessional rates. The assessee argued that these payments were in line with the Central Government's policy for the development of farmers. The tribunal highlighted the need to consider the intention of the government in fixing the FRP to provide marginal returns to farmers.

4. Application of Income and Justification of Levy of Interest: The CIT(A) upheld the disallowance of payments over FRP as distribution of profits, which the tribunal found to be against the government's policy towards farmers. Additionally, the tribunal found no justification for the levy of interest under sections 234A, 234B, and 234C. The appeals raised concerns about the CIT(A)'s reliance on a judgment from the Karnataka High Court, which was deemed inapplicable to the case at hand.

In conclusion, the ITAT Pune allowed the appeals for statistical purposes, directing a fresh adjudication of the issues related to excess cane price payment and sale of sugar at concessional rates. The tribunal emphasized the importance of considering the government's policy towards farmers and the intention behind fixing the Fair Remunerative Price.