2019 (12) TMI 1211 - HC - Income Tax

Addition u/s 37 and 40A - Disallowance of excess cane price paid to members and non members - Respondents who are sugarcane co-operative societies governed by the Maharashtra Co-operative Societies Act, 1960 had paid a price of sugarcane purchased from its members and non-members at a certain rate - AO had disallowed the price paid by the Respondents Assessee to its members as well as non-members as it was in variance with the minimum ex-factory price fixed by the Central Government under Clause 3(1) in Sugarcane (Control) Order, 1966 as revised from time to time HELD THAT - The learned Counsel for the parties are ad idem that in view of these decisions, the impugned orders passed by the Income Tax Appellate Tribunal and the Commissioner of Income Tax (Appeals) will have to be set aside. The learned Counsel further points out that though the Division Bench of this Court in The Commissioner of Income Tax-I v. Kadwa Sahakari Sakhar Karkhana Ltd 2019 (4) TMI 1804 - BOMBAY HIGH COURT in identical circumstances, had set aside the orders passed by the Tribunal and the Commissioner (Appeals) and had remanded the proceedings to the Commissioner of Income Tax (Appeals) for reconsideration, in view of the decision of the Supreme Court in the case of Tasgaon Taluka SSK Ltd. 2019 (3) TMI 321 - SUPREME COURT wherein the Apex Court had sent the proceedings to the Assessing Officer, they will have to be sent to the Assessing Officer. In view of this consensus at the bar, these appeals filed by the Revenue are allowed. The impugned orders passed by the Income Tax Appellate Tribunal and the Commissioner of Income Tax (Appeals) in these Appeals are quashed and set aside. The proceedings stand restored to the file by the respective Assessing Officers to be considered in the light of the law laid down by the Supreme Court in the cases of Tasgaon Taluka SSK Ltd. 2019 (3) TMI 321 - SUPREME COURT and Shri Satpuda Tapi Parisar SSK Ltd. 2010 (1) TMI 117 - SUPREME COURT .

Summary

Issues involved:
Challenging disallowance of excess cane price paid to members and non-members by the Assessing Officer.

Analysis:
The Appeals were admitted on the substantial question of law regarding the disallowance of excess cane price paid to members and non-members by the Assessing Officer. The Respondents, sugarcane co-operative societies, had paid a price for sugarcane purchased from its members and non-members, which was disallowed by the Assessing Officer as it did not align with the minimum ex-factory price set by the Central Government under the Sugarcane (Control) Order, 1966. This led to the assessment of the Respondents accordingly. The Commissioner of Income Tax (Appeals) allowed the Appeals filed by the Respondents following a decision of the Income Tax Appellate Tribunal, Mumbai Special Bench. The Appellant - Revenue then filed Appeals before the Income Tax Appellate Tribunal, which dismissed the appeals.

After the Appeals were filed in 2006, subsequent judicial pronouncements by both the High Court and the Supreme Court addressed the question of law raised in these appeals. The decisions in various cases, including C.I.T. v. Manjara Shetkari Sahakari Sakhar Karkhana Ltd., Deputy C.I.T. v. Shri Satpuda Tapi Parisar SSK Ltd., and C.I.T. v. Tasgaon Taluka SSK Ltd., were cited by the learned Counsel for the parties. It was unanimously agreed by the parties that the impugned orders by the Income Tax Appellate Tribunal and the Commissioner of Income Tax (Appeals) needed to be set aside in light of these decisions.

In line with the consensus reached, the appeals filed by the Revenue were allowed. The impugned orders by the Income Tax Appellate Tribunal and the Commissioner of Income Tax (Appeals) were quashed and set aside. The proceedings were restored to the respective Assessing Officers for reconsideration in accordance with the legal principles established by the Supreme Court in the mentioned cases. The decision-making process was directed to be in line with the law laid down by the Supreme Court, indicating a need for reassessment based on the new legal precedents.

This comprehensive analysis highlights the legal journey of the case, the core issue of disallowance of excess cane price, the judicial interpretations by different courts, and the final decision to set aside the previous orders for reassessment in accordance with the recent legal principles established by the Supreme Court.