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TMI Blog2005 (6) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... s, being co-operative sugar factories, made certain deductions from the price of sugarcane crop supplied by the members of the society, for different purposes. Those deductions were included in the income of the society by the Assessing Officer. The Com missioner of Income-tax (Appeals) allowed the claims of the assessees partly and finally the matters were taken up before the Income-tax Appellate Tribunal. Income-tax Appeal No. 9 of 1999 is arising out of Income-tax Appeal No. 1034/PN/97, pertaining to the assessment year 1991-92 wherein the following substantial question of law is raised: "Whether on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal relying on the decision of the Special Bench of the Income-tax Appellate Tribunal in the case of Shri Chatrapati Sahakari Sakhar Karkhana Ltd. [1992] 198 ITR (AT) 78 (Pune), was right in deleting the addition of Rs. 27,01,937 made on account of interest on NRD holding that the various funds/deposits deducted by the assessee-society out of the sugarcane purchase price payable to the cane growers are not trading receipts of the assessee." In Income-tax Appeal No. 10 of 1999 arising out of Income-tax Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... development fund, small savings fund and interest on non-refundable deposits by holding that various funds/deposits collected by the assessee-society out of sugarcane purchase price payable to the cane growers are not the trading receipts of the assessee?" In Appeal No. 21 of 1999 arising out of Income-tax Appeal No. 440/PN/97 pertaining to the assessment year 1994-95, the following question of law has arisen: "Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal relying upon the Special Bench in the case of Shri Chatrapati Sahakari Sakhar Karkhana Ltd. reported in [1992] 198 ITR (AT) 78 (Pune) was right in deleting the additions made on account of non-refundable deposits, C.M's relief fund, area development fund, cane development fund and interest on non-refundable deposits by holding that various funds/deposits collected by the assessee-society out of sugarcane purchase price payable to the cane growers are not the trading receipts of the assessee?" In Income-tax Appeal No. 24 of 1999 arising out of Income-tax Appeal No. 310/PN/94 pertaining to the assessment year 1991-92, the following substantial question of law has arisen: "Whether, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of Shri Chatrapati Sahakari Sakhar Karkhana Ltd. reported in [1992] 198 ITR (AT) 78 (Pune) was right in deleting the additions made on account of non-refundable deposits, C.M's relief fund, hutment fund, education fund and interest on non-refundable deposits by holding that these various funds/deposits collected by the assessee-society out of sugarcane purchase price payable to the cane growers are not the trading receipts of the assessee?" Heard learned counsel for the appellants and the respondents in all the appeals. Admittedly, under the bye-laws and rules of the co-operative societies and the sugar factories in the State of Maharashtra, certain deductions are made from the price of sugarcane supplied by the members of the societies for different purposes. The deductions are made for one or the other purposes noted below: 1. Non-refundable deposit. 2. Interest on non-refundable deposit. 3. C.M's relief fund. 4. Famine relief fund. 5. Hutment fund. 6. Y.B. Chavan Memorial fund. 7. Eduation fund. 8. Cane development fund. 9. Area development fund. 10. College fund. 11. Water scarcity fund. In the matter of Bazpur Co-operative Sugar Factory Ltd. [1988] 172 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment in Siddheshwar Sahakari Sakhar Karkhana Ltd. v. CIT with CIT v. Shri Chatrapati Sahakari Shakar Karkhana Ltd. reported in [2004] 270 ITR 1 (SC). Most of the points raised in the appeals before this court are already covered by the Supreme Court judgment in the said case. Bye-law No. 60 provides for fixation of cane price by the board of directors every year. Bye-law No. 61-A provides that every year the society shall collect from the members non-refundable deposits at the rate not less than Re. 1 per ton of sugarcane supplied by them. It also provides as to how the deposits shall be used and also about the rate of interest to be paid on the deposits. Bye-law No. 61-B provides for deductions as non-refundable deposits after a certain period not exceeding 5 years. After analysing all the said bye-laws, the hon'ble Supreme Court pointed out the following salient features: "1. The price of sugarcane is fixed every year by the board of directors, on a consideration of relevant factors. 2. However, so long as the share capital contribution of the State Government and/or the loans taken on capital account from IFCI and other Central financial institutions remain outstanding, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operative Societies Act, the bye-laws and the Government directives, the hon'ble Supreme Court held that Chief Minister's relief fund, Y.B. Chavan Memorial fund, hutment fund are also not trading receipts for the society because the society collects the amount from the members and makes over the same to the Chief Minister's relief fund or the Y.B. Chavan Memorial fund or to the Collector for providing facilities to the hutments. The famine relief fund is also a kind of Chief Minister's famine relief fund and the society cannot retain that amount, and therefore, the same cannot be treated to be a trading receipt or income of the society. In view of the above the Supreme Court judgment in Shri Chatrapati Sahakari Shakar Karkhana Ltd. [2004] 270 ITR 1 it is settled that deductions towards non-refundable deposits, interest on non-refundable deposits, Chief Minister's relief fund, famine relief fund, hutment fund and Y.B. Chavan Memorial Fund are not trading receipts or income. Therefore, they cannot be included in the income of the society. It should be noted that the Supreme Court also considered the provisions about the collection of amounts towards area development fund and cane de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Appeal No. 26 of 1999 and how the college fund is utilised. Therefore, it will be difficult to give any finding on the same. This subject may be left open for fresh consideration by the Tribunal. Similarly, there is no material before us to show under what provisions the deductions are made towards the water scarcity fund and how that amount is utilised. Therefore, it is difficult to conclude as to whether the said fund is a trading receipt or not. Hence, in our considered opinion, the question about the water scarcity fund may also be left open for fresh consideration by the Tribunal. In view of the above finding in Appeal No. 9 of 1999, we answer the question in the affirmative; that is, in favour of the assessee and dismiss the appeal. In Appeal No. 10 of 1999, we hold that the Tribunal was right to the extent of non-refundable deposits, famine relief fund and education fund, however, it was not correct as far as sugarcane development fund is concerned and we answer the question accordingly. In the result, the appeal is partly allowed. In Appeal No. 12 of 1999 we hold that the Tribunal was right in refusing to add non-refundable deposits, interest on non-refundable deposi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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