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TMI Blog2019 (3) TMI 1637X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to the respective assessees, in accordance with law. Sale of Sugar at Concessional rates to the Members/Shareholders - HELD THAT:- Issue of sale of sugar at concessional rates has also been considered by the Co-ordinate Bench in the case of Majalgaon Sahakari Sakhar Karkhana Ltd. Vs. ACIT [ 2019 (3) TMI 906 - ITAT PUNE] remitted the issue of payment of excessive price to the file of AO, and as such, the instant issue cannot be sent to ld. CIT(A) as it would amount to simultaneously sending one part of the same assessment order to the AO and other to the CIT(A), which is not appropriate. Disallowance of contribution to Area Development Fund - HELD THAT:- It is noticed that in the appeals under consideration, the ld. CITs(A) have not considered the impact of the judgment of the Hon ble Supreme Court in Siddheshwar Sahakari Sakhar Karkhana Limited [ 2004 (9) TMI 6 - SUPREME COURT] and decided the issue without taking note of the factors directed to be considered in the aforenoted case. In view of the above decision of Hon ble Supreme Court, we set-aside such impugned orders and remit the matter to the file of the respective AOs for deciding the issue afresh in conformity with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue. Consequently, the issue is decided in favour of the assessees. Harvesting and Transportation Expenditure - HELD THAT:- In view of CBDT Circular No. 6/2007, dated 11-10-2007 the harvesting and transportation expenditure are allowable. Consequently, the issue is decided in favour of the assessees. X X X X Extracts X X X X X X X X Extracts X X X X ..... by Shri Subhadha Koppa, Shri Pratik Sandbhor, Shri Pramod Shingte, Shri K. Srinivasan, Smt. Deepa Khare Revenue by Ms. Nandita Kanchan ORDER PER BENCH : These bunch of appeals by the assessees and the Revenue for the various assessment years mentioned in the caption are directed against the orders of Commissioner of Income Tax (Appeals). All the assessees in the present set of appeals are engaged in manufacturing of white sugar. The primary issues raised in these appeals are : i. Excess cane price paid by the assessees to sugarcane suppliers, i.e. the price over and above the Statutory Minimum Price (SMP) fixed by State Government for purchase of cane. ii. Addition on account of sale of sugar at concessional rate to the members/shareholders by the assessees. Apart from the above two primary issues following issues have also emerged in some of the appeals : i. Disallowance of contribution towards Area Development Fund. ii. Provision for Vasantdada Sugar Institute (VSI) Contribution. iii. Disallowance of Employees Contribution towards PF. iv. Addition account of contribution towards Chief Minister relief fund. v. Disallowance of interest u/s. 43B. vi. Disall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rice. In addition, the additional sugarcane price is also payable as per clause 5A of the Control Order, 1966. The AO in that case concluded that the difference between the price paid as per clause 3 of the Control Order, 1966 determined by the Central Government and the price determined by the State Government under clause 5A of the Control Order, 1966, was in the nature of `distribution of profits' and hence not deductible as expenditure. He, therefore, made an addition for such sum paid to members as well as nonmembers. When the matter finally came up before the Hon'ble Apex Court, it noted that clause 5A was inserted in the year 1974 on the basis of the recommendations made by the Bhargava Commission, which recommended payment of additional price at the end of the season on 50:50 profit sharing basis between the growers and factories, to be worked out in accordance with the Second Schedule to the Control Order, 1966. Their Lordships noted that at the time when additional purchase price is determined/fixed under clause 5A, the accounts are settled and the particulars are provided by the concerned Co-operative Society as to what will be the expenditure and what will be the profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9.5 Therefore, the assessing officer will have to take into account the manner in which the business works, the modalities and manner in which SAP/additional purchase price/final price are decided and to determine what amount would form part of the profit and after undertaking such an exercise whatever is the profit component is to be considered as sharing of profit/distribution of profit and the rest of the amount is to be considered as deductible as expenditure." 6. Both the sides are unanimously agreeable that the extant issue of deduction for payment of excessive price for purchase of sugarcane, raised in most of the appeals under consideration, is squarely covered by the aforesaid judgment of the Hon'ble Supreme Court. Respectfully following the precedent, we set-aside the impugned orders on this score and remit the matter to the file of the respective A.Os. for deciding it afresh as per law in consonance with the articulation of law by the Hon'ble Supreme Court in the aforenoted judgment. The AO would allow deduction for the price paid under clause 3 of the Sugar Cane (Control) Order, 1966 and then determine the component of distribution of profit embedded in the price pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner of Income Tax (Appeals) prior to the date of judgment of Hon'ble Supreme Court of India in the case of CIT Vs. Krishna Sahakari Sakhar Karkhana Limited (supra) i.e. 25-09-2012 and in some cases where the orders have been passed by the Commissioner of Income Tax (Appeals) subsequent to the date of said judgment, the Commissioner of Income Tax (Appeals) has not considered the judgment rendered by the Hon'ble Apex Court on this issue. 7. We find that the issue of sale of sugar at concessional rates has also been considered by the Co-ordinate Bench in the case of Majalgaon Sahakari Sakhar Karkhana Ltd. Vs. ACIT (supra) and has held as under : "11. Having heard both the sides and gone through the relevant material on record, it is observed that the AO made addition of the difference between the market price and the concessional price at which sugar (final product) was given to farmers and cane growers. In this regard, it is observed that this issue has been considered by the Hon'ble Supreme Court in the case of CIT Vs. Krishna Sahakari Sakhar Karkhana Limited (2012) 27 taxmann.com 162 (SC). Vide judgment dated 25-092012, the Hon'ble Supreme Court noticed that the difference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as restored the same to the file of Assessing Officer by observing as under : "13. Having heard both the sides and gone through the relevant material on record, it is seen that similar issue came up for consideration before the Hon'ble Supreme Court in the case of Siddheshwar Sahakari Sakhar Karkhana Limited Vs. CIT and others (2004) 270 ITR 1 (SC). In that case, the Hon'ble Supreme Court observed in para 44 that the receipts in the form of Area Development Fund always remained with the assessee. It also noted the contention of the assessee in para 45 that the realisations made towards the Area Development Fund were impressed with the specific legal obligation to spend the money for specified purposes which were unrelated to the business of the sugar factory and hence, could not be treated as income of the assessee. Eventually, the Hon'ble Supreme Court remitted the matter back for fresh determination. It is noticed that in the appeals under consideration, the ld. CITs(A) have not considered the impact of the judgment of the Hon'ble Supreme Court in Siddheshwar Sahakari Sakhar Karkhana Limited (supra) and decided the issue without taking note of the factors directed to be conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt of India in the case of Commissioner of Income Tax Vs. Alom Extrusions Ltd. reported as 319 ITR 306. 14. The assessees eligibility to claim deduction of delayed deposit of employees share in Provident Fund scheme but before due date of filing return of income is no more res integra. The Hon'ble Bombay High Court in the case of Commissioner of Income Tax Vs. Ghatge Patil Transports Ltd. reported as 368 ITR 749 after considering the judgment in the case of Commissioner of Income Tax Vs. Alom Extrusions Ltd. (supra) held that deduction to be allowed only on actual payments before the due date of filing return of income and the amended provisions of section 43B applies to both employee's and employer's contribution. In the present set of appeals it is not disputed by the Revenue that the contribution was made before the due date of filing return of income. Thus, in view of well settled law and the facts of the case, this issue is decided in favour of the assessees. Disallowance of Contribution towards Chief Minister Fund 15. Another issue in some of the appeals is disallowance of contribution by assessees towards Chief Minister relief fund. We find that this issue has been c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anted to the sugar factories by the banks/financial institutions. Thus, in the peculiar facts of the case we concur with the findings of Commissioner of Income Tax (Appeals) in holding that the provisions of section 43B are not attracted. We confirm the findings of Commissioner of Income Tax (Appeals) on this issue. Consequently, the issue is decided in favour of the assessees. Harvesting and Transportation Expenditure 19. In some of the appeals the issue of disallowance of cane harvesting and transportation expenditure incurred by the assessees has been raised. The expenditure has been disallowed by the Assessing Officer. We find that this issue is squarely covered in favour of the assessees by CBDT Circular No. 6/2007, dated 11-10-2007. For the sake of ready reference the same is reproduced here-in-below : "1. Instances have come to the notice of the Board wherein Assessing Officers have disallowed the claim of harvesting and transportation expenses incurred by the Co-operative sugar mills for procuring sugarcane from farmers, who are members of such Co-operative Sugar Mills and who are bound under an agreement to supply the sugarcane exclusively to the concerned sugar Mill ..... 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