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TMI Blog2022 (1) TMI 1096X X X X Extracts X X X X X X X X Extracts X X X X ..... in common grounds of appeals, except variation of disallowance on account of portion of cane price in excess of Fair Rate Price ('FRP' in short), the ld CIT(A) passed common order, therefore all the appeals were clubbed heard together and are decided by common order. For appreciation of fact, the facts for AY 2012-13 in assessee's Appeal in ITA No.82/SRT/2020 as well as in ITA No. 104/SRT/2020 are treated as 'lead' case. 2. The assessee has raised the following grounds of appeal:- "1 On the facts and circumstances of the case as well in law, the order of the C.I.T.(Appeals)upholding the Assessing Officer's action making disallowance of Rs. 68,22,37,290/- from total cane price paid to the sugarcane growers/farmers for the supply of sugarcane, without appreciating the past assessment/appeal "records" of the appellant co.op. society and purely on misleading, misconceptual, arbitrary and perverse observations and hence, being without jurisdiction, bad in law, in-valid, illegal, unwarranted of facts, is liable to be quashed. 28,67,10,760/- 2 On the facts and in the circumstances of the case as well in law, both the lower authorities have grievously erred in holding that the por ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir assessments and therefore, the action of the tax authorities to deny the final/approved cane price in excess of FRP as the actual business expenditure incurred to meet the commercial expediency by the appellant co.operative society, being without jurisdiction, in pure contravention to the "Rule of Consistency", arbitrary, prejudicial, subjective, perverse, bad in law and hence, liable to be struck down. As per Sr.No.1 above 6 On the facts and circumstances of the case as well in law, the order of the C.I.T.(Appeals) failed to appreciate that the total cane price including the above amount of Rs. 68,22,37,290/- was allowable both under section 28 and section 37 and the disallowance thereof results into Department taxing unreal and wrong amount of income. As per Sr. No. 1 above. 7 On the facts and in the circumstances of the case as well in law, the C.I.T.(Appeals) failed to appreciate that on identical facts, in the past in all the assessment years, such price was allowed by various Assessing Officers or the Appellate Authorities, and therefore. There was no justification on the part of the Assessing Officer to decide to the contrary, and thus, offend the law laid down ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant craves its right to add, alter, amend, delete, any of the ground or grounds of appeal. N.A Total tax effect (see note below) Rs. 1,16,95,085/- 4. At the outset of hearing, the ld. Authorized Representative (AR) for the assessee submits that the grounds of appeal raised by assessee as well as Revenue are covered in favour of assessee by the decision of the Bench of this Tribunal in Shree Khedut Sahakari Khand Udyog Mandli Ltd for same assessment year (A.Y.) 2012-13 in ITA No.1206/AHD/2017 reported viz;(2019) 108 taxmann.com 258 (Surat-Trib.). The Ld. AR for the assessee submits that same decision was followed by this combination in Shree Khedut Sahakari Khand Udyog Mandli Ltd in ITA Nos.96 & 59/SRT/2020 for AYs 2011-12 and 2013-14 as well as in Shree Madhi Vibhag Sahkari Khand Udyog Mandli in ITA No. 68, 72 & 73/SRT/2020 all dated 23.12.2021. The Ld. AR of the assessee submits that the facts in present appeals are identical except variation of figure of addition / disallowances on account of alleged excess payment of sugarcane price. The Ld. AR of the assessee also furnish the copy of decision of co-ordinate Bench of this Tribunal (supra). 5. On the oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued Sugar Cane (Control) Order, 1966, which deals with all aspects of production of sugarcane and sales thereof including the price to be paid to the cane growers. Clause 3 of the Sugar Cane (Control) Order, 1966 authorizes the Government to fix minimum sugarcane price. 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 non members. 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it/sharing of the profit. So far as the non-members are concerned, the same can be dealt with and/or considered applying Section 40A(2) of the Act, i.e., the assessing officer on the material on record has to determine whether the amount paid is excessive or unreasonable or not. 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." 9. Both the sides are unanimously agreeable that the extent issue of deduction for payment of excessive price for purchase of sugarcane 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 AO for deciding it afresh as per law in consonance with the articulation of law by the Hon'ble Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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