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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 ..... rofit embedded in the price paid under clause 5A, by considering the statement of accounts, balance sheet and other relevant material supplied to the State Government for the purpose of deciding/fixing the final price/additional purchase price/SAP under this clause. The amount relatable to the profit component or sharing of profit/distribution of profit paid by the assessee, which would be appropriation of income, will not be allowed as deduction, while the remaining amount, being a charge against the income, will be considered as deductible expenditure. At this stage, it is made clear that the distribution of profits can only be qua the payments made to the members. In so far as the non-members are concerned, the case will be considered afresh by the AO by applying the provisions of section 40A(2) of the Act, as has been held by the Hon ble Supreme Court supra. Thus the grounds of appeal raised by assessee are restored back to the file of Assessing Officer to decide the issue afresh in accordance with law to follow the decision of coordinate Bench of this Tribunal in the case of Shree Khedut Sahakarai Khand Udyog Mandli Ltd. vs. Income Tax Officer, (supra). - ITA Nos. 82 to 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the authentic, credible and cogent evidences/materials furnished demonstrating the fact of fixation of final/actual cane price with the approval of the State Government and hence, not justified. As per Sr. No. 1 above 3 On the facts and in the circumstances of the case as well in law, both the lower authorities have overlooked to see and appreciate that while computing profits of appellant society, the price to be allowed as a deduction for sugarcane supplied by farmers is the price fixed by its Board of Directors giving reasons for payment of competitive price, being approved/certified by the State Government authorities and hence, the action of the C.I.T.(Appeals) confirming the inferences of the AO to restrict the claim of sugarcane purchase price to the notified Statutory Minimum Price called FRP, which is a support price, is without jurisdiction, perverse, arbitrary, subjective, conjectural, illegal, invalid, bad in law and therefore, liable to be quashed. As per Sr.No. 1 above 4 On the facts and circumstances of the case as well in law, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore. There was no justification on the part of the Assessing Officer to decide to the contrary, and thus, offend the law laid down by the Supreme Court in CIT Vs. Excel Industries Ltd. - (2013) 358 ITR 295 holding that Revenue must be consistent and not flip-flop on the same issue in different assessment years. As per Sr. No. 1 above. 8 On the facts and in the circumstances of the case as well in law, both the lower authorities have erred in overlooking and summarily rejecting the detailed various submissions made during the course of assessment/appeal proceedings including the Statutory Audit reports of the Govt. Auditors, the Statement of Accounts, audited Balance Sheet and Manufacturing reports, other relevant materials submitted to the State Government for approval of the final cane price, other State s approve cane price, opportunity cost/cost of cultivation to the farmers per supplying sugarcane to the appellant co.operative society as well as strong agitations by farmers demanding higher prices much more than FRP and hence, the order passed bythe C.I.T.(Appeals) confirming the action of the AO making di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed 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 other hand, Ld. Commissioner of Income tax- Departmental Representative (CIT-DR) for the Revenue submits that he supports the order of Assessing Officer. 6. We have considered the rival contentions of both the parties and perused the materials available on record and find that Assessing Officer while passing the assessment order made addition of ₹ 68,22,37,292/- on account of excess payment of sugarcane growers and Statutory Minimum Price ( SMP for short) / Fair and Remunerative Price ( FRP for short). Aggrieved by the action of the Assessing Officer the assessee filed appeal before Ld. CIT(A). The Ld. CIT(A) directe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 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 etc. Considering the fact that Statutory Minimum Price (SMP), determined under clause 3 of the Control Order, 1966, which is paid at the beginning of the season, is deductible in the entirety and the difference between SMP determined under clause 3 and SAP/additional purchase price determined under clause 5A, has an element of distribution of profit wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 in the afore noted 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 paid under clause 5A, by considering the statement of accounts, balance sheet and other relevant material supplied to the State Government for the purpose of deciding/fixing the final price/additional purchase price/SAP under this clause. The amount relatable to the profit component or sharing of profit/distribution of profit paid by the assessee, which would be appropriation of income, will not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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