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TMI Blog2025 (3) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... ble ITAT vide various decisions has restored the issue to the file of the AO 2.) On facts and in the circumstances of the case and in law, the ld.CITIA) erred in not appreciating the fact that in assessee's own case for AY 2015-16, the Hon'ble ITAT has restored the issue to the file of AO by following the Coordinate Bench of Pune Tribunal's decision in the case of Shri Adinath SSK Vs. ACIT, which in turn has relied on the coordinate bench of Tribunal in the case of ACIT Vs. Shri Shankar SSK Ltd. 3.) On facts and in the circumstances of the case and in law, the ld.CIT(A) erred in not appreciating the fact that, coordinate Bench of Tribunal in the case of ACIT Vs. Shri Shankar SSK Lid. has duly considered both the cases as relied upon by the CIT(A) viz. the decision of Hon. ITAT in the case of Chhatrapati Shahu SSK and decision of Hon. Bombay HC in the case of CIT Vs. Terana SSK and then only restored the issue of sale of sugar to members at concessional rate to the file of the AO. 4.) The appellant craves leave to add, alter, amend and modify any of the above or all grounds raised at time of proceedings before the Hon'ble Tribunal which may please be granted." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted that the issue had attained finality by Hon'ble Bombay High Court's order in assessee's own case in Income Tax Appeal(Lodg.) No.2726 of 2009, dated 01.02.2010 vide which Hon'ble Bombay High Court dismissed the appeal of the Revenue Therefore, ld.AR pleaded that this issue has attained finality for the assessee. Findings & Analysis : 4. We have heard both the parties and perused the records. With the consent of both the parties, these appeals were heard together as the issue involved is same, grounds of appeal raised are same. We took appeal for A.Y.2016-17 as lead appeal. 4.1 Assessee is a Co-operative Society. Assessee filed Return of Income on 08/10/2016 disclosing total income at Rs. NIL. Then, assessee filed a revised Return of Income on 08/02/2018 claiming losses to Rs. 8,32,81,447/-. The Assessee's case was selected for scrutiny. The assessment order under section 143(3) of the Act, was passed on 20/12/2018 making an addition of Rs. 10,29,37,278/- on account of sale of sugar at concessional rate to its members and non-members. Aggrieved by the assessment order, Assessee filed appeal before the ld.CIT(A). The ld.CIT(A) deleted addition. Aggrieved by the order of the L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovided to non-members. Ld.AR also submitted that even State Government has approved the said practice. Ld.DR has not rebutted these submissions of the ld.AR. We have observed that indeed it is a customary practice among all sugar factories in this belt to sale sugar at concessional rate to Farmers. However, nowhere the exact number of members to whom sugar has been sold at concessional rate is mentioned by the Assessee. The said fact has not been mentioned by the Assessee even in the paper book filed before us. Also, Assessee has not mentioned to how many non-members sugar was sold at concessional rate and how concessional sugar was provided to non-members when the resolution, dated 14.02.1990 only allows concessional sugar to members. 4.10 The Hon'ble Supreme Court in the case CIT Vs. Krishna Sahakari Karkhana Limited [2012] 27 taxmann.com 162 (SC)(supra) vide order dated 25.09.2012 had given specific directions, the relevant paragraph as under : Quote "The assessee(s) is a Co-operative Society engaged in the business of production of sugar from sugarcane and sale thereof. Assessee(s) buys sugarcane from its Members. Every month and on Diwali, assessee(s) sells certain quantity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and procedure to be followed for sale of sugar at concession rate was fixed through Circular from this office dated 13th April, 2005 and 27th May, 2005. However, some of the factories have informed to this office that they have passed the resolution at their Annual General Meeting/ Extra Ordinary General Meeting regarding not to adopt the provisions contained in this circular on sale of sugar factories are informed that Circular was issued u/s 79A of the Maha. State Co-op Act 1960 pursuant to the decision taken at the meetings of Hon'ble Committee of Ministers on 1st September, 2005 and 30th September, 2005 on sale of sugar at concession rate to the members and employees. Since the provisions of the Act prevail over the Bye-Laws of the Society, sugar factories should sell the sugar at concession rate to their members and employees as per the directions given by the State Government. It may be noted that, action can be taken against Board of Directors of the factories not obeying these directions under Section 88 of the Maharashtra State Co-operative Societies Act, 1960. Following are the directions as per the Section 79(A) of Maharashtra Co-operative Societies Act, 1960: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o find out whether any resolution passed by State Government. Therefore, the Circular issued by Sugar Commissioner, Maharashtra State in 2006 needs to be considered as directed by Hon'ble Supreme Court(supra). In 2006, the Sugar Commissioner gave specific directions under section 79(A) of the Maharashtra Co-operative Societies Act, 1960. We have already reproduced the relevant paragraphs of the Assessment Order and ld.CIT(A)'s order. Ld.AR during the submission submitted that Assessee has sold Sugar @ Rs. 2 per kg to its members. 4.13.1 Section-79A of the Maharashtra Co-operative Societies Act, 1960 is reproduced here as under : "79- A. Government's powers to give directions in the public interest, etc.- (1) If the State Government, on receipt of a report from the Registrar or otherwise, it satisfied that in the public interest or for the purposes of securing proper implementation of co-operative production and other development programs approved or undertaken by Government, or to secure the proper management of the business of the society generally, or for preventing the affairs of the society being conducted in a manner detrimental to the interests of the members, or of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court in the case of Terana Sahakari Sakhar Karkhana Limited, [2008] 301 ITR 222 (Bombay), dated 22.10.2007. The Assessment Year involved in Terana Sahakari Sakhar Karkahana Limtied is A.Y.1992-93, emanating from ITAT's order in ITA No.256/PN/05, dated 17- 02-2006. Thus, the Hon'ble Bombay High Court in the case of Terana Sahakari Sakhar Karkhana Limited decided the appeal for A.Y.1992-93 based on ITAT's Decision dated 17.02.2006. The Hon'ble Bombay High Court in the said decision held as under : Quote "4. As regards question No. 4 is concerned, learned counsel for the revenue states that in view of the CBDT Circular No. 117, dated 22-8-1973, he is not pressing the fourth question. Hence the only question to be decided in this appeal in question No.5."Unquote 4.16 The CBDT Circular No.117, dated 22.08.1973 is regarding "Rebate allowed to members by consumer co-operative stores - Whether allowable as business deduction." The entire circular is reproduced here as under : "117 : Circular No. 117, dated 22-08-1973 22 August 1973 357. Rebate allowed to members by consumer co-operative stores - Whether allowable as business deduction 1. I am directed to say that an instance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision of Hon'ble Supreme Court in the case of Krishna SSK Ltd., dated 25.09.2012, the decision of Hon'ble Bombay High Court will not be applicable. "Also, Revenue failed to bring it to the notice of Hon'ble High Court the Circular of the Sugar Commissioner Maharashtra State". Therefore, the decision relied by ld.AR is not applicable in the case of assessee for assessment year 2007- 08 onwards. 4.20 For all these elaborate reasons, we set-aside the order of ld.CIT(A), qua sale of sugar at concessional rate to the ld.CIT(A) for denovo adjudication. The ld.CIT(A) shall bring on record the specific facts mentioned by us in earlier paragraphs. Ld.CIT(A) shall also bring on record the specific facts mentioned by Hon'ble Supreme Court in the Krishna SSK Ltd.,(supra). The Assessee shall file all necessary details before the ld.CIT(A). Accordingly, grounds of appeal raised by the Revenue are allowed for statistical purpose. 5. In the result, appeal of the Revenue in ITA No.1176/PUN/2024 is allowed for statistical purpose. ITA Nos.1177 & 1178/PUN/2024 (02 Appeals) : 6. Since we have already decided the appeal of the Revenue for A.Y.2016-17 in ITA No.1176/PUN/2024 at length. The facts o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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