9911796707
TMI Blog2025 (3) TMI 801X X X X Extracts X X X X X X X X Extracts X X X X ..... n 79(A) of Maharashtra Co-operative Societies Act, 1960. The Sugar Commissioner gave the direction that Sugar Factories shall sale maximum 5 kgs of sugar per month at concessional rate to its members only. The rate shall be @ levy sugar (+) excise duty. The sale of sugar at concessional rate shall be applicable only to those members who have supplied their Sugar Cane to the factory. The Hon'ble Supreme Court in the case of Krishna SSK Ltd. [2012 (11) TMI 669 - SUPREME COURT] had set-aside the issue with specific direction. Commissioner of Sugar had issued Circular dated 01.03.2006 in public interest. One arm of the Law cannot be used to defeat purpose of another arm of the Law. In this case, the Assessing Officer has not analysed and brought on record all the above details, which was mandatory in the light of decision of Hon'ble Supreme Court in the case of Krishna SSK Ltd.(supra). Thus, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adjudication following the principles laid down by Hon'ble Supreme Court in the case of CIT Vs. Krishna SSK [2012] 211 Taxmann 109 (SC), the A.Y.2007-08 to A.Y.2014- 15 may also be set-aside. Ld.DR also relied on the decision of Co-ordinate Bench of the ITAT Pune in the case of Shree Adinath SSK Ltd., in ITA No.485/PUN/2019 for A.Y.2013-14 dated 11.05.2022. 2.1 Mr.Ajay Kumar Keshari -ld.CIT(DR) in the written submission submitted that it is evident that the sale of sugar by the sugar factories to their members is not a discretionary decision of the factory, but is regulated under section 79(A) of the Maharashtra Co-operative Societies Act, 1960. In accordance with this provision, the Sugar Commissioner, Pune has issued a circular to regulate the sale of sugar to members. As stated above, the sale of sugar to a member should not exceed 5 kg per month at a concessional/subsidized rate. Hence, there is no ambiguity regarding the regulation of sugar sales to members. Furthermore, it is important to highlight that the Assessing Officer(AO) took note of this regulation and the circular and incorporated the same into the assessment orders for A.Y.2017-18 and A.Y.2018-19. The AO carefull ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers. Aggrieved by the assessment order, Assessee filed appeal before the ld.CIT(A). The ld.CIT(A) partly confirmed the addition. Appeal was filed before the ITAT by Revenue as well as Assessee. The appeals Number are as under : A.Y.2007-08 i. For A.Y.2007-08 / DCIT Vs. Shri Tatyasaheb Kore Warana SSK Ltd., / ITA No.205/PUN/2012. ii. For A.Y.2007-08 / Shri Tatyasaheb Kore Warana SSK Ltd., Vs. DCIT / ITA No.251/PUN/2012. A.Y.2008-09 i. For A.Y.2008-09 / DCIT Vs. Shri Tatyasaheb Kore Warana SSK Ltd., / ITA No.599/PUN/2012. ii. For A.Y.2008-09 / Shri Tatyasaheb Kore Warana SSK Ltd., Vs. DCIT / ITA No.252/PUN/2012. A.Y.2009-10 i. For A.Y.2009-10 / DCIT Vs. Shri Tatyasaheb Kore Warana SSK Ltd., / ITA No.2141/PUN/2012. ii. For A.Y.2009-10 / Shri Tatyasaheb Kore Warana SSK Ltd., Vs. DCIT / ITA No.2145/PUN/2012. A.Y.2010-11 i. Shri Tatyasaheb Kore Warana SSK Ltd., Vs. DCIT / ITA No.827/PUN/2017 /A.Y.2010-11 A.Y.2011-12 i. Shri Tatyasaheb Kore Warana SSK Ltd., Vs. DCIT / ITA No.828/PUN/2017 / A.Y.2011-12 A.Y.2012-13 i. Shri Tatyasaheb Kore Warana SSK Ltd., Vs. DCIT / ITA No.829/PUN/2017 / A.Y.2012-13 A.Y.2013-14 i. Shri Tatyasaheb Kore Warana SSK Ltd., Vs. DCIT / I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of above Quantity Rs.1658.27 (c) Price recovered from cane growers Rs.217.43 (d) Difference between (b) & (c) Rs.1440.84 (e) Disallowance (a) x (d) above Rs.27,66,55,68/- As per above chart, the assessee had sold sugar to its members at a very nominal price. This is nothing else but an appropriation of profit and application of income in the nature. Therefore, difference between Sugar levy price of quantity distributed and actual amount realized from members, which comes to Rs. 27,66,55,68/-is disallowed and added back to the Business Income of the assessee) (Addition in Business income - Rs. 27,66,55,68/-)" 4.6 Ld.CIT(A) has also ignored the directions of the ITAT in its order dated 27.03.2024. The relevant paragraph of ld.CIT(A)'s order is reproduced here as under : "In ground No.2, the Appellant has contested the action of the AO of making an addition of Rs. 2,76,65,568/- on account of sale of sugar to members at concessional rate. It is observed that the Appellant had sold sugar to its members at a very nominal price and the AO added the difference between sugar levy price of quantity distributed and actual amount realized from members amounting to Rs. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 of sugar (final product) at concessional rate to farmers/cane growers/Members. The difference between the average price of sugar sold in the market and the price of sugar sold by the assessee(s) to its Members at concessional rate is sought to be taxed by the Department under the Head 'Appropriation of Profit'. The question, whether the above difference between the fair market price and the concessional price should or should not be added to the total income of the assessee(s) Society, needs to be re-looked by Commissioner of Income Tax (Appeals) [for short, 'CIT(A)']. Apart from the afore-stated question, CIT(A) would take into account, whether the above-mentioned practice of selling sugar at concessional rate has become the practice or custom in the Cooperative Sugar Industry?; and whether any Resolution has been passed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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: 1. The factories should stop the current practice of selling the sugar at concession rate to their members. Instead, sugar at concession rate can be made available through following method. 2. The rate for concession sugar sale by a Co-op sugar factory to its members shall be at the rate of levy sugar plus excise duty on free sugar. 3. A Co-op sugar factory shall sell maximum 5 kg sugar per month at concession rate to its member. 4. This concession will be limited only to the members and employees. 5. If a factory has crushed less than 50% in the previous season, then it will not be eligible for concession sale of sugar. 6. The sale of sugar at concession rate shall be applicable only to those members who have su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gar at concessional rate? Had those members supplied sugar cane to the factory? Had assessee factory crushed more than 50% in the previous season? What is the Rate at which the sugar was sold at concessional rate and What was the levy sugar rate for that year? All these questions are relevant to decide the issue of sale of sugar at concessional rate. Ld.AR during the submission submitted that Assessee has sold Sugar @ Rs. 2 per kg to its members. However, levy sugar rate and excise duty has not been brought on record. 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 cooperative 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 the depositor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ombay High Court in the case Terana Sahakari Sakhar Karkhana Ltd. We have perused the order of Hon'ble High 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 CBDTCircular 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-op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nveer Satara SSK Ltd.(supra), Hon'ble High Court followed the decision of CIT Vs. Terna Shetkari Sahakari Sakhar Karkhana Ltd. reported in [2008] 301 ITR 222(Bom). We have already discussed the decision of Hon'ble High Court in the case of Terana SSK Ltd(supra) and distinguished it on facts. The most important fact is that after the decision 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
