Ravindra v. Ghuge,J.][S.c.dharmadhikar

FARAD CONTINUATION SHEET NO.IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD.APPELLATE SIDE JURISDICTION TAX APPEAL NO.: 38 OF 2008 THE COMMISSIONER OF INCOME TAXVERSUS SHIVAJIRAO PATIL NILANGEKAR SAHAKARI SAKHAR KHARKHANA LTD., A/P. AMBULGA, TQ. NILANGA, DIST. LATUR. *** ASG for the Appellant: Mr. Alok Sharma. *** CORAM:S.C.DHARMADHIKARI & RAVINDRA V.GHUGE,JJ.DATED: 13th FEBRUARY, 2014. PER COURT: 1.This tax appeal was before a Division Bench of this Court on 10th February, 2012. A notice was issued to the Respondent Karkhana intimating that the appeal would be disposed of finally at the stage of admission. That notice was served belatedly as is clear from the further orders passed by the Court on 26th March, 2012 and 10th May, 2012. 2. In the aforesaid circumstances, and when none is appearing for the Respondent, though duly served and the notice intimating that the appeal would be disposed of finally, that we have heard Shri Sharma appearing on behalf of the Appellant Revenue before us. 3. We have perused the record, including the impugned orders. From the record, it appears that the substantial question of law about applicability of section 40A (2) of the Income Tax Act, 1961 arises for consideration and determination in this appeal. 4. This very question was raised for consideration and determination in the case of several cooperative sugar factories and across the region. The contribution to an institute known as Vasant Dada Sugar Institute and with regard to payment of advance given to the members arises for determination in this appeals. 5. Hence, following the judgment in those appeals, the substantial questions of law arising in this appeal, are as under: "1)Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in deleting the disallowance of Rs.3,92,83,742/- made by the Assessing Officer u/s. 40A(2)(a) of the I.T. Act, 1961 on account of excessive and unreasonable payment of sugarcane price paid to its members by the assessee cooperative society and also the disallowance of Rs.22,75,311/- made u/s. 37(1) of the I.T.Act, on account of additional cane price paid to non-members, relying on the decision dated 19/08/2004 of the ITAT, Special Bench, Mumbai in the case of Manjara SSK Ltd., reported in 91 ITD 361 (SB) (Mum) which has already been contested in appeal before the Hon'ble High Court of Judicature at Bombay, Bench at Aurangabad and the said appeal has been admitted by the Hon'ble Court vide it's order dated 28/06/2007 bearing Tax Appeal No.2/2005 on the following substantial question of law: "Whether the payments made by a cooperative society (Co-operative sugar factory) to it's members or non-members towards purchase price of sugar cane supplied, in excess of the price as cooperative society (Co-operative sugar factory) to it's members or non-members towards purchase price of sugar cane supplied, in excess of the price as fixed by the Commissioner of Sugar (Registrar of Cooperative Societies representing the State) i.e. State advised price, is liable to be disallowed under Section 40A(2) of the Income Tax Act, 1961 and computed as taxable income of the assessee?" 2.Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in deleting the addition made on account of Sugar sale to members at concessional rate? 3.Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in deleting the addition made by the Assessing Officer in respect of the contribution made by the assessee for the Vasant Dada Sugar Institute, whereas there are facts on record that: i) the amount paid by the assessee is in the nature of the representing the State) i.e. State advised price, is liable to be disallowed under Section 40A(2) of the Income Tax Act, 1961 and computed as taxable income of the assessee?" 2.Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in deleting the addition made on account of Sugar sale to members at concessional rate? 3.Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in deleting the addition made by the Assessing Officer in respect of the contribution made by the assessee for the Vasant Dada Sugar Institute, whereas there are facts on record that: i) the amount paid by the assessee is in the nature of the contribution/ donation and the same can be allowed under section 35(1) of the IT Act when it is actually paid; ii)the amount paid by the assessee is not the liability of the assessee, as there are no evidences on record to this effect and, iii) even if for the sake of argument, it is considered that this is the liability of the assessee the assessee has not produced any evidence to establish that this liability has actually been incurred/ paid by the assessee. 6.Therefore, for both the issues, it is necessary to remit the matter back to the CommissionerofIncomeTax(Appeals), Aurangabad. The impugned orders are, therefore, quashed and set aside. The appeal is restored to the file of Commissioner of Income Tax (Appeals), Aurangabad for deciding it afresh on merits and in accordance with law, as expeditiously as possible. There will be no order as to costs. [RAVINDRA V. GHUGE,J.][S.C.DHARMADHIKARI,J.]Dt.13/02/2014ans/38