The Commissioner Of Income Tax Iii,Pune v. Rajgad Sahkari Sakhar Karkhana Ltd

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.995 OF 2011 The Commissioner of Income Tax III,Pune ..Appellant versus Rajgad Sahkari Sakhar Karkhana Ltd. ..Respondent -------- Mr. Vimal Gupta, Sr. Adv. with Padma Divakar for the Appellant. Mr. Mihir Naniwadekar for the Respondent. ............. CORAM : J.P. DEVADHAR & M.S.SANKLECHA, JJ. DATE : 17[th] January, 2013 P.C. : In this appeal by the revenue following questions have been raised for our consideration. 1Whether on the facts and in the circumstances of the case and in law, the ITAT was correct in holding that the disallowance made by the Assessing Officer of excess cane price paid to members and non-members was not justified and in holding that such payments could not be disallowed either u/s. 37(1) or u/s. 40A(2)(b) of the Income Tax Act, 1961? 2Whether ITAT is correct on facts and in law in deciding the issue as against setting aside such issue for further enquiry to the CIT(Appeals) as required by the order of the Supreme Court in the case of Shri Satpuda Tapi Parisar SSK Ltd. & Ors.? 3 Whether on the facts and in the circumstances of the case and in law, the ITAT was correct in deleting the addition made by the Assessing Officer on account of difference between the market price and sugar and concessional price at which sugar was sold to the cane growers by holding that no income accrued to the assessee on concessional sales and therefore, the assessee was not liable to be assessed on the difference? 4Whether the ITAT did not err on facts and in law in not treating suchdifferenceasconstituting 'distribution of profits'? 5 Whether on given facts and in the circumstances of the case, the order of the ITAT is correct in holding that cane supply expenses and cane development expenses are allowable u/s 37(1) of the Income Tax Act though such expenditure are not proved to be wholly and exclusively for purpose of business which is a condition pre-requisiteforallowabilityof expenditure u/s 37(1) of the Income Tax Act? 6 Whether on given facts and in the circumstances of the case, the order of the ITAT is correct in deleting additions on account of cane supply expenses and cane development expenses without appreciating that as distinguishable from Sections 28 to 36 of the Income Tax Act, Section 37(1) of the Income Tax Act uses the words wholly and exclusively for purpose of business as condition for allowability of expenditure u/s 37(1) of the Income Tax Act and thus lays more strict requirement u/s 37(1) of the Act as distinguishable from Secs. 28 to 36 of the Income Tax Act? 2 So far as question nos. 1 & 2 are concerned, it is agreed between the parties that in view of the decision of the Supreme Court in the matter of Shri Satpuda Tapi Parisar SSK Ltd, reported in 326 ITR page 42, the matter be remanded to the CIT (Appeals) for fresh determination. Accordingly, first two questions are remanded to the CIT(A) for fresh determination. 3So far as question nos. 3 & 4 are concerned, Counsel for the parties state that in the light of the Judgment of Apex Court in Civil Appeal No. 6949 of 2012 in the matter of CIT v. Krishna Sahakari Sakhar Karkhana Ltd., both questions be remanded to CIT(A) for fresh determination. Accordingly, question nos. 3 & 4 are disposed of by remanding the same to the CIT (A) for fresh determination. All contentions are left open. 4So far as question nos. 5 & 6 are concerned, Counsel for the parties state that the same is covered in favour of the assessee by the decision of this court rendered on 20.11.2012 in ITXA No.151/11 in the matter of CIT v/s Chhatrapati Sahakari Sakhar Karkhana Ltd. In view of the above, question nos. 5 & 6 are dismissed. 5The appeal is disposed of in above terms, no order as to costs. (M.S. SANKLECHA, J.) (J.P.DEVADHAR, J.)