The Commissioner Of Income Taxversusshrigonda Sahakari Sakhar Karkhana Ltd v. Ghuge, Jj.dated: January 27, 2014

1 IN THE HIGH COURT OF JUDICATURE OF BOMBAYBENCH AT AURANGABAD TAX APPEAL NO. 33 OF 2009 THE COMMISSIONER OF INCOME TAXVERSUSSHRIGONDA SAHAKARI SAKHAR KARKHANA LTD ... ASG for Appellant : Shri Alok Sharma...CORAM : S.C.DHARMADHIKARI & RAVINDRA V. GHUGE, JJ.Dated: January 27, 2014 ... PER COURT :- 1.Heard Shri Sharma, learned ASG for the appellant. 2.The sole respondent is duly served. Despite service, the respondent is absent. 3.We have perused the memo of the appeal and the impugned orders with the assistance of Shri Sharma, learned ASG. 4.We are of the opinion that in the light of the order passed by Honourable the Supreme Court in identical facts and circumstances, the following substantial questions of law arise for consideration and determination in this appeal. (1)Whether on the facts and in the circumstances of the case in law, the Tribunal was justified in deleting the dis-allowance of Rs.12,83,15,265/- made by the assessing officer under Section 40A(2)(a) of the I.T.Act, 1961 on account of excessive and unreasonable payment of sugar price paid to its members by the assessee cooperative society? (2)Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in deleting the dis allowance of Rs.3,03,03,133/- made by the assessing officer and under Section 37 (1) of the I.T.Act, on account of additional cane price paid to non-members relying on the decision dated 19.8.2004 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 Honourable High Court of judicature at Bombay, Bench at Aurangabad as following questions of laws arise out of the said decision of Special Bench of Tribunal: (i)Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that the Co-operative Society cannot be treated as AOP within the meaning of Section 2(31) of the I.T.Act, 1961? (ii)Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that he payments made by the Co-operative Society were not excessive and unreasonable within the meaning of Section 40A (2) and 37(1) of the I.T. Act, 1961? (iii)Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that the price actually paid by the Cooperative Society for the procurement of the sugar cane is to be allowed as business expenditure ? (iv)Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that the excess amount of expenditure on sugar cane purchase price was a charge on profit i.e. diversion of profit and not appropriation of profit ? (v)Whether on the facts and in the circumstances of the case and in law, the additional amount paid by the Cooperative Society after the finalization of the financial results for the year under consideration, can be considered to be price paid for the procurement of sugar cane and allowed as business expenditure ? (3)Whether the assessee contravened the provisions of Section 40A (2) by selling sugar at a concessional rate to its members, which amounted to the distribution of Income ? (4)Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in deleting the dis allowance of Rs.1,42,30, 320/- made by the assessing officer under Section 40A (2) of the Income Tax Act, 1961 on account of sale of sugar at concessional rate to its members by the assessee cooperative society. Relying on the decision dated 1.8.1996 of the ITAT, in the case of Shri Chattrapati Shahu SSK Ltd. ITA No.1924-26/PN/90, which has already been contested in appeal before the Honourable High Court of judicature at Bombay, as following question of law arise out of the said decision of Special Bench of Tribunal: (4)Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in deleting the dis allowance of Rs.1,42,30, 320/- made by the assessing officer under Section 40A (2) of the Income Tax Act, 1961 on account of sale of sugar at concessional rate to its members by the assessee cooperative society. Relying on the decision dated 1.8.1996 of the ITAT, in the case of Shri Chattrapati Shahu SSK Ltd. ITA No.1924-26/PN/90, which has already been contested in appeal before the Honourable High Court of judicature at Bombay, as following question of law arise out of the said decision of Special Bench of Tribunal: (i)Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that no addition was called for in respect of sugar sold at concessional rates to the members of the sugar Co-operative Society?" 5.Our attention has been invited by Shri Sharma, learned ASG to the order passed by the Honourable Supreme Court in SLP (C) No.8590 of 2010 and connected matters and it is submitted that the Honourable Supreme Court has, by the order dated 25.9.2012, remitted the cases to the Commissioner of Income Tax (Appeal) for de novo consideration of the matter. 6.We have perused the order of the Honourable Supreme Court and the orders impugned in the present appeal. We are of the opinion that the appeal cannot be kept pending since the substantial questions of law are required to be answered after elucidation and clarification from the appellate authority. Once the issue is remitted back by the Honourable Supreme Court, we then deem it fit and proper to follow the mandate in the decision Honourable Supreme Court and remand the case to Commissioner of Income Tax (Appeals), Pune for a decision on merits and in accordance with law, following the decision of the Honourable Supreme Court. 7.We quash and set aside the order of Commissioner of Income Tax (Appeals), (page 46 of the paper book) and that of the Income Tax Appellate Tribunal, Pune, dated 28.11.2008 (page 54 of the paper book) and remit the case / appeal to the Commissioner of Income Tax (Appeals) Pune for de novo consideration on merits and in accordance with law. The Commissioner of Income Tax (Appeals) shall render a fresh finding in accordance with law and as expeditiously as possible and within the period of four months from the date of receipt of the copy of this order. 5 8.With above directions, Tax Appeal stands disposed of. No order as to costs. ( RAVINDRA V. GHUGE, J. ) ( S.C.DHARMADHIKARI, J. )... akl