2019 (5) TMI 780 - AT - Income Tax

Tribunal remits tax issues for fresh consideration, condones delay in cross objection filing.

DCIT, Circle-1, Solapur Versus Shri Makai Sahakari Sakhar Karkhana Ltd., Bhilarwadi And (Vice-Versa)

The Tribunal allowed both the Revenue's appeal and the assessee's cross objection for statistical purposes, remitting the issues to the AO for fresh ... Addition towards excessive sugarcane price paid to members as well as non-members of the assessee - Addition u/s 40A - HELD THAT:- Both the sides are unanimously agreeable that the extant issue of deduction for payment of excessive price for purchase of sugarcane, raised in the appeal under consideration, is squarely covered by the aforesaid judgment in TASGAON TALUKA S.S.K. LTD. [2019 (3) TMI 321 - SUPREME COURT] remit the matter to the file of the A.O for deciding it afresh as per law in consonance with the articulation of law by the Hon’ble Supreme Court in the aforenoted judgment. It is made clear in so far as the non-members are concerned, the case will be considered afresh by the AO by applying the provisions of section 40A(2) of the Act, as has been held by the Hon’ble Supreme Court supra. Ground allowed for statistical purposes. Giving of sugar to members and non-members at concessional rates - HELD THAT:- It would be just and fair if the impugned order on this score is set aside and the matter is restored to the file of AO, instead of to the CIT(A), for fresh consideration as to whether the difference between the average price of sugar sold in the market and that sold to members at concessional rate is appropriation of profit or not, in the light of the directions given in KRISHNA SAHAKARI SAKHAR KARKHANA LTD. [2012 (11) TMI 669 - SUPREME COURT] - Issue allowed for statistical purposes. Issues:1. Delay in presenting cross objection by the assessee before the Tribunal.2. Sustenance of addition towards excessive sugarcane price paid to members and non-members.3. Giving sugar to members and non-members at concessional rates.Issue 1: Delay in presenting cross objectionThe assessee filed a cross objection with a delay of 25 days, supported by an affidavit for condonation of delay. The Tribunal condoned the delay and admitted the cross objection for hearing on merits.Issue 2: Sustenance of addition towards excessive sugarcane priceThe AO observed that the assessee paid excessive cane price above the Fair and Remunerative Price (FRP) fixed by the Government to members and non-members. The AO disallowed the excessive payment as not wholly and exclusively for business purposes. The CIT(A) upheld the addition. The Tribunal referred to a recent Supreme Court judgment which elaborately dealt with similar issues. The Supreme Court remitted the matter to the AO for reconsideration in line with the law articulated in the judgment. The Tribunal set aside the impugned order and remitted the matter to the AO for fresh consideration.Issue 3: Giving sugar at concessional ratesThe AO made an addition for the difference between market price and concessional price at which sugar was given to farmers and cane growers. The CIT(A) directed the AO to quantify the disallowance. The Tribunal referred to a Supreme Court judgment which directed consideration of various factors to determine if selling sugar at concessional rates is appropriation of profit. The Tribunal set aside the impugned order and remitted the matter to the AO for fresh consideration in line with the Supreme Court's directions.In conclusion, the Tribunal allowed both the Revenue's appeal and the assessee's cross objection for statistical purposes, remitting the issues to the AO for fresh consideration in accordance with the relevant Supreme Court judgments.