TaxTMI 
TaxTMI 
2011 (1) TMI 663
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....t Sonepat, Panipat, Kaithal, Palwal and Karnal ignoring the fact that the matter with regard to the addition of low yield of sugar and comparison of trading results of other mills should have been remanded back to the Assessing Officer for fresh verification in view of the fact that the reserves shown by the assessee were not verifiable? (ii) Whether, on the facts and in the circumstances of the case, the Ld. ITAT is right in law in upholding the deletion of addition of Rs.1,40,12,702/- made on account of low sale rate of sugar although, as pointed out by the Assessing Officer in his comments furnished to the Commissioner of Income Tax (Appeals), the sale rate of sugar is determined by the Sugar Syndicate which is applicable to all the sugar mills of Haryana and although, as pointed out in the assessment order, there was complete mismatch of the quantity of sugar actually sold by the assessee during the month of April, 2000? (iii) Whether, on the facts and in the circumstances of the case, the Ld. ITAT is right in law in upholding the deletion by the Commissioner of Income Tax (Appeals) of addition of Rs.14,69,587/- made on account of subscription and contributi....
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....f excessive expenses, difference in sale of molasses, absence of details of parties to whom amounts were entered as payable, disallowance of expenses towards subscription and contribution, non-charging of interest on the advances made, disallowance of development expenses, disallowance of penalty payable to growers and disallowance of staff welfare expenses. The CIT(A) partly allowed the appeal of the assessee and deleted additions on account of low yield, difference in rate of sugar, expenses claimed towards contribution to federation, non-recovery of interest and penalty payable to growers but partly upheld the additions. The Tribunal affirmed the deletions and allowed the appeal of the assessee against upholding of additions by the CIT (A). On the issues raised by the assessee against the additions confirmed by the CIT(A), the matter were remanded to the Assessing Officer. 3. The observations of the Tribunal are as under:- I. Issue of affirming deletions by the CIT(A): (a) Low Yield: "7. We have considered the rival submissions on this issue carefully. The assessee is a cooperative society running a sugar mill. The sugar industry is subject to super....
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....red opinion, the CIT(A) was fully justified in deleting the impugned addition. We hereby affirm the same. The Revenue fails on the first Ground." xx xx xx xx xx (b) Sale Rate: 10. We have considered the rival stands on this issue. In our opinion there is no justification for the Assessing Officer to make the impugned addition by substituting the sale rate of another concern with respect to the sales declared by the assessee. There is no whisper much less a finding by the Assessing Officer that the assessee had made any sales outside the books of account or that the assessee has realised any sale proceeds of sugar outside the books of account. Apart from the above, the reasons for deleting the addition on account of low yield, in our view, are applicable herein also. In the result the decision of the CIT(A) is affirmed on this Ground. The Revenue accordingly fails on this Ground. xx xx xx xx xx (c) Additional evidence on the issue of subscription and contribution: 14. After hearing the rival contentions and perusing the relevant material we find that the grievance of the Revenue as manifested in the Ground of appeal is clearly untenable ....
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....t dehors the business of the assessee. The same has been justifiably held to be an allowable expenditure by the CIT(A). The stand of the CIT(A) is hereby upheld and the Revenue fails on this Ground. xx xx xx xx xx (e) Penalty from growers was not income but meant for distribution to other growers: 20. After considering the rival stands, we find the grievance of the Revenue, as manifested in the Ground of appeal is merely to the effect that the CIT (A) entertained a fresh explanation in violation of the provisions of Rule 46A of the Rules. On this aspect the fact position is identical to the fact position considered by us in Ground No.3 in the earlier paragraphs. For similar reasons, we uphold the decision of the CIT(A) on this issue also. The Revenue accordingly fails on this Ground. xx xx xx xx xx II. Issues on which matter has been remanded: (f) Rate of sale of molasses: 27. From the aforesaid it emerges that the assessee itself conceded "that the sales of molasses were made at rates lower than the market rate". To this finding of the CIT(Appeals), there is no rebuttal by the assessee before us. Therefore, the implication is that t....
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....es in question have been made the purposes of business, then Section 36(1)(iii) does not permit any disallowance of the nature made by the Assessing Officer in this case. So however, if the advances are for considerations which are extraneous to business, the plea of the Assessing Officer is justified in view of the judgement of the Hon'ble Punjab & Haryana High Court in the case of Abhishekh Industries Ltd., 286 ITR 1 (P&H). We, therefore, set aside the order of the CIT(Appeals) and direct the Assessing Officer to establish as to whether or not the advances in question have been made for business purposes or not. If the advances have been made for business purpose, no disallowance is called for. if the finding of the Assessing Officer is to the contrary, then he shall be at liberty to pass any order in accordance with law. Needless to say the Assessing Officer shall allow a reasonable opportunity to the assessee of being heard before passing an order. Thus, for statistical purpose, on this Ground the assessee succeeds. xx xx xx xx xx (h) Effect of amount remaining outstanding for long: 34. After hearing the rival stands we find that the issue in quest....