TaxTMI 
TaxTMI 
2019 (3) TMI 906
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....UN/2013, 65/PUN/2014, 174/PUN/2012, 2182/PUN/2012, 2183/PUN/2012, 680/PUN/2011, 1268/PUN/2011, 1269/PUN/2011, 850-53/PUN/2014, 994/PUN/2014, 995/PUN/2014, 1272/PUN/2015, 180-83/PUN/2011, 263/PUN/2012, 265/PUN/2011, 763/PUN/2013, 1168/PUN/2015, 829/PUN/2015, 2547/PUN/2012, 262/PUN/2011, 129/PUN/2012, 128/PUN/2012, 483/PUN/2014, 1229-31/PUN/2013, 296/PUN/2012, 297/PUN/2012, 573/PUN/2011, 488-90/PUN/2014, 1015/PUN/2013, 1050/PUN/2013, 1051/PUN/2013, 1271/PUN/2012, 325/PUN/2016, 1584/PUN/2014, 1585/PUN/2014, 1666/PUN/2014, 1667/PUN/2014, 2083/PUN/2012, 989/PUN/2013, 2599/PUN/2012, 349/PUN/2011, 2598/PUN/2012, 988/PUN/2014, 989/PUN/2014, 2605/PUN/2012, 2457/PUN/2012, 575/PUN/2011, 96-98/PUN/2012, 2610-11/PUN/2016, 1117/PUN/2012, 90/PUN/2017, 980/PUN/2013, 735/PUN/2016, 1464/PUN/2009, 984/PUN/2013, 1223/PUN/2016, 702/PUN/2012, 1041/PUN/2015, 2145/PUN/2012, 2141/PUN/2012, 205/PUN/2012, 599/PUN/2012, 244-45/PUN/2013, 2526/PUN/2012, 2604/PUN/2012, 831/PUN/2014, 2455/PUN/2012, 903/PUN/2012, 1174/PUN/2016, 2595/PUN/2012, 1499/PUN/2016, 264/PUN/2013, 2597/PUN/2012, 1009/PUN/2013, 1010/PUN/2013, 1024-26/PUN/2013, 1290/PUN/2012, 1291/PUN/2012, CO 3/PUN/2016, 1171/PUN/2014, 1686/PUN/2012, 1688/PU....
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....and the appeals are admitted for disposal on merits. I. EXCESSIVE SUGARCANE PRICE PAID 3. A common issue involved in almost all the appeals is on account of the addition made by the Assessing Officer (AO) towards of excessive sugarcane price paid to members as well as non-members of the respective assessees. On a representative basis, we are espousing the facts in the case of Majalgaon Sahakari Sakhar Karkhana Limited Vs. ACIT, Circle-3, Aurangabad - ITA No.308/PUN/2018 for the assessment year 2013-14. The assessee is engaged in the business of manufacturing of white sugar. During the course of assessment proceedings, the AO observed that the assessee paid excessive cane price, over and above the Fair and remunerative price (FRP) fixed by the Government, to its members as well as non-members. On being called upon to justify such deduction, the assessee gave certain explanation by submitting that such payment was solely and exclusively in connection with the business and the entire amount was deductible u/s.37(1) of the Income-tax Act, 1961 (hereinafter also called `the Act'). Relying on the judgment of Hon'ble Supreme Court in the case of DCIT Vs. Shri Satpuda Tapi Parisar S.S.K....
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....ter finally came up before the Hon'ble Apex Court, it noted that clause 5A was inserted in the year 1974 on the basis of the recommendations made by the Bhargava Commission, which recommended payment of additional price at the end of the season on 50:50 profit sharing basis between the growers and factories, to be worked out in accordance with the Second Schedule to the Control Order, 1966. Their Lordships noted that at the time when additional purchase price is determined/fixed under clause 5A, the accounts are settled and the particulars are provided by the concerned Co-operative Society as to what will be the expenditure and what will be the profit etc. Considering the fact that Statutory Minimum Price (SMP), determined under clause 3 of the Control Order, 1966, which is paid at the beginning of the season, is deductible in the entirety and the difference between SMP determined under clause 3 and SAP/additional purchase price determined under clause 5A, has an element of distribution of profit which cannot be allowed as deduction, the Hon'ble Supreme Court remitted the matter to the file of the AO for considering the modalities and manner in which SAP/additional purchase price/f....
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....deduction for payment of excessive price for purchase of sugarcane, raised in most of the appeals under consideration, is squarely covered by the aforesaid judgment of the Hon'ble Supreme Court. Respectfully following the precedent, we setaside the impugned orders on this score and remit the matter to the file of the respective A.Os. for deciding it afresh as per law in consonance with the articulation of law by the Hon'ble Supreme Court in the aforenoted judgment. The AO would allow deduction for the price paid under clause 3 of the Sugar Cane (Control) Order, 1966 and then determine the component of distribution of profit embedded in the price paid under clause 5A, by considering the statement of accounts, balance sheet and other relevant material supplied to the State Government for the purpose of deciding/fixing the final price/additional purchase price/SAP under this clause. The amount relatable to the profit component or sharing of profit/distribution of profit paid by the assessee, which would be appropriation of income, will not be allowed as deduction, while the remaining amount, being a charge against the income, will be considered as deductible expenditure. At this stage....
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....atter to the CIT(A) for considering, inter alia,: "whether the abovementioned practice of selling sugar at concessional rate has become the practice or custom in the Cooperative sugar industry?; and whether any Resolution has been passed by the State Government supporting the practice?; The CIT(A) would also consider on what basis the quantity of the final product, i.e. sugar, is being fixed for sale to farmers/cane growers/Members each year on month-to-month basis, apart from others from Diwali?" The issue under consideration can be decided by an appropriate lower authority only on the touchstone of the relevant factors noted in the above judgment. In our considered opinion, it would be just and fair if the impugned orders on this score are set aside and the matter is restored to the file of AOs, instead of to the CITs(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 by the Hon'ble Supreme Court in the case of Krishna Sahakari Sakhar Karkhana Limited (supra). Restoration to the AO is necessitated because....
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....s of due dates and actual payments have been set out in the respective assessment orders. The AO, therefore, made such disallowance, which came to be affirmed in the first appeal. 15. We have heard the rival submissions and perused the relevant material on record. It is found that the issue raised herein is no more res integra. The Hon'ble Apex Court in the case of CIT v. Alom Extrusions Limited (2009) 319 ITR 306 (SC) has held that the amendment to first proviso and omission of the second proviso to section 43B by the Finance Act, 2003, is retrospective. The Hon'ble Delhi High Court in the case of CIT v. Aimil Limited (2010) 321 ITR 508 (Delhi) has allowed deduction in respect of employees' share when the amount was paid before the due date. When we consider these two judgments, it is manifested that both the employer's and employees' contribution are allowable as deduction if these are deposited albeit belatedly under the respective Acts, but before the due date of filing of return u/s 139(1) of the Act. 16. It is seen as an admitted position that the assessees in such cases deposited the employees' contribution towards EPF and ESIC before the due date u/s 139(1) of the Act. Re....
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....eligible for deduction u/s. 80G(iiihf) of the Act at the rate of 50% along with other qualifying sums. The ld. CIT(A) sustained the entire addition overlooking the fact that deduction u/s.80G(iiihf) was not allowed by the AO on such contribution in the computation of total income. Under these circumstances, we cannot uphold the disallowance of the entire amount claimed as deduction by the assessee in its Profit and loss account. Approving the additions made, we remit the matter to the file of the AO for granting the deduction u/s.80G(iiihf) as per law after allowing a reasonable opportunity of hearing to the assessee. VII. KHODKI CHARGES 22. Another issue raised in some of the appeals is against nongranting of deduction towards payment of Khodki charges. On being called upon to justify such deduction, the assessee submitted that this payment was made as per the order of the Director of Sugar. It was further explained that at the time of harvesting, the harvesting labour cut more part of the upper side of the crop and therefore, to compensate loss in weight to the grower, the said Khodki charges were paid to the farmers. The AO was not satisfied with the explanation tendered on b....