AI Drafter 
TaxTMI 
TaxTMI 
2022 (1) TMI 1063
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....013-14 respectively. Both the parties have raised certain common grounds of appeal, further ld CIT(A) passed common order for both the assessment years therefore all appeals are clubbed heard and are decided by common order. For appreciation of facts, the facts for AY 2012-13 are treated as lead case. The assessee in its appeal in ITA No.72/SRT/2020 for assessment year 2012-13 has raised the following grounds of appeal:- 1 On the facts and circumstances of the case as well in law, the order of the C.I.T.(Appeals)upholding the Assessing Officer's action making disallowance of Rs. 1,47,21,71,832/- from total cane price paid to the sugarcane growers/farmers for the supply of sugarcane, without appreciating the past assessment/appeal "records" of the appellant co.op. society and purely on misleading, misconceptual, arbitrary and perverse observations and hence, being without jurisdiction, bad in law, invalid, illegal, unwarranted of facts, is liable to be quashed. 61,86,90,640/- 2 On the facts and in the circumstances of the case as well in law, both the lower authorities have grievously erred in holding that the portion of the cane price disallowable u/s 37(....
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....and therefore, the action of the tax authorities to deny the final/approved cane price in excess of FRP as the actual business expenditure incurred to meet the commercial expediency by the appellant co.operative society, being without jurisdiction, in pure contravention to the "Rule of Consistency", arbitrary, prejudicial, subjective, perverse, bad in law and hence, liable to be struck down. As per Sr.No.1 above 6 On the facts and circumstances of the case as well in law, the order of the C.I.T.(Appeals) failed to appreciate that the total cane price including the above amount of Rs. 1,47,21,71,832/- was allowable both under section 28 and section 37 and the disallowance thereof results into Department taxing unreal and wrong amount of income. As per Sr. No. 1 above. 7 On the facts and in the circumstances of the case as well in law, the C.I.T.(Appeals) failed to appreciate that on identical facts, in the past in all the assessment years, such price was allowed by various Assessing Officers or the Appellate Authorities, and therefore. There was no justification on the part of the Assessing Officer to decide to the contrary, and thus, offend the law lai....
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....order maybe restored. N.A Total tax effect (see note below) Rs.,1,78,53,294/- 3. Brief facts of the case are that assessee is a co-operative society engaged in production of sugarcane and its byeproduct. The assessee filed its return of income for the year under consideration 2012-13 declaring nil income. During the assessment, the Assessing Officer noted that assessee was making to sugarcane supplier / agriculturist over and above, Statutory Minimum Price ('SMP' in short) declared by Central Government for particular crashing season. The price pay to the sugarcane growers is exempt from income tax being "agricultural income". The Assessing Officer was of the view that assessee made adjustment of price and paid over and above to the sugarcane growers with the ulterior motives with a view to diversion of income and not admissible for deduction under section 37 of the Act. The Assessing Officer accordingly made disallowance of Rs. 147.21 crores being the amount paid over and above the SMP. On further appeal, before the Tribunal the order of Assessing Officer was confirmed. However, the Ld. CIT(A) directed the Assessing Officer to recomputed the Fair and Re....
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....e Court in the case of CIT vs. Tasgaon Taluka S.S.K. Ltd., (2019) 103 taxmann.com 57/262 Taxman 176/412 ITR 420 (SC) in Shree Khedut Sahakarai Khand Udyog Mandli Ltd. Vs. ITO (supra) passed the following order; 8.We have heard both the sides and gone through the relevant material on record. It is an agreed position between the rival parties that the issue of payment of excessive price on purchase of sugarcane by the assesses is no more res integra in view of the recent judgment of Hon'ble Supreme Court in CIT Vs. Tasgaon Taluka S.S.K. Ltd. [2019] 103 taxmann.com 57 (SC). The Hon'ble Apex Court, vide its judgment dated 05-03- 2019, has elaborately dealt with this issue. It has recorded the factual matrix that the assessee in that case purchased and crushed sugarcane and paid price for the purchase during crushing seasons, firstly, at the time of purchase of sugarcane and then, later, as per the Mantri Committee advice. It further noted that the production of sugar is covered by the Essential Commodities Act, 1955 and the Government issued Sugar Cane (Control) Order, 1966, which deals with all aspects of production of sugarcane and sales thereof including the price to be pai....
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....e, to the extent of the component of profit which will be a part of the final determination of SAP and/or the final price/additional purchase price fixed under Clause 5A would certainly be and/or said to be an appropriation of profit. However, at the same time, the entire/whole amount of difference between the SMP and the SAP per se cannot be said to be an appropriation of profit. As observed hereinabove, only that part/component of profit, while determining the final price worked out/SAP/additional purchase price would be and/or can be said to be an appropriation of profit and for that an exercise is to be done by the assessing officer by calling upon the assessee to produce the statement of accounts, balance sheet and the material supplied to the State Government for the purpose of deciding/fixing the final price/additional purchase price/SAP under Clause 5A of the Control Order, 1966. Merely because the higher price is paid to both, members and non-members, qua the members, still the question would remain with respect to the distribution of profit/sharing of the profit. So far as the non-members are concerned, the same can be dealt with and/or considered applying Section 40A(2) ....
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....." 7. Considering the decision of Hon'ble Supreme Court the coordinate Bench of this Tribunal and the fact that both the parties have agreed to restore the matter to the file of Assessing Officer to pass the order by following the decision of Hon'ble Supreme Court in the case of Tasgaon Taluka S.S.SK. Ltd. (supra) and other relevant orders of assessees engaged in similar business. The grounds of appeal raised by assessee are restored back to the file of Assessing Officer to decide the issue afresh in accordance with law to follow the decision of coordinate Bench of this Tribunal in the case of Shree Khedut Sahakarai Khand Udyog Mandli Ltd. vs. Income Tax Officer, (supra). Needless to say that before passing the order afresh, the Assessing Officer shall grant fair and reasonable opportunities of hearing to the assessee and the assessee will also at liberty to raise other submission related to the issue before the Assessing Officer and when called for. In the result, appeal of assessee is allowed for statistical purposes in above terms. 8. Considering the fact that we have restored the assessee's main issue to the file of Assessing Officer for afresh adjudication, therefore, th....