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TaxTMI 
TaxTMI 
2020 (9) TMI 1234
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....l: 1. Ld. CIT (A) erred in law and on facts in confirming action of AO treating additional price paid over and above FRP (Fair & remunerative price) to the cane growers amounted to distribution of profits by the appellant. 2. Ld. CIT (A) erred in law and on facts confirming view of AO treating such payments as application of income assessable in the hands of the appellant. 3. Ld. CIT (A) erred in law and on facts in confirming action of AO that such additional payment is not allowable as business expense u/s. 37 of the Act as not expended wholly & exclusively for the purpose of business. 4. Ld. CIT (A) erred in law and on facts in holding that payment of Final Cane Price after close of the year is diversion of the profit at the same time holding purchase price paid as per FRP that is also declared after close of the year as an allowable expense u/s. 37 of the Act. 5. Ld. CIT (A) erred in law and on facts treating additional payment made to productive members only from gross receipts as per board resolution as diversion of profit whereas payment of cane price is unrelated to shareholding of the farmers and non-members are also paid the sa....
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....bmissions and Sh. Saurabh Suparkar ld. Senior Advocate/Authorized Representative (AR) for the assessee and Sh. O.P. Singh ld. CIT-DR (DR) for the Revenue and perused the record carefully. The ld. AR of the assessee submits that the grounds of appeal raised by the assessee are now covered by the decision of Hon'ble Supreme Court in the case of CIT v. Tasgaon Taluka S. S.K. Ltd., reported viz. (2019) 103 taxmann.com 57 (SC). The ld. AR submits that as per the decision of Hon'ble Apex Court, the appeals are liable to be restored to the file of the AO for passing the order afresh. The ld. AR further submits that the Hon'ble Apex Court by considering the question of law whether the sugarcane price paid to the cane grower by the assessee/cooperative society more than the Statutory Minimum Price (SMP) is determined under Clause 5A of control order 1966, can be said to be the share of profit/appropriation of profit, can be said to be reassuring of profit/appropriation of profit or the allowable the expenditure. The Hon'ble Apex Court held that as per Clause 3 of Control Order 1966, Government in the official Gazette, from time to time fixed the minimum price of sugar cane (....
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.... of the Hon'ble Apex Court, with the directions to the AO that in case of the assessee that only difference between SAP (Additional Purchase Price) and the price agreed by way of agreement with the sugar cane grower is to be considered for the purpose of determining the profit element vis-à-vis deductable expenses. 6. On the other hand, the ld. DR for the revenue fairly agreed that the issue/grounds of appeal raised by the assessee may be restores to the file of the AO for considering the issue afresh in accordance with the decision of Hon'ble Apex Court, in CIT v. Tasgaon Taluka S.S.K. Ltd. (supra). 7. We have considered both the parties and have gone through the order of the lower authorities below. The AO made addition in the assessment order by taking view that the amount paid/incurred by assessee over and above the SMP determined by Central Government is distribution of profit and not incurred wholly and exclusively the purpose of income. The additions were upheld by ld. Commissioner (Appeals). Before us, the learned representative of both the parties agreed that the issues raised in the present appeals are directly covered by the decision of Hon'ble A....
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....garcane grower during each sugar year, he shall, in addition to the minimum sugarcane price fixed under Clause 3, pay to the sugarcane grower an additional price, if found due in accordance with the provisions of the Second Schedule annexed to the Control Order, 1966. How the additional price under Clause 5A of the Control Order, 1966 is to be determined is provided in the Second Schedule, which reads as under: "SECOND SCHEDULE [See Clause 5-A] The amount to be paid on account of additional price (per quintal of sugarcane) under Clause 5-A by a producer of sugar shall be computed in accordance with the following formula, namely: X= R-L+A-B/2C Explanation--In this formula. 1 'X' is the additional price in rupees per quintal of sugarcane payable by the producer of sugar to the sugarcane grower. 2 'R' is the amount in rupees of sugar produced during the sugar year excluding the excise duty paid or payable to the factory by the purchaser. 3 'L' is the value in rupees of sugar produced during the sugar year, as calculated on the basis of the unit cost per quintal ex-factory, exclusive of excise duty, determine....
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....vernment is concerned, it is at the beginning of the season and while determining/fixing the SMP by the Central Government, the afore-stated things are required to be considered. Therefore, the difference of amount between the SMP determined under Clause 3 and the SAP/additional purchase price determined under Clause 5A has an element of profit and/or one of the components would be the profit. The entire scheme/mechanism while determining the additional purchase price under Clause 5A has been dealt with and considered by this Court in detail in the case of Maharashtra Rajya Sahkari Sakkar Karkhana Sangh Ltd. (supra). In the said decision, it is observed that the additional purchase price/SAP is paid at the end of the season; the Bhargava Commission had recommended payment of additional price at the end of season on 50:50 profit sharing basis between the growers and factories to be worked out in accordance with Second Schedule to the Control Order, 1966; that the additional purchase price comprises of not only the cost of cultivation, but profit as well; the price thus being paid on recovery of canes and profits made from sale of sugar is not minimum but optimum price which is paid ....