TaxTMI 
TaxTMI 
TaxTMI 
2025 (12) TMI 1695
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....ppeals filed by the assessee. The remaining two appeals pertain to Shree Khedut Sahakari Khand Udhyog Mandli Ltd., both of which are filed by the assessee. All these appeals pertain to different assessment years (AY) and are directed against separate orders passed by the Learned Commissioner of Income -tax (Appeals) [in short, "CIT(A)"], which, in turn, arose out of separate assessment orders passed by the Assessing Officer [in short, "AO"] under section 143(3) of the Income-tax Act, 1961 (In short, the 'Act'). 2. Since the issues involved in all these appeals are common and identical in nature, raising common questions of law and fact pertaining to the allowability of the Final Cane Price (FCP) /additional sugarcane price paid by the assessee's over and above the statutory Fair and Remunerative Price (FRP) [earlier known as the Statutory Minimum Price (SMP)] for various assessment years ranging from AY 2011-12 to AY 2016-17, all the appeals filed by the three assessee's have been clubbed and heard together. Accordingly, this consolidated order is being passed for the sake of convenience and brevity. ITA Nos. 738/SRT/2023 and 209/SRT/2024 (AYs: 2012-13 and 2016-17): 3. We ....
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....he AO and therefore, the assessment order passed in gross violation of mandatory procedure of handling of assessment by the JAO/AO covered u/s 144B(8) of the Act is without jurisdiction, illegal, bad in law and hence, liable to be annulled or nullified in toto. 4. On the facts and in the circumstances of the case as well in law, the CIT (Appeals) has erred in upholding the action of the AO in passing the assessment order u/s 143(3) r.w.s. 254 of the Act, without granting sufficient, real, satisfactory and meaningful opportunity of being heard so as to make compliance to the SCN issued on 23-09-2021 and notice u/s 142(1) of the Act dtd. 25-09-2021 fixing the date of hearing on 27-09- 2021 i.e. just one day before the date of passing the order and hence, the whole assessment proceedings being carried out in pure violation of principle of natural justice (audi alteram partem), is without jurisdiction, bad in law, void ab initio, illegal, unjustified and hence, the assessment order is liable to be struck down. 5. On the facts and in the circumstances of the case as well in law, the CIT (Appeals) ought to have found that the assessment order passed by the AO is mere re....
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....the final sugarcane price, etc. and therefore, the AO's inference for making disallowance of portion of the cane price, in pure violation of "rule of consistency" and thus, offended the law laid down by the Supreme Court in CIT Vs. Excel Industries Ltd. (2013) 358 ITR 295 (SC) holding that the Revenue must of consistent and not flip flop on the same issue in different assessment years, is unjustified, without jurisdiction, bad in law and hence, liable to be struck down. 8. On the facts and in the circumstances of the case as well in law, the CIT (Appeals) has erred in upholding the AO's order u/s 143(3) r.w.s. 254 of the Act, making disallowance of portion of sugarcane purchase price to the extent of Rs. 242,12,52,595/-actually/factually paid to the farmers/cane growers, towards the ascertained, accrued and crystalized contractual liability on procurement of sugarcane, on account of the alleged inflated purchases of sugarcane, purely on misleading, mis conceptual, arbitrary and perverse observations, being without jurisdiction, bad in law, invalid, illegal, unwarranted of facts, is liable to be quashed or annulled in toto. 9. On the facts and in the circum....
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.... failed to appreciate that the total cane price including the above amount of Rs. 242,12,52,595/- is fully allowable both under section 28 and section 37 and the disallowance thereof results into Department taxing unreal and wrong amount of income. 13. On the facts and in the circumstances of the case as well in law, both the lower authorities have overlooked the claim in the return of income filed for the carried forwards of business loss and unabsorbed depreciation as assessed in the regular assessment completed for the earlier years and hence, the assessment order passed by the AO arbitrarily at the assessed income of Rs. 242,12,52,595/- without giving set off of the brought forward business loss and unabsorbed depreciation for the earlier years is liable to be struck down. 14. On the facts and in the circumstances of the case as well in law, both the lower authorities have erred in overlooking and summarily rejecting the detailed various submissions made during the course of assessment/appeal proceedings including the Statutory Audit reports of the Govt. Auditors, the Statement of Accounts, audited Balance Sheet and Manufacturing reports, other relevant materi....
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....r 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 State Advised Price (SAP)/additional purchase price/final price is decided. He was directed to carry out an exercise of considering 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 Sugar Cane (Control) Order, 1966 and thereafter, determine as to what amount would form part of the distribution of profit and the other as deductible expenditure. Thus as per the directions of the Hon'ble Apex Court in case of Tasgaon Taluka (supra), it was directed that 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 decid....
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....alf of the assessee commenced his submissions by drawing the Bench's attention to the procedural history of the matter and submitted that the present appeal arises not in vacuum, but in consequence of a specific remand direction issued by this Hon'ble Tribunal in its earlier order dated 19.07.2019 in ITA No.1206/Ahd/2017, wherein the issue relating to the allowability of FCP was set aside to the file of the AO with a mandate that the issue be freshly adjudicated strictly in accordance with the ratio laid down by the Hon'ble Supreme Court in case of Tasgaon Taluka (supra). The ld. AR submitted that the Tribunal in its earlier order had consciously refrained from affirming the disallowance made by the AO and specifically directed that the matter required a detailed factual-cum-legal examination, keeping in view the evidentiary trail relating to fixation of cane price, the statutory mechanism under the Sugarcane (Control) Order, 1966 the nature of cooperative governance, the audit and verification by Government authorities, and the requirement to identify, if any, the portion of cane price attributable to appropriation of profit. 7. Continuing, the ld. AR submitted that instead of ....
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....llments - first, during the harvesting season based on provisional values and subsequently, on crystallization of accounts - is a standard and longstanding industry practice in the cooperative sugar sector throughout India and cannot be interpreted as an after-the-event distribution of surplus. The AR emphasized that the payment is always linked to quantity of cane supplied and not to the quantum of shareholding, voting rights or capital employed by the farmer-members, which clearly demonstrates that the payment is a purchase consideration for raw material and not a return on investment. The AR submitted that if the Revenue's theory were accepted, even payments made to non-member farmers, who have no voting or dividend entitlement, would have to be treated as profit sharing, which would lead to an absurd conclusion. 10. The ld. AR also submitted that the fixation of the final cane price is not an arbitrary unilateral act but occurs under a regulatory umbrella involving the oversight or concurrence of statutory authorities such as the Director of Sugar, Gujarat State, and the Registrar and District Registrar of Co-operative Societies. The cane price is declared, approved and reco....
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....d profit sharing, are in fact incurred wholly and exclusively for improving the quality and productivity of sugarcane supplied to the factory and therefore fall squarely within the ambit of business expenditure allowable under section 37(1) of the Act. The AR further submitted that disallowance of cane price and cane development results in taxation of notional, hypothetical and unrealistic income, which is impermissible in law, as only real income can be subjected to tax. 14. Lastly, without prejudice to the preceding submissions, the AR argued that even if the Revenue's stance were hypothetically accepted, the entire differential amount cannot be automatically treated as profit distribution, because the Hon'ble Supreme Court in Tasgaon Taluka (supra) has clearly mandated a scientific and evidence-based computation exercise, distinguishing between members and non-members, examining whether the alleged surplus corresponds to profit, and determining whether any amount can be attributed to profit sharing. The AR submitted that the AO has not undertaken any such exercise and hence the disallowance deserves to be deleted in toto, or in the alternative, the matter may be restored only....
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....contains a component in the nature of profit-sharing with members and that such profit component, to the extent it represents distribution of surplus, is not allowable as a business expenditure. He emphasized that the Hon'ble Supreme Court did not hold that no part of the additional cane price is allowable; instead, it laid down a structured exercise to be carried out by the AO by calling for all relevant materials furnished to the State Government for price fixation, examining the computation of additional price, identifying the element which is traceable to the profit of the year and treating such share of profit paid to members as appropriation of profits, while applying section 40A(2) of the Act separately in respect of payments to non-members. According to the CIT-DR, this framework of analysis remains fully binding even after the shift from the SMP-5A regime to the FRP regime, because the core principle is that expenditure in the nature of profit distribution cannot be allowed as deduction, and only that part of cane price which is a genuine charge on profits can be allowed. 17. The ld. CIT-DR submitted that post 22.10.2009, the Sugarcane (Control) Order, 1966 was amended;....
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....fixing the additional price, any relevant order by the Gujarat State Government for fixing the additional price and payment made to members/non-members, but assessee failed to give any documentary evidence to the relevant questions raised by A.O. It was pointed out that the explicit directions of this Hon'ble Tribunal while remitting the matter to the AO was to determine the element of profit based on the judgement of the Hon'ble Supreme Court in Tasgaon Taluka (supra) wherein it was held that 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/final price is decided and the AO was directed to carry out an exercise of considering 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 and thereafter determine as to what amount would form part of the distribu....
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....fits to its members in the form of additional price in order to wriggle out from the payment of taxes as profits so distributed are exempt in the hands of sugarcane growers as agricultural income while the assessee society is a pure business entity and not a charitable trust. (vi) That the appellant could not prove that a higher price was paid by it to the farmers on account of higher yield or some other factors. Besides nowhere it has been claimed that at the time of supply of sugarcane by the farmers to the appellant, any agreement or contract for payment of price higher than the FRP had been entered into between these two parties. (vii) Amount paid to members /non-members as well market rate is completely different as evident from page 107 of submission (Rs 2565/MT to members; Rs 2450/MT to non-members and Rs 2200/MT to the third parties i.e., other factories). Hence, addition of Rs. 132/- per quintal having been paid as distribution of profits is self-evident otherwise also. 18. The ld. CIT-DR submitted that the assessee's reliance on the Tribunal's decision in Shree Narmada Khand Udyog Sahakari Mandli Ltd. (supra) and the subsequent jurisdictional High Cou....
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....November 2012, after profits stood ascertained and accounts closed. Further, in Kolhapur Zilla Sahakari Dudh Utpadak (supra), the payment was made only to members, whereas in the present case and in Tasgaon (supra), the payment is made to members as well as non-members (including "nominal members"), which, according to him, is a critical factor because any element of profit can never, by definition, be said to be distributable to non-members as such. Similarly, he noted that decisions concerning West U.P. Sugar Mills, in Civil Appeal No.7508 of 2005, dated 22.04.2020, Jaora Sugar Mills, AIR 1997 SC 600 (SC) and SKG Sugar Ltd., 1959 AIR 230 (SC) related mainly to the competence or otherwise of State Governments to fix SAP under the earlier SMP regime and did not deal with the taxability of excess price as profit distribution under the FRP regime in the State of Gujarat where, admittedly, there is no SAP order issued by the Gujarat Government. Therefore, according to the CIT-DR, none of these decisions can detract from the application of Tasgaon Taluka (supra) to the facts of the present case. 20. On the factual front, the learned CIT-DR submitted that the pattern of payment adopt....
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....actory in respect of sugarcane price only to the extent such price is equal to or less than the price fixed or approved by the Government, and that the same is prospective from A.Y. 2016-17. To extend this benefit to earlier years and settle pending litigation, the Parliament inserted section 155(19) enabling the AO, upon an application by the assessee, to recompute income and allow deduction for such portion of cane price as is equal to or less than Government fixed/approved price for that year. The learned CIT-DR pointed out that this remedial mechanism requires the assessee to furnish specific documentary evidence showing that the price claimed as deduction does not exceed Government fixed/approved price and that the CBDT's SOP requires the Jurisdictional AO to dispose of such application within a stipulated timeframe. In the present case, however, he submitted that the assessee has not even filed any application under section 155(19) till date, nor has it produced the necessary documents to show that the so-called final cane price was fixed or approved by the Central or State Government. According to him, this conduct indicates that the assessee does not possess any such Govern....
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.... appeal of the assessee be dismissed and the orders of the lower authorities be confirmed. 24. We have given our thoughtful consideration to the rival submissions, carefully perused the material available on record, including the paper book filed by the assessee, the assessment order passed in pursuance of the earlier remand, the impugned appellate order, as well as the detailed written submissions and supplementary notes filed by the learned AR and ld. CIT-DR. We have also deliberated on the decisions relied upon by both sides. The controversy, shorn of verbiage, lies in a somewhat narrow but legally significant compass, namely, whether the FCP/differential cane price paid over and above FRP represents, in substance, a deductible business expenditure incurred wholly and exclusively for the purposes of the assessee's business, or whether, to any extent, it partakes the character of distribution of surplus/profits to cane growers, particularly members, under the co-operative structure. While the assessee has sought to characterize the entire additional payment as a part of the composite contractual purchase price of raw material, the Revenue has, on the other hand, portrayed at l....
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.... to a mixed question: whether, from the standpoint of procedural compliance, the directions of the Tribunal can be said to have been substantially acted upon, and secondly, whether the material actually examined and recorded by the AO is enough to support the Revenue's inference under Tasgaon. 27. On the substantive dimension, it emerges from the rival submissions that there is no dispute about certain foundational facts: the assessee is a co-operative sugar factory; FRP notified under the Sugarcane (Control) Order constitutes the minimum payable price; the assessee has in fact paid cane price higher than FRP in the relevant year; part of such payment has been made during/around the crushing season and the balance, styled as "final cane price" or "third installment", has been determined and paid much after the close of the accounting year in November, pursuant to resolutions of the co-operative society. The divergence begins at the interpretative stage-while the assessee maintains that such final fixation is a commercial mechanism of rate finalization embedded in the cooperative model and backed, in substance, by State/regulatory oversight and thus forms an accrued contractual l....
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....nue, by contrast, stresses on the prospective operation of section 36(1)(xvii), the conditional nature of relief under section 155(19) of the Act (requiring specific application and documentary proof of Government fixation/approval), and the admitted fact that, in the present case, no such application or documentary proof of formal Government price approval has been produced. At this stage, we are therefore confronted with the question whether, and to what extent, these legislative developments can be read as throwing light on the character of cane price payments in earlier years, and what weight can be accorded to co-operative audit mechanisms and the presence of Government nominees in co-operative bodies for the limited purpose of treating the impugned FCP as "Government approved" or otherwise. 30. Yet another aspect which arises from the factual submissions is the differential rate structure adopted by the assessee - one rate for members, a slightly lower rate for non-members/nominal members, and a still lower rate for outside parties/other factories. The learned CIT-DR has invited us to infer, from this pattern alone, that the incremental rate for members represents nothing ....
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....not been able to point out any concrete instance where a specific piece of evidence was tendered but refused to be taken on record, or where a particular request for adjournment/pre-hearing material was arbitrarily denied so as to cause demonstrable prejudice. In the present case, the record shows a clear pattern of higher cane price being paid to members compared to non-members/third parties, without the assessee producing before the AO any detailed working or cost-based justification correlating the entire differential with commercial exigencies such as recovery, quality or logistics etc or any iota of evidence justifying such higher payment. Equally, while it may be said that the AO has not carried out the full quantification exercise in the precise manner envisaged by this Tribunal in the earlier round, however, it is imperative to point out that the assessee has not submitted an iota of evidence to justify payments higher than the FRP, the manner of its calculation, its approval by the concerned Government Authorities etc. as laid down by Hon'ble Supreme Court and as per directions of this Tribunal, therefore, such deficiency goes to the manner of determination of disallowance....
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....unds Nos. 6 to 12 stand rejected in so far as they assail the legitimacy of making any disallowance on this count. 34. However, while the necessity of a disallowance in principle is thus upheld, the quantification made in the impugned assessment order is not in consonance with the method indicated by the Hon'ble Supreme Court in Tasgaon Taluka (supra) nor with the structured approach adopted in comparable matters, including the order of the CIT(A) in the case of Sahakari Khand Udhyog Mandali Ltd. (supra), wherein the profit-embedded portion was isolated by taking the effective rate to non-members as the commercial benchmark and treating only the differential per MT paid to members as embedded surplus (e.g. Rs. 75 per MT x quantity procured from members). A similar approach was also recognized by the Pune Bench in the case of Mohanrao Shinde Sahakari Sakhar Karkhana Ltd., ITA No.1138/Pun/2017 (AY 2012-13), dated 17.07.2019, where the price paid to non-members was regarded as a purely commercial deal, non-members having no claim on surplus of the co-operative. Guided by these principles, we are of the considered view that the correct method is: (i) to identify, on the basis of the....
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....Act, being without jurisdiction, patently in contravention to the provisions of the law, illegal, arbitrary and under gross misappreciation of the facts of the case and hence, not justified. 2. On the facts and in the circumstances of the case as well in law, both the lower authorities have grievously failed to appreciate in the right, lawful and proper perspectives the fact that the sugarcane price claimed as business expenditure is the price approved by the State Government, duly substantiated by the certificate of approval of Final Cane Price paid to the canegrowers members against supply of the sugarcane and hence, the action of the Revenue authorities to make disallowance of portion of the approved Final Cane Price to the extent of Rs. 125,56,23,819/- under gross misappreciation of facts, misconception and misconstruction of the provisions of Section 36(1)(xvii) of the Act read with the CBDT' Circular No. 18/2021 dtd. 25-10-2021 being clarificatory in nature, is without jurisdiction, against the unrebutted documentary evidences, illegal, invalid, bad in law, arbitrary, prejudicial, conjectural and therefore, liable to be quashed or annulled in toto. 3. On....
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.... as well in law, both the lower authorities have erred in overlooking and summarily rejecting the detailed submissions with explanations made duly substantiated by the authentic, speaking, corroborative and cogent evidences and hence, the order passed by the CIT (Appeals) confirming addition to the extent of Rs. 125,56,23,819/- arbitrarily, capriciously and based on lopsided, imaginary and factually incorrect inferences, deserves to be annulled or nullified. 7. Your appellant further reserves its rights to add, alter, amend or modify any of the aforesaid grounds before or at the time of hearing of an appeal. 36. Though the grounds are lengthily drafted, they essentially assert that the impugned amount represents a legitimate business expenditure allowable under section 37(1) read with section 36(1)(xvii) of the Act, that the cane price was duly approved by the competent State Government authority, that the lower authorities misapplied the statute and ignored CBDT Circular No. 18/2021 dated 25.10.2021, that the principle of consistency has been violated, and that the set-off of brought-forward unabsorbed depreciation has been wrongly denied. As all effective grounds (Gro....
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....f. 39. Per contra, the learned CIT-DR reiterated the reasoning of the AO and submitted that the approval relied upon by the assessee cannot be treated as a Government fixation of price in the statutory sense, and that the so-called final cane price is nothing more than post-profit distribution passed through a co-operative resolution. He argued that the differential price structure, where members receive higher rates compared to non-members and outsiders, indicates an element of patronage benefit akin to surplus distribution. According to him, the principles laid down in Tasgaon Taluka (supra) continue to apply even under the FRP regime, and unless the assessee conclusively demonstrates that the Government has formally fixed or approved the excess over FRP, the same cannot be allowed as a deduction under section 36(1)(xvii) of the Act. He therefore submitted that the addition made by the AO and sustained by the CIT(A) deserved to be upheld. 40. We have considered the rival submissions and examined the material placed on record. The decisive distinguishing feature in the present assessment year is the fact that the assessee has placed on record a specific and contemporaneous a....
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....st cross-appeals-one by the Revenue challenging the partial relief granted by the CIT(A), and the corresponding appeal by the assessee contesting the portion of disallowance sustained by the CIT(A). Grounds of appeal are the same for all four assessment years; therefore, for ready reference, the grounds for AY 2011-12 for both the assessee and the Revenue are reproduced below: ITA No. 211/SRT/2020 (AY 2011-12): 1. On the facts and in the circumstances of the case as well in law, the C.I.T. (Appeals) erred in confirming the disallowance of the portion of the sugarcane price to the extent of Rs. 7,23,50,683/-actually/factually paid to the registered members supplying their sugarcane, purely on misappreciation of facts, based on misconceptual, presumptive and perverse observations, and hence, being without jurisdiction, bad in law, in-valid, illegal, is liable to be quashed. 2. On the facts and in the circumstances of the case as well in law, As per Sr.No. the CIT (Appeals) has grievously failed to appreciate that the 1 above sugarcane purchased during the crushing season from the nominal members at the contractual price at the reduced amount of Rs. 75/- per....
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....itted to the State Government for approval of the final cane price, other State's approved cane price, opportunity cost/cost of cultivation to the registered farmer members for supplying sugarcane to the appellant cooperative society as well as strong agitations by registered farmer members demanding higher prices and hence, the action to treat the amount of Rs. 75/- per M.T. as an extra payments made to registered farmer members as the alleged profit embedded in the sugarcane price, being arbitrary, capricious and based on lopsided, imaginary and factually incorrect inferences, deserves to be annulled or nullified. 6. 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, sugarcane price paid to registered members was allowed by various AOs or the Appellate Authorities, and therefore, there was no justification on the part of the Revenue to decide to the contrary, and thus, offended the law laid down by the Supreme Court in CIT Vs. Excel Industries Ltd. - (2013) 358 ITR 295 holding that Revenue must be consistent and not flip-flop on the same issue in....
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....11 to 214/SRT/2020 and Ground Nos. 1 to 5 in the Revenue's appeals in ITA Nos. 218 to 221/SRT/2020 are grouped issue-wise and disposed of in a consolidated manner by the following common discussion. 45. During the hearing, the ld. AR reiterated that no portion of the cane price represents profit distribution and that the differential between members and nominal members was commercially justifiable based on quality parameters, logistical factors, and the co-operative procurement framework. The AR submitted that similar pricing patterns were accepted in earlier years and therefore the rule of consistency applies. 46. In response, the ld. CIT-DR supported the impugned orders and submitted that the assessee could not substantiate the differential pricing with contemporaneous evidence or Government approved orders / approvals. He argued that the CIT(A) adopted a balanced approach by sustaining only the demonstrable differential attributable to members, and such reasoning aligns with the mandate of the Hon'ble Supreme Court in Tasgaon Taluka (supra). 47. We have given our thoughtful consideration to rival submissions and carefully examined the orders of the authorities below. Th....
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....terfere with the CIT(A)'s conclusions. 50. The plea of consistency raised by the assessee also cannot be accepted in these years because the Hon'ble Supreme Court has clarified the legal position in Tasgaon Taluka (supra) subsequent to earlier assessments. The CIT(A), having adopted a balanced factual and legal approach, cannot be faulted. Accordingly, the findings of the CIT(A) appear reasonable, well-considered and legally sustainable. 51. In light of the above discussion, the disallowances sustained by the CIT(A) in these four assessment years are upheld. Consequently, the appeals filed by the assessee in ITA Nos.211 to 214/SRT/2020 are dismissed and the corresponding appeals filed by the Revenue in ITA Nos.218 to 221/SRT/2020 challenging the partial relief are also dismissed. All grounds of appeal raised by both sides for AYs 2011-12 to 2014-15 thus stand dismissed. ITA No.222 to 225/SRT/2020 (AY 2011-12 to 2014-15): 52. We now take up the next set of appeals concerning Maroli Vibhag Khand Udyog Sahakari Mandli Ltd., covering AYs 2011-12 to 2014-15. In this batch, the Revenue has filed appeals for all four assessment years whereas the assessee has filed appeals only....
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....vously failed to appreciate that Cane Development exps. incurred for Rs. 9,23,064/- by the appellant society was exclusively for the cultivation of better quality of sugarcane by the registered members and hence, the action of the Revenue to treat the Cane Development exps. being incurred wholly and exclusively for the prime activity of pulling of sugarcane of better quality from the registered members, fully allowable u/s 37(1) of the Act, as the alleged profit/extra payments to the member farmers is without jurisdiction, bad in law, arbitrary, imaginary, perverse, invalid and thus, deserves to be allowed as claimed. 4. On the facts and in the circumstances of the case as well in law, the CIT (Appeals) failed to appreciate that the business expenditure incurred for the Cane Development exps. for Rs. 9,23,064/- and total cane price including the above amount of Rs. 13,14,995/- were allowable both under section 28 and section 37 and the disallowance of both the expenditures incurred wholly and exclusively for business purposes results into Department taxing unreal and wrong amount of income and hence, liable to be struck down. 5. On the facts and in the circumstanc....
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....stries Ltd. - (2013) 358 ITR 295 holding that Revenue must be consistent and not flip-flop on the same issue in different assessment years. 8. Your appellant further reserves its rights to add, alter, amend or modify any of the aforesaid grounds before or at the time of hearing of an appeal. ITA No. 222/SRT/2020 (AY 2011-12): 1. On the facts and in the circumstances of the case and in Law, the Ld. CIT(A) has erred in deleting the disallowance of Rs. 23,10,40,214/- out of Rs. 23.46,50,203/- made in the assessment order on account of non business expenditure and transfer of profits effected by payment of Sugarcane purchase price at the rate over and above the Fait and Remunerative Price (FRP) holding that profit element embedded in the sugarcane purchase price paid to the member farmer is Rs. 13,14,995/-@ Rs. 11/- per MT on purchase of 119544.985 MT sugarcane from member farmers when sugarcane purchase price given to the member farmers @ Rs. 2151/- per. MT as compared to nominal member farmers @ Rs. 2140 per MT, alongside extra premium payment expenses in the form of cane development expenses of Rs. 9,23,064/- paid to member farmers to promote and motivate ....
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.... fact-based approach by analyzing the differential component and limiting disallowance strictly to amounts demonstrably linked to member-specific benefit, either by way of higher purchase price or cane development assistance. The CIT-DR submitted that in both assessment years where the assessee has filed appeals, namely AY 2011-12 and AY 2012-13, the assessee failed to furnish contemporaneous supporting documents such as computation sheets, pricing approvals, cost justification, or government-based cane pricing calibration. The CIT-DR further added that the requirement imposed by the Hon'ble Supreme Court in case of Tasgaon Taluka (supra) mandates that the Revenue must identify and segregate profit-sharing elements embedded in sugarcane payments made to members, and therefore the limited disallowance retained by the CIT(A) was not only justified but conservative. 55. We have carefully considered the rival submissions and examined the record. As noted earlier while dealing with the preceding group of appeals, the relevant assessment years fall prior to the insertion of section 36(1)(xvii) of the Act, and therefore the legal position continues to be governed by the binding ratio o....