TaxTMI 
TaxTMI 
2019 (8) TMI 1958
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.... the circumstances of the case, the Ld. CIT(A) erred in confirming carving out by Ld. AO for season 2011-12 Rs 404/Mt from uniform purchase price of Rs 2160/Mt paid to members, non-members and gate-cane for 4,67,046 Mt sugarcane purchased and disallowed Rs. 18,86,86,584 as distribution of appellant's profits to farmers. 2. Ld. CIT(A) ought to have held that while computing profits of appellant society, the price to be allowed as a deduction for sugarcane supplied by farmers is the price fixed by its Board of Directors giving reasons for payment of competitive price and the same cannot be restricted to the notified statutory minimum price called Fair and Remunerative Price (FRP) which is a support price. 3. Ld. CIT(A) o....
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....members and non-members and in respect of non-members, purchase price was fixed on the basis of contract between the parties and the said price was not in excess of similar price being paid by other Co-operative Sugar Mills to its farmer members. Both the Assessing Officer and CIT(A) did not accept the plea of assessee in this regard and had held that though the assessee's sugar factory had made payments to members and others as per final price fixed by the Commissioner of Sugar, Maharashtra, the same could not be said to be expenditure but only distribution of profits. It was further held by Assessing Officer that the said excessive payments could not be allowed as admissible expenditure. The Assessing Officer held that additional paym....
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.... from non members and gate-cane at Rs. 2,160/- per MT, which was at competitive price as adjacent neigbour sugar mill i.e. Athani Sugar Farmers Ltd. was paying Rs. 2,180/- per MT. The said payment in the hands of Athani Sugar Farmers Ltd. has been allowed but in assessee's case Rs. 440/- per MT has been disallowed out of Rs. 2,160/- per MT. 7. The learned Departmental Representative for the Revenue on the other hand, pointed out that the Hon'ble Supreme Court in CIT Vs. Tasgaon Taluka S.S.K. Ltd. and others (supra) was also aware of similar situation where the payments were made to non-members, it was observed that same could be dealt with and / or considered under section 40A(2) of the Act i.e. Assessing Officer on the basis of ....
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....that cane price paid in excess of the notified FRP of Rs.1756/Mt was to be disallowed. The justifications given by the Ld. AO are at paras 9 to 15 of this order. Accordingly, the Ld. AO disallowed Rs. 18,86,86,584 = 4,67,046 Mt x Rs.404/Mt out of cane purchases. 10. The first issue which stands decided is that during the year under consideration, the ratio laid down in CIT Vs. Tasgaon Taluka S.S.K. Ltd. and others (supra) is not applicable as it is not case of payment of Statutory Minimum Price (in short 'SMP') plus Rule 5A of the Income Tax Rules. The matter after assessment year 2009-10, the issue is payment of FRP. In the facts and circumstances of the present case, it is also not case that payment is being made to the members....