Supreme Court - Daily Orders
C.I.T.-I vs Rajarambapu Patil Sahakari S.K.Ltd. on 25 August, 2014
Bench: Ranjana Prakash Desai, N.V. Ramana
ITEM NO.64 COURT NO.6 SECTION IIIA
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
Petition(s) for Special Leave to Appeal (C) No(s). 12240/2014
(Arising out of impugned final judgment and order dated 23/12/2011
in ITA No. 849/2011 passed by the High Court of Bombay)
C.I.T.-I Petitioner(s)
VERSUS
RAJARAMBAPU PATIL SAHAKARI S.K.LTD. Respondent(s)
(With interim relief and office report)
WITH
SLP(C) No. 12568/2014
(With appln.(s) for c/delay in filing SLP and Office Report)
Date: 25/08/2014 These petitions were called on for hearing today.
CORAM :
HON'BLE MRS. JUSTICE RANJANA PRAKASH DESAI
HON'BLE MR. JUSTICE N.V. RAMANA
For Petitioner(s)
Mr. R.P. Bhatt, Sr. Adv.
Ms. Purnima Bhatt, Adv.
Ms. Sadhana Sandhu, Adv.
Mrs. Anil Katiyar ,Adv.
For Respondent(s)
UPON hearing the counsel the Court made the following
O R D E R
Special Leave Petition (Civil) 12240/2014:-
1. The respondent-assessee is a Co-operative Society engaged in the business of production of sugar from sugarcane and sale of sugar. During the course of scrutiny assessment under Section 143(3) of the Income Tax Act, 1961 for the Assessment Year Signature Not Verified Digitally signed by 2006-07, Vishal Anand Date: 2014.09.03 16:40:44 IST the Assessing Officer made an addition of Reason: Rs.1,19,81,934/- observing that the sale of sugar at concessional rate was nothing but an appropriation of profit and in the nature -2- of application of income. The respondent-assessee preferred an appeal against this order before the Commissioner of Income-Tax (Appeals), Kolhapur. The Commissioner of Income-Tax (Appeals), Kolhapur by order dated 17/3/2009 deleted the addition made by the Assessing Officer on account of sale of sugar at concessional rate relying on the decision of jurisdiction Tribunal in the case of Chhatrapati Shahu S.S.K. Ltd. in ITA No.1925/PN/90 and also CBDT’s Circular No.117 (1974)/94 ITR (STAT) 0001 A. Being aggrieved by that, the appellant-Revenue preferred an appeal before the Income-Tax Appellate Tribunal (“the ITAT”). The ITAT by its order dated 9/9/2010 dismissed the said appeal. Being aggrieved by the said order, the appellant-Revenue preferred an appeal in the Bombay High Court under Section 260-A of the Income Tax Act raising following question of law:
“Whether on the facts and in the circumstances of the case and in law, the Tribunal was right in deleting the addition of Rs.98,12,359/- made by the assessing officer on account of difference between the market price of sugar and the concessional price at which sugar was sold to the cane growers by holding that no real income accrued to the assessee on the concessional sales and, therefore, the assessee was not liable to be assessed on the difference”.?
2. By the impugned order dated 30/6/2009, the High Court confirmed the ITAT order on the basis of Circular of Central Board of Direct Taxes dated 22/8/1973 whereby a decision was taken to allow rebate given to members of the Consumer Co-operative Stores as deduction in computing business income of the Society. Being aggrieved by the said judgment, the appellant-Revenue has -3- approached this Court.
3. Our attention is drawn to order dated 25/09/2012 in Civil Appeal No.6949 of 2012 and companion appeals, where similar question was involved. This Court by the said order remitted the matter to the Commissioner of Income-Tax (Appeals). This Court observed as under:
“The question, whether the above difference between the fair market price and the concessional price should or should not be added to the total income of the assessee(s) Society, needs to be re-looked by Commissioner of Income Tax (Appeals) [for short, `CIT (A)'].
Apart from the afore-stated question, CIT (A)
would take into account, whether the
above-mentioned practice of selling sugar at
concessional rate has become the practice or custom in the Co-operative 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 Diwali?
These are some of the questions which have not been addressed by the Authorities below in the impugned orders. The CIT (A) would be entitled to look into the Accounts and verify the basis for sale of sugar at concessional price on month-to-month basis. We, therefore, keep all questions of law and facts open.
Needless to add, the CIT (A) would give liberty to both sides to produce relevant documents.
For the above reasons, we remit the cases to CIT (A) to de-novo consider the matter.”
4. We are informed that the matter is pending before the Commissioner of Income-Tax (Appeals). In the circumstances, we -4- remit the present matter to the Commissioner of Income-Tax (Appeals) for de-novo consideration in terms of order dated 25/9/2012 passed by this Court in Civil Appeal No.6949 of 2012 and companion appeals.
5. The special leave petition is disposed of. Special Leave Petition(C) NO.12568 OF 2014:-
Delay is condoned.
1. The respondent-assessee is a Co-operative Society engaged in the business of manufacturing and sale of sugar. During the course of scrutiny assessment under Section 143(3) of the Income Tax Act, 1961 for the Assessment Year 2004-05, the Assessing Officer found inclusion of various sums under different heads of expenditure.
Being dissatisfied, the Assessing Officer made various additions to the assessee’s total income. The respondent-assessee preferred an appeal against this order before the Commissioner of Income-Tax (Appeals-II), Pune. The Commissioner of Income-Tax (Appeals-II), Pune partly allowed the appeal. Being aggrieved by that, the appellant-Revenue preferred an appeal before the Income-Tax Appellate Tribunal (“the ITAT”). The ITAT by its order dated 30/10/2009 dismissed the said appeal. Being aggrieved by the said order, the appellant-Revenue preferred an appeal in the Bombay High Court under Section 260-A of the Income Tax Act raising following question of law:
“A. Whether on the facts and in the circumstances of the case and in law, the Hon’ble ITAT was correct in deleting the addition made by the Assessing Officer on account of difference between the market price of sugar and concessional price at which sugar was sold to the -5- cane growers by holding that no income accrued to the assessee on concessional sales and, therefore, the assessee was not liable to be assessed on the difference?
B. Whether the Hon’ble ITAT did not err on facts and in law in not treating such difference as constituting ‘distribution of profits’?
C. Whether on given facts and in circumstances of the case, the Hon’ble ITAT is correct in holding that cane supply expenses are allowable u/s. 37(1) of the Income-tax Act though such expenditure are not proved to be wholly and exclusively for purpose of business which is a condition prerequisite for allow ability of expenditure u/s.37(1) of the Income-tax Act? D. Whether on given facts and in circumstances of the case, the Hon’ble ITAT is correct in deleting addition on account of cane supply expenses without appreciating that as distinguished from Sec.28 to 36 of the Income-tax act, S.37(1) of the Income-tax Act uses the words wholly and exclusively for purpose of business as condition for allow ability of expenditure u/s. 37(1) of the Income-tax Act and thus lays more strict requirement u/s. 37(1) of the Act as distinguished from Sec.28 to 36 of the Income-tax Act?”
2. Relying on the decisions of the Bombay High Court in Income Tax Appeal No.930 of 2008 in CIT v. Kisanveer Satara Sahakari Sakar Karkhana Ltd. dated 30/6/2009 and in Income Tax Appeal No.151 of 2011 in CIT v. Chhatrapati Sahakari Sakhar Karkhana Ltd. dated 20/11/2012, the High Court affirmed the ITAT order and dismissed the appeals.
3. Our attention is drawn to order dated 25/09/2012 in Civil Appeal No.6949 of 2012 and companion appeals, where questions similar to questions ‘A’ and ‘B’ hereinabove were involved. This Court by the said order remitted the matter to the Commissioner of -6- Income-Tax (Appeals). This Court observed as under:
“The question, whether the above difference between the fair market price and the concessional price should or should not be added to the total income of the assessee(s) Society, needs to be re-looked by Commissioner of Income Tax (Appeals) [for short, `CIT (A)'].
Apart from the afore-stated question, CIT (A)
would take into account, whether the
above-mentioned practice of selling sugar at
concessional rate has become the practice or custom in the Co-operative 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 Diwali?
These are some of the questions which have not been addressed by the Authorities below in the impugned orders. The CIT (A) would be entitled to look into the Accounts and verify the basis for sale of sugar at concessional price on month-to-month basis. We, therefore, keep all questions of law and facts open.
Needless to add, the CIT (A) would give liberty to both sides to produce relevant documents.
For the above reasons, we remit the cases to CIT (A) to de-novo consider the matter.”
4. We are informed that the said matters are pending before the Commissioner of Income-Tax (Appeals). In the circumstances, we remit the present matter to the Commissioner of Income-Tax (Appeals) for de-novo consideration in terms of order dated 25/9/2012 passed by this Court in Civil Appeal No.6949 of 2012 and companion appeals.
5. The special leave petition is disposed of.
(VISHAL ANAND) (INDU POKHRIYAL)
COURT MASTER COURT MASTER