Case Note & Summary
The Revenue appealed under Section 260A of the Income Tax Act against the order of the Income Tax Appellate Tribunal. The Tribunal had deleted additions made by the Assessing Officer on account of non-refundable deposits, C.M.s Relief Fund, Area Development Fund, Cane Development Fund, Hutment Fund, Education Fund, Shri Y.B.Chavan Memorial Trust, and interest on non-refundable deposits. The Tribunal held that these funds/deposits collected by the assessee society out of sugarcane purchase price payable to cane growers are not trading receipts of the assessee. The Revenue raised a substantial question of law. The High Court heard the counsels and noted that the subject was squarely covered by the authority of the Supreme Court in Commissioner of Income Tax v. Shri Chhatrapati Sahakari Sakhar Karkhana Ltd. (270 ITR 1) and the Division Bench of this Court in Krishna Sahakari Sakhar Karkhana Ltd. v. Commissioner of Income Tax (229 ITR 1). Following these precedents, the Court dismissed the appeal, holding that the Tribunal was correct in deleting the additions. The Court did not find any merit in the Revenue's appeal and answered the question in the affirmative, against the Revenue.
Headnote
A) Income Tax - Cooperative Sugar Factory - Trading Receipts - Various funds and deposits collected by a cooperative sugar factory from cane growers out of sugarcane purchase price are not trading receipts of the assessee - The Supreme Court in CIT v. Shri Chhatrapati Sahakari Sakhar Karkhana Ltd. (270 ITR 1) and the Division Bench of this Court in Krishna Sahakari Sakhar Karkhana Ltd. v. CIT (229 ITR 1) have held that such collections are not trading receipts - The Revenue's appeal was dismissed as covered by these authorities (Paras 1-2).
Issue of Consideration
Whether the Income Tax Appellate Tribunal was right in deleting additions made on account of non-refundable deposits and various funds collected by the assessee society out of sugarcane purchase price payable to cane growers, by holding that such funds/deposits are not trading receipts of the assessee.
Final Decision
The appeal is dismissed. The question of law is answered in the affirmative, against the Revenue and in favor of the assessee.
Law Points
- Funds collected by a cooperative sugar factory from cane growers as non-refundable deposits
- C.M.s Relief Fund
- Area Development Fund
- Cane Development Fund
- Hutment Fund
- Education Fund
- Shri Y.B.Chavan Memorial Trust
- and interest on non-refundable deposits are not trading receipts of the assessee.
