The Commissioner of Income Tax vs Shriram Sahakari Sakhar Karkhana Ltd.

The respondent-assessee before us is a a cooperative sugar factory and functional at Phalton District Satara. The Tribunal passed an order on 16th September, 1997 in ITA No. 1449(PN) 1996 for the assessment year 1993-94. However, the Commissioner-applicant before the Revenue sought reference of a question of law for answer and opinion of this Court. It is found that the Assessing Officer made additions on account of non refundable deposits, interest on non refundable deposits the Indira Vikas Awas Nidhi, Earthquake fund, Chief Minister''s fund, Area Development fund, Cane Development fund, Small Savings etc. In the light of the Supreme Court decision in the case of Commissioner of Income Tax, Lucknow Vs. Bazpur Co-operative Sugar Factory Limited, (1989) 177 ITR 469 : (1989) 2 JT 562 : (1989) 2 SCC 240 Supp : (1989) 2 SCR 840 , these additions were deleted by the Commissioner. In appeal against the Commissioner''s order the Tribunal followed the decision of its special bench in the case of Commissioner of Income Tax Vs. Chhatrapati Sahakari Sakhar Karkhana Ltd. and Rahuri Sahakari Sakhar Karkhana Ltd., (2000) 3 BomCR 727 : (2000) 2 BOMLR 519 : (2000) 245 ITR 498 . The decision in Shri Chhatrapati Sahakari Sakhar Karkhana Limited has been challenged before this Court and a Division Bench of this Court held that several such funds and amounts cannot be made subject matter of the deduction under the Income Tax Act. However, only some of them would fall within the category permissible by law.

In the light of the authoritative pronouncement of the Division Bench and following it in the case of similarly placed sugar factories, it has been held that the non refundable deposits and interest thereon cannot be added to the income of the Sahakari Karkhana. To that extent the Revenue''s stand has been negatived by this Court. In the case of Indira Awas Nidhi and Earthquake fund, the matter has been restored back to the Tribunal for being decided afresh and in the light of the judgment of this Court in the case of Shri Chhatrapati Sahakari Sakhar Karkhana Limited (supra). As far as Chief Minister''s fund, Area Development fund, Cane Development fund, Small Savings etc., insofar as the Chief Minister''s fund is concerned, the question will have to be answered in favour of the assessee and against the Revenue in the light of the Division Bench judgment of this Court. As far as Area Development fund is concerned, the matter will have to go back to the Tribunal for being decided afresh and in the light of the authoritative pronouncement of the Division Bench. The Cane development fund is a fund which has been said to be capable of treated as an income of the sugar factory and, therefore, the issue stands answered in favour of the Revenue and against the assessee. In our view, a further Division Bench judgment of this Court in the case of Commissioner of Income Tax vs. Malegaon Sahakari Sakhar Karkhana Limited (2005) 279 ITR 89 concludes this aspect. The said aspect is also concluded by the judgment of the Hon''ble Supreme court in the case of Siddheshwar Sahakari Sakhar Karkhana Ltd. Vs. Commissioner of Income Tax , Kolhapur and Others, (2004) 191 CTR 66 : (2004) 270 ITR 1 : (2004) 7 JT 295 : (2004) 7 SCALE 519 : (2004) 12 SCC 1 . Therefore, so far as Cane Development fund is concerned, the issue stands concluded in favour of the Revenue and against the assessee. As far as Area Development fund etc. are concerned, the matter must go back to the Tribunal for fresh consideration in the light of the Division Bench judgment. As far as Small Savings are concerned, the issue is answered in favour of the assessee and against the Revenue in terms of the Division Bench judgment in the case of Malegaon Sahakari Sakhar Karkhana Limited (supra).

All the above References are disposed of accordingly.