Section 40A of Income tax Act, 1961—In the instant case, AO made addition of Rs. 65,82,559/-, being, the difference between the market price and the concessional price at which sugar (final product) was given to farmers and cane growers. The ld. CIT(A) gave certain directions and directed the AO to quantify the disallowance. Aggrieved by the same, both the parties have come up in appeal before the Tribunal.

Held that—it would be just and fair if the impugned order on this score is set aside and the matter is restored to the file of AO, instead of to the CIT(A), for fresh consideration as to whether the difference between the average price of sugar sold in the market and that sold to members at concessional rate is appropriation of profit or not, in the light of the directions given by the Hon’ble Supreme Court in the case of Krishna Sahakari Sakhar Karkhana Limited (supra).[DCIT, CIRCLE-1, SOLAPUR VERSUS SHRI MAKAI SAHAKARI SAKHAR KARKHANA LTD., BHILARWADI AND (VICE-VERSA)] [2019] 13 ITCD Online (8) [ITAT PUNE]