Agricultural Market Committee, Indervelli, Adilabad District V. 2nd respondent and 1st respondent

WP/6326/2011

AI Insights

The case involves the Agricultural Market Committee (AMC) of Indervelli, Adilabad District, challenging the decision of the 2nd respondent, which rejected their request not to be treated as an assessee in default for the assessed income for the year 2007-2008. The AMC, a body corporate under the A.P. (Agricultural Produce and Live Stock) Markets Act, 1966, was previously exempt from income tax but lost this status due to an amendment in 2003. The AMC's appeal against the tax assessment for the years 2003-2006 is pending, and they sought a stay on tax collection during this period. The court considered a precedent that recognized Agricultural Market Committees as charitable institutions and thus eligible for certain tax exemptions under Section 12-A of the Income-tax Act. The court's decision aimed to balance the immediate financial obligations of the AMC with the potential long-term benefits of their pending appeal for tax exemption status.

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 820989 (HC-ANDHRA_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 01-04-2011
• Assessment Year: misc
• Other Referred Cases: CIT v. Agricultural Market Committee, Giddalur (ITTA. No.251 of 2008 and batch dated 01.03.2011)
• Laws Referred To: A.P. (Agricultural Produce and Live Stock) Markets Act, 1966, Income-tax Act
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Keywords: Agricultural Market Committee; Charitable Body; Income tax exemption; Legal Status; Public interest
• Section: 3; 4; 220(6); 246 A; 12(A)

Judgement Text

"THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION No.6326 of 2011 ORDER: (Per Hon’ble Sri Justice V.V.S.Rao) This Writ Petition by Agricultural Market Committee (the AMC), Indervelli, Adilabad District, is about the legality and propriety of the order of the 2nd respondent whereby and whereunder the petitioner’s request not to treat them as an assessee in default in respect of the assessed income for the year 2007-2008 was rejected. The case of the petitioner in brief, to the extent necessary for this order of in limini disposal, is as follows: The petitioner - AMC is a body corporate constituted under Sections 3 and 4 of the A.P. (Agricultural Produce and Live Stock) Markets Act, 1966 (the AMC Act for brevity). Till the assessment year 2002-2003 (upto 31.03.2003), it was exempted from income tax as a local authority. However there was an amendment with effect from 01.04.2003, as a result of which it was disentitled for exemption. The 2nd respondent, therefore, assessed the income for the three years referred to hereinabove. Aggrieved by the same, the AMC filed an appeal before the 1st respondent under Section 246-A of the Income-tax Act. The appeal is pending. The petitioner also moved the 2nd respondent under Section 220(6) of the Act for stay of collection of tax by not treating it as an assessee in default. The Counsel for the petitioner submits that the petitioner is seeking registration under Section 12-A of the Act as a charitable body; and the same having been rejected by the Commissioner, the petitioner filed an appeal before the Income-tax Appellate Tribunal which is pending; and, pending consideration, if the petitioner is coerced to pay tax, then public interest would suffer. He would also rely on a recent judgment of this Court in CIT v. Agricultural Market Committee, Giddalur (ITTA. No.251 of 2008 and batch dated 01.03.2011) wherein this Court held that the Agricultural Market Committees under Section 4 were entitled to seek registration under Section 12-A of the Act to claim the benefit under Section 11 as a juridical person for the advancement of objects of general public utility. The Senior Counsel for Income-tax also made submissions but does not dispute the legal position. There is no dispute that the petitioner’s application, seeking registration under Section 12-A of the Act is pending. If ultimately the same is allowed, either by the jurisdictional Commissioner or the ITAT, it would be certainly cause the petitioner prejudice especially when Agricultural Market Committees have already been held, in the aforementioned judgment, to be charitable institution of general public utility. Therefore, in the interest of justice, we deem it proper to dispose of the Writ Petition in the following manner. The petitioner shall deposit 1/3rd of the assessed tax within a period of four weeks. The 1st respondent-Commissioner (Appeals) may pass appropriate orders in the appeals, keeping in view the decision aforementioned, within a period of three months from today. We grant liberty to the petitioner to pursue the ITAT or the Commissioner on the issue of registration under Section 12-A of the Act. The Writ Petition shall stand disposed of accordingly. No costs. _____________ V.V.S.RAO, J ___________________________ RAMESH RANGANATHAN, J 01 .04.2011 MRKR "