Agricultural Market Committee, Shadnagar, Hyderabad V. DCIT, Hyderabad

CO 73/HYD/2010

• Counselvise Citation: [2010] 122 COUNSELVISE.COM (IT) 5293 (ITAT-HYDERABAD)
• Duration Of Justice: 9 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 15-10-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 23-11-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 06-10-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K RAGHUNATH
• Assessee Lawyers: AMLAN TRIPATHY
• Keywords: Opportunity of being heard
• Section: 43B; 12A; 12; 10; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A , HYDERABAD BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI CHANDRA POOJARI ACCOUNTANT MEMBER (1) ITA NO.1002/HYD/2010 ASSESSMENT 2003-04 (2) ITA NO.1003/HYD/2010 ASSESSMENT 2004-05 THE DCIT, CIRCLE 5(1), HYDERABAD VS AGRICULTURAL MARKET COMMITTEE SHADNAGAR, MAHABOOBNAGAR DISTRICT. (APPELLANT) (RESPONDENT) (1) CO.73/HYD/2010 ARISING OUT OF ITA NO.1002/H/2010 ASSESSMENT 2003-04 (2) CO.74/HYD/2010 ARISING OUT OF ITA NO.1003/H/2010 ASSESSMENT 2004-05 THE DCIT, CIRCLE 5(1), HYDERABAD VS AGRICULTURAL MARKET COMMITTEE SHADNAGAR, MAHABOOBNAGAR DISTRICT. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AMLAN TRIPATHY RESPONDENT BY : SHRI K. RAGHUNATH O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THESE TWO CROSS APPEALS ARE DIRECTED AGAINST TH E ORDER OF THE CIT(A)-V, HYDERABAD DATED 30/1/2009 AND PERTAINS TO THE ASSESSMENT YEARS 2003-04 & 2004-05. SINCE ISSUES INVOLVED IN THESE CROSS APPEALS ARE COMMON IN NATURE, THEY ARE CLUBBED TOGETHER, HE ARD TOGETHER AND DISPOSED OFF VIDE THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NO.1002&1003 + COS.73 & 74/H/2010 AGRICULTURAL MARKET COMMITTEE 2 2 2. THE REVENUE RAISED THE FOLLOWING GROUNDS: 1. THE CIT(A) OUGHT TO HAVE CONFIRMED THE FINDINGS OF THE ASSESSING OFFICER AS THE ASSESSEES INCOME IS NOT E XEMPT U/S 10(26AAB). 2. APPLICATION OF SECTION 10(26 AAB) IS APPLICABLE FROM ASSESSMENT 2009-10 AS SUPPORTED BY THE ORDER OF ITA T BENCH, HYDERABAD IN THE CASES OF 21 AMCS VIDE ITS ORDER D ATED 26.3.2010. 3. THE ASSESSEE RAISED IN ITS CROSS APPEALS THE F OLLOWING GROUNDS: 1. THE CIT(A) IS NOT ERRONEOUS IN FACTS AND LAW BE CAUSE ON THE DATE OF PASSING OF THE IMPUGNED ORDER THE CIT(A) NO R THE ASSESSEE WERE AWARE OF THE ORDER OF THE ITAT, HYDER ABAD. 2. THE CIT(A) WHILE PASSING THE ORDER HAS NOT CONS IDERED THE OTHER GROUNDS OF APPEALS BUT PASSED THE ORDER RELYI NG ON THE DECISION OF ITAT VIZAG BENCH HOLDING THAT AMC ARE E XEMPT FROM TAX U/S 10(26AAB) RETROSPECTIVELY. 3. WITHOUT PREJUDICE TO THE GROUNDS TAKEN ABOVE, T HE ASSESSEE PLEADS THAT ONCE REGISTRATION HAS BEEN GRANTED U/S1 2A, IT SHOULD BE EFFECTIVE FOR ALL THE YEARS FOR WHICH CONSTITUTI ON OF THE AMC HAS BEEN REMAINED THE SAME AND THEREFORE THE ASSESS EE SHOULD BE ENTITLED FOR THE BENEFITS OF EXEMPTION U/S 11 AN D 12 FOR THE IMPUGNED ASSESSMENT YEAR ALSO. 4. THE ISSUE RAISED BY THE REVENUE IN ITS APPEAL IS COVERED BY THE ORDER OF THIS TRIBUNAL DATED 26.3.2010 IN ITA NOS.5 42/H/2009 AND OTHERS IN THE CASE OF AGRICULTURAL MARKET COMMITTEE , MADHIRA. THE TRIBUNAL AFTER CONSIDERING THE ENTIRE FACTS AND CIR CUMSTANCES OF THE CASE IN PARAS 15, 16, 17, 18 & 19 DECIDED THE ISSUE AGAINST THE ASSESSEE AS FOLLOWS: 15. ON CAREFUL CONSIDERATION OF THE MATTER IN THE L IGHT OF THE SUBMISSIONS OF BOTH THE SIDES, WE FIND THAT THE CIT (A) ADJUDICATED THE ISSUE ONLY WHETHER THE INSERTION OF SUB-SECTION 26AAB TO SECTION 10 WAS A DECLARATORY ACT TO REMOVE DOUBTS EXISTING WITH REGARD TO THE EFFECT OF PRE-EXISTING STATUTE AND ITA NO.1002&1003 + COS.73 & 74/H/2010 AGRICULTURAL MARKET COMMITTEE 3 3 HENCE WHETHER IT IS RETROSPECTIVE ACTION OR NOT. T HE CIT (A) ALLOWED THE APPEAL OF THE ASSESSEE HOLDING THAT THE AMCS ARE ELIGIBLE FOR EXEMPTION U/S 10(26AAB) OF THE ACT BY FOLLOWING THE DECISION OF THE VISAKHAPATNAM BENCH OF ITAT. WE ALS O RESTRICT OUR VIEW ONLY WITH RESPECT TO WHETHER THE INSERTION OF SUB- SECTION 26AAB TO SECTION 10 OF THE ACT IS IN RETROS PECTIVE NATURE OR NOT AND AMCS ARE ELIGIBLE FOR EXEMPTION U /S 10(26AAB) OF THE ACT FOR THE YEARS UNDER CONSIDERAT ION OR NOT. WE REFRAIN FROM GOING TO OTHER GROUNDS RAISED IN TH E APPEALS FILED BY THE REVENUE. WHILE DOING SO, WE FIND SOME FORCE IN THE ARGUMENTS OF THE LEARNED DEPARTMENTAL REPRESENTATIV E WHICH CRYSTALLIZED IN THE ISSUES NOTED ABOVE. WE FIND THA T THE VISAKHAPATNAM BENCH OF THE TRIBUNAL IN THE CASE OF AGRICULTURAL MARKET COMMITTEE (SUPRA) NOTED THAT THE APEX COURT IN AGRICULTURAL PRODUCE MARKET COMMITTEE'S CASE (SUPRA ) RENDERED A DECISION ON 21.8.2008 BY EXPRESSING ITS CANDID VI EW WITH REGARD TO MEANING OF THE EXPRESSION 'LOCAL AUTHORIT Y' IN THE LIGHT OF THE EXPLANATION INSERTED BELOW SECTION 10(20) OF THE ACT, BY THE FINANCE ACT, 2002. HOWEVER, ADDRESSING TO THE CONCERNS EXPRESSED IN THE LIGHT OF THE TAXABILITY OF AMCS, T HE HON'BLE FINANCE MINISTER CLARIFIED THE POSITION, BY INTRODU CING NEW SUB- SECTION 26AAB TO SECTION 10 OF THE INCOME-TAX ACT, WHICH CATEGORICALLY PROVIDES EXEMPTION TO ANY INCOME OF A MC CONSTITUTED UNDER ANY LAW FOR THE TIME BEING IN FOR CE AND FOR THE PURPOSE OF REGULATING THE MARKETING OF AGRICULT URAL PRODUCE. THIS SUB-SECTION WAS CLARIFIED BY THE VISAKHAPATNAM BENCH OF THE TRIBUNAL IN THE CASE CITED ABOVE, TO HAVE BEEN INSERTED TO CURE THE UNINTENDED CONSEQUENCES ARISING OUT OF THE INSERTION OF EXPLANATION TO SECTION 10(20) OF THE ACT. FINALL Y, IT WAS HELD BY THE VISAKHAPATNAM BENCH IN THAT CASE THAT THE PR OVISIONS OF SECTION 10 (26AAB) OF THE INCOME-TAX ACT ARE INTEND ED TO BE RETROACTIVE IN OPERATION. 16. HOWEVER, WE FIND THAT THE APEX COURT IN THE CAS E OF AGRICULTURAL PRODUCE MARKET COMMITTEE (SUPRA) HELD THAT THE AMC(S) ARE NEITHER A MUNICIPAL COMMITTEE NOR A DIST RICT BOARD UNDER THE EXPLANATION TO SECTION 10 (20) OF THE ACT AND IT WAS CATEGORICALLY CONCLUDED THAT AS PER SUB-SECTION 26A AB OF SECTION 10 OF THE ACT, INCOME OF THE AMC(S) IS EXEM PT AND THE SAME COMES INTO FORCE ONLY WITH EFFECT FROM 1.4.200 9. EVEN THOUGH THE LEARNED COUNSEL FOR THE ASSESSEE CONTEND ED THAT THE OBSERVATIONS OF THE APEX COURT ARE ONLY A PASSING R EMARK AND NOT EVEN ABITER DICTA MADE BY THE APEX COURT, WE MA Y NOTE THAT WHETHER IT IS A PASSING REMARK OR A SPECIFIC OBSERV ATION MADE BY THE APEX COURT AND EVEN IF THE RELEVANT QUESTION BE FORE THE ITA NO.1002&1003 + COS.73 & 74/H/2010 AGRICULTURAL MARKET COMMITTEE 4 4 APEX COURT IS NOT SPECIFICALLY IN RELATION TO THE P OINT AT ISSUE, THE SAID OBSERVATIONS/REMARKS, AS CONTENDED BY THE LEARNED COUNSEL FOR THE ASSESSEE, OF THE APEX COURT ARE BIN DING ON US. IN THAT CASE, THE APEX COURT CLEARLY HELD THAT SUB-SEC TION 26AAB OF SECTION 10 COMES INTO FORCE WITH EFFECT FROM 1ST AP RIL, 2009 AND THERE IS NO AMBIGUITY IN THIS REGARD. THE PRONOUNCE MENT OF THE SAID APEX COURT ORDER WAS ON 21ST AUGUST 2008 WHERE AS THE FINANCE ACT, 2008 RECEIVED THE PRESIDENTS ASSENT O N 10.05.2008 AND AFTER HAVING TAKEN COGNIZANCE OF THE EXISTENCE OF THIS PROVISION, ABSTAINED FROM EXTENDING ITS BEN EFIT TO THE ASSESSEE FOR THE INTERVENING PERIOD FROM 1.4.2003 T O 1.4.2009. THE ELEMENTARY PRINCIPLES OF JUDICIAL DISCIPLINE WA RRANT THAT SUPERIOR WISDOM OF THE TIER BELOW HAS TO GIVE WAY T O HIGHER WISDOM OF THE TIER OF THE ABOVE. 17. AN ACT MAY BE SAID TO BE DECLARATORY AND HELD T O BE RETROSPECTIVE OR RETROACTIVE WHEN IT IS ASSUMED TO REMOVE DOUBTS EXISTING AS TO THE COMMON LAW OR THE MEANING OR EFFECT OF ANY STATURE, FOR EXAMPLE, THE PROVISO ADDED TO S ECTION 43B OF THE ACT WITH EFFECT FROM 1.4.1988 WAS GIVEN RETROSP ECTIVE EFFECT IN ALLIED MOTORS (P) LTD V CIT (BY THE SUPREME COUR T (AIR 1997 SC 1361) ON THE REASONING THAT THE PROVISO WAS ADDE D TO REMEDY UNINTENDED CONSEQUENCES AND SUPPLY AN OBVIOU S OMISSION AND THAT THE AMENDMENT TO INSERT THE PROVI SO WOULD NOT SERVE ITS PURPOSE UNLESS IT IS CONSTRUED AS RET ROSPECTIVE. SIMILARLY, IN CIT V PODAR CEMENTS PVT LTD. (226 ITR 625(SC)) IT WAS HELD THAT THE AMENDMENTS INTRODUCED BY THE FINA NCE ACT, 1987 IN SO FAR AS THEY RELATED TO SEC.27(III), (III A), AND (IIIB) WHICH REDEFINED THE EXPRESSION OWNER OF HOUSE PROP ERTY, IN RESPECT OF WHICH THERE WAS A SHARP DIVERGENCE OF OP INION AMONGST THE HIGH COURTS, WAS CLARIFICATORY AND DECL ARATORY IN NATURE. 18. AS PER THE EXPLANATORY NOTES TO THE FINANCE ACT , 2008 REPORTED IN 310 ITR (ST.) 54, VIDE PARA 7.2, THE IN TENTION OF THE LEGISLATURE IS VERY CLEAR STATING THAT THE AMENDMEN T IS WITH EFFECT FROM 1ST APRIL, 2009. THE FINANCE MINISTER APPEARS TO HAVE REFERRED TO CLAUSE 3 OF THE FINANCE BILL, 2008 PERTAINING TO AMENDMENT TO SECTION 2(15) OF THE ACT WITH EFFECT F ROM 01.04.2009. THE ANTICIPATED HARDSHIP TO AMCS IS CON SEQUENTIAL TO THE AMENDMENT TO SECTION 2(15) OF THE ACT AND HA S NO RELATION TO SECTION 10(20) OF THE ACT AND ITS AMEND MENT BY THE FINANCE ACT, 2002 WITH EFFECT FROM 01.04.2003. THE DOUBTS SOUGHT TO BE REMOVED ARISE FROM THE AMENDMENT TO SE C. 2(15) WHICH CAME INTO EFFECT FROM 01.04.2009. THEREFORE, THE ITA NO.1002&1003 + COS.73 & 74/H/2010 AGRICULTURAL MARKET COMMITTEE 5 5 CONSEQUENTIAL INSERTION OF THE NEW SECTION 10[26AAB ] OF THE ACT CAN BE SAID TO BE TAKEN PLACE ONLY FROM 1ST APRIL 2 009. 19. IT IS WELL SETTLED THAT THE INCOME TAX ACT AS I T STANDS AMENDED ON THE FIRST DAY OF APRIL OF ANY FINANCIAL YEAR MUST APPLY TO THE ASSESSMENT OF THAT YEAR AND THAT A PRO VISION NOT EXPRESSLY RETROSPECTIVE IS PROSPECTIVE. WE DO NOT S EE ANY AMBIGUITY OR LACK OF CLARITY EXISTED PRIOR TO THE I NSERTION OF A NEW SECTION 10(26AAB) OF THE ACT IN WHICH THIS PROV ISION CAN BE SAID TO HAVE REMEDIED. THE INTENTION OF THE LEGISL ATURE HAS TO BE GATHERED FROM THE LANGUAGE OF THE STATUTE ITS ELF. WHEN THERE IS A CLEAR PROVISION OF LAW, ONE CANNOT RESOR T TO THE LIBERAL OR FAVORABLE INTERPRETATION OF THE ASSUMED DOUBT. W HEN THE LANGUAGE OF THE TEXT IS CLEAR AND UNAMBIGUOUS, WE A RE BOUND TO ADOPT THE LITERAL CONSTRUCTION AND NOT DO VIOLENCE TO THE LANGUAGE ADOPTING A LIBERAL OF FAVORABLE CONSTRUCTI ON OF THE STATUTORY PROVISIONS. OUR VIEW IS FORTIFIED BY THE DECISION OF THE APEX COURT IN THE CASE OF CIT V TARA AGENCIES REPOR TED IN 292 ITR 444. IN VIEW OF THE ABOVE, RESPECTFULLY FOLLOWI NG THE DECISION OF THE APEX COURT IN THE CASE OF APMC (SUP RA), THE CIT [A] IS NOT CORRECT IN HOLDING THAT THE ASSESSES ARE ELIGIBLE FOR EXEMPTION UNDER SECTION 10 [26AAB] OF THE ACT FOR T HE ASSESSMENT YEARS UNDER CONSIDERATION. IN THE RESULT , ALL THE APPEALS OF THE REVENUE ARE ALLOWED. 5. RESPECTFULLY FOLLOWING THE ABOVE ORDER OF THIS TRIBUNAL, THE GROUNDS TAKEN BY THE REVENUE ARE ALLOWED. 6. THE ISSUES RAISED BY THE ASSESSEE IN ITS CROSS APPEALS CO.NOS.73 & 74/H/2010 ARE DECIDED IN FAVOUR OF THE ASSESSEE IN PARA NO.22 BY SAME ORDER OF THE TRIBAL CITED SUPRA WHICH IS AS FOLLOWS: 22. THE GROUND NO.4 RAISED IN THE CROSS OBJECTIONS FILED BY THE ASSESSEES IS WHETHER AMCS ARE ENTITLED TO THE BENEF ITS OF EXEMPTION U/S 11 AND 12 OF THE INCOME-TAX ACT FOR T HE ASSESSMENT YEAR UNDER CONSIDERATION IS NOT. THIS IS SUE WAS NOT RAISED BEFORE THE CIT (A) AND ACCORDINGLY, THERE WA S NO DISCUSSION BY THE CIT (A) ON THIS ISSUE. UNDER TH ESE CIRCUMSTANCES, WE FEEL IT PROPER TO RESTORE THIS IS SUE TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER IS DIRECTED TO VERIFY THE REGISTRATION U/S 12A OF THE ACT GRANTED TO THE AMC BY THE DIT (EXEMPTION) AND PASS AN ORDER IN ACCORDANCE WITH LAW ITA NO.1002&1003 + COS.73 & 74/H/2010 AGRICULTURAL MARKET COMMITTEE 6 6 AFTER AFFORDING AN OPPORTUNITY OF BEING HEARD TO TH E ASSESSEE ON THIS ISSUE. 7. RESPECTFULLY FOLLOWING THE ABOVE ORDER OF THE TRIBUNAL, THE GROUNDS TAKEN BY THE ASSESSEE IN ITS CROSS OBJECTIO NS ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, THE REVENUE APPEALS IN ITA NOS. 1002/HYD/2010 & 1003/HYD/2010 ARE ALLOWED AND THE ASSESSEES CRO SS OBJECTIONS IN CO NOS.73 & 74/H/2010 ARE PARTLY ALLOWED FOR STATISTIC AL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT 15.10.201 0 SD/- SD/- G.C. GUPTA CHANDRA POOJARI VICE PRESIDENT ACCOUNTANT MEMBER DATED THE 15 TH OCTOBER, 2010 COPY FORWARDED TO: 1. THE DCIT, CIRCLE 5(1), HYDERABAD 2. THE AGRICULTURAL MARKET COMMITTEE, SHADNAGAR, MAHABOOBNAGAR DISTRICT. 3. CIT(A)-V HYDERABAD. 4. CIT, HYDERABAD 5. THE D.R., ITAT, HYDERABAD. NP