Krishi Uttpanna Bajar Samiti, Pune V. Income-tax Officer, Ward - 11(3), Pune

ITA 106/PUN/2019

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2455 (ITAT-PUNE)
• Duration Of Justice: 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 21-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Benefit of exemption
• Section: 143(3); 12A

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC , PUNE , , . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI D. KARUNAKARA RAO , AM . / ITA NO. 106 /P U N/201 9 / ASSESSMENT YEAR : 20 08 - 09 KRISHI UTTPANNA BAJA R SAMITI, SHRI CHHATRAPATI SHIVAJI MARKET YARD, PUNE 411037 . / APPELLANT PAN: A A ALK0006E VS. THE INCOME TAX OFFICER , WARD - 11( 3), PUNE . / RESPONDENT / APPELLANT BY : SHRI C.H. NANIWADEKAR / RESPONDENT BY : SHRI RAJESH GAWALI / DATE OF HEARING : 2 6 . 0 2 .201 9 / DATE OF PRONOUNCEMENT : 12 . 0 3 .201 9 / ORDER PER SUSHMA CHOWLA, J M : TH E APPEAL FILED BY ASSESSEE IS AGAINST ORDER OF CIT (A) , PUNE - 10 , DATED 02 . 11 .201 8 RELATING TO ASSESSMENT YEAR 20 08 - 09 AGAINST ORDER PASSED UNDER SECTION 143(3) OF THE INCOME - TAX ACT , 1961 (IN SHO RT THE ACT) . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND OF APPEAL: - 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED ON FACTS AND IN LAW IN UPHOLDING THE ASSESSING OFFICERS ACTION OF BRINGING SURPLUS OF RS.6,35,498/ - TO TAX, BEING SURPLUS FROM THE ACTIVITY OF RUNNING A PETROL PUMP, WHILE DENYING EXEMPTION U/S 11. HE FAILED TO APPRECIATE THE FACTS AS ALSO THE CONTENTIONS OF THE ASSESSEE IN ITS PROPER PERSPECTIVE. HE ITA NO. 10 6 /P U N/201 9 KRISHI UTTPANNA BAJAR SAMITI 2 ALSO FAILED TO APPRECIATE THAT THE SAID ACTIVITY IS INCIDENTAL TO THE MAI N ACTIVITY OF THE ASSESSEE. 3. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS BRINGING TO TAX THE SURPLUS OF 6,35,498/ - BEING THE PROFIT ARISING FROM THE ACTIVITY OF RUNNING PETROL PUMP AND DENYING EXEMPTION UNDER SECTION 11 OF THE ACT. 4. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE WAS CO - OPERATIVE SOCIETY ENGAGED IN REGULATING THE MARKETING OF AGRICULTURAL PRODUCE, TRADING IN PETROL AND PETROLEUM PRODUCTS. THE ASSESSEE WAS THE LOCAL AUTHORITY AND ITS INCOME WAS EXEMPT UNDER SECTION 10(20) OF THE ACT PRIOR TO 01.04.2003. AFTER INSERTION OF EXPLANATION TO SECTION 10(20) OF THE ACT, THE ASSESSEE SOUGHT REGISTRATION UNDER SECTION 12A OF THE ACT AND CLAIMED EXEMPTION UNDER SECTION 11 OF THE ACT. THE ASSESSEE WAS GRANTED REGISTRATION UNDER SECTION 12A OF THE ACT. IT MAY BE POINTED OUT THAT THE INCOME ARISING FROM THE ACTIVITY OF REGULATION OF AGRICULTURAL PRODUCE AND OTHER PRODUCE IN THE MARKET AREA, WAS HELD TO BE ENTITLED TO THE CLAIM OF EXEMPTION UNDER SECTION 11 OF THE ACT. HOWEVER, THE ASSESSING OFFICER WAS OF THE VIEW THAT THE PROFIT ARISING ON TRADING OF PETROL, DIESEL, ETC. TO THE TUNE OF 17,37,013/ - WAS NOT ENTITLED TO THE EXEMPTION UNDER SECTION 11 OF THE ACT. THE ASSESSEE EXPLAINE D THAT THE ACTIVITY OF RUNNING THE PETROL PUMP WAS ALSO AS PER PROVISIONS OF RULE 94(4) OF THE MAHARASHTRA AGRICULTURAL PRODUCE MARKETING (REGULATION) RULES, 1967 AND FURNISHED A COPY OF LETTER NO.PANAN - 5KRU U BA SA PUNE/PETROL PUMP/8652 DATED 01.11.2010 ISSUED BY THE DIRECTOR OF MARKETING, MAHARASHTRA STATE PUNE (PANAN SANCHALAK). THE ASSESSEE EXPLAINED IN THE SAID LETTER THAT THE COMMITTEE COMMENCED THE ACT IVITY OF TRADING IN PETROL AND DIESEL ACTIVITY WITH A VIEW TO PROVIDE THE FACILITY OF PETROL PUMP TO THE VARIOUS PERSONS CONNECTED WITH THE ITA NO. 10 6 /P U N/201 9 KRISHI UTTPANNA BAJAR SAMITI 3 BAJAR SAMITI. HE FURTHER EXPLAINED THAT THE SAID ACTIVITY WAS AS PER THE PROVISIONS OF SECTION 29(2)(V) AND OF THE AGRICULTURAL PRODUCE MARKETING (REGULATIONS) ACT, 1963 AND RULE 94(4) OF THE MAHARASHTRA AGRICULTURAL PRODUCE MARKETING (REGULATION) RULES, 1967. A COPY OF THE RESOLUTION DATED 07.02.1981 AND SUPPORTING DOCUMENTS RELATING TO TRADING IN PETROL, DIESEL, ETC . WERE FURNISHED. THE ASSESSEE ALSO SUBMITTED A STATEMENT OF INCOME AND EXPENDITURE FOR TRADING IN PETROL AND DIESEL ACTIVITY. AFTER DEBITING EXPENSES ON MAINTENANCE, DAILY WORKERS SALARY, STAFF SALARY, DEPRECIATION, ETC. AND CREATING INTEREST ON CREDIT SALES, NET SURPLUS WAS SHOWN AT 6,35,498/ - AS AGAINST TRADING PROFIT OF 17,37,013/ - . THE ASSESSING OFFICER DID NOT ACCEPT THE STAND OF ASSESSEE AND HELD THAT THE ACTIVITY OF SALE OF PETROL WAS NOT INCIDENTAL TO ATTAINMENT OF OBJECTS OF THE TRUST AND BROUGHT THE SAID INCOME TO TAX. 5. THE CIT(A) DID NOT ACCEPT THE PLEA OF ASSESSEE THAT IT HAD PROVIDED THE SAID FACILITY TO NEARLY ONE LAKH PERSONS, WHO WERE VISITING THE MARKET AND SINCE THERE WAS NO PETROL PUMP FOR TRANSPORTERS TO COME TO THE AREA AND D ENIED EXEMPTION UNDER SECTION 11 OF THE ACT AND TAXED NET SURPLUS FROM THE PETROL PUMP BUSINESS OF 6,34,498/ - . 6. THE ASSESSEE IS IN APPEAL AGAINST THE SAME. 7. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE YEAR UNDER APPEAL IS ASSESSMENT YEAR 2008 - 09. HE FURTHER POINTED OUT THAT UPTO ASSESSMENT YEAR 2002 - 03, IN VIEW O F PROVISIONS OF SECTION 10(20) OF THE ACT, INCOME OF ASSESSEE WAS NOT LIABLE FOR TAXATION. THE ASSESSEE WAS MARKET COMMITTEE AND WAS IN OPERATION AL SINCE 1972. HE FURTHER POINTED OUT THAT THE ITA NO. 10 6 /P U N/201 9 KRISHI UTTPANNA BAJAR SAMITI 4 ASSESSEE APPLIED FOR REGISTRATION UNDER SECTION 12A OF THE ACT WHICH WAS GRANTED TO THE ASSESSEE IN THE YEAR UNDER APPEAL. THE ASSESSING OFFICER APPLIED PROVISO TO SECTION 2(15) OF THE ACT AND DENIED EXEMPTION UNDER SECTION 11 OF THE ACT TO THE NET SURPLUS FROM THE PETROL PUMP BUSINESS. IN THIS REGARD, HE POINTED O UT THAT PROVISO TO SECTION 2(15) OF THE ACT WAS INSERTED BY THE FINANCE ACT, 2010 W.E.F. 01.04.2009 AND IS NOT APPLICABLE TO THE YEAR UNDER APPEAL. HE FURTHER EMPHASIZED THAT THE ACTIVITY UNDERTAKEN WAS INCIDENTAL TO THE ACTIVITIES OF CO - OPERATIVE SOCIETY , HENCE THE PROFIT ARISING THEREFROM WAS ELIGIBLE FOR EXEMPTION UNDER SECTION 11 OF THE ACT. HE THEN RELIED ON THE RATIO LAID DOWN BY PUNE BENCH OF TRIBUNAL IN PRADESHIK KRISHI UTPANNA BAZAR SAMITI VS. CIT IN ITA NO.1776/PN/2013, RELATING TO ASSESSMENT YE AR 2013 - 14, ORDER DATED 29.10.2015. 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE ORDERS OF AUTHORITIES BELOW. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE SOCIETY WAS ESTABLISHED TO REG ULATE AND MARKET THE AGRICULTURAL PRODUCE IN THE AREA, FOR WHICH IT WAS ALSO PROVIDING FACILITY OF PETROL PUMP TO VARIOUS CUSTOMERS VISITING THE PLACE. THE QUESTION WHICH ARISES IS WHETHER THE PROVISION OF PETROL PUMP BY THE ASSESSEE IS INCIDENTAL TO ITS ACTIVITIES AND HENCE, ELIGIBLE FOR CLAIM OF EXEMPTION UNDER SECTION 11 OF THE ACT. THE ASSESSEE SOCIETY WAS ESTABLISHED UNDER THE PROVISIONS OF THE MAHARASHTRA AGRICULTURAL PRODUCE MARKETING (DEVELOPMENT & REGULATION) ACT, 1963. THE ASSESSEE WAS THUS, CR EATION OF STATUTE AND HAS BEEN IN OPERATIONAL SINCE 1972 , THE LEVY OR CHARGES ARE PRESCRIBED BY THE STATE GOVERNMENT. FURTHER, UNDER ITA NO. 10 6 /P U N/201 9 KRISHI UTTPANNA BAJAR SAMITI 5 CLAUSE (V) OF SECTION 29(2) OF THE MAHARASHTRA AGRICULTURAL PRODUCE MARKETING (DEVELOPMENT & REGULATION) ACT, 1963, THE MA RKET COMMITTEES ARE EMPOWERED FOR PROVIDING NECESSARY FACILITIES FOR THE MARKETING OF AGRICULTURAL PRODUCE WITHIN MARKET IN THE MARKET AREAS. THE POWER TO PROVIDE FACILITY OF PETROL, DIESEL ETC. IS AS PER PROVISIONS OF SECTION 29(2)(V) OF THE MAHARASHTRA AGRICULTURAL PRODUCE MARKETING (DEVELOPMENT & REGULATION) ACT, 1963 AND ALSO UNDER PROVISIONS OF RULE 94(4) OF THE MAHARASHTRA AGRICULTURAL PRODUCE MARKETING (REGULATION) RULES, 1967. THE ASSESSEE HAS POINTED OUT THAT THIS FACILITY IS OVER THE AREA OF 100 ACRES AND IT IS PROVIDING THE SAID FACILITY TO ABOUT ONE LAKH VISITORS AND S INCE VARIOUS TRUCKS VISIT THE MARKET AREA, HENCE THE NECESSITY TO PROVIDE FACILITY OF PETROL PUMP IN THE AREA. A DMITTEDLY, THE TRANSPORTERS ARE NOT THE MEMBERS OF MARKET COMMITTE E BUT THE FACILITY HAS BEEN PROVIDED FOR REGULATING THE BUSINESS OF MARKET COMMITTEE AND HENCE, IS INCIDENTAL TO CARRYING ON THE ACTIVITIES OF MARKET COMMITTEE. IN SUCH CIRCUMSTANCES, THE SURPLUS ARISING ON PROVIDING SUCH FACILITY IS ELIGIBLE FOR EXEMPTION UNDER SECTION 11 OF THE ACT. FURTHER, EVEN THE DIRECTOR OF MARKETING, MAHARASHTRA STATE HAD ISSUED LETTER DATED 01.11.2010 STATING THAT PETROL PUMP ACTIVITY WAS COVERED BY MAIN OBJECT OF BAZAR SAMITI. THE SAID LETT ER WAS PRODUCED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER AND CIT(A). IN THIS REGARD, WE FIND SUPPORT FROM THE RATIO LAID DOWN BY PUNE BENCH OF TRIBUNAL IN PRADESHIK KRISHI UTPANNA BAZAR SAMITI VS. CIT (SUPRA), WHEREIN IT WAS HELD THAT THE ENTIRE ACTIV ITY OF MARKET COMMITTEE QUALIFIES FOR EXEMPTION UNDER SECTION 11 OF THE ACT. 10. BEFORE PARTING, WE MAY ALSO POINT OUT THAT PROVISO TO SECTION 2(15) OF THE ACT HAS BEEN INSERTED W.E.F. 01.04.2009 AND IS NOT APPLICABLE TO THE YEAR UNDER APPEAL SINCE THE MA RKET COMMITTEE HAS BEEN ESTABLISHED FOR REGULATING THE ITA NO. 10 6 /P U N/201 9 KRISHI UTTPANNA BAJAR SAMITI 6 MARKETING OF AGRICULTURAL AND OTHER PRODUCE . IN THE ADVANCEMENT OF ITS OBJECT OF GENERAL PUBLIC UTILITY, IT HAD PROVIDED THE FACILITY OF PETROL PUMP AND THE SURPLUS ARISING THEREFROM IS THUS, ELIGIBLE FOR THE BENEFIT OF EXEMPTION UNDER SECTION 11 OF THE ACT. WE HOLD SO AND DIRECT THE ASSESSING OFFICER ACCORDINGLY. THE GROUND OF APPEAL RAISED BY ASSESSEE IS THUS, ALLOWED. 11 . IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 12 TH DAY OF MARCH , 201 9 . SD/ - SD/ - ( D.KARUNAKARA RAO ) (SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 12 TH MARCH , 201 9 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / T HE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) , PUNE - 10 ; 4. THE PR. CIT - 3 , PUNE ; 5. 6. , , , - / DR SMC , ITAT, PUNE; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE