Agricultural Market Committee, Devarakadra, Mahabubnagar, Hyderabad V. ITO, Ward-1, Mahabubnagar, Mahabubnagar

ITA 1116/HYD/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5989 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 17-11-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 25-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A SITARAMA RAO
• Assessee Lawyers: S RAMA RAO
• Keywords: Condonation of delay
• Section: 143(3); 12A; 147; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA.NO. A.Y. APPELLANT RESPONDENT 1114/H/15 2005 - 06 AGRICULTURAL MARKET COMMITTEE, DEVARKADRA, MAHABUBNAGAR DISTRICT. PAN AAALA0938M THE INCOME TAX OFFICER, WARD-1, MAHABUBNAGAR. 1115/H/15 2006 - 07 1116/H/15 2007 - 08 FOR ASSESSEE : MR. S. RAMA RAO FOR REVENUE : MR. A. SITARAMA RAO DATE OF HEARING : 22.11.2016 DATE OF PRONOUNCEMENT : 22.11.2016 ORDER PER D. MANMOHAN, V.P. THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST TH E ORDERS PASSED BY THE CIT(A)-4, HYDERABAD AND THEY PER TAIN TO THE A.YS. 2005-06 TO 2007-08. SINCE THE ISSUE INVOLVED I N ALL THESE APPEALS IS IDENTICAL, WE PROCEED TO DISPOSE OF THESE A PPEALS BY A COMBINED ORDER, FOR THE SAKE OF CONVENIENCE. 2. THE ISSUE BEING IDENTICAL WE REFER TO THE FACTS MEN TIONED IN THE ASSESSMENT ORDER AS WELL AS THE CIT(A) ORDER FOR TH E A.Y. 2005-06. 2.1. BEFORE PROCEEDING WITH THE MERITS OF THE ISSUE, I T DESERVES TO BE NOTICED THAT THERE IS A DELAY OF 14 DAYS IN FILING THE APPEAL. THE SECRETARY OF THE ASSESSEE-TRUST HAS FILED AN AFF IDAVIT AND ALSO A PETITION SEEKING CONDONATION OF DELAY WHEREIN HE HAS NARRATED THE SEQUENCE OF THE EVENTS WHICH LEAD TO THE DELAY IN FI LING THE APPEAL. THE LD. D.R. HAS NOT RAISED ANY OBJECTION WIT H REGARD TO 2 ITA.NO.1114, 1115, 1116/HYD/2015 AGRICULTURAL MARKET COMMITTEE, DEVARAKADRA, MAHABUBNAGAR DISTRI CT. THE REASONS GIVEN THEREIN. UNDER THESE CIRCUMSTANCES, WE CONDONE THE DELAY AND ADMIT THE APPEALS. 3. THE ASSESSEE DERIVED INCOME AS AN AGRICULTURAL M ARKET COMMITTEE (HEREINAFTER REFERRED TO AS AMC) WHICH WAS CLAIMED AS EXEMPT UNDER SECTION 10(29) OF THE ACT. THIS PROVIS ION WAS OMITTED W.E.F. 01.04.2003 WHEREBY THE INCOME OF THE AMC BECAME TAXABLE, AS PER THE ASSESSING OFFICER. IN THE S CRUTINY PROCEEDINGS UNDER SECTION 143(3) READ WITH SECTION 147 OF THE ACT THE ASSESSING OFFICER OBSERVED THAT AFTER INSERTION OF EXPLANATION TO SECTION 10(20) OF THE ACT DEFINITION OF LOCAL AUTHOR ITY HAS BEEN CHANGED W.E.F. 01.04.2003. BY VIRTUE OF THE EXPL ANATION THEREIN THE LOCAL AUTHORITY MEANS A PANCHAYAT, MUNIC IPAL CORPORATION, MUNICIPAL COMMITTEE ETC., OBJECTS OF WHICH SHOULD BE CHARITABLE IN NATURE WHEREAS THE MARKET COMMITTEE COL LECTS FEES AND FINE WHICH CANNOT BE TREATED AS CHARITABLE. M OREOVER, THE ASSESSEE IS GETTING OTHER INCOMES SUCH AS PROPERTY INCOME, INTEREST ON FIXED DEPOSITS, PARKING CHARGES FOR VEHICL ES ETC., AND THUS IT CANNOT BE TREATED AS A LOCAL AUTHORITY. IN FACT, THE FUNDS OF THE COMMITTEE ARE TO BE SPENT IN THE MANNER SPECIFIED BY THE GOVERNMENT AND NOT NECESSARILY FOR THE CHARITABLE/WELF ARE OF RYOTS AND TRADERS. HE ALSO OBSERVED THAT THE RECEIPTS OF THE ASSESSEE DO NOT CONSTITUTE VOLUNTARY CONTRIBUTION FACILITI ES. THEREFORE, MERELY BECAUSE EXEMPTION WAS AVAILABLE IN THE PAST, IT CANNOT BE TAKEN AS A REASON TO SECURE RIGHT TO PERPETUAL LY RETAIN SUCH EXEMPTION IF THE LEGISLATIVE INTENT IS OTHERWISE. HE ALSO OBSERVED, BY RELYING UPON CERTAIN CASE LAW, THAT A MAR KET COMMITTEE CONSTITUTED FOR A MARKET AREA CANNOT BE CONSTRU ED AS A MUNICIPAL COMMITTEE OR A LOCAL AUTHORITY WITHIN THE M EANING OF 3 ITA.NO.1114, 1115, 1116/HYD/2015 AGRICULTURAL MARKET COMMITTEE, DEVARAKADRA, MAHABUBNAGAR DISTRI CT. SECTION 10(20) OF THE ACT. HE ACCORDINGLY BROUGHT TO TA X THE INCOME RECEIVED BY THE MARKET COMMITTEE. 4. AGGRIEVED, ASSESSEE CONTENDED BEFORE THE CIT(A) TH AT THE COMMITTEE IS ESTABLISHED UNDER THE A.P. (AGRICULTURAL PR ODUCE LIVE STOCK) MARKETS ACT, 1966 AND THE INCOME THEREON I S EXEMPT FROM TAX IN VIEW OF PROVISIONS OF SECTION 11 OR SECTIO N 10(26AAB) OF THE I.T. ACT. IT WAS FURTHER CONTENDED THAT THE ASSESSIN G OFFICER DID NOT GRANT EXEMPTION UNDER SECTION 11 OR UNDER SECTIO N 10(26AAB) OF THE ACT BUT ASSESSED THE ENTIRE INCOME TREA TING THE ASSESSEE AS A LOCAL AUTHORITY. IT WAS ALSO MENTIONED, IN THE STATEMENT OF FACTS, THAT AN APPLICATION BEFORE THE DIT (EX EMPTION) WAS MADE FOR GRANT OF REGISTRATION UNDER SECTION 12A OF THE ACT WHICH WAS DENIED AND ON AN APPEAL FILED BEFORE THE I TAT, HYDERABAD, REQUESTING FOR GRANT OF REGISTRATION UNDER SECTION 12A OF THE ACT, THE HONBLE TRIBUNAL VIDE ITS ORDER IN ITA.NO.181/H/2008 DATED 24.11.2008 DIRECTED THE LD. DIT(E) TO GRANT REGISTRATION. IT WAS THUS CONTENDED THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION UNDER SECTION 11 OF THE ACT. 5. THE ASSESSEE ALSO OBJECTED TO THE JURISDICTION OF THE ASSESSING OFFICER AS ACCORDING TO IT, THE ASSESSMENT H AS TO BE COMPLETED BY DDIT(E) OR ADIT (E), AND NOT BY THE ITO, MAHABUBNAGAR. REFERENCE WAS MADE TO THE ORDER OF THE I TAT, VISAKHAPATNAM BENCH ITA.NO.90/VIZAG/2007 AND GROUP WHEREIN IT WAS HELD THAT THE PROVISIONS OF SECTION 10(26AAB) AR E RETROACTIVE AND HENCE, THE ASSESSEE IS ELIGIBLE FOR SU CH EXEMPTION EVEN FOR THE EARLIER ASSESSMENT YEARS. HOWEVER THE ASS ESSING OFFICER DID NOT GRANT SUCH EXEMPTION ALSO. 4 ITA.NO.1114, 1115, 1116/HYD/2015 AGRICULTURAL MARKET COMMITTEE, DEVARAKADRA, MAHABUBNAGAR DISTRI CT. 6. IN THE GROUNDS OF APPEAL, IT WAS SPECIFICALLY MENTI ONED THAT THE ASSESSING OFFICER HAS NO JURISDICTION TO PASS AN ORDER UNDER SECTION 143(3) OF THE ACT AND ASSESSING OFFICER ERRED IN NOT CONSIDERING THE CLAIM OF EXEMPTION UNDER SECTION 11 OF THE ACT. THE LD. CIT(A) EXTRACTED THE SUBMISSIONS OF THE ASSESS EE AS WELL AS THE OBSERVATIONS MADE BY THE ASSESSING OFFICER AND FINALLY CONCLUDED AS UNDER : 7. THE CONTENTIONS OF THE APPELLANT ARE CONSIDERED . REGARDING JURISDICTION OF THE ASSESSING OFFICER, IT IS SEEN THAT THE AO IS ENTRUSTED WITH JURISDICTION OF THE CASE A S THERE IS NO REGISTRATION U/S. 12A AND EXEMPTION IS NOT AVAIL ABLE. FURTHER, NO REGISTRATION OF DIT(E) HAS BEEN PLACED ON RECORD BY THE APPELLANT. REGARDING THE EXEMPTION U/S. 10(2 6AAB), THE ISSUE STANDS DECIDED AGAINST THE APPELLANT BY T HE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF AP STATE SEED CERTIFICATION AGENCY & OTHERS IN WP NO. 31640 OF 20 11. IN VIEW OF THE ABOVE, THE ACTION OF THE AO IS UPHELD A ND THE GROUNDS OF APPEAL RAISED BY THE APPELLANT ARE REJEC TED. 7. FURTHER AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. VIDE GROUNDS NO.2 AND 3, THE ASSESSEE CONTE NDS THAT THE ASSESSING OFFICER HAS NO JURISDICTION TO PASS AN ORDER UNDER SECTION 143(3) INASMUCH AS THE MATTER WAS SET ASIDE BY THE ITAT DIRECTING THE DIT(E) TO GRANT REGISTRATION UNDER SECTION 1 2AA OF THE ACT AND UNLESS THE ISSUE IS CONSIDERED THE OTHER ASP ECTS CANNOT BE EXAMINED. IN ALL THERE WERE 07 GROUNDS OF APPEAL OUT OF WHICH GROUND NOS.1 AND 7 ARE GENERAL IN NATURE. GRO UND NO.6 IS CONSEQUENTIAL AND DOES NOT REQUIRE INDEPENDENT CONSIDE RATION. GROUND NO.5 WAS NOT SERIOUSLY CONTESTED BY THE LEARNED COUNSEL FOR THE ASSESSEE SINCE HE ADMITTED THAT THE ISSUE, AS O F NOW, IS SQUARELY COVERED BY THE DECISION OF A.P. HIGH COURT. HE MAINLY OBJECTED TO THE ASSESSMENT MADE BY THE ASSESSING OFFICER WITHOUT 5 ITA.NO.1114, 1115, 1116/HYD/2015 AGRICULTURAL MARKET COMMITTEE, DEVARAKADRA, MAHABUBNAGAR DISTRI CT. WAITING FOR THE ORDER TO BE PASSED BY THE DIT(E) TO GIV E EFFECT TO THE DIRECTION OF THE ITAT. 8. WE HAVE ALSO HEARD LD. D.R. AND CAREFULLY PERUSE D THE RECORD. IT IS NOT IN DISPUTE THAT THE ITAT, A BENCH, H YDERABAD HAD CONSIDERED AN IDENTICAL ISSUE FOR THE A.Y. 2003-2 004 WHEREIN THE ISSUE WAS SET ASIDE TO THE FILE OF THE DIT(E) TO DE CIDE THE MATTER AFRESH. LD. D.R. ADMITTED THAT THERE IS NOTHING ON RECORD TO SUGGEST THAT THE DIT(E) HAD PASSED ANY ORDER TO GIVE E FFECT TO THE ORDER OF THE ITAT. SUCH BEING THE CASE, CONSISTENT WITH THE VIEW TAKEN THEREIN, WE ARE OF THE VIEW THAT THE ASSESSMEN TS IN ALL THESE THREE YEARS DESERVES TO BE SET ASIDE AND TO BE RE STORED TO THE FILE OF THE ASSESSING OFFICER TO CONSIDER IT AFRESH AFTER THE DECISION OF THE DIT(E), GIVING EFFECT TO THE ORDER OF THE ITAT, HYDERABAD BENCH VIDE ITA.NO.181/HYD/2008. SINCE THE MAIN ISSUE IS SET ASIDE, IT IS NOT NECESSARY FOR US TO GO I NTO THE OTHER ASPECTS OF THE MATTER AND WE HEREBY SET ASIDE THE ORDER OF THE ASSESSING OFFICER AS WELL AS THE ORDER OF THE CIT(A) AND RESTORE THE ASSESSMENTS TO RE-CONSIDER THE MATTER IN LINE WITH TH E VIEW TAKEN BY THE ITAT IN THE APPEAL FOR THE A.Y. 2003-2004. 9. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 22.11.2016. SD/- SD/- (B.RAMAKOTAIAH) (D.MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT HYDERABAD, DATED 22 ND NOVEMBER, 2016. VBP/- 6 ITA.NO.1114, 1115, 1116/HYD/2015 AGRICULTURAL MARKET COMMITTEE, DEVARAKADRA, MAHABUBNAGAR DISTRI CT. COPY TO 1. AGRICULTURAL MARKET COMMITTEE, DEVARAKADRA, MAHABUBNAGAR DISTRICT. C/O. SHRI S. RAMA RAO, ADVOCATE , FLAT NO.102, SHRIYAS ELEGANCE, 3-6-643, STREET NO.9, HIMAYATNAGAR, HYDERABAD 500 029. 2. THE INCOME TAX OFFICER, WARD-1, MAHABUBNAGAR. 3. CIT(A)-4, 3 RD FLOOR ANNEXE, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD 500 004. 4. CIT-4, HYDERABAD. 5. D.R. ITAT A BENCH, HYDERABAD. 6. GUARD FILE.