Rajya Krishi Utpadan Mandi Parishad, Lucknow V. ITO, Lucknow

ITA 15/LKW/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9061 (ITAT-LUCKNOW)
• Duration Of Justice: 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2011
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 28-03-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 17-01-2011
• Court: TRIBUNAL
• Department Lawyers: VIVEK MISHRA
• Keywords: Business income; Charitable institution; Principle of natural justice; Difference of opinion; TDS; Set aside
• Section: 143(3); 244A; 12A; 12AA; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B BB B, LUCKNOW , LUCKNOW , LUCKNOW , LUCKNOW BEFORE HONBLE SHRI H.L. KARWA BEFORE HONBLE SHRI H.L. KARWA BEFORE HONBLE SHRI H.L. KARWA BEFORE HONBLE SHRI H.L. KARWA AND HONBLE SHRI N.K. SAINI AND HONBLE SHRI N.K. SAINI AND HONBLE SHRI N.K. SAINI AND HONBLE SHRI N.K. SAINI ITA NO.15/LKW/2011 ASSESSMENT YEAR:2007-08 RAJYA KRISHI UTPADAN MANDI PARISHAD KISAN MANDI BHAWAN, VIBHUTI KHAND, GOMTINAGAR, LUCKNOW V. ITO-II(2) LUCKNOW PAN:AAALR0128E (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI AMIT SHUKLA, ADVOCATE RESPONDENT BY: SHRI VIVEK MISHRA, D.R. O R D E R PER H. L. KARWA: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-I, LUCKNOW DATED 19.10.2010 RELATING TO ASSESSMENT YEA R 2007-08. 2. IN THIS APPEAL, THE ASSESSEE HAS TAKEN THE FOLLOWIN G GROUNDS:- 1. BECAUSE THERE WAS INHERENT LACK OF JURISDICTION AT THE END OF ITO- II(2), LUCKNOW TO ACT AS ASSESSING OFFICER AND CONS EQUENTLY THE 'CIT(A)' SHOULD HAVE ANNULLED THE ASSESSMENT ORDER DATED 30. 10.2009 AS NULL AND VOID. 2. BECAUSE IN CASE OF DIFFERENCE OF OPINION ON THE OBJECTION RAISED BY THE 'APPELLANT', TO THE JURISDICTION OF ITO-II(2), LUCKNOW TO ACT AS ASSESSING OFFICER, THE MATTER WAS TO BE NECESSARILY REFERRED TO (BY THE ITO- II(2), LUCKNOW) TO THE CHIEF COMMISSIONER OF INCOME TAX/COMMISSIONER OF INCOME TAX, LUCKNOW FOR ADJUDICATION AND IN THE ABS ENCE OF SUCH A REFERENCE BEING MADE, THE ITO-II(2), LUCKNOW, ACTED WITHOUT THE JURISDICTION IN MAKE THE ASSESSMENT VIDE ORDER DATE D 30.10.2009, AND CONSEQUENTLY THE ASSESSMENT ORDER DATED 30.10.2009 WAS LIABLE TO BE DECLARED AS NULL AND VOID. :-2-: 3. BECAUSE THE 'CIT(A)' ON A DUE CONSIDERATION OF T HE FACTS AND CIRCUMSTANCES OF THE CASE, PARTICULARLY THAT; (A) THE 'APPELLANT' IS AN 'AOP TRUST', AS PER CLAUS E (V) OF SECTION 2(31) OF THE ACT; (B) IN THAT STATUS ONLY, IT HAD FILED THE 'RETURN' VOLUNTARILY AND ALL THE ASSESSMENT RELATED PROCEEDINGS HAD BEEN INI TIATED AND CONCLUDED ALSO BY ITO-II(2), LUCKNOW, WITH REFERENC E TO THE SAID 'RETURN' ONLY; (C) THE ASSESSMENT ORDER DATED 30.10.2009 AS WAS IM PUGNED BEFORE THE CIT(A) IN FIRST APPEAL HAD BEEN PASSED O N A 'PERSON' WITH THE STATUS OF 'ARTIFICIAL JURIDICAL PERSON' (A JP), WHOLLY DIFFERENT FROM THE PERSONS FILED THE 'RETURN'.; AND THE 'CIT(A)' SHOULD HAVE HELD THAT THE ASSESSMENT O RDER DATED 30.10.2009 WAS NOT AT ALL ENFORCEABLE AGAINST THE APPELLANT. 4. BECAUSE IN ANY CASE, COMPUTATION OF INCOME AT RS .95,31,12,420/- AS MADE IN THE IMPUGNED ASSESSMENT ORDER DATED 30.1 0.2009 IS WHOLLY VITIATED AS THE SAME HAS BEEN MADE BY THE ITO-II(2) , LUCKNOW WITHOUT SPECIFYING THE METHOD OF ACCOUNTING FOLLOWED/ INTEN DED TO BE FOLLOWED BY HIM. 5. BECAUSE THE 'APPELLANT' DENIES WHOLE OF THE LIAB ILITY AS HAS BEEN SOUGHT TO HAVE BEEN ENFORCED FOR PAYMENT AGAINST IT , BY SERVING THE NOTICE OF DEMAND ACCOMPANIED BY THE ABOVE REFERRED ASSESSM ENT ORDER, AS INCOME IN ITS HANDS QUALIFIED FOR EXEMPTION UNDER S ECTION 11, BY VIRTUE OF ITSELF BEING DULY REGISTERED UNDER SECTION 12AA OF THE ACT. 6. BECAUSE ON THE OTHER HAND, THE 'APPELLANT' HAVIN G ALREADY BEEN HELD TO BE ELIGIBLE FOR REGISTRATION UNDER SECTION 12AA, WAS LIABLE TO BE ASSESSED AT NIL, WITH THE RESULT THAT THE TAXES AGG REGATING RS.22,45, 11,324 AS HAD BEEN PAID/COLLECTED FROM IT (EVEN BY APPLYING COERCIVE MEASURES) AS PER PARTICULARS GIVEN BELOW: (A) ADVANCE TAX COLLECTED FROM THE APPELLANT THROU GH :-3-: AN ORDER ISSUED BY THE JT. CIT, RANGE-II, LUCKNOW 17,37,91,305 (B) TDS ON RENT AND MAINTENANCE CHARGES ETC 7,20,019 (C) APPROPRIATED OUT OF REFUNDS DUE FOR THE ASST. YEARS 2001-02 & 2002-03 5,00,00,000 22,45.11,324 SHOULD HAVE BEEN DIRECTED TO BE REFUNDED TO IT ALON G-WITH INTEREST UNDER SECTION 244A OF THE ACT. 7. BECAUSE IN ANY CASE THE COMPUTATION OF INCOME WA S LIABLE TO BE MADE AT NIL, AS PER THE PROCEDURE LAID DOWN IN SECTION 11 A ND 12 OF THE ACT, RULES MADE THERE UNDER, AND CIT(A) SHOULD HAVE HELD THAT THERE EXISTED NO INCOME WHICH COULD BE SUBJECTED TO TAXATION IN THE HANDS OF THE 'APPELLANT. WITHOUT PREJUDICE TO THE CONTENTION RAISED IN THE F OREGOING GROUNDS: 8. BECAUSE COMPUTATION OF INCOME AT RS.95,31,12,420 WAS INCORRECT EVEN ARITHMETICALLY AS SUMS AGGREGATING RS.32,40,73 ,567 MADE UP OF CREDITS; (A) UNDER THE HEAD DEVELOPMENT CESS 4,90,74,782 (B) UNDER THE HEAD MANDI VIKAS NIDHI 27,49 ,98,785 HAVE BEEN INCLUDED TWICE IN THE SAID COMPUTATION UN DER THE ASSESSMENT ORDER DATED 30.10.2010. :-4-: 9. BECAUSE VARIOUS OTHER ADDITIONS REPRESENTED BY (I) KISAN VIKAS NIDHI 8,13,131 (II) ELECTION FEES 63,33,345 (III) GUEST HOUSE 1,33,365 (IV) RENTAL INCOME 1,61,646 AS STOOD INCLUDED IN THE COMPUTATION OF INCOME AMOU NTING TO RS.95,31,12,420 WERE ERRONEOUS AND LIABLE TO BE EXC LUDED FROM THE COMPUTATION OF INCOME. 10. BECAUSE THE AUTHORITIES BELOW, IN ANY CASE, SHO ULD HAVE HELD THAT LOOKING TO THE FACTS THAT; (A) THE 'APPELLANT' IS A CREATURE OF UTTAR PRADESH KRISHI MANDI ADHINIYAM, 1964; (B) THE STATE GOVERNMENT HAD NOT GIVEN UP ITS RIGHT TO THE PROPERTY CREATED BY THE 'APPELLANT'; AND (C) EVEN AFTER THE LAPSE OF CONSIDERABLE PERIOD OF TIME, THE OVERALL FUNCTIONING AND AFFAIRS OF 'APPELLANT' CONT INUE TO BE WITHIN THE PURVIEW AND CONTROL OF THE STATE GOVERNMENT, TH ROUGH ITS OWN CADRE OF CIVIL SERVICES. THE 'APPELLANT' HAS THE STATUS OF THE 'GOVERNMENT', NOT LIABLE FOR TAXATION. 11. BECAUSE THE ORDER APPEARED AGAINST IS CONTRARY TO THE FACTS, LAW AND PRINCIPLE OF NATURAL JUSTICE. 3. FIRSTLY, WE WILL TAKE UP GROUNDS NO.5, 6 AND 7 WHIC H GO TO THE ROOT OF THE MATTER. 4. THE FACTS IN BRIEF ARE THAT THE ASSESSEE RAJYA KRI SHI UTPADAN MANDI PARISHAD IS A BODY CORPORATE WHICH CAME INTO EXISTENCE IN THE YEA R 1973, BY VIRTUE OF NOTIFICATION ISSUED IN TERMS OF SECTION 26-A OF UTTAR PRADESH K RISHI UTPADAN MANDI ADHINIYAM, 1964. THE SAID ENACTMENT WAS BROUGHT TO PROVIDE FOR REGULATION OF SALE AND PURCHASE OF AGRICULTURAL PRODUCE AND FOR ESTABLISHING, SUPER INTENDENCE AND CONTROL OF MARKETS AREA IN THE STATE OF U.P. THROUGH VARIOUS MANDI SAMITIE S. INITIALLY, THE ASSESSEE CLAIMED THE :-5-: STATUS OF LOCAL AUTHORITY WHICH EXEMPTED IT FROM TAX U/S. 10(20) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) AND ALSO CLAIMED EXE MPTION U/S. 10(29), UPTO THE ASSESSMENT YEAR 2002-03. HOWEVER, WITH THE AMENDME NT INTRODUCED BY THE FINANCE ACT, 2002, THE DEFINITION OF LOCAL AUTHORITY UNDE R SECTION 10(20) WAS CONFINED TO CERTAIN SPECIFIC AUTHORITIES, IN WHICH THE ASSESSEE DID NOT FALL, AND SECTION 10(29) OF THE ACT WAS ALSO ABOLISHED. THESE AMENDMENTS WHICH WER E EFFECTIVE FROM 1.4.2003 I.E. FROM THE ASSESSMENT YEAR 2003-04, CHANGED THE ENTIR E STATUTORY BASIS ON WHICH THE ASSESSEE HAD ENJOYED EXEMPTION EARLIER. THE ASSESS EE APPLIED FOR REGISTRATION/RECOGNITION U/S. 12A OF THE ACT AS A CHARITABLE INSTITUTION CARRYING OUT ACTIVITIES OF GENERAL PUBLIC UTILITY. ACCORDINGL Y, THE APPLICATION SEEKING REGISTRATION U/S. 12A OF THE ACT WAS MADE BEFORE THE CIT-I, LUCKNOW O N 29.3.2006. HOWEVER, THIS APPLICATION WAS REJECTED BY THE THEN CIT-I, LUCKNOW VIDE HIS ORDER DATED 29.9.2006. THE SAID ORDER WAS CHALLENGED BY THE ASSESSEE BEFOR E THE TRIBUNAL. THE TRIBUNAL VIDE ITS ORDER DATED 28.8.2008 SET ASIDE THE ORDER OF TH E CIT AND THE MATTER WAS SENT BACK TO THE FILE OF THE CIT-I, LUCKNOW FOR FRESH ADJUDICATI ON IN ACCORDANCE WITH LAW. HOWEVER, THE CIT-I, LUCKNOW AGAIN REFUSED TO GRANT REGISTRAT ION U/S. 12AA OF THE ACT TO THE ASSESSEE VIDE HIS ORDER DATED 27.3.2009. AGAINST T HIS, THE ASSESSEE FILED APPEAL BEFORE THE TRIBUNAL. THE TRIBUNAL VIDE ITS ORDER DATED 25 .9.2009 DIRECTED THE CIT TO GRANT REGISTRATION U/S. 12AA OF THE ACT. THE ORDER OF TH E TRIBUNAL HAS BEEN CONFIRMED BY THE HON'BLE ALLAHABAD HIGH COURT VIDE ITS ORDER DATED 1 2.5.2010 IN INCOME-TAX APPEAL NO.07/2010. THE ORDER GRANTING REGISTRATION AS PER DIRECTIONS OF THE TRIBUNAL WAS PASSED BY THE CIT ON 10.12.2009. HOWEVER, THE ASSE SSING OFFICER PASSED THE ORDER OF ASSESSMENT FOR THE YEAR UNDER CONSIDERATION ON 30.1 0.2009 MUCH BEFORE THE ORDER GRANTING REGISTRATION WAS PASSED BY THE CIT. 4.1. IN THE ASSESSMENT ORDER PASSED U/S. 143(3) OF THE A CT DATED 30.10.2009, THE ASSESSING OFFICER COMPUTED THE INCOME OF THE ASSESS EE AS UNDER:- 15. SUBJECT TO DISCUSSIONS AS ABOVE, THE TOTAL INC OME OF ASSESSEE IS COMPUTED AS BELOW IN THE STATUS OF ARTIFICIAL JURI DICAL PERSON AS DEFINED U/S. 2(31) OF THE INCOME-TAX ACT,. AFTER CONSIDERING ALL THE ASPECTS OF THE CASE, AFT ER DISCUSSION AND SUBJECT OF ABOVE FINDINGS, INCOME OF THE ASSESSEE I S COMPUTED AS UNDER:- INCOME OVER EXPENDITURE AS PER :-6-: CORRECTED COMPUTE OF INCOME DATED 7.9.2009 62,15, 97,380 LESS: FOR SEPARATE CONSIDERATION (A) INTEREST INCOME 43,01,05,958 (B) MISC. INCOME - 2,74,05,821 (-) 45,75,11,779 16,40,85,601 ADD: AS DISCUSSED ABOVE IN PARA:- 12. DEVELOPMENT CESS 4,90,74,782 13. MADI VIKASH NIDHI 27,49,98,785 14. (I) KRISHI VIKASH NIDHI 81,31,31 14.(III) ELECTION FEES 63,33,345 14.(IV) GUEST HOUSE 1,33,365 14.(V) RENTAL INCOME 1,61,636 33,15,15,044 A. BUSINESS INCOME (+) 49,56,00,645 B. INTEREST INCOME (+) 43,01,05,958 C. MISCELLANEOUS INCOME (+) 2,74,05,821 TOTAL (+) 95,31,12,424 OR ROUND OFF RS.95,31,12,420/- 4.2. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT AS A BOVE ON A TOTAL INCOME OF $ 95,31,12,420 WITHOUT GIVING BENEFIT OF SECTIONS 11 AND 12 OF THE ACT. 5. ON APPEAL, THE LD. CIT(A) REJECTED THE CLAIM OF T HE ASSESSEE OBSERVING AS UNDER:- 6.1 I HAVE CAREFULLY CONSIDERED THESE GROUNDS OF A PPEAL. THIS PLEA DOES NOT HOLD ANY GROUND SINCE AT THE TIME OF COMPLETION OF ASSESSMENT BY THE ASSESSING OFFICER NO ORDER GRANTING REGISTRATION U/ S. 12AA HAD BEEN PASSED BY THE COMMISSIONER OF INCOME-TAX-I, LUCKNOW. THUS , UNLESS THE APPELLANT WAS REGISTERED UNDER SECTION 12AA, IT COU LD NOT BE ALLOWED ANY EXEMPTION U/S. 11. THIS POSITION OF LAW HAS BEEN A FFIRMED BY THE HON'BLE :-7-: SUPREME COURT IN THE CASE OF U.P. FOREST CORPORATIO N VS. DY. COMMISSIONER OF INCOME TAX, REPORTED IN (2008) 297 ITR 01(SC). ACCORDINGLY, THE GROUND OF APPEAL NO.8 AND 9 ARE HEREBY DISMISSED. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALSO P ERUSED THE MATERIALS AVAILABLE ON RECORD. SHRI AMIT SHUKLA, THE LD. COU NSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE VIDE LETTER DATED 13.12.2009 HAS FURNI SHED THE COPY OF THE ORDER OF THE TRIBUNAL DATED 25.9.2009 TO THE ASSESSING OFFICER W HEREIN THE TRIBUNAL DIRECTED THE CIT TO GRANT REGISTRATION U/S. 12AA OF THE ACT. THE AS SESSING OFFICER, HOWEVER, DID NOT CONSIDER THE ABOVE ORDER OF THE TRIBUNAL BECAUSE TH E ORDER GRANTING REGISTRATION WAS PASSED BY THE CIT ON 10.12.2009 I.E. AFTER COMPLETI ON OF THE ASSESSMENT ORDER BY THE ASSESSING OFFICER ON 30.10.2009. IT IS SEEN THAT T HE ASSESSING OFFICER AS WELL AS THE LD. CIT(A) HAVE REFUSED TO GRANT EXEMPTION U/S. 11 AND S 12 OF THE ACT TO THE ASSESSEE ON THE PREMISE THAT SINCE AT THE TIME OF COMPLETION OF ASSESSMENT BY THE ASSESSING OFFICER NO ORDER GRANTING REGISTRATION U/S. 12AA OF THE ACT HAD BEEN PASSED BY THE CIT-I, LUCKNOW. SHRI AMIT SHUKLA, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ORDER GRANTING REGISTRATION U/S. 12AA OF THE ACT BY THE C IT DATED 10.12.2009 AND COPY OF THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT C ONFIRMING THE ORDER OF THE TRIBUNAL (SUPRA) WAS FURNISHED BEFORE THE LD. CIT(A). HOWEV ER, THE LD. CIT(A) HAS NOT CONSIDERED THE ORDER OF THE CIT DATED 10.12.2009 AND ALSO THE ORDER OF THE HON'BLE JURISDICTIONAL HIGH COURT DATED 12.5.2010 PASSED IN INCOME-TAX APP EAL NO.07/2010 CONFIRMING THE ORDER OF THE TRIBUNAL. IN OUR VIEW, THE LD. CIT(A) HAS COMMITTED AN ERROR OF LAW WHILE IGNORING THE ORDER OF THE CIT GRANTING REGISTRATION AND ALSO THE ORDER OF THE HON'BLE HIGH COURT IN CONFIRMING THE ORDER OF THE TRIBUNAL DATED 25.9.2009. CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, WE ARE OF THE VIEW THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN IGNORING THE REGISTRATION GRANTED TO THE ASSESSEE. IN THAT VIEW OF THE MATTER, WE SET ASIDE THE ORDER OF THE LD. CIT(A) IN TOTO AND REMAND THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO COMPUT E THE INCOME OF THE ASSESSEE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION KEEPING IN VIEW THE PROVISIONS OF SECTIONS 11 AND 12 OF THE ACT AFTER AFFORDING DUE AND REASONABLE OPPORTUNITY OF BEING H EARD TO THE ASSESSEE. . THE ASSESSING OFFICER IS DIRECTED TO DECIDE THE MATTER EXPEDITIOUSLY. :-8-: 7. GROUNDS NO.1 TO 4 ARE ACADEMIC IN NATURE AND THEREF ORE NO FINDINGS ARE BEING GIVEN. 8. SINCE WE HAVE SET ASIDE THE ORDER OF THE LD. CIT(A) IN TOTO AND THEREFORE GROUNDS NO. 8 TO 11 ARE RESTORED TO THE FILE OF THE ASSESSI NG OFFICER TO CONSIDER THE SAME IN ACCORDANCE WITH LAW AT THE TIME OF FRESH ASSESSMENT . 9. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLO WED IN THE ABOVE TERMS. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 28.3.2011 . SD/- SD/- [ N. K. SAINI] [H. L. KARWA] ACCOUNTANT MEMBER VICE PRESIDENT DATED:28.3.2011 JJ:2803 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR