Agricultrual Market Committee, Hyderabad V. ITO, Ward 2, Nizamabad

ITA 1664/HYD/2013

• Counselvise Citation: 166422514 RSA 2013
• Duration Of Justice: 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 02-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ADAGIRI
• Assessee Lawyers: S RAMA RAO
• Section: 12A; 10; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA.NO.1663/HYD/2013 ASSESSMENT YEARS 2004-05 AGRICULTURAL MARKET COMMITTEE, ARMOOR, NIZAMABAD DT. PAN AABTA 2584J VS. ITO, WARD-1 NIZAMABAD. (APPELLANT) (RESPONDENT) ITA.NO.1664/HYD/2013 ASSESSMENT YEARS 2006-07 AGRICULTURAL MARKET COMMITTEE, BODHAN, NIZAMABAD DT. PAN AAALA 0787C VS. ITO, WARD-2 NIZAMABAD. (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. S. RAMA RAO FOR REVENUE : MR. B. YADAGIRI DATE OF HEARING : 03.04.2014 DATE OF PRONOUNCEMENT : 16.04.2014 ORDER PER B. RAMAKOTAIAH, A.M. THESE TWO APPEALS ARE BY THE ASSESSEE FOR ASSESSMENT YEARS 2004-05 AND 2006-07. 2 ITA.NO.1663 & 1664/HYD/2013, AGRICULTURAL MARKET COMMITTEE, ARMOOR & BODHAN, NIZAMABAD DIST. 2. BRIEF FACTS ARE THAT THE ASSESSEE AGRICULTURAL MARKET COMMITTEE, ARMOOR CLAIMED EXEMPTION UNDER SE CTION 10(20) OF THE I.T. ACT AS LOCAL AUTHORITY UP TO THE A.Y. 2002-03. CONSEQUENT TO THE INSERTION OF EXPLANATION BELOW SE C.10(20) BY FINANCE ACT, 2002 W.E.F. 01.04.2003, INCOMES OF LO CAL AUTHORITY NOT SPECIFIED IN THE SAID EXPLANATION AR E NO LONGER EXEMPT. HENCE, NOTICE U/S.142(1) WAS ISSUED TO THE AGRICULTURAL MARKET COMMITTEE (IN SHORT AMC), ARM OOR. IT WAS THE CONTENTION OF THE ASSESSEE THAT MARKET COMM ITTEE DID NOT CONSTITUTE INCOME LET ALONE TAXABLE INCOME FOR THE REASONS THAT THE COLLECTIONS MADE BY THE ASSESSEE W ERE BURDENED WITH AN OVERRIDING STATUTORY OBLIGATION CA ST UPON IT BY THE ANDHRA PRADESH (AGRICULTURAL PRODUCE AND LIV E STOCK) MARKETS ACT, 1966 AND THE RULES MADE THEREUNDER. TH E CONTENTION OF THE ASSESSEE IS THAT ITS INCOME CONTI NUES TO BE EXEMPT U/S. 10(20) OF THE I.T. ACT, 1961, DESPITE I NSERTION OF AN EXHAUSTIVE LIST OF LOCAL AUTHORITIES WHICH ARE MA DE ELIGIBLE FOR EXEMPTION. ACCORDING TO THE LEARNED A.R. CLAUSE (II I) OF THE EXPLANATION BELOW SECTION 10(20) OF THE ACT IS NOT AS DEFINITIVE AS THE OTHER CLAUSES ARE AND THUS, IS CAPABLE OF EN COMPASSING EVEN THE AGRICULTURAL MARKET COMMITTEES TO IN ITS M EANING. THE A.O. OBSERVED THAT IN THE CASE OF AGRICULTURAL PRODUCE MARKET COMMITTEE VS. CIT 173 TAXMAN 115 (SC) IT HAS BEEN HELD THAT SINCE AN AGRICULTURAL MARKET COMMITTEE I S NEITHER A MUNICIPAL COMMITTEE NOR A DISTRICT BOARD UNDER THE SAID EXPLANATION TO SECTION 10(20) INSERTED IN THE FINAN CE BILL 2002 W.E.F. 01.04.2003, THUS, THE A.O. HAS DISALLOWED RS.25,25,600/- AND ADDED BACK TO THE TAXABLE INCOME . 3 ITA.NO.1663 & 1664/HYD/2013, AGRICULTURAL MARKET COMMITTEE, ARMOOR & BODHAN, NIZAMABAD DIST. 3. AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) WHILE RELYING ON THE DECISIO N OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. AG RICULTURAL MARKET COMMITTEE 337 ITR 299 WHEREIN IT WAS HELD TH AT ASSESSEES ARE ENTITLED FOR EXEMPTION BUT SECTION 10 (26AAB) INSERTED BY FINANCE ACT, 2008 W.E.F. 01.04.2009 CAN NOT BE APPLIED RETROSPECTIVELY, DISMISSED THE ASSESSEES CO NTENTION THAT ASSESSEES ARE ELIGIBLE FOR CLAIM OF EXEMPTION UNDER SECTION 11 IN THE ABSENCE OF REGISTRATION UNDER SECTION 12A OF THE ACT. ASSESSEE SUBMITTED THAT THE APPLICATION FOR REGISTR ATION UNDER SECTION 12A WAS FILED, BUT DIT(E) REJECTED THE SAME AND APPEAL FILED BEFORE ITAT WAS PENDING. THE LD. CIT(A) ON TH E FACTS AS AVAILABLE AT THAT POINT OF TIME OF PASSING THE ORDE R DID NOT ACCEPT THE ASSESSEES CONTENTION AND REJECTED THE G ROUNDS. 4. AT THE OUTSET, LD. COUNSEL SUBMITTED THAT THE HONBLE ITAT IN ITS ORDERS IN ITA.NO.928/HYD/2013 D ATED 23.09.2013 AND ALSO ORDERS IN ITA.NO.44/HYD/2007 AN D ITA.NO.156/HYD/2008 DATED 24.11.2008 DIRECTED THE D IT(E) TO GRANT REGISTRATION UNDER SECTION 12A. SINCE THE ITA T IN ITS ORDER DATED 23.09.2013 FOLLOWED THE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF AGRICULTURAL MARKET COMMITT EE, KUBIR, ADILABAD 336 ITR 641 WHEREIN THE HONBLE HIGH COURT OF A.P. HELD THAT AGRICULTURAL MARKET COMMITTEES ARE ENTITL ED FOR REGISTRATION UNDER SECTION 12A/12AA AND DIRECTED TH E DIT(E) TO GRANT REGISTRATION. SINCE THIS ORDERS OF ITAT ON THE ISSUE OF GRANTING REGISTRATION ARE YET TO BE IMPLEMENTED BY THE DIT(E), IN THE INTEREST OF JUSTICE, WE SET ASIDE BOTH THE A SSESSMENT ORDERS AND RESTORE THE ISSUE TO THE FILE OF THE A.O . TO ALLOW EXEMPTION UNDER SECTION 11, AFTER THE DIT(E) GRANTS 4 ITA.NO.1663 & 1664/HYD/2013, AGRICULTURAL MARKET COMMITTEE, ARMOOR & BODHAN, NIZAMABAD DIST. REGISTRATION UNDER SECTION 12A. THEREFORE, THE GROU NDS ARE CONSIDERED AS ALLOWED FOR STATISTICAL PURPOSES. 5. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 16.04.2014. SD/- SD/- (ASHA VIJAYARAGHAVAN) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACOUNTANT MEMBER HYDERABAD, DATED 16 TH APRIL, 2014 VBP/- COPY TO : 1. AGRICUJLTURAL MARKET COMMITTEE, 3-1-81, OPP. BUS STAND, ARMOOR, NIZAMABAD DIST., 2. AGRICUJLTURAL MARKET COMMITTEE, 1-3-3, AZAM GUNZ , BODHAN, NIZAMABAD DIST., C/O. S. RAMA RAO, ADVOCATE, FLAT NO. 102, SHRIY AS ELEGANCE, H.NO.3-6-643, STREET NO.9, HIMAYATNAG AR, HYDERABAD 500 029. 3. INCOME TAX OFFICER,WARD-2, NIZAMABAD. 4. CIT(A)-18, ROOM NO.20, 3 RD FLOOR, B-WING, MITTAL COURT, NARIMAN POINT, MUMBAI 400 020.(HAVING CONCURR ENT JURISDICTION OF CIT(A)-VI, HYDERABAD) 5. CIT(A)-VI, HYDERABAD 6 & 7. CIT-5 & 6, HYDERABAD 8. D.R. ITAT, A BENCH, HYDERABAD.