Dy.C.I.T.,Circle-5, Firozabad V. M/s Krishi Utpadan Mandi Samiti, Firozabad

ITA 202/AGR/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 0426 (ITAT-AGRA)
• Duration Of Justice: 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-09-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 13-09-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 26-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M M AGARWAL
• Keywords: Charitable institution; Capital expenditure
• Section: 12A; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH : AGRA BEFORE SHRI R.K. GUPTA, J. M. AND SHRI P.K. BANSAL, A.M. PAN NO. AAALK0568P I.T.A.NOS . 202/AGR/10 A. Y. 2006-07 DY. CIT, M/S. KRISHI UTPADAN MANDI SAMITI, CIRCLE 5, VS. SHIKOHABAD, FIROZABAD FIROZABAD APPELLANT RESPONDENT PAN NO. AAALK0555C I.T.A.NOS . 203/AGR/10 A. Y. 2006-07 DY. CIT, M/S, KRISHI UTPADAN MANDI SAMITI, CIRCLE 5, VS. TUNDLA, FIROZABAD FIROZABAD APPELLANT RESPONDENT PAN NO. AAALK0568P I.T.A.NOS . 199/AGR/10 A. Y. 2006-07 INCOME-TAX OFFICER, M/S. KRISHI UTPADAN MANDI SAMITI, 4(2), VS. ACCHNERA, AGRA AGRA APPELLANT RESPONDENT PAN NO. AAHFK678F I.T.A.NOS . 156/AGR/10 A. Y. 2006-07 DY. CIT, M/S. KRISHI UTPADAN MANDI SAMITI, CIRCLE 5, VS. ACCHNERA, FIROZABAD AGRA - 2 - 2 APPELLANT RESPONDENT PAN NO. AALK0637M I.T.A.NOS . 153/AGR/10 A. Y. 2006-07 DY. CIT, M/S. KRISHI UTPADAN MANDI SAMITI, CIRCLE 5, VS. ETAWAH FIROZABAD APPELLANT RESPONDENT APPELLANT BY : NONE (APPLICATION REJECTED) RESPONDENT BY : SHRI M.M.AGARWAL, C.A. O R D E R PER BENCH THESE ARE FIVE APPEALS BY THE DEPARTMENT RELATING TO DIFFERENT KRISHI UTPADAN MANDI SAMITI. THESE ARE AGAINST THE ORDER OF THE LD. CIT(A) RELATING TO ASSESSMENT YEAR 2006-07. 2. COMMON ISSUES ARE INVOLVED IN ALL THESE APPEALS. TH EREFORE, THEY ARE DISPOSED OF TOGETHER. 3. THE DEPARTMENT IS OBJECTING IN DIRECTING THE ASSES SING OFFICER TO ALLOW BOARDS DEVELOPMENT CESS AND ADMINISTRATIV E EXPENSES. IN ALL THESE CASES. THE ISSUE AS STATED ABOVE IS SIMILAR, HOWEVER, THE AMOUNT INVOLVED IS DIFFERENT. 4. THE BRIEF FACTS OF THE CASE ARE THAT THESE ASSESSEE S ARE CREATURE OF UTTAR PRADESH UTPADAN MANDI ABHINIYAM 1964, AND ITS FUNDS AND DUTIES ARE GOVERNED BY THE PROVISIONS OF THE SAID A CT. UNDER THE SAID ACT, - 3 - 3 IT HAD BEEN GRANTED THE STATUTES OF LOCAL AUTHORITI ES. THESE ASSESSEES ARE ENJOINED ITS INCOME AS EXEMPT BY VIRTUE OF SECTION 10(20) AND 10(29) OF THE ACT, EVER SINCE THEIR INCEPTION. HOWEVER, ON AN AMENDMENT IN THE DEFINITION OF LOCAL AUTHORITIES AS APPEARING IN SEC TION 10(20) OF THE ACT BY INSERTION OF EXPLANATION OF FINANCE ACT. THE ASSESS EE WAS NO MORE ABLE TO CLAIM EXEMPTION UNDER THAT SECTION WITH EFFECT F ROM ASSESSMENT YEAR 2003-04. UNDER SUCH CIRCUMSTANCES, THESE ASSESSEES SOUGHT REGISTRATION UNDER SECTION 12A OF THE ACT ON THE BASIS THAT THEI R ACTIVITIES FALL WITHIN THE DEFINITION OF CHARITABLE PURPOSES AS DEFINED IN SECTION 2(15) OF THE ACT. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSI NG OFFICER NOTICED THAT THE ASSESSEE HAD CLAIMED EXPENDITURE ON ACCOUN T OF DEVELOPMENT CESS AND ADMINISTRATIVE EXPENSES. IN HIS VIEW, THESE EXP ENSES CANNOT BE ALLOWED AS EXPENDITURE. ACCORDINGLY, THE ASSESSING OFFICER DISALLOWED THE SAME. THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A), BEFORE WHOM, IT WAS TAKEN THAT ON IDENTICAL FACTS THE APP EALS OF THE DEPARTMENT HAVE BEEN DISMISSED BY THE TRIBUNAL, WHILE DECIDING THE APPEAL IN I.T.A.NO. 545/AGR/08 IN THE CASE OF KRISHI UTPADAN MANDI SAMITI, AURIYA, FOR ASSESSMENT YEAR 2005-06. 5. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL, THE LD. CIT(A) FOUND THAT ON IDENTICAL FACTS, THE T RIBUNAL HAS ALLOWED THE ISSUE IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, FOLLO WING THE DECISION OF THE TRIBUNAL, THE LD. CIT(A) ALLOWED BOTH THE ISSUES I. E. ON ACCOUNT OF - 4 - 4 DISALLOWANCE OF DEVELOPMENT CESS AND ADMINISTRATIVE EXPENSES, ALLOWED THE ISSUES IN FAVOUR OF THE ASSESSEE FOR THE YEAR U NDER CONSIDERATION ALSO. THE FINDING OF LD. CIT(A) HAD BEEN RECORDED IN PARA 13, 13.1 AND 13.2 AT PAGES 7 & 8 OF HIS ORDER :- 13. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPEL LANT, THE CONTENTIONS OF ASSESSING OFFICER AND HAVE ALSO GONE THROUGH THE PROVISIONS OF UPKUMA AND THE ORDERS PASSED BY T HE APPELLATE AUTHORITIES TO WHICH MY ATTENTION WAS DRA WN. I FIND THAT ISSUES ON HAND HAVE ALREADY BEEN ADJUDICATED B Y HON'BLE I.T.A.T., AGRA IN I.T.A.NO. 545/AGR/208 IN THE APPEAL FILED BY THE REVENUE AGAINST THE ORDER PASSE D BY CIT(A)-I, AGRA IN THE CASE OF KRISHI UTPADAN MANDI SAMITI, AURIYA FOR ASSESSMENT YEAR 2005-06 AND A DECISION I N FAVOUR OF THE APPELLANT WAS ARRIVED AT. HON'BLE TRIBUNAL I N PARAS 8 HELD AS UNDER :- 9. AFTER CONSIDERING THE RIVAL SUBMISSION, WE FIN D THAT THE ASSESSEE COLLECTED VIKAS CESS AS PER POWER S GRANTED UNDER UPKUMA. IN TERMS OF VERY SAID ACT UNDER SECTI ON 26-PPP CENTRAL MANDI FUND IS ESTABLISHED AND TO WHI CH ALL MONEYS PAID TO MANDI BOARD UNDER SECTION 19(6) BY T HE MARKET COMMITTEE ARE TO BE CREDITED. THEREFORE, THE PAYMENT TO THE BOARD EVERY MONTH IS A STATUTORY OBL IGATION - 5 - 5 ON THE MARKET COMMITTEE (LIKE ASSESSEE BEFORE US). SINCE THE AMOUNT IS PAID IN TERMS OF STATUE UNDER WHICH IT IS ESTABLISHED, THE AMOUNT PAID AMOUNTS TO APPLICATION OF ITS INCOME AND HENCE EXEMPT UNDER SECTION 11 OF THE ACT . 13.1 SIMILARLY, WHILE ALLOWING THE ADMINISTRATIVE EXPENS E OF THE MANDI BOARD, IT HAS BEEN HELD AS UNDER AS PER PARAG RAPH 1 OF THE SAID ORDER :- 11. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE A RE INCLINED TO, AGREE WITH THE FINDINGS OF LD. CIT(A). JUST AS THE ASSESSEE IS ENTITLED TO COLLECT ANSHDAN, IT IS ALSO REQUIRED TO CONTRIBUTE SUCH SUM TO MANDI BOARDS. THEREFORE, THE PAYMENT IS STATUTORY IN NATURE. SO F AR AS ASSESSEE IS CONSIDERED, IT WILL AMOUNT TO APPLICATI ON OF ITS INCOME AS THE AMOUNT HAS GONE IRRETRIEVABLY FRO M THE ASSESSEE. ACCORDINGLY, THE SAID AMOUNT WAS RIGH TLY DELETED BY LD. CIT(A). 13.2 RESPECTFULLY FOLLOWING THE ORDER PASSED BY HON'BLE TRIBUNAL, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER TOWA RDS DEVELOPMENT CESS AND ADMINISTRATIVE EXPENSES OF THE BOARD ARE DELETED. IN SO FAR AS THE CONTENTION OF THE ASS ESSING OFFICER THAT IT WAS NOT CLEAR AS TO WHETHER THE AMO UNT PAID TO - 6 - 6 DY. DIRECTOR (CONSTRUCTION) WAS MADE AVAILABLE BY T HE BOARD OUT OF ITS OWN FUND OR THE FUND STANDING TO T HE CREDIT OF MANDI DEVELOPMENT FUND LYING WITH THE BOARD, THE CONTENTIONS OF APPELLANT DESERVES ACCEPTANCE IN THI S REGARD BECAUSE THE VERY SAME CERTIFICATE RELIED BY ASSESSI NG OFFICER STATES ABOUT DEVELOPMENT FUND AND THE SUM RECEIVED BY DDC ON ACCOUNT OF SUCH FUND WOULD BE RECEIVED FROM MANDI BOARD ONLY AND NO OTHER MEANS (BECAUSE SAID F UND IS HELD BY MANDI BOARD ONLY ). THE ACCOUNTING ENTRIES REFERRED BY THE APPELLANT ALSO SUPPORTS SUCH A VIEW. FURTHER , THE ASSESSING OFFICER HAS NOT BROUGHT ANY MATERIAL TO J USTIFY THE CONCLUSION DRAWN BY HIM. SINCE THE ASSESSING OFFICE R HAS COMPUTED THE INCOME ON THE BASIS OF ORIGINAL RETURN , WHICH HAS BEEN HELD TO BE UNJUSTIFIED, THE INCOME IS COMP UTED AS UNDER IN ACCORDANCE WITH REVISED INCOME & EXPENDITU RE ACCOUNTS OF THE APPELLANT :- GROSS RECEIPT AS SHOWN (WITHOUT DEVELOPMENT CESS) RS. 79,0 6,235/- LESS : 15 % ALLOWED TO BE ACCUMULATED RS. 1,85,935/- BALANCE RS. 67,20,300/- LESS: AMOUNT INCURRED TOWARDS ADMINISTRATIVE EXPENSES OF THE SAMITI RS. 39,13,570/- CAPITAL EXPENDITURE RS. 9,30,000/- REPAYMENT OF LOAN RS. 30,0,000 BALANCE (-)RS.11,23,270/- - 7 - 7 THUS, TOTAL INCOME OF APPELLANT IS DIRECTED TO BE T AKEN AT NIL FOR THE YEAR UNDER CONSIDERATION. 6. SIMILAR FINDING HAD BEEN GIVEN BY THE LD. CIT(A) IN ALL THESE CASES. 7. NOW THE DEPARTMENT IS IN APPEAL HERE BEFORE THE TR IBUNAL IN ALL THESE CASES. 8. WE HAVE PERUSED THE RECORDS PLACED ON RECORD AND TH E ORDER OF THE ASSESSING OFFICER IN ALL THESE CASES. THE LD.CO UNSEL FOR THE ASSESSEE PLACED RELIANCE ON THE ORDER OF THE LD. CIT(A). IT WAS FURTHER SUBMITTED THAT EVEN THE ASSESSING OFFICER, HIMSELF IN SUBSEQU ENT YEARS HAS ACCEPTED THE CONTENTION OF THE ASSESSEE AS NO ADDITION HAD B EEN MADE ON THESE ISSUES. ATTENTION OF THE BENCH WAS DRAWN ON COPY OF THE ASSESSMENT ORDER PLACED IN THE COMPILATION AT PAGES 28 TO 45 OF THE PAPER BOOK. 9. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL PLACED ON RECORD, WE FOUND THAT BOTH THE ISSUES, WH ICH HAVE BEEN DECIDED BY THE LD. CIT(A) IN FAVOUR OF THE ASSESSEE ARE COV ERED BY THE ORDER OF THE TRIBUNAL IN EARLIER YEARS I.E. ASSESSMENT YEAR 2005 -06. THE LD. CIT(A) HAS ALLOWED THESE ISSUES FOLLOWING THE ORDER OF THE TRI BUNAL IN CASE OF ONE OF THESE ASSESSEES. SINCE THE ISSUE IS SIMILAR IN THE APPEALS HERE BEFORE US TO THE ISSUE INVOLVED IN THE IMMEDIATELY PRECEDING YEA RS. THEREFORE, THERE IS NO REASON TO INTERFERE IN THE FINDING OF THE LD. CI T(A) AS THE ISSUE HAD - 8 - 8 BEEN DECIDED FOLLOWING THE ORDER OF THE TRIBUNAL. A CCORDINGLY, WE CONFIRM THE ORDER OF THE LD. CIT(A) IN CASE OF ALL THESE ASSESSEES. 10. IN THE RESULT, APPEALS OF THE DEPARTMENT ARE DISMIS SED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 17 TH SEPTEMBER, 2010. SD/- SD/- ( P.K. BANSAL ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AGRA DATED : 17 TH SEPTEMBER,2010. CPU* 139 COPY FORWARDED TO :- THE APPELLANT THE RESPONDENT THE CIT THE CIT(A) CONCERNED. THE D.R, ITAT AGRA. GUARD FILE BY ORDER, AR, I.T.A.T., AGRA.