A.C.I.T., Circle-3(1), Gwalior V. Krishi Upaj Mandi Samiti, Guna

ITA 243/AGR/2011

• Counselvise Citation: 24320314 RSA 2011
• Duration Of Justice: 1 year(s) 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 03-10-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 24-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: GAURAV GOYAL
• Keywords: Capital asset; Depreciation; Charitable institution; Capital expenditure
• Section: 12A; 12AA; 32; 37; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO.165/AGR/2011 ASSESSMENT YEAR: 2008-09 INCOME TAX OFFICER, VS. KRISHI UPAJ MANDI SAMIT I, GUNA. GUNA (M.P.) (PAN: AAALK 0212 E). ITA NO.166/AGR/2011 ASSESSMENT YEAR: 2008-09 INCOME TAX OFFICER, VS. KRISHI UPAJ MANDI SAMIT I, GUNA. ASHOKNAGAR. (M.P.) (PAN: AAALK 0322 P). ITA NO.243/AGR/2011 ASSESSMENT YEAR: 2004-05 ASSTT. COMMISSIONER OF INCOME TAX VS. KRISHI UPAJ MANDI SAMITI, CIRCLE 3(1), GWALIOR. GUNA (M.P.) (PAN: AAALK 0212 E). (APPELLANTS) (RESPONDENTS) APPELLANTS BY : SHRI WASEEM ARSHAD, SR. D.R. RESPONDENTS BY : SHRI GAURAV GOYAL, C.A. DATE OF HEARING : 03.10.2012 DATE OF PRONOUNCEMENT OF ORDER : 12.10.2012 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: ITA NOS.165, 166 & 243/AGR/2011 A.YS.2008-09 & 2004-05. 2 ALL THESE THREE APPEALS HAVE BEEN FILED BY THE REVE NUE. ITA NOS.165 & 166/AGR/2011 HAVE BEEN FILED AGAINST CONSOLIDATED O RDER DATED 22.02.2011 AND ITA NO.243/AGR/2011 HAS BEEN FILED AGAINST THE ORDE R DATED 04.03.2011 PASSED BY THE CIT(A), GWALIOR FOR THE ASSESSMENT YEARS 2008-0 9, 2008-09 AND 2004-05 RESPECTIVELY. 2. SINCE THE APPEALS ARE BASED ON IDENTICAL SET OF FACTS, THEREFORE, THESE APPEALS ARE BEING DECIDED CONSIDERING THE FACTS OF THE CASE IN ITA NO.165/AGR/2011 IN THE CASE OF KRISHI UPAJ MANDI SAMITY, GUNA. 3. THE GROUND RAISED IN ITA NO.165/AGR/2011 FOR A.Y . 2008-09 ARE AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(APPEAL) HAS ERRED IN :- 1. DELETING THE ADDITION OF RS.9,10,464/- ON ACCOUN T OF DEDUCTION FOR AARAKSHIT NIDHI. 2. DELETING THE ADDITION OF RS.6,85,69,812/- ON ACC OUNT OF CAPITAL EXPENDITURE. 3. HOLDING THE REGISTRATION GRANTED U/S 12AA AUTOMA TICALLY MAKES ELIGIBLE FOR EXEMPTION U/S 11 OF I.T. ACT. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E SAMITI WAS ESTABLISHED UNDER NOTIFICATION ISSUED BY M.P. GOVERNMENT. THE SAMITI WAS ESTABLISHED FOR REGULATING THE AGRICULTURE MARKETING. THE MANDI FE ES WAS COLLECTED AT THE RATE ITA NOS.165, 166 & 243/AGR/2011 A.YS.2008-09 & 2004-05. 3 PRESCRIBED BY THE M.P. KRISHI UPAJ MANDI ADHINIYAM, 1972. THE SAMITI WAS ESTABLISHED FOR REGULATION OF BUYING AND SELLING OF AGRICULTURE PRODUCE AND ADMINISTRATION OF MARKETS OF AGRICULTURE PRODUCE. THE SAMITI HAS BEEN GRANTED REGISTRATION UNDER SECTION 12A W.E.F. A.Y. 2003-04 VIDE CIT GWALIOR ORDER DATED 07.08.2007. DURING THE ASSESSMENT PROCEEDINGS, THE A.O. NOTICED THAT THE ASSESSEE SAMITI ENGAGED IN BUSINESS/COMMERCIAL ACTIVITIES. THE SAMITI IS ALSO EARNING INCOME FROM GODOWN RENTS BESIDES INTEREST N DEPOSIT , CAMPUS ENTRY FEES, VEHICLE RENT ETC. THE A.O. NOTED THAT WHILE COMPUTING THE TOTAL INCOME, THE ASSESSEE CLAIMED DEDUCTION OF RS.9,10,464/- UNDER THE HEAD A ARAKSHIT NIDHI. THE SAMITI HAS DEBITED 8% OF MANDI FEES COLLECTED TO THE AARAK SHIT NIDHI ACCOUNT AND MADE PROVISION OF AMOUNT PAYABLE TO MANDI BOARD, BHOPAL. THE PAYMENT OF RS.9,10,464/- IS ONE THIRD AMOUNT OF 8% DEBITED TO AARAKSHIT NIDHI ACCOUNT, WHICH IS SENT TO MANDI BOARD FOR PAYMENT OF PENSION TO TH E RETIRED EMPLOYEES. THE A.O. NOTED THAT THE ASSESSEE DID NOT PRODUCE PROOF OF EX PENDITURE BY MANDI BOARD. IT HAS ALSO BEEN NOTED THAT THE AARAKSHIT NIDHI FUND I S NOT AN APPROVED PENSION FUND, THEREFORE, THE CLAIM OF ASSESSEE IS NOT ALLOWABLE. THE A.O. MADE ADDITION OF RS.9,10,464/-. THE A.O. ALSO MADE ADDITION OF RS.6 ,85,69,812/- BEING THE CAPITAL EXPENDITURE INCURRED FOR ACQUIRING CAPITAL ASSETS O F BUSINESS. THE A.O. NOTED THAT THE ASSESSEE HAS ALSO CLAIMED DEPRECIATION ON THE F IXED ASSETS INCLUDING ADDITIONS MADE DURING THE YEAR OUT OF GROSS INCOME SHOWN. TH E A.O. MADE ADDITION OF THE SAID AMOUNT. ITA NOS.165, 166 & 243/AGR/2011 A.YS.2008-09 & 2004-05. 4 5. THE CIT(A) DELETED THE SAID ADDITION OF RS.6,85, 69,812/- ALONG WITH THE ISSUE RELATED TO DISALLOWANCE OF DEPRECIATION. THE RELEVANT FINDING OF CIT(A) IS REPRODUCED AS UNDER :- (PARAGRAPH NO.5.2) 5.2 APPELLANTS SUBMISSIONS ALONG WITH THE ASSESSM ENT ORDER HAVE BEEN CONSIDERED CAREFULLY. THE A.O. HAS ADDED THE CAPITAL EXPENDITURE MAINLY ON THE GROUND THAT THE APPELLANT IS CARRYING ON BUSINESS ACTIVITY AND THE SAID EXPENDITURE HAS BEEN INCURRED ON THE CONSTRUCTIONS OF GODOWNS/SHOP FOR EARNING MORE INCO ME BY GIVING THESE GODOWNS ON RENT TO TRADERS AND NOT THE FARMER S. FURTHER, THE APPELLANT HAS CLAIMED DEPRECIATION ON THE SAME ASSE TS AND THUS, THIS TANTAMOUNT TO DOUBLE DEDUCTION. THE A.O. HAS RELIE D ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF ESCORTS LIM ITED & OTHERS VS. CIT, 199 ITR 43 IN THIS REGARD. IT IS WELL SETTLED POSITION IN LAW THAT IN THE CASE OF CHARITABLE INSTITUTIONS, ANY EXPENDITURE WHETHER REVENUE OR CA PITAL IN NATURE, INCURRED FOR THE FURTHERANCE OF ITS OBJECTS IS AN A PPLICATION OF INCOME TO THE OBJECTS OF THE INSTITUTION AND, THEREFORE, A LLOWABLE AS PER PROVISIONS OF SECTION 11(1) OF THE I.T. ACT. AS PE R SECTION 11(1)(A) OF THE I.T. ACT, ANY INCOME DERIVED FROM PROPERTY HELD UNDER TRUST WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES, TO THE EXTENT TO WHICH SUCH INCOME IS APPLIED TO SUCH PURPOSES IN INDIA, S HALL NOT BE INCLUDED IN THE TOTAL INCOME OF THE INSTITUTION. T HUS, ANY INCOME APPLIED TO THE OBJECTS OF THE INSTITUTION, WHICH IN CLUDES CAPITAL EXPENDITURE ON BUILDINGS, EQUIPMENT ETC. WILL NOT B E INCLUDED IN THE TOTAL INCOME OF THE INSTITUTION. THE DECISION OF HONBLE APEX CURT IN THE CASE OF ES CORTS LTD. (SUPRA) IS DISTINGUISHABLE ON FACTS FROM THE APPELL ANTS CASE. IN THAT CASE THE ASSESSEE, CARRYING ON BUSINESS ACTIVITIES, WAS CLAIMING DEDUCTION U/S 35 ON THE ASSETS USED FOR ITS BUSINES S PURPOSES AND AT THE SAME TIME DEPRECIATION ON THOSE ASSETS WAS ALSO BEING CLAIMED U/S 32 OF THE I.T. ACT THUS AMOUNTING TO DOUBLE DEDUCTI ON AND, THEREFORE, NOT ALLOWABLE AS OBSERVED BY THE HONBLE COURT. HO WEVER, IN CASE OF THE APPELLANT, IT HAS BEEN HELD TO BE A CHARITABLE INSTITUTION AS ABOVE WHERE THE EXPENDITURE ON ASSETS IS TO BE TREATED AS APPLICATION OF INCOME AS PER SECTION 11(1)(A). FURTHER IT HAS BEE N HELD BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF DIRECTOR O F INCOME TAX ITA NOS.165, 166 & 243/AGR/2011 A.YS.2008-09 & 2004-05. 5 (EXEMPTION) VS. FRAMJEE CAWASJEE INSTITUTE (1993) 1 09 CTR 463 THAT DEPRECIATION IS TO BE ALLOWED IN COMPUTING THE INCO ME OF AN ASSESSEE CLAIMING EXEMPTION U/S 11, ALTHOUGH THE AMOUNT SPEN T ON ACQUIRING ASSETS HAS ALREADY BEEN TREATED AS APPLICATION OF I NCOME OF THE INSTITUTION IN THE YEAR IN WHICH THE ASSETS HAVE BE EN ACQUIRED. THE SAME VIEW HAS BEEN TAKEN BY HONBLE M.P. HIGH COURT IN THE CASE OF CIT VS. RAIPUR PALLOTTINE SOCIETY (180 ITR 579) WHE REBY DEPRECIATION HAS BEEN ALLOWED TO A CHARITABLE INSTITUTION IN RES PECT OF THE ASSETS OWNED BY IT WHERE CAPITAL EXPENDITURE TOO ALLOWED I N RESPECT OF THE SAME AS APPLICATION OF INCOME. THE INCOME OF A CHA RITABLE TRUST AS CONTEMPLATED BY SECTION 11(1)(A) IS REQUIRED TO BE COMPUTED, NOT IN ACCORDANCE WITH THOSE PROVISIONS, BUT IN ACCORDANCE WITH THE NORMAL RULES OF ACCOUNTANCY WHERE DEPRECIATION IS ALWAYS T AKEN INTO ACCOUNT FOR FINDING OUT THE REAL INCOME. THE AMOUNT OF DEPRECIATION DEBITED TO THE ACCOUNTS OF THE CHARITABLE INSTITUTION HAS TO BE DEDUCTED TO ARRIVE AT THE INCOME AVAILABLE FOR APPLICATION TO CHARITABLE AND RELIGIO US PURPOSES. THUS, THE A.O. WAS NOT JUSTIFIED IN MAKING THE ADDI TION ON ACCOUNT OF CAPITAL EXPENDITURE TREATING IT AS DISAL LOWABLE EXPENDITURE IN THE CASE OF THE APPELLANTS. ADDITION OF RS.6,85 ,69,812/- & RS.81,88,361/- RESPECTIVELY IS, HEREBY, DELETED. 6. THE CIT(A) HAS ALSO DELETED THE ADDITION OF RS.9 ,10,464/- AS UNDER:- (PARAGRAPH NO.5.3) 5.3 THE A.O. HAS MADE ADDITION OF RS.9,10,464/- & RS.8,38,363/- RESPECTIVELY ON ACCOUNT OF AARAKSHIT NAIDHI ON THE GROUND THAT NO EXPENDITURE PROOF HAS BEEN GIVEN BY THE APPELLANT A ND ALSO THAT THE FUND IS NOT AN APPROVED PENSION FUND. THE A.O. HAS FURTHER RELIED ON ENHANCEMENT NOTICE GIVEN TO KRISHI UPAJ MANDI SAMIT I, PIPRAIGAON, GUNA WHEREBY STHAI NIDHI/AARAKSHIT NIDHI IS PROPOSE D TO BE DISALLOWED. FROM THE PERUSAL OF AUDIT REPORT AND ACCOUNTS OF TH E APPELLANT, IT IS SEEN THAT THE APPELLANT HAS CREDITED AMOUNT O F RS.9,10,464/- & RS.8,38,363/- RESPECTIVELY TO AARAKSHIT NIDHI ACCOU NT AS PER MANDATORY STATUTORY PROVISIONS OF THE MANDI ADHINIY UM AND ORDERS OF ITA NOS.165, 166 & 243/AGR/2011 A.YS.2008-09 & 2004-05. 6 THE MANDI BOARD, BHOPAL. OUT OF THIS AARAKSHIT NID HI ACCOUNT, 1/3 RD AMOUNT IS REMITTED TO THE MANDI BOARD WHEREAS 2/3 RD PORTION IS USED FOR ACTUAL PAYMENT OF PENSION AND GRATUITY TO THE R ETIRED EMPLOYEES OF THE SAMITI. NO PROVISION HAS BEEN MADE BY THE APPE LLANT AS REQUIRED IN THE CASE OF AN APPROVED PENSION FUND. FURTHER, THE RELIANCE OF THE A.O. ON THE NOTICE OF ENHANCEMENT IN CASE OF KRISHI UPAJ MANDI SAMITI, PIPRAIGAON IS MISPLACED, AS THE THEN CIT(AP PEALS) HAS ONLY PROPOSED TO DISALLOW THE AMOUNT OF AARAKSHI NIDHI A ND THE MATTER IS STILL SUBJUDICED. IT IS ALSO SEEN THAT THE THEN CI T(A) HAS RELIED ON DECISION OF HONBLE ITAT, JABALPUR BENCH, JABALPUR IN CASE OF KRISHI UPAJ MANADI SAMITY, KATNI VS. ACIT, KATNI IN ITA NO .244 AND 245 (JAB) OF 2006 WHILE ISSUING THE SAID NOTICE. HOWEV ER, ON PERUSAL OF THE SAID ORDER OF HONBLE ITAT, JABALPUR, IT IS SEE N THAT THE FACTS OF THE APPELLANTS CASE UNDER THESE APPEALS ARE DISTING UISHABLE. IN THE CASE OF KARISHI UPAJ MANDI SAMITI, KATNI, THE AMOUN T CREDITED TO STHAI NIDHI WAS NOT CONSIDERED AS AN ACCUMULATION O F SURPLUS U/S 11 OF THE I.T. ACT BECAUSE NO CLAIM OF EXEMPTION U/S 1 1 WAS MADE BY THE ASSESSEE BEFORE THE A.O. THE ITAT, THEREFORE HELD HAT IF ANY DEDUCTION WHICH HAS NO BEEN CLAIMED BEFORE THE A.O . AND IF CONSIDERED AND ALLOWED NOW WOULD RESULT IN DETERMIN ING THE ASSESSED INCOME LOWER THAN THE INCOME DECLARED IN THE VOLUNT ARY RETURN FILED BY THE ASSESSEE ON WHICH SELF-ASSESSMENT TAX HAS AL SO BEEN PAID. IN THE CASE OF THE APPELLANTS, CLAIM FOR EXEMPTION U/S 11 HAS DULY BEEN MADE BEFORE THE A.O. WHILE FILING OF RETURN AND DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS. THE ONLY RELEVANT FACT NOW TO BE SEEN IN THE CASE OF THE APPELLANTS IS TO EXAMINE WHETHER PRESCR IBED PERCENTAGE OF THE INCOME HAS BEEN APPLIED TOWARDS THE OBJECTS OF THE SAMITI AND WHETHER ANY VIOLATION OF PROVISIONS OF SECTION 11-1 3 OF THE I.T. ACT HAVE BEEN MADE BY THE APPELLANT. THE FACT THAT THE SAID FUND IS NOT AN APPROVED PENSION FUND SHALL NOT DEBAR THE APPELLANT S FROM CLAIMING EXEMPTION, IF THE PRESCRIBED CONDITIONS, AS MENTION ED ABOVE HAVE BEEN FULFILLED. THE A.O. HAS NOT BROUGHT ANY MATER IAL ON RECORD NOR ANY ADVERSE FINDING BEEN GIVEN THAT THE APPELLANT H AS VIOLATED THE PRESCRIBED CONDITIONS DISENTITLING THEM FROM CLAIMI NG EXEMPTION U/S 11 OF THE I.T. ACT. THEREFORE, THE A.O. WAS NOT JU STIFIED IN MAKING THE ADDITION ON ACCOUNT OF AARAKSHIT NIDHI. ACCORDINGL Y, ADDITION OF RS.9,10,464/- & RS.8,38,363/- RESPECTIVELY IS, HERE BY, DELETED. ITA NOS.165, 166 & 243/AGR/2011 A.YS.2008-09 & 2004-05. 7 7. THE LD. DEPARTMENTAL REPRESENTATIVE WHILE REFERR ING THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF KRISHI UPAJ MA NDI SAMITI VS. ORIENT PAPER & INDUSTRIES LIMITED, 1995 SSC (1) 655 SUBMITTED TH AT THE FUND CONTRIBUTED BY THE ASSESSEE OF THE MANDI BOARD IS NOT ELIGIBLE FOR EXE MPTION UNDER SECTION 11. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THER E IS DISTINCTION BETWEEN TAX AND FEES. FEES CONFER A SPECIAL CAPACITY ALTHOUGH THE SPECIAL ADVANTAGE IS SECONDARY TO THE PRIMARY MOTIVE OF REGULATION IN THE PUBLIC INTE REST. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE CLAIM OF THE ASSE SSEE CANNOT BE SAID TO BE AN APPLICATION OF INCOME IN PUBLIC INTEREST. 8. AT THE OUTSET, THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THE ISSUE PERTAINING TO AARAKSHIT NIDHI IS COVERED BY VARIOUS JUDGEMENTS OF HONBLE HIGH COURTS AND ORDERS OF I.T.A.T. HE FURTHER SUBMITTED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY ASSESSEES OWN CASE FOR A .Y. 2007-08 IN ITA NO.271/AGR/2010 ORDER DATED 30.06.2011. THE RELEVA NT FINDING OF I.T.A.T. IS REPRODUCED FROM PARAGRAPH NO.5 OF ORDER OF I.T.A.T. IN ITA NO.271/AGR/2010 AS UNDER :- 5. SIMILAR FINDING HAS BEEN GIVEN WHILE DELETING T HE SAME ADDITION IN THE CASES OF OTHER SAMITIS BEFORE US. IN OUR OPI NION NO INTERFERENCE IS CALLED FOR IN THE ORDER OF CIT(A). THE CIT(A) HA S RIGHTLY DELETED THE ADDITION. THE ASSESSING OFFICER MADE THE DISALLOWAN CE IN RESPECT OF EXPENDITURE INCURRED ON ACCOUNT OF AARAKSHIT NIDHI WHILE HOLDING THAT THE ASSESSEE HAS CARRIED OUT THE BUSINESS DURING TH E YEAR. THE FINDING OF THE CIT(A) HAS BECOME FINAL THAT THE ASSESSEE WA S NOT CARRYING ON ITA NOS.165, 166 & 243/AGR/2011 A.YS.2008-09 & 2004-05. 8 BUSINESS ACTIVITIES BUT THE ASSESSEE IS ENTITLED FO R EXEMPTION U/S. 11. UNDER SECTION 11A, THE ASSESSEE IS ENTITLED FOR DED UCTION IF THE INCOME HAS BEEN APPLIED BY THE ASSESSEE FOR THE CHARITABLE PURPOSE. THE ASSESSEE HAS INCURRED THE EXPENDITURE ON AARAKSHIT NIDHI AS PER THE STATUTORY PROVISIONS OF THE MANDI ADHINIYAM AND ORD ERS OF THE MANDI BOARD, BHOPAL. THIS IS NOT DENIED BY THE LD. DR AND NO CONTRARY EVIDENCE IN THIS REGARD WAS FILED BEFORE US. IN OUR OPINION, THE CIT(A) HAS RIGHTLY DELETED THE DISALLOWANCE, AS THE SUM OF RS.1,04,988/- WILL BE TREATED AS APPLICATION OF THE INCOME U/S. 11 OF THE INCOME-TAX ACT. THUS, GROUND NO. 1 STANDS DISMISSED. 9. IN RESPECT OF ADDITION ON ACCOUNT OF CAPITAL EXP ENDITURE, THE I.T.A.T. DECIDED THE ISSUE AS UNDER WHICH IS REPRODUCED FROM PARAGRA PH NO.7 OF THE ORDER OF I.T.A.T. IN ITA NO.271/AGR/2010 7. AFTER HEARING THE RIVAL SUBMISSIONS, WE NOTED T HAT THE FINDING OF THE CIT(A) THAT THE INCOME OF THE ASSESSEE HAS TO B E COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 11 HAS BE COME FINAL, AS THE REVENUE HAS NOT COME IN APPEAL AGAINST THIS FINDING AND IN VIEW OF THE DECISION OF THE JURISDICTIONAL HIGH COURT, THE INCO ME OF A CHARITABLE INSTITUTION IS ENTITLED FOR DEDUCTION AS CONTEMPLAT ED U/S. 11(1)(A). UNDER SECTION 11, ANY EXPENDITURE WHETHER REVENUE O R CAPITAL, INCURRED FOR THE OBJECTS OF THE CHARITABLE INSTITUT ION AND THE SAME IS ALLOWABLE U/S. 11(1) OF THE ACT. IT IS NOT DENIED T HAT THE CAPITAL EXPENDITURE INCURRED BY THE ASSESSEE DOES NOT RELAT E TO THE OBJECTS OF THE INSTITUTION. THIS ISSUE IS NO MORE RES INTEGRA IN VIEW OF THE DECISION OF SRMMCTM TRIPUTI TRUST VS. CIT, 230 ITR 636 IN WHICH IT WAS HELD THAT THE CAPITAL EXPENDITURE SHOULD BE CON SIDERED AS APPLICATION PROVIDED THEY ARE TOWARDS THE OBJECTS O F THE ORGANIZATION. NO MATERIAL WAS BROUGHT TO OUR KNOWLEDGE TO PROVE C APITAL EXPENDITURE INCURRED BY THE SAMITI NOT RELATING TO THE FULFILLMENT OF THE OBJECTS OF THE SAMITI. UNDER THESE FACTS AND CIRCUM STANCES, IN OUR OPINION, NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE CIT(A). WE, ACCORDINGLY CONFIRM THE ORDER OF THE CIT(A) IN ALL THESE APPEALS. ITA NOS.165, 166 & 243/AGR/2011 A.YS.2008-09 & 2004-05. 9 10. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PA RTIES AND RECORDS PERUSED. THE LD. DEPARTMENTAL REPRESENTATIVE DID NOT DISPUTE THE FACTS OF THE CASE UNDER CONSIDERATION AND THE FACTS OF THE CASE DECIDED BY I.T.A.T. (SUPRA). HOWEVER, THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE JUD GEMENT OF HONBLE SUPREME COURT IN THE CASE OF 1995 SCC 655 AND SUBMITTED THA T THE ASSESSEE FAILED TO FURNISH CONFIRMATION IN RESPECT OF UTILIZATION OF FEES/CESS FOR THE DEVELOPMENT OF MARKET. WE NOTICED THAT THE A.O. TREATED THE ACTIVITIES OF THE SAMITY AS BUSINESS ACTIVITIES WHICH HAS BEEN REVERSED BY THE CIT(A) BUT THE REVEN UE DID NOT RAISE ANY GROUND IN THIS REGARD AS EVIDENT FROM THE GROUNDS RAISED I N THE APPEALS. 11. AS REGARDS THE MERIT OF THE CASE, REGARDING ADD ITION OF RS.9,10,464/- ON ACCOUNT OF DEDUCTION OF AARAKSHIT NIDHI AND ADDITIO N OF RS.6,85,69,812/- ON ACCOUNT OF CAPITAL EXPENDITURE, WE FIND THAT THE IS SUE IS SQUARELY COVERED BY THE ORDER OF I.T.A.T. (SUPRA). WE, THEREFORE, FOLLOW T HE SAME AND IN THE LIGHT OF THE FACT, ORDER OF THE CIT(A) IS CONFIRMED. 12. GROUND NO.3 IS GENERAL IN NATURE. IT IS TRUE T HAT BY MERELY HAVING REGISTRATION UNDER SECTION 12A OF THE ACT THE ASSESSEE IS NOT AU TOMATICALLY ELIGIBLE FOR EXEMPTION UNDER SECTION 11 OF THE ACT BUT IN THE CA SE UNDER CONSIDERATION, THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE CIT(A) AFTER EXAMINING THE ITA NOS.165, 166 & 243/AGR/2011 A.YS.2008-09 & 2004-05. 10 RELEVANT PROVISIONS AND FACTS OF THE CASE. THEREFO RE, WE DO NOT FIND ANY SUBSTANCE IN THIS GROUND OF APPEAL OF THE REVENUE. 13. THE GROUND RAISED IN ITA NO.166/AGR/2011 FOR A. Y. 2008-09 ARE AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(APPEAL) HAS ERRED IN :- 1. DELETING THE ADDITION OF RS.8,38,363/- ON ACCOUN T OF DEDUCTION FOR AARAKSHIT NIDHI. 2. DELETING THE ADDITION OF RS.81,83,361/- ON ACCOU NT OF CAPITAL EXPENDITURE. 3. DELETING THE ADDITION OF RS.50,31,282/- ON ACCOU NT OF DEDUCTION U/S 11(1)(A) OF I.T,. ACT. 4. HOLDING THE REGISTRATION GRANTED U/S 12AA AUTOMA TICALLY MAKES ELIGIBLE FOR EXEMPTION U/S 11 OF I.T. ACT. 14. THE FACTS OF GROUND NOS.1, 2 & 4 ARE IDENTICAL TO THE FACTS OF THE CASE OF KRISHI UPAJ MANDI SAMITI, GUNA IN ITA NO.165/AGR/20 11 WHICH HAS BEEN DECIDED ABOVE. THE CIT(A) THOUGH DECIDED THE ISSUES BY SEP ARATE ORDERS IN CASE OF KRISHI UPAJ MANDI SAMITI, GUNA, ITA NO.165/AGR/2011 AND KR ISHI UPAJ MANDI SAMITI ASHOK NAGAR, ITA NO.166/AGR/2011 BUT BY A COMMON DI SCUSSION. THUS, FACTS OF BOTH THE CASES ARE IDENTICAL. SINCE THE FACTS ARE IDENTICAL, WE FOLLOW THE SAID DISCUSSION AND FINDING AND IN THE LIGHT OF THAT, GR OUND NOS.1, 2 & 4 OF THIS APPEAL ARE DISMISSED. ITA NOS.165, 166 & 243/AGR/2011 A.YS.2008-09 & 2004-05. 11 15. AS REGARDS GROUND NO.3, THE A.O. MADE ADDITION OF RS.50,31,282/-. THE A.O. DISALLOWED THE BENEFIT OF SECTION 11 CONSIDERI NG ACTIVITIES OF THE ASSESSEE AS BUSINESS ACTIVITIES. THE A.O. HELD THAT THE ASSESS EE WAS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 11 OF THE ACT ON GROSS RECEIPTS, THER EFORE, HE MADE THE ADDITION OF RS.50,31,282/-. 16. THE CIT(A) HELD THAT THE SAMITI IS A CHARITABLE INSTITUTION AND ITS INCOME IS REQUIRED TO BE COMPUTED IN ACCORDANCE WITH THE PROV ISIONS OF THE ACT. THE CIT(A) MADE A DETAILED DISCUSSION IN PARAGRAPH NO.5.2 WHIC H HAS BEEN REPRODUCED ABOVE. IN THE LIGHT OF THE DISCUSSION, WE DO NOT FIND ANY SUBSTANCE IN MAKING ADDITION OF RS.50,31,282/- BY THE A.O. TREATING THE BUSINESS AC TIVITIES OF THE ASSESSEE AND DENYING BENEFIT OF PROVISIONS OF SECTION 11 OF THE ACT. THUS, THIS GROUND OF THE REVENUE IS ALSO DISMISSED. 17. THE GROUND RAISED IN ITA NO.243/AGR/2011 FOR A. Y. 2004-05 ARE AS UNDER :- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE CIT(APPEAL) HAS ERRED IN DELETING THE ADDITION OF R S.22,64,692/-ON ACCOUNT OF EXCESS CLAIM OF 85% OF ROAD DEVELOPMENT. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT(APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS.30,05,327/- ON ACCOUNT OF BOARD FEE. (CORRECT AMOUNT IS RS.36,05, 327/-). ITA NOS.165, 166 & 243/AGR/2011 A.YS.2008-09 & 2004-05. 12 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT(APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS.7,63,742/- ON ACCOUNT OF 8% PENSION FUND. 4. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT(APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS.94,489/- ON ACCOUNT OF EXCESS CLAIM OF DEPRECIATION. 5. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT(APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS.3,30,000/- ON ACCOUNT OF EXPENSES NOT PERTAINING TO OBJECT OF THE SAMITI. 6. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT(APPEALS) HAS ERRED IN CONSIDERING THE FACT THAT A COMPULSORY PAYMENT MADE BY THE SAMITI TO MP MANDI BOARD FALLS IN THE CATEGORY OF CHARITY. 18. THE FIRST AND SECOND GROUNDS OF APPEAL ARE IN R ESPECT OF ADDITION OF RS.22,64,692/- AND RS.36,05,327/-. DURING THE ASSE SSMENT PROCEEDINGS, THE A.O. NOTICED THAT THE ASSESSEE HAS DEBITED EXCESS AMOUNT THAN THE LIMITS PRESCRIBED IN MANDI ACT ON ACCOUNT OF ROAD DEVELOPMENT FUND AND B OARD FEES. THE RELEVANT DETAILS NOTED BY THE A.O. AT PAGE 10 ARE AS UNDER:- SL. NO. HEAD OF EXPENDITURE ACTUAL AMOUNT AS PER NORMS (RS) AMOUNT DEBITED IN INC & EXP A/C (RS) EXCESS AMT DEBITED IN INC & EXP A/C (RS) 1 85% ROAD DEVP FUND 1,28,81,251/- 1,51,45,943/- 22,64,692/- 2 BOARD FEE 25,46,323/- 61,51,650/- 36,05,327/- 19. THE A.O. MADE THE ADDITION OF BOTH THE ITEMS ON THE GROUND THAT THE ASSESSEE HAS DEBITED EXCESS EXPENDITURE THAN THE LIMITS PRES CRIBED IN THE MANDI ACT UNDER ITA NOS.165, 166 & 243/AGR/2011 A.YS.2008-09 & 2004-05. 13 THE HEAD ROAD DEVELOPMENT FUND AND BOARD FEE IN THE INCOME AND EXPENDITURE ACCOUNT. THE CIT(A) HAS DELETED BOTH THE ADDITIONS . 20. THAT THE ASSESSEE HAS BEEN GRANTED REGISTRATION UNDER SECTION 12A OF THE ACT, THEREFORE, THE ASSESSEES CASE IS ELIGIBLE FOR EXEM PTION UNDER SECTION 11 OF THE ACT. THE CIT(A) ADMITTED THE ADDITIONAL GROUND OF APPEAL RAISED BEFORE HIM CLAIMING EXEMPTION UNDER SECTION 11 IN VIEW OF REGISTRATION UNDER SECTION 12A OF THE ACT VIDE REGISTRATION CERTIFICATE DATED 31.05.2007. TH E CIT(A) CALLED FOR THE REMAND REPORT FROM THE A.O. WHICH WAS FURNISHED BY THE A.O . ON 01.03.2011. THE OBJECTION OF THE A.O. BEFORE THE CIT(A) WAS THAT AP PEAL IS PENDING BEFORE THE HONBLE SUPREME COURT AGAINST THE JUDGEMENT OF HON BLE HIGH COURT OF MADHYA PRADESH UPHOLDING REGISTRATION UNDER SECTION 12A OF THE ACT. THEREFORE, THE ASSESSEE IS NOT ELIGIBLE FOR EXEMPTION UNDER SECTIO N 11 OF THE ACT. THE CIT(A) AFTER CONSIDERING THE ASSESSEES SUBMISSION AND THE REMAND REPORT OF THE A.O. FOUND THAT THE ASSESSEE IS ELIGIBLE FOR EXEMPTION U NDER SECTION 11 OF THE ACT. THE CIT(A) FURTHER NOTICED THAT THE EXCESS CLAIM OF EXP ENDITURE IS APPLICATION OF INCOME WHICH IS NOT IN CONTRAVENTION TO THE PROVISI ONS OF SECTION 11 OF THE ACT. 21. IN GROUND NO.3 OF APPEAL, APART FROM THE ABOVE TWO ADDITIONS, THE A.O. MADE ADDITION OF RS.7,63,742/- ON ACCOUNT OF 8% PENSION FUND AND RS.94,489/- ON ACCOUNT OF EXCESS CLAIM OF DEPRECATION. THE A.O. M ADE THE IDENTICAL ADDITION IN ITA NOS.165, 166 & 243/AGR/2011 A.YS.2008-09 & 2004-05. 14 EARLIER YEAR ALSO. THE ADDITION ON ACCOUNT OF ADDI TIONAL DEPRECIATION WAS ALSO MADE CONSIDERING EARLIER YEARS AND WRITTEN DOWN VAL UE TAKEN IN A.Y. 2003-04. 22. THE FACTS OF THE GROUND NOS.4 & 5 ARE THAT DURI NG THE ASSESSMENT PROCEEDINGS, THE A.O. NOTICED THAT THE ASSESSEE INC URRED EXPENDITURE OF RS.3,30,000/- FOR INSTALLING STATUE IN THE PREMISES OF MANDI SAMITI. THE A.O. OBSERVED THAT THERE IS NO LOGIC FOR EXPENDITURE MAD E ON STATUE AS THERE IS NO DIRECT RELATION WITH THE PURPOSE AND OBJECT OF THE SAMTI A S THE EXPENDITURE WAS OF PERSONAL NATURE. THE A.O. ALSO MADE ADDITION ON AC COUNT OF EXPENDITURE. THE CIT(A) DELETED THE ABOVE ADDITIONS ALSO ON THE GROU ND THAT THE ASSESSEE IS ELIGIBLE FOR EXEMPTION UNDER SECTION 11 OF THE ACT AND THE E XPENDITURE INCURRED AMOUNTS TO APPLICATION OF INCOME. SINCE THE EXPENSES INCURRED BY THE ASSESSEE ARE ALLOWABLE IN ACCORDANCE WITH SECTION 11 AND NOT UNDER SECTION 37 OF THE ACT, THE CIT(A) DELETED THE ADDITION WHICH WAS MADE BY THE A.O. TRE ATING THE ASSESSEE AS BUSINESS ENTITY. THE GROUND RELATING TO EXCESS DEPRECIATION HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE AFTER A DETAILED DISCUSSION MADE IN PA RAGRAPH NOS.10 TO 12 OF THIS ORDER. 23. GROUND NO.5 IS IN SUPPORT OF GROUND NO.2 OF THE APPEAL REQUIRES NO SEPARATE FINDING. ITA NOS.165, 166 & 243/AGR/2011 A.YS.2008-09 & 2004-05. 15 24. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PA RTIES AND RECORDS PERUSED. IN THE LIGHT OF THE DETAILED DISCUSSION MADE IN ITA NO S.165 & 166/AGR/2011 ABOVE, AND IN THE LIGHT OF THE FACT THAT THE ASSESSEE HAS BEEN GRANTED REGISTRATION UNDER SECTION 12A AND ELIGIBLE FOR EXEMPTION UNDER SECTIO N 11 OF THE ACT, THE CIT(A) DELETED THE ADDITION AFTER CONSIDERING THE A.O.S R EMAND REPORT. IN THE LIGHT OF THE FACTS, WE DO NOT FIND ANY INFIRMITY IN THE ORDERS O F CIT(A). THE ORDERS OF CIT(A) ARE CONFIRMED. 25. IN THE RESULT, ALL THE THREE APPEALS FILED BY T HE REVENUE ARE DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY