Appeal details
Counselvise Citation
27023114 RSA 2011
Assessee PAN
Bench
Appeal Number
Duration Of Justice
4 month(s) 20 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
19-08-2011
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
A
Assessment Year
2008-2009
Appeal Filed On
30-03-2011
Judgement Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR (BEFORE SHRI R.K.GUPTA AND SHRI N.L.KALRA) ITA NO.270 & 271/ JP/2011 ASSESSMENT YEARS: 2008-09 & 2009-10 PAN: AAALK 0705 G M/S. KRISHI UPAJ MANDI SAMITI VS. THE ITO SURAJPOLE MANDI TDS -2, JAIPUR JAIPUR (APPELLANT ) (RESPONDENT) ASSESSEE BY : SHRI S.K. SHARMA AND SHRI K.R. SABBAR WAL DEPARTMENT BY : SHRI VINOD JOHRI ORDER PER N.L. KALRA, AM:- THE APPELLANT HAS FILED THE APPEALS AGAINST TWO DIF FERENT ORDERS OF THE LD. CIT(A)-III, JAIPUR DATED 10-12-2010 FOR THE AS SESSMENT YEARS 2008-09 AND 2009-10. 2.1 THE GROUNDS OF APPEAL FOR BOTH THE ASSESSMENT Y EARS ARE AS UNDER:- ITA NO. 270/JP/2011 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) HAS ERRED IN :- 1. IN HOLDING THAT THERE IS CONTRACTOR AND CONTRACT EE RELATIONSHIP IN BETWEEN RSAMB AND THE ASSESSEE SAMI TI AND THEREFORE, THE ASSESSEE SAMITI WAS LIABLE TO MA KE TDS IN TERM OF PROVISIONS OF SECTION 194C AND THERE BY 2 CONFIRMING THE LIABILITY OF RS. 3,08,602/- U/S 201( 1A) OF THE I.T. ACT . 2. IN HOLDING THAT THE STATUTORY CONTRIBUTION MADE BY THE ASSESSEE SAMITI TO RSAMB U/S 18A OF RAJASTHAN AGRICULTURAL PRODUCE MARKET ACT, 1961 FALLS IN THE PURVIEW OF SECTION 194J AND THEREBY CONFIRMING THE LIABILITY OF RS. 7,36,918/- U/S 201(1A) OF THE I.T. ACT 3. IN NOT HOLDING THAT THE ASSESSEE SAMITI AND RSA MB ARE STATUTORY BODY OF RAJASTHAN GOVT. AND PAYMENTS MADE TO RSAMB ARE PAYMENTS MADE TO STATE OF RAJASTHAN GOVT., WHICH IS EXEMPTED FROM TAX UNDER ARTICLE 289 OF THE CONSTITUTION OF INDIA AND AS SUC H THE ASSESSEE SAMITI WAS NOT UNDER OBLIGATION TO DEDUCT TAX AT SOURCE U/S 194C AND 194J OF THE I.T. ACT ITA NO. 271/JP/2011 A.Y. 2009-10 1. THE LD. CIT(A) WAS NOT JUSTIFIED IN REJECTING TH E ASSESSEE SAMITIS ADDITIONAL GROUND THAT THE SAMITI (DEDUCTOR) AND RSAMB (DEDUCTEE)S INCOME/ RECEIPTS ARE EXEMPTED U/S 10(26AAB) OF THE I.T. ACT AND AS SUCH THE ASSESSEE SAMITI WAS NOT UNDER OBLIGATION TO DEDUCT TAX AT SOURCE ON PAYMENTS MADE TO THE RSAMB. 2. IN HOLDING THAT THERE IS CONTRACTOR AND CONTRACT EE RELATIONSHIP IN BETWEEN RSAMB AND THE ASSESSEE SAMI TI AND THEREFORE, THE ASSESSEE SAMITI WAS LIABLE TO MA KE TDS IN TERM OF PROVISIONS OF SECTION 194C AND THERE BY CONFIRMING THE LIABILITY OF RS. 50,72,441/- U/S 201 & RS. 6,92,116/- U/S 201(1A), OF THE I.T. ACT . 3. IN HOLDING THAT THE STATUTORY CONTRIBUTION MADE BY THE ASSESSEE SAMITI TO RSAMB U/S 18A OF RAJASTHAN AGRICULTURAL PRODUCE MARKET ACT, 1961 FALLS IN THE PURVIEW OF SECTION 194J AND THEREBY CONFIRMING THE 3 LIABILITY OF RS. 54,13,374/- U/S 201 AND RS.8,19,9 50/- U/S 201(1A) OF THE I.T. ACT 4. IN NOT HOLDING THAT THE ASSESSEE SAMITI AND RSA MB ARE STATUTORY BODY OF RAJASTHAN GOVT. AND PAYMENTS MADE TO RSAMB ARE PAYMENTS MADE TO STATE OF RAJASTHAN GOVT., WHICH IS EXEMPTED FROM TAX UNDER ARTICLE 289 OF THE CONSTITUTION OF INDIA AND AS SUC H THE ASSESSEE SAMITI WAS NOT UNDER OBLIGATION TO DEDUCT TAX AT SOURCE U/S 194C AND 194J OF THE I.T. ACT 2.2 THE ABOVE REFERRED ISSUES HAVE BEEN CONSIDERED IN THE CASE OF KRISHI UPAJ MANDI SAMITI IN ITA NO. 55/JP/2011 TO 58/JP/20 11 DATED -5-08-2011. THE FINDING GIVEN IN THAT ORDER IS AS UNDER:- 2.1 THE FIRST ISSUE RAISED BEFORE US CAN BE DECID ED ON THE BASIS OF THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. KRISHI UPAJ MANDI SAMITI, GAJSI NGHPUR & ORS. 227 CTR 79. IN THIS CASE, THE HON'BLE JURISDIC TIONAL HIGH COURT HAD AN OCCASION TO CONSIDER AS TO WHETHER THE CONTRIBUTION MADE TO RAJASTHAN STATE AGRICULTURAL M ARKETING BOARD CAN BE CONSIDERED AS AN APPLICATION OF INCOME OR AN ADVANCE. IF THE AMOUNT HAS NOT BEEN UTLISED BY THE BOARD THEN AS TO WHETHER THE SAID AMOUNT CAN BE CONSIDERED AS NOT UTILISED BY KRISHI UPAJ MANDI SAMITI. WHILE DECIDING THE ISS UE, THE HON'BLE JURISDICTIONAL HIGH COURT AT PARA 16 AND 17 OF THE ORDER HAS HELD AS UNDER:- 16. FROM BARE PERUSAL OF THE VARIOUS PROVISIONS O F THE ACT OF 1961 AND THE RULES MADE THEREUNDER REFERRED HEREINBELOW. IT IS MANIFESTLY CLEAR THAT BOTH THE S TATUTORY BODIES 4 I.E. THE MARKET COMMITTEE AND THE BOARD CONTROLLIN G AND MANAGING THE MARKET COMMITTEE FUND ARE UNDER AN OBL IGATION TO UTILIZE THE SAME FOR CARRYING OUT THE PURPOSES OF T HE ACT IN ACCORDANCE WITH THE GUIDELINES PRESCRIBED. THE MARK ETING COMMITTEE TAKES THE DECISION AS PER ITS OWN REQUIRE MENT FOR PROVIDING FACILITIES IN THE MARKET AREA SUCH AS SHE LTERS , SHEDS, PARKING ACCOMMODATION IN CONSTRUCTION AND REPAIR OF THE APPROACH ROADS, CULVERTS, BRIDGES ETC. AND ACCORDIN GLY PREPARES THE BUDGET AND SUBMITS THE SAME FOR SANCTION TO THE BOARD. IT IS THE BOARD WHICH IS LOOKING AFTER THE IMPROVEMENT AN D REGULATION OF AGRICULTURAL MARKETS IN THE STATE. TH E WORKS OF PLANNING AND DEVELOPMENT OF INFRASTRUCTURE I.E. CON STRUCTION AND MAINTENANCE OF ROADS WITHIN THE MARKET AREA AN APPR OACH ROADS ETC. ARE EXECUTED AND CARRIED OUT BY THE BOARD. 17. IT IS NOT IN DISPUTE THAT THE AMOUNT GIVEN BY T HE ASSESSEE TO THE BOARD FOR SPECIFIC PURPOSE ON THE A PPROVAL OF THE PROJECT BY THEE STATE GOVT. THE LEARNED TRIBUNA L HAS RIGHTLY OBSERVED THAT THE AMOUNT GIVEN IS NOT A VOLUNTARY C ONTRIBUTION BY THE ASSESSEE BUT TOWARDS THE ACHIEVEMENT OF THE OBJECT SET OUT IN THE ACT FOR WHICH THE ASSESSEE CAME INTO EXI STENCE. IT IS NOT EVEN THE CASE OF THE REVENUE THAT THE ASSESSEE CAN CLAIM THE REFUND OF THE AMOUNT ONCE GIVEN TO THE BOARD SO AS TO EXECUTE AND CARRY OUT THE CONSTRUCTION WORK. ON THE FACTS A ND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED TRIBUNAL HAS RIGHTLY HELD THAT THE AMOUNT WHICH REMAINED UNUTILIZED CANNOT BE TREATED AS ADVANCE WHICH PRESUPPOSES EXISTENCE OF AN ELEMENT OF GETTING THE AMOUNT BACK IN CASE THE TERMS OF THE AGREEMENT ARE NOT 5 COMPLIED WITH. SINCE THE AMOUNT ONCE GIVEN FOR A SP ECIFIC CHARITABLE PURPOSES BY THE MARKET COMMITTEE TO THE BOARD IS NOT REFUNDABLE AND THE ASSESSEE IS NOT IN POSITION TO ENSURE THAT THE AMOUNT IS SPENT WITHIN THE SAME YEAR AND ALSO CANNO T CALL BACK THE UNSPENT AMOUNT THEREFORE, SO FAR AS THE ASSESSE E IS CONCERNED, THE MAKING OF THE PAYMENT TO THE BOARD B Y ITSELF HAS TO BE TREATED AS APPLICATION. IN THIS VIEW OF THE MATTER, WE ARE IN COMPLETE AGREEMENT WITH FINDING ARRIVED AT BY TH E LEARNED TRIBUNAL RELYING UPON THE DECISION OF THE HON'BLE SUPREME COURT IN THE MATTER OF CIT VS. THANTHI TRUST (1999) 156 CTR 605: (1999) 239 ITR 502 (SC) THAT THE CREDITING OF THE AMOUNT IN THE ACCOUNT OF THE BOARD IS ENOUGH AND THE REVEN UE CANNOT INSIST THAT THE AMOUNT SO GIVEN BY THE ASSESSEE MUS T BE SPENT WITHIN A RELEVANT YEAR ONLY. IN OUR CONSIDERED OPIN ION, THE MARKET COMMITTEE HAVING PUT ITS INCOME TO USE IN CO NFORMITY WITH THE PROVISIONS OF THE ACT OF 1961 FOR CHARITAB LE PURPOSE, IT HAS TO BE TREATED AS THE APPLICATION OF THE INCOME FOR THE CHARITABLE PURPOSE IN THE RELEVANT YEAR. 2.2 IT HAS BEEN HELD THAT BY HON'BLE JURISDICTIONAL HIGH COURT THAT THE WORKS OF PLANNING AND DEVELOPMENT OF INFRASTRUCTURE I.E. CONSTRUCTION AND MAINTENANCE OF ROADS WITHIN THE MARKET AREA AND APPROACH ROADS ETC. ARE EXECUTE D AND CARRIED OUT BY THE BOARD. THUS THESE WORKS ARE CARR IED OUT BY THE BOARDS AND NOT BY THE COMMITTEE. HENCE, SECTION 194C WILL NOT BE APPLICABLE IN THE CASE OF THE ASSESSEE. IT I S AN AGRICULTURAL MARKETING BOARD WHO IS EXECUTING AND CARRYING OUT T HE WORKS. 6 HENCE, THERE WAS NO REQUIREMENT OF MAKING DEDUCTION U/S 194C OF THE ACT BY THE ASSESSEE . 2.3 IN RESPECT OF CONTRIBUTION THE RAJASTHAN STATE AGRICULTURAL MARKETING BOARD, THE AO IS OF THE VIEW THAT THE TAX IS REQUIRED TO BE DEDUCTED AT SOURCE U/S 194J O F THE ACT. THERE IS DIFFERENCE BETWEEN THE FEES AND CONTRIBUTI ON. SEC 194J IS APPLICABLE WHEN A PERSON PAYS THE FEES FOR PROFE SSIONAL OR TECHNICAL SERVICES. IF THERE IS A STATUTORY CONTRIB UTION, THEN IT IS NOT A FEE. M/S. KRISHI UPAJ MANDI SAMITI HAS NO WRI TTEN, ORAL OR IMPLIED CONTRACT WITH RSAMB FOR TECHNICAL SERVICES. HENCE, SECTION 194J IS NOT APPLICABLE. 2.4 BEFORE US, THE LD. AR SUBMITTED IN THE WRITTEN SUBMISSION THAT RSAMB IS DEDUCTING THE TAX AT SOURC E IN RESPECT OF PAYMENT GIVEN TO THE CONTRACTORS AND SE CTION 194C IS COMPLIED WITH RSAMB. 2.5 AFTER HEARING BOTH THE PARTIES AND LOOKING TO T HE ABOVE DISCUSSIONS, WE HOLD THAT ASSESSEES BEFORE US WERE NOT REQUIRED TO DEDUCT THE TAX AT SOURCE IN RESPECT OF THE AMOUNTS PAYMENTS PAID TO RSAMB EITHER AS CONTRIBUTION OR FO R EXECUTION OF THE DEVELOPMENT WORK. HENCE, THE APPEA LS ARE ALLOWED. 2.3 FOLLOWING OUR FINDING IN THE CASE OF KRISHI UPA J MANDI, SIKAR, WE HOLD THAT THE ASSESSEE WAS NOT REQUIRED TO DEDUCT T HE TAX AT SOURCE. SINCE WE HAVE ALREADY HELD THAT TAX IS NOT REQUIRED TO BE DE DUCTED, THEREFORE, THE OTHER GROUNDS OF APPEAL BECOME ACADEMIC AND ARE NOT ADJUD ICATED. 7 3. IN THE RESULT, THE APPEALS OF THE ASSESSEES ARE ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 19-08 -2011 SD/- SD/- (R.K. GUPTA) (N.L. KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR DATED; 19/08/2011 *MISHRA COPY FORWARDED TO :- 1. KRISHI UPAJ MANDI, SURAJPOLE, JAIPUR 2. THE ITO , TDS -2, JAIPUR 3 THE LD. CIT BY ORDER 4. THE LD. CIT(A) 5 THE LD.DR 6 THE GUARD FILE (ITA NO.270/JP /11) A.R, ITAT, JAIPUR
