District Agricultural & Industrial Exhibition Committee, Muzaffarnagar V. Addl. CIT, Muzaffarnagar

ITA 2705/DEL/2009

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 7017 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 26-09-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 02-06-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: A MATHUR
• Keywords: Business income
• Section: 234B; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B NEW DELHI) BEFORE SHRI RAJPAL YADAV AND SHRI K.D. RANJAN ITA NO.2705/DEL/2009 ASSESSMENT YEAR: 2006-07 M/S. DISTRICT AGRICULTURAL & INDUSTRIES VS. ADDITI ONAL CIT, EXHIBITION COMMITTEE, RANGE-2, MUZAFFARNAGAR (UP) MUZAFFARNAGAR (UP) (PAN: AAALD0008R) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI A MATHU R, CA RESPONDENT BY: SHRI ROHIT GARG, SR. DR ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE OR DER OF LEARNED CIT(APPEALS) DATED 03.03.2009 PASSED FOR ASSESSMENT YEAR 2006-07. THE ASSESSEE HAS TAKEN SEVEN GROUNDS OF APPEAL WHICH AR E NOT IN CONSONANCE WITH RULE 8 OF THE ITATS RULES, THEY ARE DESCRIPTI VE AND ARGUMENTATIVE IN NATURE. IN BRIEF, ITS GRIEVANCE REVOLVES AROUND TWO ISSUES WHETHER IN THE ABSENCE OF REGISTRATION UNDER SEC. 12AA OF THE INCO ME-TAX ACT, 1961, LEARNED CIT(APPEALS) IS JUSTIFIED IN CONFIRMING THE ADDITION OF RS.13,10,283 AS BUSINESS INCOME AND REJECTING ITS P RAYER FOR TREATING IT AS A LOCAL AUTHORITY. IN THE SECOND FOLD, IT IS IMPUGNIN G CHARGING OF INTEREST UNDER SEC. 234B AND D OF THE INCOME-TAX ACT, 1961. 2 2. THIS APPEAL WAS PRESENTED BY THE ASSESSEE ON 2.6 .2009 IN THE ACKNOWLEDGMENT-CUM-NOTICE, DATE OF HEARING WAS INTI MATED TO THE ASSESSEE AS 18.8.2009. THE APPEAL WAS LISTED ON 18.8.2009 AN D HEARING WAS ADJOURNED FOR WANT OF TIME. THEREAFTER, IT LISTED ON NUMBER O F OCCASIONS AND LEARNED COUNSEL FOR THE ASSESSEE SOUGHT ADJOURNMENT ON TEN OCCASIONS. IT WAS LISTED LAST TIME ON 20 TH SEPTEMBER 2011. WHILE GRANTING ADJOURNMENT, WE HAV E MADE IT CLEAR THAT NO FURTHER ADJOURNMENT WOULD BE GRANTED TO THE ASSESSEE. SHRI A. MATHUR, CA APPEARED ON BEHALF OF THE ASSESS EE ON 20 TH SEPTEMBER 2011. HEARING WAS ADJOURNED TO 25 TH SEPTEMBER 2011. THE LEARNED COUNSEL FOR THE ASSESSEE AGAIN SOUGHT ADJOURNMENT ON THE GR OUND THAT THERE WAS NO ELECTRICITY IN HIS OFFICE, THEREFORE, HE COULD NOT TRACE THE FILE. ON THE LAST OCCASION, WE HAD MADE IT CLEAR THAT NO ADJOURNMENT WOULD BE GRANTED AND WE DO NOT FIND ANY PLAUSIBLE REASON IN THE APPLICAT ION SUBMITTED BY THE ASSESSEE FOR GRANT OF ADJOURNMENT. THE APPEAL IS ON THE BOARD ALMOST FROM THE LAST TWO YEARS. WE HAVE GRANTED TEN ADJOURNMENT S TO THE ASSESSEE, THEREFORE, WE DO NOT FIND ANY GROUND TO ADJOURN THE HEARING AND ACCORDINGLY WE REJECT THE APPLICATION FILED BY THE ASSESSEE. WE PROCEED TO DECIDE THE APPEAL ON MERIT. 3 3. THE BRIEF FACTS IN THE CASE ARE THAT ASSESSEE HA S FILED ITS RETURN OF INCOME ON 31 ST OCTOBER, 2006 DECLARING NIL INCOME. ASSESSING OFFI CER FOUND THAT THE ASSESSEE HAD SUBMITTED INCOME AND EXPENDIT URE ACCOUNT WHICH DEMONSTRATES THE EXCESS OF INCOME OVER EXPENDITURE AT RS.13,10,283. THE ASSESSEE ALLEGED TO HAVE BEEN A SOCIETY CONSTITUTED UNDER THE DIRECTIONS OF THE STATE GOVERNMENT. ITS ACTIVITY IS TO ORGANIZE A NNUAL EXHIBITION WHEREFROM IT EARNS RENTAL INCOME RECEIPT AND ALSO C ONTRACT OF THE THE BAZARI ETC. THE ASSESSEE DOES NOT ENJOY REGISTRATION UNDER SEC. 12AA OF THE ACT. IT CLAIMED THAT IT IS A LOCAL AUTHORITY UNDER SEC. 10( 20) AND, THEREFORE, IT IS EXEMPT FROM THE LEVY OF TAX. 4. THE CLAIM OF THE ASSESSEE HAS BEEN REJECTED BY T HE ASSESSING OFFICER ON THE GROUND THAT SECTION 10(20) HAS BEEN AMENDED BY FINANCE ACT, 2002 W.E.F. ASSESSMENT YEAR 2003-04. THE DEFINITION OF L OCAL AUTHORITY HAS BEEN EXPLAINED IN EXPLANATION APPENDED TO THIS SECTION W HICH READS AS UNDER: THE INCOME OF A LOCAL AUTHORITY WHICH IS CHARGEAB LE UNDER THE HEAD INCOME FROM HOUSE PROPERTY, CAPITAL GAIN, OR IN COME FROM OTHER SOURCES OR FROM A TRADE OR BUSINESS CARRIED ON BY IT WHICH ACCRUES OR ARISES FROM THE SUPPLY OF A COMMODITY OR SERVICE (N OT BEING AFTER OR ELECTRICITY) WITHIN ITS OWN JURISDICTION AREA OR FR OM THE SUPPLY OF WATER OR ELECTRICITY WITHIN OR OUTSIDE IT OWN JURISDICTIO NAL AREA] 4 [ EXPLANATION FOR THE PURPOSES OF THIS CLAUSE, TH E EXPRESSION LOCAL AUTHORITY MEANS (I) PANCHAYAT AS REFERRED TO IN CLAUSE (D) OF ARTICLE 2 43 OF THE CONSTITUTION; OR (II) MUNICIPALITY AS REFERRED TO IN CLAUSE (E) OF ARTICL E 243P OF THE CONSTITUTION; OR (III) MUNICIPAL COMMITTEE AND DISTRICT BOARD, LEGALLY ENT ITLED TO, OR ENTRUSTED BY THE GOVERNMENT WITH, THE CONTROL OR MA NAGEMENT OF A MUNICIPAL OR LOCAL FUND; OR (IV) CANTONMENT BOARD AS DEFINED IN SECTION 3 OF THE CAN TONMENTS ACT, 1924 (2 OF 1924) 5. SINCE THE ASSESSEE DOES NOT FALL WITHIN THE AMBI T OF EXPRESSION LOCAL AUTHORITY ENUNCIATED IN THE EXPLANATION, ASSESSING OFFICER ASSESSED IT IN THE CAPACITY OF A JURIDICAL PERSON AS AOP AND THE EXCES S INCOME OVER EXPENDITURE HAS BEEN TREATED BUSINESS INCOME. THE I NTEREST UNDER SEC. 234B AND 234D HAS BEEN LEVIED. 6. APPEAL TO THE LEARNED CIT(APPEALS) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 7. THE LEARNED COUNSEL FOR THE ASSESSEE DID NOT ADV ANCE ANY ARGUMENTS, HOWEVER, LEARNED DR RELIED UPON THE ORDERS OF THE R EVENUE AUTHORITIES BELOW. HE ALSO POINTED OUT THAT THE EXPLANATION APP ENDED TO SECTION 10(20) OF THE ACT HAS BEEN EXPLAINED BY THE HON'BLE SUPREM E COURT IN THE CASE OF 5 AGRICULTURAL PRODUCE MARKET COMMITTEE, NARELA VS. C IT REPORTED IN 305 ITR 1 WHEREIN HONBLE COURT HAS HELD THAT AGRICULTU RAL PRODUCE MARKET COMMITTEE CANNOT BE TERMED AS A LOCAL AUTHORITY WIT HIN THE MEANING OF EXPLANATION APPENDED TO SEC. 10(20) OF THE ACT. HE POINTED OUT THAT THE HONBLE COURT HAD CONSIDERED THE DEFINITION OF LOCA L AUTHORITY IN THE GENERAL CLAUSES ACT AS WELL AS IN THE INCOME-TAX ACT, 1961. 8. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D GONE THROUGH THE RECORD CAREFULLY. WE FIND THAT ASSESSEE HAS FILED P APER BOOK CONTAINING 15 PAGES WHEREIN IT HAS PLACED ON RECORD COPIES OF THE SUBMISSIONS FILED BEFORE THE LEARNED CIT(APPEALS) VIDE LETTER DATED 27.2.200 9, 20.1.2009 AND 17.3.2009. WE HAVE GONE THROUGH ALL THESE SUBMISSIO NS. THE STAND OF THE ASSESSEE IS THAT IT IS A LOCAL BODY AND, THEREFORE, IT SHOULD BE CONSIDERED AS A LOCAL AUTHORITY. IT HAS MADE REFERENCE TO THE DECIS ION OF HON'BLE HIGH COURT IN THE CASE OF CIT KRISHI UDYOG & SURAKSHA PARDARSA NI REPORTED IN 128 ITR 214 WHEREIN SUCH COMMITTEES ARE CONSIDERED AS LOCAL AUTHORITIES. ON DUE CONSIDERATION OF THE ASSESSEES SUBMISSIONS, WE AR E OF THE VIEW THAT IT IS STILL HARPING UPON THE POSITION OF LAW PRIOR TO ASSESSMEN T YEAR 2003-04. THE LAW HAS BEEN CHANGED AFTER DELETION OF EXPRESSION ANY OTHER AUTHORITY FROM THE EXPLANATION APPENDED TO SEC. 10(20) OF THE ACT. THE AGRICULTURAL PRODUCE 6 MARKET COMMITTEE, NARELA WAS ALSO ENJOYING THE STAT US OF A LOCAL AUTHORITY PRIOR TO ASSESSMENT YEAR 2003-04. BUT AFTER THE CHA NGE IN THE DEFINITION OF LOCAL AUTHORITIES IN THE EXPLANATION, SUCH COMMITTE ES CANNOT BE TERMED AS A LOCAL AUTHORITIES. RESPECTFULLY FOLLOWING THE DECIS ION OF HON'BLE SUPREME COURT, WE ARE OF THE VIEW THAT LEARNED CIT(APPEALS) HAS RIGHTLY REJECTED THE CLAIM OF ASSESSEE. WE DO NOT FIND ANY MERIT IN THIS APPEAL, IT IS DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 26.09.2011 SD/- SD/- ( K.D. RANJAN ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 26/09/2011 MOHAN LAL COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR