Income Tax Officer (Exemptions), Rajahmundry V. Agricultural Market Committe, , Penugonda

ITA 315/VIZ/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0901 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2003-2004
• Appeal Filed On: 18-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Keywords: Depreciation; Charitable institution
• Section: 143(3); 12AA; 10B; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , HONBLE ACCOUNTANT MEMBER ITA NO. 315 / VIZ /201 8 (ASST. YEAR : 20 0 3 - 0 4 ) ITO (EXEMPTIONS), RAJAHMUNDRY. V S . M/S. AGRICULTURAL MARKET COMMITTEE, SIDHANTAM ROAD MARKET YARD, PENUGONDA, W EST G ODAVARI DISTRICT PAN NO. AAALA 0388 F (APPELLANT) (RESPONDENT) C.O.NO. 110/VIZ/2018 (ARISING OUT OF ITA NO. 315 / VIZ /201 8) (ASST. YEAR : 20 03 - 04 ) M/S. AGRICULTURAL MARKET COMMITTEE, SIDHANTAM ROAD MARKET YARD, PENUGONDA, WEST GODAVARI DISTRICT VS. ITO (EXEMPTIONS), RAJAHMUNDRY. PAN NO. AAALA 0388 F (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.V.N. HARI ADV OCATE . DEPARTMENT BY : SMT. SUMAN MALIK SR. DR DATE OF HEARING : 2 1 / 0 3 /201 9 . DATE OF PRONOUNCEMENT : 27 / 0 3 /201 9 . 2 ITA NO. 315 /VIZ/2018 C.O.NO. 110/VIZ/2018 ( M/S. AGRICULTURAL MARKET COMMITTEE ) O R D E R PER V. DURGA RAO, JUDICIAL MEMBER TH IS APPEAL BY THE REVENUE AND THE CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 11 , HYDERABAD , DATED 30 /0 1 /201 8 FOR THE ASSESSMENT YEAR 200 3 - 0 4 . 2. THIS APPEAL IS BARRED BY LIMITATION BY 09 DAYS. THE REVENUE HAS FILED AN AFFIDAVIT FOR CONDONATIO N OF DELAY IN FILING THE APPEAL . WE FIND THAT THERE IS A SUFFICIENT CAUSE FOR NON - FILING THE APPEAL IN TIME AND IS A FIT CASE TO CONDONE THE DELAY. ACCORDINGLY, DELAY IS CONDONED. 3 . FACTS OF THE CASE, IN BRIEF, ARE THAT T HE ASSESSEE IS A STATUTORY BODY ESTABLISHED UNDER THE AN DHRA PRADESH (AGRICULTURAL P RODUCE AND LIVE STOCKS) MARKETS A CT, 1966. THE LD. CIT , RAJA H MUNDRY GRANTED REGISTRATION U/S. 12AA TO THE ASSESSEE FROM 22.07.1 997 . FOR THE ASSESSMENT YEAR 2003 - 04 , ASSESSEE CLAIMED EXEMPTION OF ITS INCOME UN DER THE PROVISIONS OF SEC . 11 & 12 OF THE ACT. DURING THE COURSE OF THE DE - NOVO ASSESSMENT PROCEEDINGS U /S. 143(3) R.W.S 254, CONSEQUENT TO THE ORDER OF THE ITAT, VIZAG IN ITA NO. 105/ VIZ /2009, THE ASSESSEE FILED A LETTER DT.25.01.2014, REQUESTI NG EXEMPTION OF ITS INCOME 3 ITA NO. 315 /VIZ/2018 C.O.NO. 110/VIZ/2018 ( M/S. AGRICULTURAL MARKET COMMITTEE ) U/S. 11. AS PER THE RECEIPTS AND CHARGES ACCO UNT , AUDITED BY THE STATE AUDIT DEPARTMENT OF THE GOVT . OF A.P DURING THE YEAR , ASSESSEES GROSS INCOME WAS RS. 1,53,22,921 / - AND THE AMOUNT APPLIED FOR THE ASSESSEES CHARITABLE ACTIVITIES WAS RS.1, 43,74,285/ - . MORE THAN 85% OF THE INCOME OF THE YEAR WAS APPLIED FOR CHARITABLE PURPOSES AND HENCE THERE W AS NO ACCUMULATION OF INCOME AND NOTICE I N F ORM N O. 10 WAS NOT NECESSARY. THE ASSESSMENT WAS COMPLETED DENYING EXEMPTION U/S. 11, REJECTIN G FORM NO. 10 AND AUDIT REPORT IN FORM 1 0B FOR THE FOLLOWING REASONS: 1. THE PURPOSE FOR WHICH THE AMOUNT IS REQUIRED TO BE SET APART WAS NO CONTAINED THEREIN. 2. THE PERIOD FOR WHICH IT IS REQUIRED TO BE ACCUMULATED WAS NO T CONTAINED THEREIN. AN AMOUNT OF RS.84,94,050/ - WAS BROUGHT TO TAX, WHICH WAS THE TOTA L INCOME ASSESSED AS PER THE ORIGINAL ORDER U/S. 143(3) R.W.S 147, DT.18.12.2007 AND AS PER THE CONSEQUENTIAL ORDER DT.19.07.2011. THE AMOUNT O F RS.84,94,050/ - WAS ARRIVED BY ALLOWING DEPRECIATION FROM THE PROFIT AS PER THE INCOME AND EXPENDITURE ACCOUNT OF RS.87,97,791/ - . 4 ITA NO. 315 /VIZ/2018 C.O.NO. 110/VIZ/2018 ( M/S. AGRICULTURAL MARKET COMMITTEE ) 4 . ON BEING AGGRIEVED, ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) AND SUBMITTED A DETAILED REPLY, WHICH IS REPRODUCED AS UNDER: - 'THE ASSESSEE IS A TRUST WHICH IS GOVERNED BY THE A.P AGRICULTURAL (PRODUCE AND LIVE STOCK) MARKETS A CT, 1966, FILED IT RETURN OF INCOME FOR THE ASST . YEAR 2003 - 04 ON 17.05.2006, DECLARING TOTAL INCOME AT RS. NIL. THE SCRUTINY ASSESSMENT WAS COMPLETED IN THIS CASE ON 18.12.2007 DETERMINING THE INCOME AT RS.84,94,050/ - . SUBSEQUENTLY, VIDE THE CONSEQUENTIA L ORDER PASSED ON 19.07.2011 THE INCOME OF THE ASSESSEE IS DETERMINED AT RS.84,94,050/ - . AGGRIEVED BY THIS ORDER THE ASSESSEE PREFERRED AN APPEAL WITH CIT(A ) AND SUBSEQUENTLY WITH THE HON 'BLE ITAT, VISAK H APATNAM. THE TRIBUNAL VIDE ITS ORDER DT.08.11.2012 DIRECTED TO CARRY OUT THE ASSESSMENT AFRESH DE NOVO IN ACCORDANCE WITH LAW. ACCORDINGLY, NOTICES ARE ISSUED FROM TIME TO TIME. IN RESPONSE TO THE NOTICES ISSUED, SRI D.V. SUBBA RAO APPEARED AND FURNISHED THE REQUIRED INFORMATION CALLED FOR. AFTER VERIFICATION OF THE INFORMATION FILED AND DISCUSSION WITH THE AUTHORIZED REPRESENTATIVE, THE ASSESSMENT IS COMPLETED ACCEPTING THE INCOME RETURNED. DURING THE COURSE OF PROCEEDINGS THE ASSESSEE WAS ASKED TO PRODU CE THE BILLS IN SUPPORT OF ITS CLAIM OF DEPRECIATION. THE ASSESSEE EXPRESSED ITS INABILITY TO PRODUCE THE SAME. HENCE, THE DEPRECIATION OF RS.3,03,742/ - IS DISALLOWED AS DONE IN ORDER DT. 18.12.2007. VIDE THE ABOVE REFERRED ORDER THE HON'BLE ITAT DIRECTED THAT THE AUDITOR REPORT IN FORM 10 B WHICH WAS STATUTORILY REQUIRED TO BE FILED BY THE ASSESSEE ALONG WITH THE RETURN OF INCOME BE TAKEN DURING THE COURSE OF PROCEEDINGS AND THE CLAIM OF THE ASSESSEE BE EXAMINED. ACCORDINGLY, THE ASSESSEE WAS ASKED TO FILE THE SAME. THE FORM NO. 10 B WA S FILED BY THE ASSESSEE. THE SAME WAS EXAMINED. THE RELEVANT SECTIONS ARE REPRODUCED FOR CLARITY SAKE. ((2) WHERE (EIGHTY - FIVE) PER CENT OF THE INCOME REFERRED TO IN CLAUSE (A) OR CLAU S E (B) OF SUB - SECTION(1) READ WITH THE EX PLANATION TO THAT SUB SECTION IS NOT APPLIED, OR IS NOT DEEMED TO HAVE BEEN APPLIED, TO CHARITABLE OR RELIGIOUS PURPOSES IN INDIA DURING THE PREVIOUS YEAR BUT IS ACCUMULATED O R SET APART, EITHER IN WHOLE OR IN PART, FOR APPLICATION TO SUCH PURPOSES IN I NDI A, SUCH INCOME SO ACCUMULATED OR SET APART 5 ITA NO. 315 /VIZ/2018 C.O.NO. 110/VIZ/2018 ( M/S. AGRICULTURAL MARKET COMMITTEE ) SHALL NOT BE INCLUDED IN THE TOTA L . INCOME OF THE PREVIOUS YEAR OF THE PERSON IN RECEIPT OF THE INCOME, PROVIDE D THE FOLLOWING CONDITIONS ARE COMPLIED WITH NAMELY); (A) SUCH PERSON SPECIFIED BY NOTICE IN WRITING GIVEN TO THE (ASSESSING OFFICER IN THE PRESCRIBED MANNER, THE PURPOSE FOR WHICH THE INCOME IS BEIN G ACCUMULATED OR SET APART AND THE PERIOD FOR WHICH THE INCOME IS TO B E ACCUMULATED OR SET APART, WHICH SHALL IN NO CASE EXCEED TEN YEARS; AS PER THE STATUTE THE REPORT SHOULD CONTAIN AT LEAST THE FOLLOWIN G IMPORT A N T DETAILS . THE FIRST ONE BEING THE PURPOSE FOR WHICH THE AMOUNT I S REQUIRED TO BE SET APART AND THE SECOND ONE BEING IS THE PERIOD FOR WHICH IS REQUIRED TO BE ACCUMULATED. IN THE ABSENCE OF THESE TW O DETAILS THE FOR M FILLED BY THE ASSESSEE CANNOT BE CONSIDERED AS COMPLETE AND VALID. IN TH E PRESENT CASE THE REPORT F I LED BY THE ASSESSEE DOES NOT CARRY THE DETAILS OF TH E DETAILS OF THE PER IOD FOR WHICH THE AMOUNT PROPOSED IS TO BE ACCUMULATED. IN VIEW OF TH IS THE DEFECTIVE AUDIT REPORT FILED BY THE ASSESSEE IS REJECTED AND CONSEQUENTLY THE ASSESSEE FAILED THE CONDITIONS PRESCRIBED FOR CLAIMING THE EXEMPTION U/S. 11 OF THE ACT. HENCE, THE ASSESSMENT ORDER PASSED EARLIER IS RESTORED AND THE EXCESS INCOME OVER EXPENDITURE IS BROUGHT TO TAX.' 5 . THE LD. CIT(A) BY CONSIDERING THE DETAILED SUBMISSION MADE BY THE ASSESSEE, HE HAS OBSERVED THAT ASSESSEE - TRUST IS REGISTERED UNDER SECTION 12AA OF THE ACT . AS THE ASSESSEES APPLICATION OF INCOME IS MORE THAN 8 5 %, THE ASSESSEE IS ELIGIBLE FOR EXEMPTION UNDER SECTION 11 OF THE ACT WITHOUT ANY NECESSITY OF FILING FROM NO. 10B AND DIRECTED TO DELETE THE ADDITION MADE BY THE ASSESSING OFFICER. 6 . ON BEING AGGRIEVED REVENUE IS IN APPEAL BEFORE THIS TRIBUNAL. 7 . LD. DEPARTMENTAL REPRESENTATIVE HAS STRONGLY SUPPORTED THE ORDER PASSED BY THE ASSESSING OFFICER. 6 ITA NO. 315 /VIZ/2018 C.O.NO. 110/VIZ/2018 ( M/S. AGRICULTURAL MARKET COMMITTEE ) 8 . ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSEE HAS SUPPORTED THE ORDER PASSED BY THE LD. CIT(A). 9 . THE ONLY ISSUE FOR CONSIDERATION BEFORE US IS WHETHER ASSESSEE HAS TO FILE FORM 10B OR NOT. IT IS A FACT THAT THE ASSESSEE IS HAVING A REGISTRATION UNDER SECTION 12AA AND HIS APPLICATION OF INCOME IS MORE THAN 8 5 % , THEREFORE, ASSESSEE IS ELIGIBLE FOR EXEMPTION UNDER SECTION 11 OF THE ACT AND N O NECESSITY TO FILE FORM 10B. THE LD. CIT(A) BY CONSIDERING ALL THE FACTS AND CIRCUMSTANCES OF THE CASE DIRECTED THE ASSESSING OFFICER TO DELETE THE ADDITION. FOR THE SAKE OF CONVENIENCE, THE RELEVANT PORTION OF THE ORDER OF THE LD.CIT (A) IS EXTRACTED AS UNDER: - 5. I HAVE CONSIDERED THE ASSESSMENT ORDER, GROUNDS OF APPEAL. IT IS SEEN THAT HON'BLE ITAT ORDER DOES NOT CONTAIN ANY DIRECTION W.R.T FILING OF FORM - 10 B OR ITS EXAMINATION. AS IT TRANSPIRES, THE TOTAL RECEIPTS OF THE APPELLANT FOR THE YEAR ARE RS. 1,53,22, 921 / - AS AGAINST THE ABOVE, THE TOTAL EXPENDITURE IS RS. 1,43,74,285 / - , WHICH IS SPENT FOR CHARITABLE PURPOSES. THE ASSESSEE TRUST IS REGISTERED U/S.12AA AS BROUGHT OUT IN ORDER OF ITAT ALSO. A S THE ASSESSEE'S EXPENSES/APPLICATION OF INCOME IS MORE THAN 80 % OF RECEIPTS FOR THE YEAR, THE ASSESSEE IS ELIGIBLE FOR EXEMPTION U/S. 11 WITHOUT ANY NECESSITY OF FILING F O R M - 10 B. IN VIEW OF THE ABOVE, IT IS HELD THAT THE INCOME OF TRUST IS EXEMPT U/S. 11 AND THE INCOME ASSESSED BY THE AO IS TO BE DELETED. IT IS DIRECT ED ACCORDINGLY . 10 . IN VIEW OF THE ABOVE, WE FIND NO REASON TO INTERFERE WITH THE ORDER PASSED BY THE LD. CIT(A). THUS, THIS APPEAL FILED BY THE REVENUE IS DISMISSED. 7 ITA NO. 315 /VIZ/2018 C.O.NO. 110/VIZ/2018 ( M/S. AGRICULTURAL MARKET COMMITTEE ) 1 1 . SO FAR AS CROSS OBJECTION IS CONCERNED, IT IS ONLY SUPPORTIVE TO THE ORDER OF THE LD. CIT(A). IN VIEW OF OUR DECISION ABOVE, THIS CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED. 1 2 . IN THE RESULT, APPEAL FILED BY THE REVENUE AS WELL AS CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON TH IS 2 7 T H DAY OF MARCH , 201 9 . S D / - S D / - ( D.S. SUNDER SINGH ) ( V. DURGA RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 2 7 T H MARCH , 201 9 . VR/ - COPY TO: 1. THE ASSESSEE M/S. AGRICULTURAL MARKET COMMITTEE, SIDHANTAM ROAD MARKET YARD, PENUGONDA, WEST GODAVARI DISTRICT. 2. THE REVENUE - ITO (EXEMPTIONS), RAJAHMUNDRY. 3. THE PR. CIT , RAJAHMUNDRY. 4. THE CIT(A) - 11, HYDERABAD. 5. THE D.R . , VISAKHAPATNAM . 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.