The DCIT, Circle-1(1), Guntur V. M/s Agricultural Market Committee, Paruchuru

ITA 386/VIZ/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 2897 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 21-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J SIRI KUMAR
• Assessee Lawyers: Y SURYACHANDRA RAO
• Section: 10

Judgement Text

PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM B EFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI B.R.BASKARAN, ACCOUNTANT MEMBER ITA NO.386/VIZAG/2010 ASSESSMENT YEAR: 2004-05 DCIT, CIRCLE-1(1) VS. AGRICULTURAL MARKET COMMITT EE, GUNTUR PARUCHURU (APPELLANT) (PAN NO.AAALA 0789 N) (RESPONDENT) APPELLANT BY : SHRI J. SIRI KUMAR, DR RESPONDENTS BY: SHRI Y. SURYACHANDRA RAO, CA ORDER PER SHRI B.R. BASKARAN, ACCOUNTANT MEMBER: THE APPEALS FILED AT THE INSTANCE OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD CIT (A), GUNTUR DATED 26/03/2010 P ASSED AGAINST THE QUANTUM ASSESSMENT RELATING TO ASSESSMENT YEAR 2004-05. 2. THE SOLITARY ISSUE URGED IN THIS APPEAL IS WHETH ER THE LD CIT (A) IS RIGHT IN HOLDING THAT THE SECTION 10(26AAB) IS RETROACTIVE I N OPERATION AND THEREBY THE INCOME OF THESE ASSESSEES ARE EXEMPT U/S 10(26AAB) OF THE ACT. 3. WE HAVE HEARD THE PARTIES AND CAREFULLY PERUSED THE RECORD. FOR THE SAKE OF CONVENIENCE WE EXTRACT THE OPERATIVE PART OF THE ORDER OF THE LD CIT (A). 5. I HAVE CONSIDERED THE FACTS OF THIS CASE AND TH E SUBMISSIONS MADE. IN THE CONSOLIDATED ORDER OF THE ITAT VIZAG. B ENCH DATED 28-11-2008 ON 24 APPEALS RELATING TO A.YS 2003-04 A ND 2004-05 OF VARIOUS AMCS, THE ITAT HAD HELD AS BELOW: PAGE 2 OF 3 WE ARE LEFT FOR CONSIDERATION WITH ONLY TWO ISSUES (I) WHETHER INSERTION OF SUB-CLAUSE (26AAB) OF SECTION 10 OF TH E INCOME TAX ACT WAS A DECLARATORY ACT TO REMOVE DOUBTS EXISTING WITH REGARD TO THE EFFECT OF PRE-EXISTING STATUTE AND HENCE IT IS RETROSPECTIVE IN OPERATION; AND (II) WHETHER THE IMPUGNED EXPENDI TURE IN THE FORM OF CONTRIBUTION TO NEERU MEERU ETC.,: AND TH E MANDATORY PAYMENT TO THE CENTRAL MARKET FUND UNDER SEC. 16/26 OF THE MARKET COMMITTEE ACT CAN BE CONSIDERED AS AMOUNTS I NCURRED FOR THE OBJECT OF THE AMCS UNDER SEC. 36 (1) (XII) OF THE INCOME TAX ACT OR WHETHER THE INCOME AS SUCH CAN BE TREATE D AS FALLING OUTSIDE THE KEN OF TAXATION ON THE PRINCIPLE AND DI VERSION OF INCOME BY OVERRIDING TITLE. SINCE WE ARE OF THE VIEW THAT THE PROVISIONS OF S ECTION 10(26AAB) OF THE INCOME TAX ACT, 1961 ARE INTENDED TO BE RETROACTIVE IN OPERATION, HAVING BEEN INSERTED IN T HE STATUTE BOOK WITH A VIEW TO CLARIFY THE POSITION OF AMCS EV EN UNDER THE PRE-EXISTING STATUTE AND THE FINANCE MINISTER HAVIN G SPECIFICALLY MENTIONED, WHILE REPLYING TO THE DEBATE IN THE LOK SABHA, THAT THERE IS NO INTENTION TO TAX AMCS, THE ENTIRE FEE/I NCOME COLLECTED/RECEIVED HAS TO BE CONSIDERED AS EXEMPT F ROM THE LEVY OF TAX IN WHICH EVEN THE DECISION ON THE ANCILLARY ISSUE IS OF ACADEMIC IMPORTANCE AND THUS NEED NOT BE GONE INTO . 6. FOLLOWING THE ITATS DECISION THAT SEC. 10(26AAB ) HAS RETROSPECTIVE APPLICATION, THE INCOME OF THIS AMC I S HELD TO BE EXEMPT FOR THE A.Y 2004-05 ALSO AND THE APPEAL IS A LLOWED. 4. WE NOTICE THAT THE LD CIT(A) HAS FOLLOWED THE DECISION RENDERED BY THIS BENCH ON THE INSTANT ISSUE. IN A BATCH OF APPEALS, I.E., IN I.T.A.NO.90/VIZAG/2007 AND BATCH, I.T.A.T., VISAKHAPATNAM BENCH, VIDE ORDER DT.28.11.2008, HELD THAT THE INCOME OF THE AGRICULTURAL MARKET COMMITTEES IS EXEMPT UNDER SECTION 10(26AAB) OF THE ACT. THE DECISION RENDERED IN THA T CASE IS EXTRACTED BELOW: HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE, WE ARE OF THE FIRM VIEW THAT THE INSERTION OF SUB-CLAUSE (26AAB) TO SECTION 10 OF THE INCOME TAX ACT IS ESSENTIALLY INTENDED TO DECLARE THE INTENTION OF THE LEGISLATURE OF NOT TAXING THE INCO ME OF AMCS CONSTITUTED UNDER ANY LAW FOR THE TIME BEING IN FOR CE FOR THE PURPOSES OF REGULATING THE MARKETING OF AGRICULTURA L PRODUCE PAGE 3 OF 3 AND HENCE IT HAS TO BE TREATED AS RETROACTIVE IN OP ERATION AND APPLICABLE EVEN FOR THE PRIOR YEARS, WE ORDER ACCOR DINGLY. 5. SINCE THE LD CIT (A) HAS FOLLOWED THE DECISI ON RENDERED BY THIS BENCH, WE DO NOT FIND ANY REASON TO INTERFERE WITH HIS ORDER. 6. IN THE RESULT, THE APPEAL FILED BY THE REVEN UE IS DISMISSED. PRONOUNCED ACCORDINGLY IN THE OPEN COURT ON 27 TH AUGUST, 2010. SD/- SD/- (SUNIL KUMAR YADAV) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM DATE: 27 TH AUGUST, 2010. COPY TO 1. THE DCIT CIRCLE-1(1), CENTRAL REVENUES BUILDING, KA NNAVARITHOTA, GUNTUR 522004 2. THE AGRICULTURAL MARKET COMMITTEE, PARUCHURU 3. THE COMMISSIONER OF INCOME-TAX (APPEALS), GUNTUR 4. THE COMMISSIONER OF INCOME TAX-1, GUNTUR 5. THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., VISA KHAPATNAM 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM