Agricultural Market Committee, Hyderabad V. Director of Income-Tax (Exemtions), Hyderabad

ITA 400/HYD/2014

• Counselvise Citation: 40022514 RSA 2014
• Duration Of Justice: 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 10-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D SUDHAKAR RAO
• Assessee Lawyers: S RAMA RAO
• Keywords: Charitable institution
• Section: 12A; 12AA; 6; 12; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICAL MEMBER ITA.NO.400/HYD/2014 AGRICULTURAL MARKET COMMITTEE, ACHAMPET, MAHABUBNAGAR DIST., PAN-AACTA-1522-B VS. DIRECTOR OF INCOME TAX (EXEMPTIONS) HYDERABAD. (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. S. RAMA RAO FOR REVENUE : MR. D. SUDHAKAR RAO DATE OF HEARING : 21.07.2014 DATE OF PRONOUNCEMENT : 05.09.2014 ORDER PER B. RAMAKOTAIAH, A.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF DIT(E) REJECTING REGISTRATION OF THE ASSES SEE SOCIETY UNDER SECTION 12A OF THE I.T. ACT. 2. BRIEFLY STATED, ASSESSEE AN AGRICULTURAL MARKET COMMITTEE ('AMC' IN SHORT), ACHAMPET, HAS EARLIER F ILED AN APPLICATION IN FORM NO.10A ON 30.05.2007 SEEKING REGISTRATION U/S 12A OF THE INCOME TAX ACT, 1961 (' THE ACT' IN SHORT). HOWEVER; AS DURING THE COURSE OF PROCEEDING S, THE APPLICANT AMC FAILED TO FURNISH COMPLETE AND SATISF ACTORY REPLY TO THE QUESTIONNAIRE DT.17-9-2007 ISSUED TO T HEM SEEKING INFORMATION ON VARIOUS POINTS AND COULD NOT PRODUCE THE BOOKS OF ACCOUNTS AND BILLS & VOUCHERS FOR VERIFICATION AND ALSO THE BALANCE SHEET AS AT THE END OF DIFFERE NT ACCOUNTING YEARS, POINTING OUT THE SAME AND STATING OTHER 2 ITA.NO.400/HYD/2014 AGRICULTURAL MARKET COMMITTEE, HYDERABAD. REASONS IN THAT REGARD, THE SAID APPLICATION WAS RE JECTED BY THE THEN DIRECTOR OF INCOME TAX (EXEMPTIONS), HYDER ABAD, VIDE HIS ORDER IN F NO.DIT(E)/12A/264(05)/ 2007-08 DATED 29.11.2007, COMMUNICATED UNDER THE SIGNATURE OF THE INCOME TAX OFFICER (H.QRS) (EXEMPT), O/O. THE DIT(E ), HYDERABAD. AGGRIEVED BY THE SAID ORDER OF THE DIT(E ), THE ASSESSEE HAS FILED AN APPEAL BEFORE THE INCOME TAX APPELLATE TRIBUNAL, HYDERABAD (ITAT' IN SHORT). DURING SUCH A PPEAL, THE ASSESSEE HAS PLEADED THAT THE SAID ORDER REJECTING CLAIM FOR REGISTRATION U/S.12A WAS NOT SIGNED BY THE AUTHORIS ED OFFICER BUT IT WAS SIGNED BY THE INCOME TAX OFFICER. AFTER CONSIDERING SUCH SUBMISSION OF THE ASSESSEE, THE ITAT, VIDE THE IR ORDER IN ITA N O.214/HYD/2008 DATED 05.08.2008, HAD SET-ASIDE THE SAID ORDER DT. 29.11.2007 AND REMITTED THE MATTER T O THE FILE OF THE DIT(E) WITH A DIRECTION TO PASS AN ORDER ON MERITS, AFTER GIVING OPPORTUNITY TO THE ASSESSEE AND IN ACC ORDANCE WITH LAW. THE RELEVANT OBSERVATIONS MADE BY THE ITA T IN THIS REGARD, UNDER PARA 3 AT PAGE 2 OF THAT ORDER, ARE R EPRODUCED AS UNDER: ......UNDER THE INCOME-TAX ACT, ONLY AN OFFICER OF THE LEVEL OF COMMISSIONER HAS TO PASS AN ORDER EITHER GRANTING OR EJECTING THE REGISTRATION. SINCE THERE IS NO INDICATION THAT THE COMMISSIONER HAS PASSED THE ORD ER, THE IMPUGNED COMMUNICATION DATED 29-11-2007 IS SET- ASIDE AND THE MATTER IS REMITTED BACK TO THE FILE O F THE DIRECTOR OF INCOME-TAX (E), HYDERABAD. THE DIRECTOR IS DIRECTED TO PASS AN ORDER ON MERITS AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE, IN ACCORDAN CE WITH LAW. ' 3. CONSEQUENT TO THAT, THE PRESENT DIT(E) GAVE AN OPPORTUNITY TO THE ASSESSEE AND ISSUED VARIOUS NOTI CES AND ULTIMATELY, THE LEARNED DIT(E) REJECTED THE REGISTR ATION BY STATING AS UNDER : 3 ITA.NO.400/HYD/2014 AGRICULTURAL MARKET COMMITTEE, HYDERABAD. 3. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE ABOVE AMC MADE DURING THE COURSE OF THE PROCEEDINGS AND ALSO THE FACTS OF, THE CASE. FIRST OF ALL, IT MAY B E MENTIONED HERE, THOUGH IN THE LETTER DT. 27-1-2014 THE ASSESS EE HAS SUBMITTED REGARDING FILING OF INCOME & EXPENDITURE ACCOUNT FOR THE YEAR ENDED 31-3-2005, 31-3-2006 & 31-3-2007, ON VERIFYING THE SAME, IT WAS NOTICED THAT THE ASSESSE E HAS FILED SUCH STATEMENT ONLY FOR THE MONTH OF MARCH OF THOSE YEARS. 3.1 IN THE SUBMISSIONS MADE EARLIER VIDE LETTER DT .5-1- 2009, IT WAS SUBMITTED THAT THE ACTIVITIES OF THE A MC ARE GOVERNED BY THE AGRICULTURAL PRODUCE AND LIVESTOCK MARKETS ACT, 1966 OF THE GOVT. OF ANDHRA PRADESH. I T WAS FURTHER STATED THAT THE ONLY OBJECT OF THE AMC IS T O PROVIDE FACILITIES TO THE AGRICULTURISTS FOR MARKETING THEI R PRODUCE. SUCH AN OBJECT MERELY TO PROVIDE FACILITIES FOR MAR KETING OF THEIR PRODUCE TO AGRICULTURISTS, MAY NOT BE CHARITA BLE, HAVING REGARD TO THE MEANING OF 'CHARITABLE PURPOSE ' AS DEFINED IN SECTION 2(15) OF THE ACT. FURTHER, WHEN DURING THE COURSE OF PRESENT PROCEEDINGS, THE ASSESSEE HAS NOT BEEN ABLE TO FURNISH COMPLETE INCOME & EXPENDITURE ACCOUNT FOR WHOLE OF THOSE THREE FINANCIAL YEARS AN D HAS NOT BEEN ABLE TO PRODUCE ITS BOOKS OF ACCOUNTS AND BILLS & VOUCHERS FOR THE SAID FINANCIAL YEARS FOR VERIFICAT ION AND ALSO HAS NOT BEEN ABLE TO PRODUCE THE BALANCE SHEET AS AT THE END OF THE SAID THREE ACCOUNTING YEARS, IT IS N OT POSSIBLE TO VERIFY THE ACTUAL ACTIVITIES UNDERTAKEN BY THE ASSESSEE AMC AND HENCE, UNDER THAT CIRCUMSTANCE, IT CANNOT BE GRANTED REGISTRATION U/S.12AA OF THE ACT. FURTHER, WHEN IN THE SAID LETTER FILED ON 27.01.201 4, IT HAS BEEN STATED THAT THE RECEIPTS OF THE MARKET COMMITT EE REPRESENTS THE RECEIPTS ON BEHALF OF THE GOVERNMENT , UNDER THAT CIRCUMSTANCE, THE ABOVE AMC, IN MY VIEW, CANNO T BE CONSIDERED AS A PUBLIC CHARITABLE INSTITUTION AND H ENCE, CANNOT BE GRANTED REGISTRATION U/S.12AA OF THE ACT. 3.2. FURTHER, IT MAY BE MENTIONED HERE THAT THE HO N'BLE HIGH COURT OF JUDICATURE OF ANDHRA PRADESH, IN THEI R DECISION VIDE JUDGEMENT DATED 17TH DECEMBER, 2012 I N WP NO.31640 OF 2011, IN THE CASE OF ANDHRA PRADESH STA TE SEED CERTIFICATION AGENCY VS. CHIEF COMMISSIONER OF INCOME TAX-ILL, HYDERABAD AND OTHERS, HAVE HELD THA T THE ACTIVITY OF AGRICULTURAL MARKET COMMITTEE DOES NOT COME WITHIN THE AMBIT OF 'CHARITABLE PURPOSE'. IN THAT D ECISION, THE HON'BLE JURISDICTIONAL HIGH COURT, HELD SO, AFT ER 4 ITA.NO.400/HYD/2014 AGRICULTURAL MARKET COMMITTEE, HYDERABAD. CONSIDERING THEIR EARLIER DECISION IN CIT VS. AGRIC ULTURAL MARKET COMMITTEE (2011) 336 ITR 641, THE MEMORANDUM EXPLAINING THE PROVISIONS IN THE FINANCE BILL, 2008 AND THE BUDGET SPEECH OF THE FINANCE MINISTER OF UNION OF I NDIA DELIVERED ON 29.02.2008 AND THE PROVISO TO SECTION 2(15) OF THE ACT, INTRODUCED VIDE FINANCE (NO.2) ACT, 2009. IN THIS CONTEXT, IT IS PERTINENT TO REFER TO THE FOLLOWING OBSERVATIONS MADE BY THE HON'BLE JURISDICTIONAL HIGH COURT IN PA RA-18 AT PAGE 15-16 OF THE SAID DECISION .......... IN OUR VIEW THE SAID DECISION HAS NO APP LICATION TO THE PRESENT CASE AND WAS BASED UPON AN INTERPRETATI ON OF THE VARIOUS PROVISIONS OF THE ANDHRA PRADESH (AGRIC ULTURAL PRODUCE AND LIVESTOCK) MARKETS ACT, 1966 AND THE ATTENTION OF THE DIVISION BENCH DOES NOT APPEAR TO HAVE BEEN DRAWN TO THE PROVISO TO SECTION 2(15) OF THE I. T. ACT MORE PARTICULARLY THE PORTION 'ANY ACTIVITY OF REND ERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSIN ESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERATION ..... '. SIN CE AGRICULTURAL MARKET COMMITTEES RENDER SERVICES 'IN RELATION TO TRADE, COMMERCE OR BUSINESS' BY FACILITATING TRA DE IN AGRICULTURAL COMMODITIES BY FARMERS/GROWERS OF AGRICULTURAL PRODUCE OR LIVESTOCK, WE ARE OF THE OPINION THAT THE ACTIVITY OF AGRICULTURAL MARKET COMMITTEE MAY NOT COME WITHIN THE AMBIT OF 'CHARITA BLE PURPOSE'. 4. FOR THE REASONS STATED ABOVE AND HAVING REGARD TO THE ABOVE DECISION OF THE HON'BLE JURISDICTIONAL HI GH COURT VIDE JUDGMENT DATED 17TH DECEMBER, 2012 IN WP NO.31640 OF 2011, HOLDING THAT THE ACTIVITIES OF THE AGRICUL TURAL MARKET COMMITTEE, MAY NOT COME WITHIN THE AMBIT OF 'CHARITABLE PURPOSE', THE ABOVE INSTITUTION, AGRICU LTURAL MARKET COMMITTEE, ACHAMPET, IN MY CONSIDERED VIEW, IS NOT ELIGIBLE FOR REGISTRATION U/S 12AA OF THE ACT. HENC E, REGISTRATION SOUGHT U/S 12AA OF THE ACT, IS REFUSED TO THE ABOVE AMC. THUS, THE SAID APPLICATION IN FORM NO.10 A FILED BY THE ABOVE AMC IS REJECTED. 5. AT THIS STAGE, IT MAY BE FURTHER MENTIONED HERE THAT, THE PRESENT ORDER PASSED IN THE CASE OF THE A BOVE AMC, IS WITHIN THE PERIOD OF TIME LIMITATION AND IS LEGALLY VALID, HAVING REGARD TO THE PROVISIONS CONTAINED IN SEC.12AA OF THE ACT. RELIANCE IN THIS REGARD IS PLA CED ON THE DECISION OF HON'BLE ORISSA HIGH COURT IN M/S. SRIKH ETRA, A.C. BHAKTIVEDANTA SWAMI CHARITABLE TRUST VS. ACIT, 5 ITA.NO.400/HYD/2014 AGRICULTURAL MARKET COMMITTEE, HYDERABAD. CIRCLE-L, VIDE JUDGEMENT DATED 9.5.2006 IN W~P.(C)NO.12437 OF 2005 REPORTED IN ORISSA LAW REPO RT (2006)(II)-VOL.20, PAGE 75, AND THE DECISIONS OF HO NBLE MADRAS HIGH COURT IN CIT VS. SHEELA CHRISTIAN CHARI TABLE TRUST (2013) 354 ITR 478 & CIT VS. KARIMANGALAM ONR IYA PENGAL SEMPU AMAIPU LTD., (2013) 354 ITR 482, WHERE IN, IT HAS BEEN HELD THAT THE TIME FRAME PROVIDED UNDER SU B- SECTION (2) OF SECTION 12AA OF THE INCOME TAX ACT, 1961, IS ONLY DIRECTORY. 4. ASSESSEE IS CONTESTING THE ABOVE. IT WAS THE SUBMISSION THAT THE JURISDICTIONAL HIGH COURT IN TH E BATCH OF CASES IN THE CASES OF AGRICULTURE MARKET COMMITTEE HAS CO NSIDERED THE ISSUE AND DIRECTED THE REVENUE TO ALLOW THE REGISTR ATION UNDER SECTION 12A FOR THE INTERREGNUM PERIOD DURING WHICH AMC WERE MADE TAXABLE ENTITIES BY VIRTUE OF AMENDMENT, VIDE THE JUDGEMENT IN THE CASE OF CIT VS. AGRICULTURE MARKET COMMITTEE , 336 ITR 641. HOWEVER, THE LEARNED DIT(E) RELYING ON THE LATER JU DGMENT IN THE CASE OF A.P. STATE SEED CERTIFICATION AGENCY IN WP. NO.31640 OF 2011 DATED 17.12.2012 DENIED THE BENEFIT TO THE SOC IETY. 5. LD. COUNSEL PLACED ON RECORD THE ORDER OF A.P. STATE SEED CERTIFICATION AGENCY TO SUBMIT THAT THE ISSUE DECID ED BY THE HONBLE A.P. HIGH COURT IS NOT ABOUT THE REGISTRATI ON UNDER SECTION 12A WHICH WAS ALREADY GRANTED TO THE SAID SOCIETY B UT, APPROVAL UNDER 10(23C). THEREFORE, THE SAID ORDER DOES NOT A PPLY TO THE FACTS OF THE CASE. IT WAS SUBMITTED THAT LEARNED DI T(E) DID NOT FIND ANY OF THE OBJECTS NOT FOR CHARITABLE PURPOSE AND T HERE IS NO REQUIREMENT OF PRODUCING BOOKS OF ACCOUNTS BEFORE T HE DIT(E) AT THE TIME OF CONSIDERING THE REGISTRATION. IN FACT, ASSESSEE ALSO FURNISHED INCOME AND EXPENDITURE STATEMENT AND BEIN G A GOVERNMENT ORGANIZATION IT HAS MAINTAINED ITS BOOKS OF ACCOUNTS. SINCE THE HONBLE A.P. HIGH COURT HAS CONSIDERED SI MILAR CASES AND DIRECTED THE REVENUE TO GRANT REGISTRATION UNDE R SECTION 12A, 6 ITA.NO.400/HYD/2014 AGRICULTURAL MARKET COMMITTEE, HYDERABAD. ASSESSEE PLEADS THAT IT MAY BE GRANTED REGISTRATION UNDER SECTION 12A OF THE ACT. 6. LD. D.R. HOWEVER, RELIED ON THE ORDER OF THE DI T(E). 7. WE HAVE CONSIDERED THE ISSUE AND PERUSED THE FA CTS ON RECORD. IN OUR VIEW, LEARNED DIT(E) REJECTED THE REGISTRATION ON EXTRANEOUS CONSIDERATIONS, BUT ALSO PASSED THE ORDE R VERY BELATEDLY BEYOND THE TIME LIMIT PROVIDED UNDER THE ACT. EVEN THOUGH HE JUSTIFIED IN PARA-5 REGARDING THE BELATED PASSING OF THE ORDERS, WE ARE OF THE OPINION THAT THOSE DECISIONS DO NOT APPLY. BE THAT AS IT MAY, THE HONBLE HIGH COURT IN THE CASE OF CIT VS. AGRICULTURAL MARKET COMMITTEE, GIDDALUR & OTHERS, ( 2011) 336 ITR 641 HAS CONSIDERED THE ISSUE ELABORATELY AND DE CIDED AS UNDER: SEC. 2(31) DEFINES PERSON IN AN INCLUSIVE MANNER . IT HAS TO BE GIVEN A BROADER MEANING. SEVEN CATEGORIES OF PERSON S ARE MENTIONED IN S. 2(31). THESE ARE NATURAL PERSONS AS WELL AS JURISTIC PERSONS. INDEED, S. 2(31)(VII) MAKES IT CL EAR THAT EVERY ARTIFICIAL JURIDICAL PERSON, NOT FALLING WITHIN CLS . (I) TO (VI) OF S. 2(31), IS ALSO A PERSON FOR THE PURPOSE OF THE AC T. EVEN IF AN AMC DOES NOT FALL IN ANY OF THE CATEGORIES UNDER SS . 2(31)(I) TO (VI), IT CERTAINLY FALLS WITHIN THE SCOPE OF ARTIFI CIAL JURIDICAL PERSON. BY FINANCE ACT, 2002, W.E.F. 1ST APRIL, 2003, AN EX PLANATION WAS INSERTED TO S. 2(31) WHICH MAKES IT CLEAR THAT INTER ALIA AN ARTIFICIAL JURIDICAL PERSON SHALL BE DEEMED TO BE A PERSON WHETHER OR NOT IT IS ESTABLISHED OR INCORPORATED WI TH THE OBJECT OF DERIVING INCOME, PROFITS OR GAINS. AS PER S. 4 OF T HE AMC ACT, AMC CONSTITUTED BY THE GOVERNMENT FOR EVERY NOTIFIE D AREA SHALL BE A BODY CORPORATE HAVING PERPETUAL SUCCESSION AND A COMMON SEAL WITH POWER TO ACQUIRE, HOLD AND DISPOSE OF THE PROPERTY AND MAY BY ITS CORPORATE NAME SUE AND BE SUED. IT IS SE TTLED LAW THAT A BODY CORPORATE IS A PERSON. ASSTT. CIT VS. V ALLIAPPA TEXTILES LTD. AIR 2004 SC 86 APPLIED. IT IS NOT THE CASE OF THE AMC THAT THEY ARE NOT INS TITUTIONS OF CHARITY PRIOR TO THE AMENDMENT OF S. 10(20) BY THE FINANCE ACT, 2002. ALL THOSE STATUTORY, NON-STATUTORY ENTITIES, CONCERNS AND INSTITUTIONS, SPECIFIED IN S.10 SUBJECT TO PRESCRIB ED 7 ITA.NO.400/HYD/2014 AGRICULTURAL MARKET COMMITTEE, HYDERABAD. CONDITIONALITIES AND LEGAL REQUIREMENTSARE AUTOMAT ICALLY EXEMPTED FROM PAYMENT OF TAX AND THOSE WHO WERE NOT INCLUDED THEREIN WERE ONLY REQUIRED TO OBTAIN REGISTRATION U NDER S. 12A SO AS TO CLAIM THE BENEFIT UNDER S. 11(1). THE FACT OF BEING COVERED UNDER ANY OF THE CLAUSES OF S. 10 DOES NOT MEAN THA T A PERSON IS DISQUALIFIED TO SEEK REGISTRATION UNDER S. 12A. IT IS NOBODY'S CASE. WHEN THE STATUTE CONFERS THE BENEFIT, THERE W AS NO NECESSITY FOR AMCS TO SEEK REGISTRATION UNDER S. 12 A. BY REASON OF THE AMENDMENTS BY THE FINANCE ACT, 2002, WHEN TH EY WERE DENIED THE EXEMPTION BY REASON OF LOSING THE STATUS OF LOCAL AUTHORITY FOR THE PURPOSE OF THE IT ACT, SO AS TO CLAIM EXEMPTION IT WAS NECESSARY FOR THE AMCS TO APPLY FOR REGISTRA TION UNDER S. 12A/12AA. EVEN THOUGH THE OBJECT OF ADDING THE EXPL ANATION TO S. 10(20) WAS TO RESTRICT THE BENEFIT UNDER S. 10(2 0), IT WAS NEVER THE INTENTION OF PARLIAMENT TO DENY THE BENEFIT TO A JURIDICAL PERSON WHICH WAS OTHERWISE ENTITLED TO SEEK EXEMPTI ON FROM PAYMENT OF TAX DE HORS S. 10(20). THE ABSENCE OF AN Y CORRESPONDING AMENDMENTS TO SS. 11 TO 13, ALTHOUGH S. 10(29) WAS DELETED AND 10(20) WAS AMENDED, ITSELF IS SUFFI CIENT INDICATION TO BELIE THE SUBMISSION MADE BY THE REVE NUES COUNSEL.CIT VS. MARKET COMMITTEE DHARIWAL & ORS. ( 2007) 294 ITR 563 (P&H) CONCURRED WITH. THE WORDS PUBLIC UTILITY OR GENERAL PUBLIC UTILI TY ARE NOT CAPABLE OF A PRECISE MEANING. THE QUESTION WHETHER SERVICE IS PUBLIC UTILITY OR NOT HAS TO BE DISCHARGED IN THE C ONTEXT OF DIFFERENT SITUATIONS BUT IT IS WELL-SETTLED THAT PU BLIC UTILITY MEANS PUBLIC PURPOSE DEPENDING UPON THE CONTEXT IN WHICH IT IS USED IN THE STATUTE OR THE RULES. AN AMC, CONSTITUTED UNDER THE ENACTMENT OF THE STATE LEGISLATURE, IS DERIVING INC OME FROM THE PROPERTY HELD UNDER LEGAL OBLIGATION FOR A CHARITAB LE PURPOSE TO WIT THE ADVANCEMENT OF GENERAL OBJECT OF UTILITY. I T IS, THEREFORE, ENTITLED TO BE REGISTERED UNDER S. 12A/12AA TO ENAB LE AMC TO CLAIM EXEMPTION AS PER LAW. AMC IS CONSTITUTED UNDE R THE STATE ACT FOR THE SOLE PURPOSE OF PROTECTING THE INTEREST OF AGRICULTURISTS, FARMERS AND GROWERS. THE PURPOSE OF MARKETING LEGISLATION IS TO ENABLE PURCHASERS TO GET A FAIR P RICE FOR THE COMMODITIES BY ELIMINATING MIDDLEMEN AND PROVIDE RE GULAR MARKET WITH ALL NECESSARY FACILITIES. SECONDLY, THE AMC IS UNDER LEGAL OBLIGATION TO PROVIDE ALL NECESSARY INFRASTRU CTURE AND MARKET FACILITIES WITHIN THE MARKET PLACE/YARD IN N OTIFIED MARKET AREA, INCLUDING WATER, ELECTRICITY, AUCTION/TRADING PLATFORMS, FACILITIES FOR RECEIVING, PAYING AND DEPOSITING MON EY, AND RESOLVING DISPUTES. THIRDLY, THE INCOME OF AMC FROM DIFFERENT SOURCESLICENCE FEES, MARKET FEES, LOANS ETC., WHIC H IS DERIVED WITHOUT ANY PROFIT MOTIVE IS TO BE USED TO MEET THE EXPENDITURE 8 ITA.NO.400/HYD/2014 AGRICULTURAL MARKET COMMITTEE, HYDERABAD. FOR PROVIDING MARKET FACILITIES. FOURTHLY, ALL THE INCOME HAS TO BE DEPOSITED IN THE MARKET COMMITTEE FUND, OUT OF WHIC H TEN PER CENT SHALL BE CONTRIBUTED TO THE CENTRAL MARKET FUN D WHICH SHALL VEST IN THE GOVERNMENT, WHICH EXERCISES POWER OF SU PERVISION AND SUPERINTENDENCE OVER THE MARKET COMMITTEES. THE GOVERNMENT ADMINISTERS AND APPLIES CENTRAL MARKET F UND INTER ALIA FOR PROVIDING GRANTS TO NEEDY AMCS. FIFTHLY, A MCS SERVE AN IMPORTANT ASPECT OF RURAL ECONOMY, I.E., PROVIDING FACILITIES FOR MARKETING AGRICULTURAL PRODUCE AND PRODUCTS OF LIVE STOCK.CIT VS. GUJARAT MARITIME BOARD (2008) 214 CTR (SC) 81 : (2008) 1 DTR (SC) 1 : (2007) 295 ITR 561 (SC), THE TRUSTEES OF THE TRIBUNE, IN RE (1939) 7 ITR 415 (PC), CIT VS. ANDHR A CHAMBER OF COMMERCE (1965) 55 ITR 722 (SC) AND ADDL. CIT VS. S URAT ART SILK CLOTH MANUFACTURERS ASSOCIATION (1979) 13 CTR (SC) 378 : (1980) 121 ITR 1 (SC) RELIED ON. THE EXEMPTION UNDER S. 11(1) INTER ALIA IS SUBJECT TO COMPLYING WITH S. 11(5). THIS PRESCRIBES THE FORMS AND MODES OF INVESTING OR DEPOSITING THE MONEY BY A TRUST OR CHARITABLE IN STITUTION REGISTERED UNDER S. 12A. THE SUBMISSION THAT AS AN AMC IS BOUND TO ADHERE TO THE FINANCIAL PRACTICES AS MANDA TED BY THE AMC ACT, IT WOULD NOT BE IN A POSITION TO COMPLY WI TH S. 11(5) IS WHOLLY MISCONCEIVED. IT IS WELL-SETTLED THAT AT THE TIME OF CONSIDERING THE APPLICATION MADE FOR REGISTRATION A S A TRUST OR A CHARITABLE INSTITUTION UNDER S. 12A R/W S. 12AA, TH E CIT IS REQUIRED TO LOOK TO THE OBJECTS OF THE TRUST AND NO THING MORE. EVEN OTHERWISE THE CONTENTION IS WITHOUT SUBSTANCE. SEC. 14(1) OF THE AMC ACT R/W R. 8 OF THE RULES MANDATE THAT ' ALL MONEYS RECEIVED BY AN AMC SHALL BE DEPOSITED IN A SINGLE B ANKING ACCOUNT WITH THE NEAREST GOVERNMENT TREASURY, OR WI TH THE SANCTION OF THE GOVERNMENT IN A BANK' OUT OF WHICH ALL THE EXPENDITURE OF THE AMC SHALL BE DEFRAYED. UNDER S. 11(5)(III) DEPOSIT OF THE MONEYS IN SCHEDULED BANK IS SUBSTANT IAL COMPLIANCE WITH THE LAW. IT IS NOBODY'S CASE THAT A NY AMC CONTRAVENED S. 14(1) OF THE AMC ACT AT ANY TIME IN THE PAST. THEREFORE, THE CONTENTION OF THE REVENUE IS REJECTE D. SANJEEVAMMA HANUMANTHE GOWDA CHARITABLE TRUST VS. D IRECTOR OF IT (EXEMPTIONS) (2006) 203 CTR (KAR) 533 : (2006 ) 285 ITR 327 (KAR) CONCURRED WITH. ON THE ANALYSIS AS ABOVE OF THE VARIOUS ISSUES THAT HAVE ARISEN FOR CONSIDERATION, IT IS HELD THAT DENIAL OF REGIST RATION TO THE AGRICULTURAL MARKET COMMITTEES CONSTITUTED UNDER S. 4(1) OF THE ANDHRA PRADESH (AGRICULTURAL PRODUCE AND LIVESTOCK) MARKETS ACT, 1966 IS ERRONEOUS AND THE TRIBUNAL HAS CORRECT LY APPLIED THE LAW IN REVERSING THE DECISION OF THE CIT. 9 ITA.NO.400/HYD/2014 AGRICULTURAL MARKET COMMITTEE, HYDERABAD. 7.1. LEARNED DIT(E) DID NOT GRANT REGISTRATION BUT REJECTED FOLLOWING THE JUDGMENT OF A.P. HIGH COURT IN THE CA SE OF A.P. SEED CERTIFICATION AGENCY, IN WHICH THE FACTS ARE ENTIRE LY DIFFERENT. THE ISSUE FOR CONSIDERATION BEFORE THE HONBLE HIGH COUR T IN THE SAID CASE WAS APPROVAL UNDER SECTION 10(23C) AND NOT REG ISTRATION UNDER SECTION 12A OF THE ACT. IN FACT, THE SAID AGE NCY WAS REGISTERED UNDER SECTION 12A. IN VIEW OF THAT, WE A RE OF THE OPINION THAT THE JUDGMENT GIVEN IN THE CONTEXT OF SECTION 1 0(23C) WILL NOT APPLY, WHEN THERE IS A DIRECT JUDGMENT OF THE JURIS DICTIONAL HIGH COURT ON THE ISSUE OF REGISTRATION UNDER SECTION 12 A AS STATED ABOVE. IN VIEW OF THIS, WE DIRECT THE A.O. TO GRANT REGISTRATION UNDER SECTION 12A OF THE ACT. 8. IN THIS CONTEXT, WE HAVE TO OBSERVE THAT LEARNE D DIT(E) IS WHOLLY BENT ON REFUSING REGISTRATION ON VARIOUS EXTRANEOUS CONSIDERATIONS IN ALMOST ALL CASES WHICH HAVE COME UP BEFORE HIM. THIS FORUM HAS BEEN OBSERVING REGULARLY AND ALSO SO ME TIMES PASSING ADVERSE REMARKS THAT DIT(E) WAS EXCEEDING H IS JURISDICTION AND NOT FOLLOWING THE JURISDICTIONAL H IGH COURT DIRECTION/ITAT ORDERS WHILE CONSIDERING THE ISSUES. EVEN THOUGH ITAT DIRECTS THE DIT(E) TO GRANT REGISTRATION IN MA NY CASES, HE IS MAKING SOME OTHER CONDITIONS APPLICABLE WHICH ARE B EYOND HIS PURVIEW. THIS FORUM CANNOT IGNORE SUCH BLATANT VIOL ATIONS OF JUDICIAL PROPRIETARY. EVEN THOUGH THERE IS A DIRECT JURISDICTIONAL HIGH COURT JUDGMENT IN THE CASE OF AMCS FOR GRANT O F REGISTRATION UNDER SECTION 12A OF THE ACT, LEARNED DIT(E) TOOK R ECOURSE TO THE JUDGMENT OF ANOTHER HIGH COURT DECISION GIVEN IN TH E CONTEXT OF SEC.10(23C) SO AS TO DENY THE REGISTRATION UNDER SE CTION 12A WHICH, IN FACT, WAS GRANTED TO THE SAID SEED CERTIF ICATION AGENCY BY THE DIT(E) AS CAN BE SEEN FROM THE FACTS OF THAT CASE. THIS MAY CALL FOR CONTEMPT OF COURT, BUT SINCE THAT IS NOT B EFORE US, WE CAN 10 ITA.NO.400/HYD/2014 AGRICULTURAL MARKET COMMITTEE, HYDERABAD. ONLY OBSERVE THAT LEARNED DIT(E) SHOULD BE VISITED WITH COSTS FOR MAKING ASSESSEE UNNECESSARILY COMING UP IN APPEAL. SINCE ASSESSEE PAID RS.500 AS APPEAL FEES AND EMPLOYED CO UNSEL FOR REPRESENTING THE CASE BEFORE THE ITAT, WE WILL LEVY A COST OF RS.2000 (RUPEES TWO THOUSAND ONLY) ON DIT(E), WHICH SHOULD BE RECOVERED FROM HIS SALARY AND PAID TO THE ASSESSEE. WITH THESE OBSERVATIONS, ASSESSEES APPEAL IS ALLOWED, WITH CO STS TO BE PAID BY THE DIT(E). 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 05.09.2014. SD/- SD/- (SAKTIJIT DEY) (B.RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 05 TH SEPTEMBER, 2014 VBP/- COPY TO 1. AGRICULTURAL MARKET COMMITTEE, ACHAMPET, MAHABUBNAGAR DIST., C/O. MR. S. RAMA RAO, ADVOCATE, FLAT NO.102, SHRIYAS ELEGANCE, H.NO.3-6-643, STREET NO.9, HIMAYATNAGAR, HYDERABAD 500 029. 2. DIRECTOR OF INCOME TAX (EXEMPTIONS), HYDERABAD. 3. ADIT (EXEMPTIONS), HYDERABAD 4. D.R. B BENCH, ITAT, HYDERABAD.