Income Tax Officer-I, Hardoi V. Mis Krishi Utpadan Mandi Samiti, Hardoi

ITA 405/LKW/2013

• Counselvise Citation: 40523714 RSA 2013
• Duration Of Justice: 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 03-03-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 03-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y P SRIVASTA VA
• Assessee Lawyers: P K KAPOOR
• Keywords: Charitable institution; Benefit of exemption
• Section: 12AA

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.405/LKW/2013 ASSESSMENT YEAR:2008 - 09 INCOME TAX OFFICER, HARDOI. VS. KRISHI UTPADAN MANDI SAMITI, SANDI, HARDOI. PAN:AABTK0824D (APPELLANT) (RESPONDENT) ITA NO.430/LKW/2013 ASSESSMENT YEAR:2008 - 09 INCOME TAX OFFICER, SITAPUR. VS. KRISHI UTPADAN MANDI SAMITI, SIDHAULI, SITAPUR. PAN:AABTK0462F (APPELLANT) (RESPONDENT) ITA NO.431/LKW/2013 ASSESSMENT YEAR:2008 - 09 INCOME TAX OFFICER, SITAPUR. VS. KRISHI UTPADAN MANDI SAMITI, MISHRIKH, SITAPUR. PAN:AABTK0925C (APPELLANT) (RESPONDENT) APPELLANT BY SHRI Y. P. SRIVASTAVA, D. R. RESPONDENT BY SHRI P. K. KAPOOR, C.A. DATE OF HEARING 03/03/2014 DATE OF PRONOUNCEMENT 2 3 /05/2014 O R D E R PER BENCH: ALL THESE THREE APPEALS ARE FILED BY THE REVENUE IN THE CASE OF THE THREE DIFFERENT ASSESSEES FOR ASSESSMENT YEAR 2008 - 09. SINCE THE ISSUE INVOLVED IS 2 COMMON IN ALL THE APPEALS, ALL THESE APPEALS ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE GROUNDS RAISED BY THE REVENUE IN ALL THESE APPEALS ARE IDENTICAL EXCEPT THE DIFFERENCE IN AMOUNT AND HENCE, WE REPRODUCE THE GROUNDS RAISED BY THE REVENUE IN I.T.A. NO.4 30 /LKW/2013, WHICH ARE AS UNDER: 1. THAT THE ORDER OF LEARNED CIT(A) IS ERRONEOUS IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.17,77,576/ - , WHICH HAS RIGHTLY BEEN MADE BY THE ASSESSING OFFICER TO THE TOT AL INCOME OF THE ASSESSEE. 2. THAT THE ORDER OF THE LEARNED CIT(A) MAY BE CANCELLED AND THE ORDER OF THE ASSESSING OFFICER MAY BE RESTORED. 3. ANY OTHER GROUND OF APPEAL MAY BE TAKEN AT THE TIME OF HEARING OF APPEAL. 3. LEARNED D.R. OF THE REVENUE SUP PORTED THE ASSESSMENT ORDERS WHEREAS LEARNED A.R. OF THE ASSESSEE SUPPORTED THE ORDERS OF THE CIT(A). HE ALSO SUBMITTED THAT THE ISSUE INVOLVED IN ALL THESE APPEALS IS ONLY ONE AS TO WHETHER THE AMOUNT TRANSFERRED BY THE ASSESSEE TO RAJYA KRISHI UTPADAN M ANDI PARISHAD CONSTITUTES APPLICATION OF INCOME OR NOT. HE SUBMITTED THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF HON'BLE APEX COURT RENDERED IN THE CASE OF COMMISSIONER OF INCOME - TAX VS KRISHI UTPADAN MANDI SAMITI AS R EPORTED IN [2012] 348 ITR 566 (SC) . IN PARTICULAR, OUR ATTENTION WAS DRAWN TO PARA 8 & 9 OF THIS JUDGMENT. HE ALSO SUBMITTED THAT THE JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT RENDERED IN THE CASE OF COMMISSIONER OF INCOME - TAX VS KRISHI UTPADAN MANDI SAMI TI AS REPORTED IN [2011] 339 ITR 488 (ALL) IS ALSO IN FAVOUR OF THE ASSESSEE ON THE SAME ISSUE AND OUR ATTENTION WAS DRAWN TO PARA 11 TO 18 OF THIS JUDGMENT. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THAT ADMITTEDLY, THE ONLY ISSUE INVOLVED IS THI S AS TO WHETHER THE AMOUNT TRANSFERRED BY THE ASSESSEE TO 3 RAJYA KRISHI UTPADAN MANDI PARISHAD IS APPLICATION OF INCOME OR NOT AND ON THIS ASPECT, WE FIND THAT THE ISSUE INVOLVED IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF HON'BLE APEX COURT CITED BY LEARNED A.R. OF THE ASSESSEE. THE RELEVANT PARAS OF THIS JUDGMENT I.E. PARA NO. 8 & 9 ARE REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: THE QUESTION IS WHAT DO WE MEAN BY 'APPLICATION OF INCOME' ? THIS JUDGMENT IS CONFINED TO THE STATUTORY SCHEME OF THE 1964 ADHINIYAM. UNDER SECTION 19(2) OF THE 1964 ADHINIYAM, ALL EXPENDITURE INCURRED BY THE ASSESSEE IN CARRYING OUT THE PURPOSES OF THE 1964 ADHINIYAM (WHICH INCLUDES ADVANCING CREDIT FACILITIES TO FARMERS AND AGRICULTURISTS AS A LSO CONSTRUCTION OF DEVELOPMENT WORKS IN THE MARKET AREA) HAS TO BE DEFRAYED OUT OF THE MARKET COMMITTEE FUND AND THE SURPLUS, IF ANY, HAS TO BE INVESTED IN SUCH MANNER AS MAY BE PRESCRIBED. THIS IS ONE CIRCUMSTANCE IN THE 1964 ACT TO INDICATE APPLICAT ION OF INCOME. SIMILARLY, UNDER SECTION 19B(2) OF THE 1964 ADHINIYAM, THE ASSESSEE IS STATUTORILY OBLIGED TO APPLY THE MARKET DEVELOPMENT FUND FOR THE PURPOSES OF DEVELOPMENT OF THE MARKET AREA. UNDER SECTION 19B(3), THE ASSESSEE IS STATUTORILY OBLIGED TO UTILIZE THE AMOUNTS LYING TO THE CREDIT IN THE MARKET DEVELOPMENT FUND FOR EXTENDING FACILITIES TO THE AGRICULTURISTS, PRODUCERS AND PAYERS OF MARKET FEES. THE MARKET DEVELOPMENT FUND IS ALSO TO BE STATUTORILY UTILIZED FOR DEVELOPMENT OF MARKET YARD S. SIMILARLY, ALL CONTRIBUTIONS RECEIVED BY THE MARKET COMMITTEE (MANDI SAMITI) FROM ITS MEMBERS UNDER SECTION 19(5) SHALL BE STATUTORILY PAID BY THE MARKET COMMITTEE (ASSESSEE) TO THE UTTAR PRADESH STATE MARKETING DEVELOPMENT FUND. THESE PROVISIONS CLE ARLY INDICATE APPLICATION OF INCOME OF THE ASSESSEE TO THE STATUTORY FUNDS SET UP UNDER THE 1964 ADHINIYAM. KEEPING IN MIND THE STATUTORY SCHEME OF THE 1964 ADHINIYAM, WHOSE OBJECT FALLS UNDER SECTION 2(15) OF THE 1961 ACT, THERE IS NO DOUBT THAT THE AS SESSEE SATISFIES THE CONDITIONS OF SECTION 11(1)(A) OF THE 1961 ACT. THE INCOME DERIVED BY THE ASSESSEE (WHICH IS AN INSTITUTION REGISTERED UNDER SECTION 12AA OF THE 1961 ACT) FROM ITS PROPERTY HAS BEEN APPLIED FOR CHARITABLE PURPOSES WHICH INCLUDES ADV ANCEMENT OF AN OBJECT OF GENERAL PUBLIC UTILITY. CONSEQUENTLY, WE SEE NO REASON TO INTERFERE WITH THE IMPUGNED JUDGMENT OF THE HIGH COURT. 4 BEFORE CONCLUDING, ONE POINT NEEDS TO BE HIGHLIGHTED. IN ONE OF THE MATTERS, THE ASSESSING OFFICER HAS HELD THAT, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESSEE WAS NOT ENTITLED TO AVAIL OF THE BENEFITS OF EXEMPTION UNDER SECTION 12(1) OF THE 1 961 ACT, DESPITE THE FACT THAT IT WAS REGISTERED UNDER SECTION 12AA OF THE 1961 ACT, BECAUSE THE ASSESSEE WAS STATUTORILY OBLIGED TO CONTRIBUTE TO THE FUND OF THE MANDI PARISHAD UNDER THE 1964 ADHINIYAM. THEREFORE, ACCORDING TO THE ASSESSING OFFICER, TH ERE WAS NO VOLUNTARY CONTRIBUTION. IN THE ABSENCE OF SUCH VOLUNTARY CONTRIBUTION, ACCORDING TO THE ASSESSING OFFICER, THE ASSESSEE HEREIN WAS NOT ENTITLED TO CLAIM THE BENEFIT OF EXEMPTION UNDER SECTION 12(1) OF THE 1961 ACT. WE FIND NO MERIT IN THIS FIN DING OF THE ASSESSING OFFICER. AT THE OUTSET, IT NEEDS TO BE MENTIONED THAT THE ASSESSING OFFICER HAS NOT UNDERSTOOD THE SCHEME OF THE 1964 ACT. ON READING THE 1964 ADHINIYAM (ACT) IT IS CLEAR THAT THE WORD 'CONTRIBUTION' IN THE ADHINIYAM IS IN THE CONT EXT OF WHAT THE MEMBERS CONTRIBUTE TO THE FUND(S) HELD STATUTORILY BY THE MANDI SAMITI WHICH MERELY TRANSFERS THE AMOUNT(S) TO THE FUND(S) OF MANDI PARISHAD. EVEN THE QUESTION FRAMED BY COURT/AUTHORITIES BELOW IS 'WHETHER AMOUNTS TRANSFERRED BY THE MAN DI SAMITI WOULD CONSTITUTE APPLICATION OF INCOME UNDER SECTION 11(1)(A) OF THE 1961 ACT'. THEREFORE, THE QUESTION OF VOLUNTARY CONTRIBUTION UNDER SECTION 11(1)(D) OR UNDER SECTION 12(1) DOES NOT ARISE. THE QUESTION OF 'CONTROL' MAY BE RELEVANT IN THE CON TEXT OF SECTION 11(1)(D) OR UNDER SECTION 12(1). HOWEVER, IN THE PRESENT CASE, THE QUESTION FRAMED DEALS WITH APPLICATION OF INCOME UNDER SECTION 11(1)(A). HENCE, THE ASSESSING OFFICER HAD ERRED IN INVOKING SECTION 12(1). SECTION 11(1) DEALS WITH FOUR ITEMS OF 'INCOME' FROM PROPERTY HELD FOR CHARITABLE PURPOSES. THESE FOUR ITEMS OF INCOME ARE DISTINCT AND SEPARATE ITEMS OF INCOME. SECTION 11(1)(D) DEALS WITH THE FOURTH ITEM OF INCOME. SECTION 11(1)(D), INTER ALIA, REFERS TO INCOME IN THE FORM OF VOLUN TARY CONTRIBUTIONS MADE WITH A SPECIFIC DIRECTION THAT IT SHALL FORM PART OF THE CORPUS OF THE TRUST OR INSTITUTION WHEREAS SECTION 12(1) REFERS TO NON - CORPUS VOLUNTARY CONTRIBUTION. IN THE PRESENT CASE, NEITHER SECTION 11(1)(D) NOR SECTION 12(1) OF THE 1961 ACT IS ATTRACTED. IN THE PRESENT CASE, THE NARROW CONTROVERSY IS, WHETHER, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE AMOUNTS STATUTORILY TRANSFERRED TO RAJYA KRISHI UTPADAN MANDI PARISHAD WOULD CONSTITUTE APPLICATION OF INCOME FOR CHARITABLE PURPOSES UNDER SECTION 11(1)(A) OF THE 1961 ACT ? LOOKING TO THE PROVISIONS OF THE 1964 ADHINIYAM WE HOLD THAT THE TRANSFER OF THE AMOUNTS BY 5 MANDI SAMITI CONSTITUTED APPLICATION OF INCOME UNDER SECTION 11(1)(A) OF THE 1961 ACT. 5. WE FIND THAT HON'B LE APEX COURT HAS DULY CONSIDERED THE PROVISIONS OF RAJYA KRISHI UTPADAN MANDI PARISHAD ADHINIYAM 1964 ( UPKUMA, 1964) AND EVEN THEREAFTER , THIS ISSUE WAS DECIDED BY HON'BLE APEX COURT IN FAVOUR OF THE ASSESSEE AS PER THESE PARAS REPRODUCED ABOVE. HENCE, W E DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A) ON THIS ISSUE IN ANY OF THESE APPEALS. 6. IN THE RESULT, ALL THE APPEALS OF THE REVENUE ARE DISMISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 3 /05/2014. *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR