The ITO, Ward-2(2), Guntur V. M/s Agricultural Market Committee, Tadikonda

ITA 420/VIZ/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 2763 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 06-10-2010
• Assessment Year: 2007-2008
• Appeal Filed On: 02-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T L PETER
• Assessee Lawyers: CH SRINIVASA RAO
• Keywords: Diversion of income
• 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.419/VIZAG/2010 ASSESSMENT YEAR: 2007-08 ITO WARD-2(2) VS. AGRICULTURAL MARKET COMMITTEE, GUNTUR MANGALAGIRI (APPELLANT) (PAN NO.AAALA 0744 R) (RESPONDENT ITA NO.420/VIZAG/2010 ASSESSMENT YEAR: 2007-08 ITO WARD-2(2) VS. AGRICULTURAL MARKET COMMITTEE, GUNTUR TADIKONDA (APPELLANT) (PAN NO.AAALA 0745 Q) (RESPONDENT APPELLANT BY : SHRI T.L. PETER, (DR) RESPONDENTS BY: SHRI CH SRINIVASA RAO CA ORDER PER B.R.BASKARAN: THESE APPEALS FILED AT THE INSTANCE OF THE REVENUE ARE DIRECTED AGAINST THE ORDER OF THE LEARNED CIT (A), GUNTUR AND THEY RELAT E TO THE ASSESSMENT YEAR 2007-08. SINCE THE ISSUES URGED IN THESE THREE APPE ALS ARE IDENTICAL IN NATURE, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. 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. , BENCH PAGE 2 OF 3 DATED 28-11-2008 ON 24 APPEALS RELATING TO A.YS 200 3-04 & 2004-05 OF VARIOUS AMCS, THE INCOME TAX APPELLATE T RIBUNAL HAS HELD AS BELOW: WE ARE LEFT FOR CONSIDERATION WITH ONLY TWO ISSUES (I) WHETHER INSERTION OF SUB-CLAUSE (26AAB) OF SECTION 10 OF THE INCOME TAX ACT WAS A DECLARATORY ACT TO REMOVE DOUBTS EXISTING WITH REGARD TO THE EFFECT OF PRE-EX ISTING STATUTE AND HENCE IT IS RETROSPECTIVE IN OPERATION; AND (II) WHETHER THE IMPUGNED EXPENDITURE IN THE FORM OF CONTRIBUTION TO NEERU MEERU ETC., AND THE MANDATO RY PAYMENT TO THE CENTRAL MARKET FUND UNDER SEC.16/26 OF THE MARKET COMMITTEE ACT CAN BE CONSIDERED AS AMOUN TS INCURRED FOR THE OBJECT OF THE AMCS UNDER SEC.36(1) (XII) OF THE INCOME TAX ACT OR WHETHER THE INCOME AS SUCH CAN BE TREATED AS FALLING OUTSIDE THE KEN OF TAXATION O N THE PRINCIPLE AND DIVERSION OF INCOME BY OVERRIDING TIT LE. SINCE WE ARE OF THE VIEW THAT THE PROVISIONS OF SEC.10(26AAB) OF THE INCOME TAX ACT ARE INTENDED TO BE RETROACTIVE IN OPERATION, HAVING BEEN INSERTED IN T HE STATUTE BOOK WITH A VIEW TO CLARIFY THE POSITION OF AMCS EVER UNDER PRE-EXISTING STATUE AND THE FINANCE MINI STER HAVING SPECIFICALLY MENTIONED, WHILE REPLYING TO TH E DEBATE IN THE LOK SABHA, THAT THERE IS NO INTENTION TO TAX THE AMCS, THE ENTIRE FEE/INCOME COLLECTED/RECEIVED HAS TO BE CONSIDERED AS EXEMPT FROM THE LEVY OF TAX IN WHI CH EVENT THE DECISION ON THE ANCILLARY ISSUE IS OF ACA DEMIC IMPORTANCE AND THUS NEED NOT BE GONE INTO. 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 AND HENCE IT HAS TO BE TREATED AS RETROACTIVE IN OP ERATION AND APPLICABLE EVEN FOR THE PRIOR YEARS, WE ORDER ACCOR DINGLY. PAGE 3 OF 3 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, ALL THE APPEALS FILED BY THE REVENUE ARE DISMISSED. PRONOUNCED ACCORDINGLY IN THE OPEN COURT ON 8 TH OCTOBER, 2010. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM DATE:8-10-2010. COPY TO 1. THE INCOME TAX OFFICER, WARD-2(2) GUNTUR 2. THE AGRICULTURAL MARKET COMMITTEE, MANGALAGIRI 3. THE AGRICULTURAL MARKET COMMITTEE, TADIKONDA 4. THE COMMISSIONER OF INCOME-TAX (APPEALS), GUNTUR 5. THE COMMISSIONER OF INCOME TAX GUNTUR 6. THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., VISA KHAPATNAM 7. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM