The DCIT, Circle-2(1), Guntur V. M/s Agricultural Market Committee, Vinkonda

ITA 477/VIZ/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 9160 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 31-10-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 23-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBRATA SARKAR
• 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 SL. NO. CASE NO. ASST. YEAR P.A.N.NO. APPELLANTS RESPONDENTS 1 ITA NO.474 / VIZ/2009 2006 - 07 AAAALA 0745 Q ITO, WARD - 2(2) , GUNTUR AGRICULTURAL MARKET COMMITTEE, TADIKONDA 2 ITA NO.475/ VIZ/2009 2006 - 07 AAAALA 0744 R ITO, WARD - 2(2) GUNTUR AGRICULTURAL MARKET COMMITTEE, MANGALAGIRI 3 ITA NO. 477 /VIZ/2009 2004 - 05 AAALA 0301 L DCIT, CIRCLE - 2(1), GUNTUR AGRICUL TURAL MARKET COMMITTEE, VINKONDA 4 ITA NO.478/VIZ/2009 2005 - 06 AAALA 0301 L DCIT, CIRCLE - 2(1), GUNTUR AGRICULTURAL MARKET COMMITTEE, VINKONDA APPELLANT BY : SHRI SUBRATA SARKAR, CIT-DR RESPONDENTS BY: SHRI CH.SRINIVASA RAO. ORDER PER BENCH: - THE APPEALS FILED AT THE INSTANCE OF THE REVENUE AR E DIRECTED AGAINST THE ORDER OF THE LD CIT (A), GUNTUR PASSED AGAINST THE QUANTUM ASSESSME NTS RELATING TO ASSESSMENT YEAR 2006-07. 2. THOUGH THE REVENUE HAS RAISED SEVERAL GROUNDS, T HE ONLY ISSUE THAT EMERGES IS WHETHER THE LD CIT (A) IS RIGHT IN HOLDING THAT THE SECTION 10(26AAB) IS RETROACTIVE IN 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 OR DER OF THE LD CIT (A). . 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 WIT H REGARD TO THE EFFECT OF PRE-EXISTING STATUTE AND HENCE IT IS RETR OSPECTIVE IN OPERATION; PAGE 2 OF 3 AND (II) WHETHER THE IMPUGNED EXPENDITURE IN THE FO RM OF CONTRIBUTION TO NEERU MEERU ETC., AND THE MANDATORY PAYMENT TO THE CENTRAL MARKET FUND UNDER SEC.16/26 OF THE MARKET COMMITTEE ACT CAN BE CONSIDERED AS AMOUNTS INCURRED FOR THE OBJECT OF TH E 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 TAXATI ON ON THE PRINCIPLE AND DIVERSION OF INCOME BY OVERRIDING TITLE . SINCE WE ARE OF THE VIEW THAT THE PROVISIONS OF SECTION 10(26AAB) OF THE INCOME TAX ACT ARE INTENDED TO BE RETROACTIV E IN OPERATION, HAVING BEEN INSERTED IN THE STATUTE BOOK WITH A VIE W TO CLARIFY THE POSITION OF AMCS EVEN UNDER PRE-EXISTING STATUTE, A ND THE FINANCE MINISTER HAVING SPECIFICALLY MENTIONED, WHILE REPLY ING TO THE DEBATE IN THE LOK SABHA, THAT THERE IS NO INTENTION TO TAX AM CS, THE ENTIRE FEE/INCOME COLLECTED/RECEIVED HAS TO BE CONSIDERED AS EXEMPT FROM THE LEVY OF TAX IN WHICH EVEN THE DECISION ON THE ANCIL LARY ISSUE IS OF ACADEMIC IMPORTANCE AND THUS NEED NOT BE GONE INTO 5. FOLLOWING THE ITATS DECISION THAT SEC.10(26AAB) HAS RETROSPECTIVE APPLICATION, THE INCOME OF THE AMCS IS HELD TO BE E XEMPT FOR THE A.Y 2006-07 ALSO AND THE APPEAL IS ALLOWED. 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 SECT ION 10(26AAB) OF THE ACT. THE DECISION RENDERED IN THAT 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 SE CTION 10 OF THE INCOME TAX ACT IS ESSENTIALLY INTENDED TO DECLARE T HE INTENTION OF THE LEGISLATURE OF NOT TAXING THE INCOME OF AMCS CONSTI TUTED UNDER ANY LAW FOR THE TIME BEING IN FORCE FOR THE PURPOSES OF REGULATING THE MARKETING OF AGRICULTURAL PRODUCE AND HENCE IT HAS TO BE TREATED AS RETROACTIVE IN OPERATION AND APPLICABLE EVEN FOR TH E PRIOR YEARS, WE ORDER ACCORDINGLY. 5. SINCE THE LD CIT(A) HAS FOLLOWED THE DECISIO N RENDERED BY THIS BENCH, WE DO NOT FIND ANY REASON TO INTERFERE WITH HIS ORDER. 6. IN THE RESULT, THE APPEALS FILED BY THE REVE NUE ARE DISMISSED AND THE CROSS OBJECTIONS FILED BY THE ASSESSEES ARE ALLOWED. PAGE 3 OF 3 PRONOUNCED ACCORDINGLY IN THE OPEN COURT ON 19-01-2010. SD/- SD/- (SUNIL KUMAR YADAV) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM DATE: 19 TH JANUARY, 2010 COPY TO 1. ITO, WARD-2(2), GUNTUR 2. DCIT, CIRCLE 2(1), GUNTUR 3. GUNTUR AGRICULTURAL MARKET COMMITTEE, TADIKONDA, 4. AGRICULTURAL MARKET COMMITTEE, MANGALAGIRI 5. AGRICULTURAL MARKET COMMITTEE, VINKONDA 6. THE COMMISSIONER OF INCOME-TAX (APPEALS), GUNTUR 7. THE COMMISSIONER OF INCOME TAX, GUNTUR 8. THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., VISA KHAPATNAM 9. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM