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

ITA 903/HYD/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69825 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 30-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G M BELAGALI
• Assessee Lawyers: S RAMA RAO
• Keywords: Charitable institution; Rule of consistency
• Section: 12A; 12AA; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 903/HYD/2013 ASSESSMENT YEAR NOT APPLICABLE THE AGRICULTURAL MARKET COMMITTEE, SARANGAPUR, ADILABAD DIST. PAN: AAALA0825H VS. THE DIRECTOR OF INCOME - TAX (EXEMPTIONS) HYDERABAD APPELLANT RESPONDENT ITA NO. 904/HYD/2013 ASSESSMENT YEAR NOT APPLICABLE THE AGRICULTURAL MARKET COMMITTEE, KUBEER, ADILABAD DIST. PAN: AAALA0853F VS. THE DIRECTOR OF INCOME - TAX (EXEMPTIONS) HYDERABAD APPELLANT RESPONDENT APPELLANT BY: SRI S. RAMA RAO RESPONDENT BY: SRI G.M. BELAGALI DATE OF HEARING: 17.09.2013 DATE OF PRONOUNCEMENT: 17.09.2013 O R D E R PER CHANDRA POOJARI, AM: THESE TWO APPEALS BY DIFFERENT ASSESSEES ARE DIREC TED AGAINST DIFFERENT ORDERS OF THE DIRECTOR OF INCOME- TAX (EXEMPTIONS), HYDERABAD WHEREIN THE DIT(E) REJECTED THE APPLICATIONS OF THE ASSESSEES FOR REGISTRATION U/S. 12AA OF THE INCOME-TAX ACT, 1961. SINCE THE ISSUE INVOLVED IN BOTH THE APPEALS IS COMMON, THEY ARE CLUBBED TOGETHER, HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NO. 903/HYD/2013 & ANR THE AMC, SARANGAPUR, ADILABAD DIST. & ANR. ================================= 2 2. ADMITTEDLY, IN BOTH THESE CASES, THE ASSESSEES CAME IN APPEAL BEFORE THIS TRIBUNAL ON EARLIER OCCASION. T HE TRIBUNAL ON EARLIER OCCASION, VIDE ORDER DATED 24.11.2008 IN ITA NOS. 172 AND 174/HYD/2008 OBSERVED AS FOLLOWS: '7. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THERE IS NO DISPUTE THAT THE IMPUGNED ORDER WAS PASSED BY THE AO AS PER THE DIRECTIONS OF THE DIT(E), HYDERABAD AND NOT BY DIT( E) HIMSELF. THIS BEING SO AND IN THE ABSENCE OF ANY CONTRARY MATERIAL PLACED ON RECORD BY THE REVENUE A ND ALSO KEEPING IN VIEW THE RULE OF CONSISTENCY, WE, I N THE INTEREST OF JUSTICE, SET ASIDE THE ORDER PASSED BY THE AO ON THIS ACCOUNT AND RESTORE THE MATTER TO THE FILE OF THE LD. DIT(E) WHO SHALL DECIDE THE SAME AFRESH IN THE LIGHT OF OUR OBSERVATIONS HEREINABOVE AND ACCORDING TO LA W AFTER PROVIDING A REASONABLE OPPORTUNITY OF BEING H EARD TO THE ASSESSEE AND ACCORDINGLY THE GROUNDS TAKEN B Y THE RESPECTIVE ASSESSEES ARE ALLOWED FOR STATISTICA L PURPOSES.' 3. CONSEQUENT TO THE ORDER OF THE TRIBUNAL, THE CIT(A) WHILE PLACING RELIANCE ON THE JUDGEMENT OF JURISDIC TIONAL HIGH COURT DATED 17 TH DECEMBER, 20121 IN WP NO. 31640 OF 2011 IN THE CASE OF AP SEED CERTIFICATION AGENCY VS. CHI EF COMMISSIONER OF INCOME-TAX-III REJECTED THE APPLICA TION FOR GRANTING REGISTRATION U/S. 12AA OF THE ACT. AGAINS T THIS, BOTH THE ASSESSEES ARE IN APPEAL BEFORE US. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN OUR OPINION, THE JUDGEMENT RELIED ON BY THE DIT(E) IN THE CASE OF AP STATE SEED CERTIFIC ATION AGENCY HAS NO RELEVANCE TO THE FACTS OF THE CASE. THE TRIBUNAL IS CONSISTENTLY HOLDING THAT OBJECT FOR WH ICH THE AGRICULTURAL MARKET COMMITTEE WAS FORMED IS FOR THE PURPOSE OF CARRYING ON THE OBJECTIVES AS ENUMERATED IN SECT ION 2(15) OF THE ACT AND THE PROVISO TO THE SECTION IS NOT AP PLICABLE TO ITA NO. 903/HYD/2013 & ANR THE AMC, SARANGAPUR, ADILABAD DIST. & ANR. ================================= 3 THE ASSESSEES' CASES. WE HAVE CONSIDERED THE EARLI ER ORDER OF THE TRIBUNAL AND ALSO THE JUDGEMENT OF THE SUPREME COURT IN THE CASE OF AGRICULTURAL PRODUCE MARKET COMMITTEE V S. CIT (301 ITR 1). WE TAKE SUPPORT FROM THE JUDGEMENT OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. AG RICULTURAL MARKET COMMITTEE (336 ITR 641) (AP), WHEREIN THE HIG H COURT HELD AS UNDER: 'CHARITABLE PURPOSE' IN SECTION 2(15) OF THE INCOME -TAX ACT, 1961 INCLUDES RELIEF TO THE POOR, EDUCATION, MEDICAL RELIEF AND THE ADVANCEMENT OF ANY OTHER OBJ ECT OF GENERAL PUBLIC UTILITY. THE WORDS 'PUBLIC UTILIT Y' OR 'GENERAL PUBLIC UTILITY' ARE NOT CAPABLE OF A PRECI SE MEANING. THE QUESTION WHETHER SERVICE IS PUBLIC UTI LITY OR NOT HAS TO BE DETERMINED IN THE CONTEXT OF DIFFE RENT SITUATIONS BUT IT IS WELL-SETTLED THAT 'PUBLIC UTIL ITY' MEANS PUBLIC PURPOSE DEPENDING UPON THE CONTEXT IN WHICH IT IS USED IN THE STATUTE OR THE RULES. INDEE D, IN SOME DECISIONS, PUBLIC UTILITY IS CONSIDERED VERY S IMILAR PUBLIC PURPOSE. AT THE TIME OF CONSIDERING THE APPLICATION MADE FOR REGISTRATION AS A TRUST OR A CHARITABLE INSTITUTION UNDER SECTION 12A READ WITH SECTION 12AA THE COMMISSIONER IS REQUIRED TO LOOK AT THE OBJECTS OF THE TRUST AND NOTHING MORE. THE AGRICULTURAL MARKETING ACTS PROVIDE FOR ESTABLISHMENT OF NOTIFIED MARKET AREAS/YARDS FOR PURCHASE AND SALE OF AGRICULTURAL PRODUCE AND LIVES TOCK AND FOR BETTER REGULATION OF SUCH MARKETS. THE PURP OSE OF MARKETING LEGISLATION IS TO ENABLE PURCHASERS TO GET A FAIR PRICE FOR THE COMMODITIES BY ELIMINATING MIDDLEMEN AND PROVIDE A REGULATING MARKET WITH FACILITIES FOR CORRECT WEIGHMENTS, STORAGE, ACCOMMODATION AND EQUAL POWERS OF BARGAIN FOR REASONABLE PRICE TO THE GROWERS AND THE CONSUMERS. AGRICULTURAL MARKETING COMMITTEES DISCHARGE AN IMPORTANT DUTY AND FUNCTION OF PROTECTING THE INTER EST OF A LARGE BODY OF PERSONS, NAMELY, AGRICULTURISTS, FARMERS AND GROWERS OF AGRICULTURAL PRODUCE AND LIVESTOCK. AN AGRICULTURAL MARKETING COMMITTEE CONSTITUTED UNDE R THE ENACTMENT OF THE STATE LEGISLATURE DERIVES INCO ME FROM PROPERTY HELD UNDER LEGAL OBLIGATION FOR A CHARITABLE PURPOSE TO WIT THE ADVANCEMENT OF AN OBJ ECT OF GENERAL UTILITY. ITA NO. 903/HYD/2013 & ANR THE AMC, SARANGAPUR, ADILABAD DIST. & ANR. ================================= 4 EVEN IF AN AGRICULTURAL MARKETING COMMITTEE DOES NO T FALL IN ANY OF THE CATEGORIES UNDER SECTION 2(31)(0 TO (VI) OF THE ACT, NAMELY, AN INDIVIDUAL, A HINDU UNDIVIDED FAMILY, A COMPANY, A FIRM, AN ASSOCIATION OF PERSON S OR BODY OF INDIVIDUALS AND LOCAL AUTHORITY, IT CERTAIN LY FALLS WITHIN THE SCOPE OF ARTIFICIAL JURIDICAL PERSON. BY THE FINANCE ACT, 2002, WITH EFFECT FROM APRIL 1, 2003, AN EXPLANATION WAS INSERTED TO SECTION 2(31) WHICH MAK ES IT CLEAR THAT, INTER ALIA, AN ARTIFICIAL JURIDICAL PERSON SHALL BE DEEMED TO BE A PERSON WHETHER OR NOT IT IS ESTABLISHED OR INCORPORATED WITH THE OBJECT OF DERI VING INCOME, PROFITS OR GAINS. AGRICULTURAL MARKETING COMMITTEES WERE ENTITLED TO SEEK EXEMPTION UNDER SECTION 10(20) READ WITH SECTI ON 10(29) TILL MARCH 31,2003 BUT BY REASON OF AMENDMEN T TO SECTION 10(20) AND DELETION OF SECTION 10(29) WI TH EFFECT FROM APRIL 1, 2003, THEY, FOR THE PURPOSE OF THE ACT, CEASED TO BE 'LOCAL AUTHORITIES'. THIS ITSELF WOULD NOT DISQUALIFY THEM FROM CLAIMING EXEMPTION UNDER SECTIONS 11(1) AND 12 PROVIDED THEY ARE CONSIDERED AS INSTITUTIONS ESTABLISHED FOR ADVANCEMENT OF OBJECTS OF GENERAL PUBLIC UTILITY, BECAUSE THE PARLIAMENTARY BENEFIT UNDER SECTION 10(20) IS ALTOGETHER DIFFEREN T FROM THE BENEFIT GRANTED BY THE TAX MACHINERY SUBJE CT TO STATUTORY CONDITIONS CONTAINED IN SECTIONS 11 TO 13. AN AGRICULTURAL MARKETING COMMITTEE IS CONSTITUTED UNDER THE STATE ACT FOR THE SOLE PURPOSE OF PROTECTI NG THE INTEREST OF AGRICULTURISTS, FARMERS AND GROWERS . SECONDLY, THE AGRICULTURAL MARKETING COMMITTEE IS UNDER LEGAL OBLIGATION TO PROVIDE ALL NECESSARY INFRASTRUCTURE AND MARKET FACILITIES WITHIN THE MA RKET PLACE/YARD IN A NOTIFIED MARKET AREA, INCLUDING WAT ER, ELECTRICITY, AUCTION/TRADING PLATFORMS, FACILITIES FOR RECEIVING, PAYING AND DEPOSITING MONEY, AND RESOLVI NG DISPUTES. THIRDLY, THE INCOME OF THE AGRICULTURAL MARKETING COMMITTEE FROM DIFFERENT SOURCES-LICENCE FEES, MARKET FEES, LOANS, ETC., WHICH IS DERIVED WI THOUT ANY PROFIT MOTIVE IS TO BE USED TO MEET THE EXPENDI TURE FOR PROVIDING MARKET FACILITIES. FOURTHLY, ALL THE INCOME HAS TO BE DEPOSITED IN THE MARKET COMMITTEE FUND, O UT OF WHICH TEN PER CENT. SHALL BE, CONTRIBUTED TO THE CENTRAL MARKET FUND WHICH SHALL VEST IN THE GOVERNMENT, WHICH EXERCISES POWER OF SUPERVISION A ND SUPERINTENDENCE OVER THE MARKET COMMITTEES. THE GOVERNMENT ADMINISTERS AND APPLIES THE CENTRAL MARKET FUND, INTER ALIA, FOR PROVIDING GRANTS TO NE EDY AGRICULTURAL MARKETING COMMITTEES. FIFTHLY, AGRICUL TURAL ITA NO. 903/HYD/2013 & ANR THE AMC, SARANGAPUR, ADILABAD DIST. & ANR. ================================= 5 MARKETING COMMITTEES SERVE AN IMPORTANT ASPECT OF RURAL ECONOMY, I.E., PROVIDING FACILITIES FOR MARKE TING AGRICULTURAL PRODUCE AND PRODUCTS OF LIVESTOCK. SEC TION 14(1) OF THE AGRICULTURAL MARKETING COMMITTEE ACT READ WITH RULE 8 OF THE RULES MANDATE THAT 'ALL MON EYS RECEIVED BY AN AGRICULTURAL MARKETING COMMITTEE SHA LL BE DEPOSITED IN A SINGLE BANKING ACCOUNT WITH THE NEAREST GOVERNMENT TREASURY, OR WITH THE SANCTION O F THE GOVERNMENT IN A BANK' OUT OF WHICH ALL THE EXPENDITURE OF THE AGRICULTURAL MARKETING COMMITTEE SHALL BE DEFRAYED. UNDER SECTION 11 (5)(III), DEPOS IT OF THE MONEYS IN A SCHEDULED BANK IS SUBSTANTIAL COMPLIANCE WITH THE LAW. AN AGRICULTURAL MARKETING COMMITTEE IS ENTITLED TO B E REGISTERED UNDER SECTION 12A/12AA.' 5. IN VIEW OF THE ABOVE JUDGEMENT OF THE JURISDICTIONA L HIGH COURT, WE ARE INCLINED TO HOLD THAT THE ASSESSEES H AVE TO BE GRANTED WITH REGISTRATION U/S. 12AA OF THE ACT. 6. IN THE RESULT, BOTH APPEALS OF THE ASSESSEES IN ITA NOS. 903 AND 904/HYD/2013 ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH SEPTEMBER, 2013. SD/ - (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED THE 17 TH SEPTEMBER, 2013 COPY FORWARDED TO: 1. THE AGRICULTURAL MARKET COMMITTEE, SARANGAPUR, C/O. SRI S. RAMA RAO, ADVOCATE, FLAT NO. 102, SHRIYA'S ELEGANCE, H. NO. 3-6-643, ST. NO. 9, HIMAYATHNAGAR, HYDERABAD-29. 2. THE AGRICULTURAL MARKET COMMITTEE, KUBEER 3 . THE DIRECTOR OF INCOME - TAX (EXEMPTIONS), HYDERABAD. 4 . THE AD IT( E ) - I I I , HYDERABAD. 5 . THE DR 'B' BENCH, ITAT, HYDERABAD. TPRAO