Agriculture Produce Market Committee, Pune V. ITO, Wd.-1(1), Aurangabad

ITA 915/PUN/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4334 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 31-01-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 24-06-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R G NAHAR
• Assessee Lawyers: D S KOTHARI
• Keywords: Charitable institution; Maximum Marginal Rate
• Section: 12AA; 28; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JUDICIAL MEMBER AND SHRI R.K. PANDA ACCOUNTANT MEMBER ITA NO. 915/PN/2011 (ASSESSMENT YEAR 2004-05) AGRICULTURE PRODUCE MARKET COMMITTEE, C/O. KHANDELWAL JAIN & ASSOCIATES ALANKAR CINEMA BUILDING, PUNE PAN NO. AAJFA 3721B .. APPELLANT VS. ITO, WARD-1(1), AURANGABAD. .. RESPONDENT ASSESSEE BY : SHRI D.S. KOTHARI RESPONDENT BY : SHRI R.G. NAHAR DATE OF HEARING : 05-07-2013 DATE OF PRONOUNCEMENT : 22-07-2013 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 06-05-2011 OF THE CIT(A)-AURANGABAD RELATING TO ASS ESSMENT YEAR 2004-05. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS AN AGRICULTURAL PRODUCE MARKET COMMITTEE ESTABLISHED U/S.39A OF MAH ARASHTRA AGRICULTURAL MARKETING (REGULATION) ACT, 1963. THE ASSESSEE SOCIETY HAS GOT REGISTRATION U/S.12AA(L)(B)(I) OF THE INCOME TA X ACT, 1961 W.E.F. A.Y.2003-04 VIDE CERTIFICATE OF REGISTRATION DATED 03/10/2007. THE OFFICE BEARERS OF THE ASSESSEE SOCIETY ARE NOT MUCH EDUCATED AND HAVE NOT FILED RETURNS OF INCOME. THE SECRETARY OF THE S OCIETY HAS ATTENDED BEFORE THE A.O. IN RESPONSE TO SUMMONS AND HAS INFO RMED THAT THE APMC HAS STARTED FUNCTIONING FROM 10/10/2002 AND TH E FINAL ACCOUNTS 2 PREPARED ARE FOR THE YEAR ENDING ON 30/09/2003 & 30 /09/2004. THE ASSESSEE SUBMITTED COPY OF ACCOUNTS AS ON 30/09/200 4. THE AO ASSESSED THE INCOME OF THE ASSESSEE FOR A.Y.2003-04 AND 2004-05 AS UNDER : PARTICULARS A.Y.2003-04 A.Y.2004-05 PROFIT FOR THE PERIOD 10/10/2002 TO 30/09/2003 RS.2,10,806/-, PROFIT FOR F.Y.2002-03 & 2003-04 AT 50% RS.1,05,403/- RS.1,05,403/- ADD : PROBABLE DISALLOWANCE ESTIMATED BY THE A.O. RS.19,597/- RS.19,597/- PROFIT FOR THE YEAR 01/10/2003 TO 30/09/2004 RS.9,15,479/-, PROFIT FOR THE PERIOD 01/10/2003 TO 31/03/2004 AT 50% RS.4,57,740/- ADD : PROBABLE DISALLOWANCE ESTIMATED BY THE A.O. RS.42,260/- INCOME ASSESSED BY THE A.O. RS.1,25,000/- RS.6,25,000/- THE A.O. ASSESSED THE INCOME OF THE ASSESSEE IN THE STATUS OF A.O.P. LIABLE TO TAX AT MAXIMUM MARGINAL RATE. 2.1 DURING THE APPEAL PROCEEDINGS THE ASSESSEE FILE D A COPY OF THE REGISTRATION CERTIFICATE U/S.12AA(1)(B)(I) DATED 03 -10-2007 GRANTED BY THE CIT W.E.F. A.Y. 2003-04. IT WAS SUBMITTED THA T THE OFFICE BEARERS OF THE APMC ARE NOT MUCH EDUCATED FOR WHICH THE RETURN OF INCOME COULD NOT BE FILED IN TIME. IT WAS SUBMITTED THAT THE AS SESSEE HAS ALSO FILED COPY OF FORM NO.10B AND FORM NO.10 U/S.11(2) FOR SE TTING APART ITS INCOME OF CONSTRUCTION OF OFFICE BUILDING AND GODOW N AND TO DEVELOP INFRASTRUCTURE FACILITY OF ROADS AND DRINKING WATER . THE SAID APPLICATION IN FORM NO.10 HAS BEEN FILED BEFORE THE CIT, AURANG ABAD ON 24-03- 2008. IT WAS ACCORDINGLY ARGUED THAT THE ASSESSEE SHOULD BE ALLOWED 3 DEDUCTION U/S.11(2) OF THE INCOME TAX ACT SINCE IT HAS ALREADY BEEN GRANTED REGISTRATION U/S.12A OF THE INCOME TAX ACT. ON THE BASIS OF THE SUBMISSIONS FILED BEFORE HIM THE LD.CIT(A) CALLED F OR A REMAND REPORT FROM THE ASSESSING OFFICER. THE AO SUBMITTED THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S.11(1)(A) SINCE THE ASSES SEE HAS TO SPEND ATLEAST 85% OF ITS INCOME. 3. THE LD.CIT(A) WAS NOT FULLY CONVINCED WITH THE A RGUMENTS OF THE ASSESSEE. HE HELD THAT SINCE THE ASSESSEE IS REGIS TERED U/S.12AA OF THE I.T. ACT, THEREFORE, IT IS ELIGIBLE FOR DEDUCTION U /S.11(1)(A) AS CLAIMED BY THE ASSESSEE. SO FAR AS THE ELIGIBILITY FOR DEDUCT ION U/S.11(2) OF THE INCOME TAX ACT IS CONCERNED HE HELD THAT THE ASSESS EE HAS NOT FILED NOTICE IN FORM NO.10 OF THE INCOME TAX RULES, 1962 BEFORE THE AO WITHIN THE STATUTORY TIME PRESCRIBED. THE ASSESSEE HAS NOT FILED ANY EVIDENCE IN SUPPORT OF HIS CLAIM THAT HE HAS UTILIS ED THE AMOUNT SET-ASIDE FOR CONSTRUCTION OF OFFICE BUILDING AND GODOWN AND FOR DEVELOPING INFRASTRUCTURE FACILITIES WITHIN 6 MONTHS FROM THE END OF THE PREVIOUS YEAR AS CLAIMED BY IT. SINCE THE ASSESSEE HAS NOT COMPLIED WITH THE PROVISIONS OF SECTION 11(2) R.W.R. 17 OF THE INCOME TAX RULES, THEREFORE, IT IS NOT ELIGIBLE FOR DEDUCTION US/.11(2) OF THE I NCOME TAX ACT 1962. HE HOWEVER DIRECTED THE AO TO ASSESS THE INCOME OF THE ASSESSEE AGRICULTURAL MARKET PRODUCE COMMITTEE AT RS.2,08,83 8/- FOR A.Y. 2004- 05 AND DIRECTED HIM TO TAX THE INCOME AS AOP AT THE NORMAL RATES APPLICABLE TO THE INDIVIDUALS. THE RELEVANT DECISI ON OF THE CIT(A) AT PARA 8 TO 8.2 READ AS UNDER : 8. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE, ASSESSMENT ORDER AND REMAND REPORT OF THE A.O. AND SUBMISSION OF THE 4 APPELLANT. IT IS UNDISPUTED FACT THAT THE APPELLANT IS AN AGRICULTURAL PRODUCE MARKET COMMITTEE AND OBJECTS OF THE COMMITT EE ARE CHARITABLE OBJECTS AS HELD BY THE HON'BLE BOMBAY HI GH COURT IN THE CASE OF CIT VS. AGRICULTURAL PRODUCE MARKET COM MITTEE, HINGANGHAT & ORS. (2007) 291 ITR 419 (BOM.). THE AP PELLANT IS ALSO REGISTERED U/S 12AA OF THE INCOME TAX ACT, 196 1. THEREFORE, THE APPELLANT IS ELIGIBLE FOR DEDUCTION U/S.11(1)(A ) AS CLAIMED BY THE APPELLANT. 8.1 THE APPELLANT HAS CLAIMED THAT IT IS ALSO ELIGI BLE FOR DEDUCTION U/S.11(2) OF THE ACT. ON PERUSAL OF THE PROVISIONS OF THE SAID SECTION AND RULE-17 AND FORM NO. 10 OF THE I.T . RULES, IT HAS BEEN NOTICED THAT IN ORDER TO CLAIM DEDUCTION U/S. 11(2), THE NOTICE IN FORM NO.10 OF THE INCOME TAX RULES'1962 IS TO BE FILED WITH THE A.O. BEFORE THE DUE DATE OF FILING THE RETURN OF IN COME U/S 139(1). IT HAS ALSO BEEN PROVIDED THAT THE SAID NOTICE OF A CCUMULATION IN FORM NO.10 SHOULD SPECIFY THE PERIOD FOR WHICH THE INCOME IS TO BE ACCUMULATED AND SPENT AND ALSO THE PURPOSE FOR WHIC H THE SAID INCOME HAS BEEN ACCUMULATED. ON PERUSAL OF THE ASSE SSMENT RECORD AND THE SUBMISSION OF THE APPELLANT IT HAS B EEN NOTICED THAT THE APPELLANT HAS NOT FILED ANY NOTICE IN FORM NO.1 0 ALONGWITH THE INFORMATION REQUIRED TO BE FILED WITH THE A.O. THE APPELLANT HAS FILED FORM NO.10 WITH CIT, AURANGABAD ON 24/03/2008 WHICH IS AFTER EXPIRY OF SUBSTANTIAL PERIOD FROM THE DUE DAT E OF FILING RETURN OF INCOME FOR THE YEAR UNDER APPEAL. ON PERUSAL OF THE SAID APPLICATION IN FORM NO.10, IT HAS BEEN NOTICED THAT THE APPELLANT HAS CLAIMED THAT THE AMOUNT SET-ASIDE IS TO BE UTIL IZED FOR CONSTRUCTION OF OFFICE BUILDING AND GODOWNS AND FOR DEVELOPING INFRASTRUCTURE FACILITIES LIKE ROADS, DRINKING WATE R ETC. BEFORE EXPIRY OF SIX MONTHS FROM THE END OF EACH PREVIOUS YEAR. THE APPELLANT HAS FURTHER STATED THAT THE AMOUNT SET-AS IDE HAS BEEN/WILL BE INVESTED OR DEPOSITED IN MODES OF INVE STMENT SPECIFIED IN SECTION 11(5) OF THE ACT. THE APPELLAN T HAS NOT FILED ANY EVIDENCE IN SUPPORT OF HIS CLAIM THAT HE HAS UT ILIZED THE AMOUNT SET-ASIDE FOR CONSTRUCTION OF OFFICE BUILDIN G AND GODOWN AND FOR DEVELOPING INFRASTRUCTURE FACILITIES WITHIN SIX MONTHS FROM THE END OF THE PREVIOUS YEAR AS CLAIMED BY IT. THE DEPOSIT OF THE AMOUNT IN MODES SPECIFIED U/S. 11(5) OF THE ACT CAN NOT BE TREATED AS AMOUNT SET-ASIDE HAS BEEN UTILIZED FOR THE OBJEC TS OF THE TRUST FOR WHICH IT HAS BEEN SET-ASIDE I.E. FOR CONSTRUCTI ON OF OFFICE BUILDING AND GODOWN AND FOR DEVELOPING INFRASTRUCTU RE FACILITIES. IN VIEW OF THE ABOVE FACTS, IT IS EVIDENT THAT THE APPELLANT HAS NOT COMPLIED WITH THE PROVISIONS OF SECTION 11(2) OF TH E ACT AND RULE- 17 OF THE IT. RULES, 1962. IN VIEW OF THE ABOVE FAC TS IT IS EVIDENT THAT THE APPELLANT HAS NOT COMPLIED WITH THE PROVIS IONS OF SECTION 11(2) OF THE ACT AND RULE-17 OF THE IT. RULES, 1962 . THEREFORE, THE APPELLANT IS NOT ELIGIBLE FOR DEDUCTION U/S 11(2) O F THE ACT. 5 8.2 THE A.O. HAS DISALLOWED PART OF THE EXPENSES O N ADHOC BASIS AND MADE ADDITION OF RS.19,597/- AND RS.61,857/- IN A.Y.2003-04 & 2004-05 RESPECTIVELY. IT IS UNDISPUTED FACT THAT TH E APPELLANT IS AN INSTITUTION ESTABLISHED WITH THE OBJECT OF PUBLIC U TILITY. THE PROVISIONS OF SECTION 28 TO 44 APPLICABLE TO ARRIVE AT BUSINES S INCOME ARE NOT APPLICABLE TO THE APPELLANT APMC. THEREFORE, THE DI SALLOWANCE MADE BY THE A.O. IS NOT JUSTIFIED AS THE APPLICATION OF INCOME FOR THE OBJECTS OF THE APMC IS TO BE ALLOWED AS PER PROVISI ONS OF SECTION 11 OF THE ACT. 4. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSE SSEE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS 1. THE LEARNED ASSESSING OFFICER HAD ERRED IN ASSE SSING THE APPELLANT AS A LOCAL AUTHORITY. THE LEARNED CIT (AP PEALS) AURANGABAD HAD ERRED IN TREATING THE APPELLANT AS A PUBLIC CHARITABLE TRUST AND DIRECTING TO REASSESS THE APPE LLANT. CONSIDERING THE FACTS OF THE CASE AND PROVISIONS OF LAW, THE AP PELLANT BE ASSESSED AS A CO-OPERATIVE SOCIETY. JUST AND PROPER RELIEF B E GRANTED TO THE APPELLANT COMPANY AS PER THE PROVISIONS OF LAW. 2. THE LEARNED TAXING AUTHORITIES BELLOW HAD ERRED IN NOT GRANTING DEDUCTION U/S SOP (2)(III) OF THE IT ACT. CONSIDERING THE FACTS OF THE CASE AND PROVISIONS OF LAW, THE APPELL ANT BE ASSESSED AS A CO-OPERATIVE SOCIETY ELIGIBLE FOR 100% DEDUCTI ON U/S SOP (2)(III) OF THE IT ACT. JUST AND PROPER RELIEF BE G RANTED TO THE APPELLANT COMPANY AS PER THE PROVISIONS OF LAW. 4.1 THE ASSESSEE HAS ALSO TAKEN AN ADDITIONAL GROUN D WHICH READS AS UNDER ; ON FACTS AND CIRCUMSTANCES PREVAILING IN THE CASE AND AS PER PROVISION OF LAW, DEDUCTION U/S.11(2) SHOULD BE ALL OWED TO THE APPELLANT 5. AFTER HEARING BOTH THE SIDES THE ADDITIONAL GROU ND RAISED BY THE ASSESSEE IS ADMITTED BEING A LEGAL ONE AND WHICH HA S ALREADY BEEN ADJUDICATED BY LD.CIT(A). 5.1 AFTER HEARING BOTH THE SIDES, WE FIND THERE IS NO DISPUTE TO THE FACT THAT THE INCOME OF THE ASSESSEE AGRICULTURAL MARKET PRODUCE COMMITTEE, 6 WHOSE INCOME WAS EXEMPT FROM INCOME-TAX UPTO A.Y. 2 002-03. THERE IS NO DISPUTE TO THE FACT THAT DESPITE REPEATED OPP ORTUNITIES THE ASSESSEE DID NOT COOPERATE FOR WHICH THE AO PASSED ORDER U/S .144 R.W.S. 147 DETERMINING THE TOTAL INCOME AT RS.6,25,000/- FOR T HE A.Y. 2004-05. THE ABOVE INCOME HAS BEEN REDUCED TO RS.2,08,838/- BY T HE LD.CIT(A) FOR WHICH THE REVENUE HAS NOT FILED ANY APPEAL. THERE IS ALSO NO APPEAL AGAINST OBSERVATION OF THE CIT(A) DIRECTING THE AO TO TAX THE INCOME OF THE AGRICULTURAL MARKET PRODUCE COMMITTEE AS AOP AT THE NORMAL RATES APPLICABLE TO THE INDIVIDUALS. 5.2 SO FAR AS THE GROUNDS OF APPEAL NO. 1 AND 2 ARE CONCERNED WE FIND THE CIT, AURANGABAD HAD GRANTED REGISTRATION U/S.12 AA(1)(4)(I) DATED 03-10-2007 ON THE BASIS OF APPLICATION FILED BY THE ASSESSEE. THEREFORE, THE ARGUMENT OF THE ASSESSEE THAT THE LD.CIT(A) HAS ERRED IN TREATING AS A PUBLIC CHARITABLE TRUST IS DEVOID OF ANY MERIT AND DESERVES TO BE DISMISSED. ACCORDINGLY, THE ABOVE GROUNDS ARE DISM ISSED. 6. NOW COMING TO THE ADDITIONAL GROUND FILED BY THE ASSESSEE, WE FIND IT IS THE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE THAT DEDUCTION U/S.11(2) SHOULD BE ALLOWED TO THE ASSESSEE SINCE I T HAS ALREADY FILED FORM NO.10 U/S.11(2) BEFORE THE LD.CIT, AURANGABAD ON 24-03-2008. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSMENT YEAR INVOLVED IN THE IMPUGNED CASE IS A.Y. 2004-05 AND THE DUE DATE OF FILING OF RETURN U/S.139(1) IS 31 ST OF OCTOBER 2005. HOWEVER, THE APPLICATION IN FORM NO.10 WAS NOT FILED BEFORE THE ASSESSING OFFICER. HOWEVER, FORM NO.10 HAS BEEN FILED BEFORE THE CIT AURANGABAD ON 24-03-2 008 WHICH IS NOT IN DISPUTE. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. NAGPUR 7 HOTEL OWNERS ASSOCIATION REPORTED IN 247 ITR 201 HA S HELD AS UNDER (SHORT NOTES) : IT IS ABUNDANTLY CLEAR FROM THE WORDING OF SUB-SEC TION (2) OF SECTION 11OF THE INCOME TAX ACT, 1961 THAT IT IS MA NDATORY FOR THE PERSON CLAIMING THE BENEFIT OF SECTION 11 TO INTIMA TE TO THE ASSESSING AUTHORITY THE PARTICULARS REQUIRED, UNDER RULE 17 IN FORM NO. 10 OF THE INCOME-TAX RULES, 1962. IF DURIN G THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER DOES NOT HAVE THE NECESSARY INFORMATION, THE QUESTION OF EXCLUDING SU CH INCOME FROM ASSESSMENT DOES NOT ARISE AT ALL. AS A MATTER OF FACT, THIS BENEFIT OF EXCLUDING THIS PARTICULAR PART OF THE IN COME FROM THE NET OF TAXATION ARISES FROM SECTION 11 AND IS SUBJECTED TO THE CONDITIONS SPECIFIED THEREIN. THEREFORE, IT IS NECE SSARY THAT THE ASSESSING AUTHORITY MUST HAVE THIS INFORMATION AT T HE TIME HE COMPLETES THE ASSESSMENT. IN THE ABSENCE OF ANY SUC H INFORMATION, IT WILL NOT BE POSSIBLE FOR THE ASSESSING AUTHORITY TO GIVE THE BENEFIT OF SUCH EXCLUSION. EVEN ASSUMING THAT THERE IS NO VALID LIMITATION PRESCRIBED UNDER THE ACT AND THE RULES, IT IS REASO NABLE TO PRESUME THAT THE INTIMATION REQUIRED UNDER SECTION 11 HAS TO BE FURNISHED BEFORE THE ASSESSING AUTHORITY COMPLETES THE CONCERNED ASSESSMENT BECAUSE SUCH REQUIREMENT IS MANDATORY AN D WITHOUT THE PARTICULARS OF THIS INCOME, THE ASSESSING AUTHO RITY CANNOT ENTERTAIN THE CLAIM OF THE ASSESSEE UNDER SECTION 1 1 OF THE ACT, THEREFORE, COMPLIANCE WITH THE REQUIREMENT OF THE A CT WILL HAVE TO BE ANY TIME BEFORE THE ASSESSMENT PROCEEDINGS. FURT HER, ANY CLAIM FOR GIVING THE BENEFIT OF SECTION 11 ON THE BASIS O F INFORMATION SUPPLIED SUBSEQUENT TO THE COMPLETION OF ASSESSMENT WOULD MEAN THAT THE ASSESSMENT ORDER WILL HAVE TO BE REOPENED. THE ACT DOES NOT CONTEMPLATE SUCH RE-OPENING OF THE ASSESSMENT. 6.1 SINCE IN THE INSTANT CASE FORM NO.10 HAS NOT BE EN FILED BEFORE THE ASSESSING AUTHORITY BEFORE THE COMPLETION OF THE AS SESSMENT, THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT CITED (SUPRA) WE HOLD THAT THE ASSESSEE IS NOT ENTITLED T O THE BENEFIT OF SECTION 11. THE GROUND RAISED BY THE ASSESSEE IS ACCORDING LY DISMISSED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 22 ND DAY OF JULY 2013. SD/- SD/- (SHAILENDRA KUMAR YADAV) (R.K. PANDA ) JUDICIAL MEMBER ACCOUNT ANT MEMBER PUNE DATED: 22 ND JULY 2013 SATISH 8 COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. CIT(A)-A, AURANGABAD 4 CIT-AURANGABAD 5. THE D.R, B PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY ITAT, PUNE BENCHES, PUNE