ACIT, Jamshepur V. M/s. Krishi Utpadan Bazar Samittee, Saraikella

ITA 92/RAN/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67349 (ITAT-RANCHI)
• Duration Of Justice: 10 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2003-2004
• Appeal Filed On: 18-06-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: SHIKESH JHA
• Section: 12A; 194C; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI CIRCUI T BENCH, RANCHI (BEFORE SHRI P.K.BANSAL, HONBLE A.M.& SHR I D,T. GARASIA, HONBLE J.M.) I.T.A. NOS. 92 & 90/RAN/2012 : ASSESSMENT YEARS 2 003-04 & 2005-06 ACIT, CIRCLE-2, JAMSHEDPUR VS- M/S. KRIS HI UTPADAN BAZAR COMMITTEE, SARAIKELA (APPELLANT) (RES PONDENT) APPELLANT BY : SHRI RAJIV KUMAR, D.R. RESPONDENT BY : SHRI SHIKESH JHA, ADVOCATE DATE OF CONCLUDING THE HEARING : 06.05.2013 DATE OF PRONOUNCING THE ORDER : 08.05.2013 O R D E R PER BENCH : THESE TWO APPEALS HAVE BEEN FILED BY THE REVENUE AG AINST THE ORDER OF THE CIT(A). JAMSHEDPUR DATED 27.04.2012 FOR THE ASSESSM ENT YEARS 2003-04 AND 2005-06. ITA NO.92/RAN/2012 2. THE ONLY ISSUE INVOLVED IN THIS APPEAL RELATES T O TREATING THE SUM OF RS.5,25,400/- CONTRIBUTED BY THE ASSESSEE TO THE MA RKETING BOARD, IN PURSUANCE WITH THE PROVISIONS OF SECTION 33C OF THE AGRICULTU RAL PRODUCE MARKET ACT,1960. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CL AIMED EXEMPTION UNDER SECTION 11 IN RESPECT OF CONTRIBUTION MADE BY THE A SSESSEE TO JSAMB AMOUNTING TO RS.5,25,400/-. THE ASSESSING OFFICER, WHILE COMP LETING THE ASSESSMENT UNDER SECTION 144, DISALLOWED THE SAME. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). THE CIT(A) NOTED THAT THE ASSESSEE HAS PAID THE SUM OF RS.5,25,400/- TOWARDS THE BOARDS CONTRIBUTION, AS PER ITS STATUTORY LIABILIT Y UNDER SECTION 33C OF THE BAZAR 2 SAMITY ACT AND ACCORDINGLY ALLOWED THE DEDUCTION TO THE ASSESSEE SUBJECT TO THE VERIFICATION BEING CARRIED OUT BY THE ASSESSING OFF ICER. 4. WE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CON SIDERED THE SAME. WE NOTED THAT UNDER THE PROVISIONS OF BIHAR AGRICULTUR AL PRODUCE AND MARKET ACT, 1960, UNDER SECTION 33C, THE ASSESSEE IS BOUND TO P AY TO THE BOARD SO MUCH PERCENTAGE OF ITS INCOME, DERIVED FROM ITS LICENCE FEES AS MARKET FEES AS HAS BEEN PRESCRIBED TO MEET THE EXPENSES OF THE ESTABLISHMEN T OF THE BOARD AND ALSO THOSE INCURRED IN THE INTEREST OF THE MARKET COMMITTEE. I T IS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE HAS FAILED TO PAY THE MARKET BOAR D EVEN IN CONTRAVENTION OF THE BIHAR AGRICULTURAL PRODUCE MARKET ACT, 1962. THE IN COME OF THE SAMITY HAS TO BE COMPUTED AS PER THE NORMAL PROVISION. EXPENDITUR E SO INCURRED BY WAY OF STATUTORY LEVY IS AN ESSENTIAL EXPENDITURE AND HAS TO BE ALLOWED, WHILE COMPUTING THE INCOME OF THE ASSESSEE AND IF THE REGISTRATION IS NOT GRANTED TO THE ASSESSEE UNDER SECTION 12A AND ONCE THE REGISTRATION IS GRAN TED UNDER SECTION 12A, THE SAID AMOUNT, IN OUR OPINION, WILL ALSO BE DEDUCTIBLE, WH ILE DETERMINING THE INCOME OF THE TRUST FOR THE PURPOSE OF SECTION 11 OF THE INCO ME-TAX ACT. IN VIEW OF THIS, WE DO NOT FIND ANY ILLEGALITY OR INFIRMITY IN THE ORDE R OF THE CIT(A). ACCORDINGLY, THIS APPEAL FILED BY THE REVENUE STANDS DISMISSED. ITA NO.90/RAN/2012 5. THE ONLY ISSUE INVOLVED IN THIS APPEAL FILED BY THE REVENUE RELATES TO WHETHER THE PROVISION OF SECTION 194C WILL APPLY TO THE ASSESSEE OR NOT. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAD PAID CO NTRIBUTION TO THE MARKETING BOARD AMOUNTING TO RS.6,10,138/- AS PER THE PROVISI ONS OF SECTION 33C OF THE BIHAR AGRICULTURAL PRODUCE & MARKET ACT. THE ASSESS ING OFFICER TOOK THE VIEW THAT THE PROVISION OF SECTION 194C WAS APPLICABLE A ND HENCE, THE ASSESSEE HAS NOT DEDUCTED ANY TDS. THEREFORE, HE DISALLOWED THE SAME UNDER SECTION 40(A)(IA) OF THE INCOME TAX ACT. WHEN THE MATTER WENT BEFORE THE CIT(A), THE CIT(A) NOTED 3 THAT THE REGISTRATION UNDER SECTION 12A WAS NOT INI TIALLY GRANTED TO THE ASSESSEE AND THEREFORE, THE INCOME OF THE ASSESSEE HAS TO BE COMPUTED AS THE COMMERCIAL INCOME ARE TO BE COMPUTED AND CONTRIBUTION TO THE M ARKET BOARD WERE DEDUCTIBLE AS DEDUCTION BUT SINCE THE PAYMENT HAS BEEN MADE TO THE MARKET BOARD UNDER SECTION 33C OF THE BIHAR AGRICULTURAL PRODUCE & MAR KET ACT. THEREFORE, IT WAS A STATUTORY LEVY AND THE PROVISIONS OF SECTION 194C W ERE NOT APPLICABLE AND ACCORDINGLY HE DELETED THE DISALLOWANCE MADE UNDER SECTION 40(A)(IA). 6. WE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CON SIDERED THE SAME. WE HAVE ALSO GONE THROUGH THE PROVISIONS OF SECTION 19 4C. WE NOTED THAT THE PAYMENTS MADE BY THE ASSESSEE TO THE BIHAR AGRICULT URAL PRODUCE & MARKET ACT, WAS MADE UNDER SECTION 33C OF THE BIHAR AGRICULTURA L PRODUCE & MARKET ACT. THIS PAYMENT AS PER THE PROVISIONS OF THAT ACT WAS CLEARLY A STATUTORY LIABILITY. KRISHI UTPADAN BAZAR SAMITY CAN NOT SURVIVE UNTIL A ND UNLESS SUCH LEVY BY WAY OF CENT PERCENT OF ITS INCOME DERIVED FROM LICENCE FEES AND MARKET FEES AS HAS BEEN PRESCRIBED TO MEET THE EXPENSES OF THE ESTABLI SHMENT OF THE BOARD ARE PAID BY THE SAMITY. THIS PAYMENT IS NOT IN RESPECT OF AN Y CONTRACT ENTERED INTO BETWEEN THE ASSESSEE AND THE MARKET BOARDS. THEREFO RE, THE ASSESSEE WAS NOT LIABLE TO DEDUCT ANY TAX AT SOURCE UNDER SECTION 19 4C OF THE INCOME TAX ACT. WE, THEREFORE, CONFIRM THE ORDER OF THE CIT(A) DELETING THE DISALLOWANCE UNDER SECTION 40(A)(IA). 7. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE COURT ON 8 TH MAY 2013. SD/- SD/- [D.T.GARASIA] [P.K.BANSAL] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 8 TH MAY, 2013 4 COPY OF ORDER FORWARDED TO : 1. M/S. KRISHI UTPADAN BAZAR COMMITTEE, SARAIKELA 2. ACIT, CIRCLE-2, JAMSHEDPUR 3. C.I.T.(A), 4. THE C.I.T., RANCHI 5. THE D.R., I.T.A.T., TRUE COPY, BY ORDER, SR. PRIVATE SECRETARY, ITAT, RANCHI [MST, SR.PS]