Krushi Utpanna Bazar Samiti, Jalgaon v. ITO, Ward 2(2),

ITA 1417/PUN/2009 | 2006-2007
Pronouncement Date: 27-09-2011 | Result: Partly Allowed

Appeal Details

RSA Number 141724514 RSA 2009
Assessee PAN AAAAA4854F
Bench Pune
Appeal Number ITA 1417/PUN/2009
Duration Of Justice 1 year(s) 9 month(s) 20 day(s)
Appellant Krushi Utpanna Bazar Samiti, Jalgaon
Respondent ITO, Ward 2(2),
Appeal Type Income Tax Appeal
Pronouncement Date 27-09-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 27-09-2011
Date Of Final Hearing 12-09-2011
Next Hearing Date 12-09-2011
Assessment Year 2006-2007
Appeal Filed On 07-12-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JUDICIAL MEMBER AND SHRI G.S. PANNU ACCOUNTANT MEMBER ITA NOS 1417/PN/09 & 219/PN/11 (ASSTT. YEARS 2006-07 & 2007-08) KRUSHI UTPANNA BAZAR SAMITI .. APPELLANT GHAT ROAD CHALISGAON JALGAON PAN AAAAA 4854 F VS. INCOME-TAX OFFICER .. RESPONDENT WARD 2(2) JALGAON APPELLANT BY: SHRI VINAY V K AWADIA RESPONDENT BY: SHRI SANJAY SINGH DATE OF HEARING : 12.09.2011 DATE OF PRONOUNCEMENT : 27.09.2011 ORDER PER G.S. PANNU AM THE CAPTIONED APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDERS OF THE COMMISSIONER OF INCOME-TAX (APPEA LS)-II NASHIK WHICH IN TURN HAVE ARISEN FROM THE ORDERS PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE INCOME-TAX ACT 1961 (IN SHORT THE ACT) PERTAINING TO THE ASSESSMENT YEARS 2006 -07 & 2007-08. 2. THE COMMON GROUND NO. 1 OF APPEAL ORIGINALLY RAISE D BY THE ASSESSEE IN BOTH THE APPEALS READS AS FOLLOWS: 2 ON FACTS AND IN CIRCUMSTANCES OF CASE AND IN LAW THE LD CIT(A) ERRED IN SUSTAINING THE ADDITION MADE BY THE LD AO WHICH AROSE OUT OF TAXIN G THE INCOME OF APMC BY DENYING IT THE BENEFIT OF SECTION 10(20) AND FURTHER OF SECTIO N 11 OF THE INCOME-TAX ACT 1961 WITHOUT APPRECIATING SUBMISSIONS AND DOCUMENTS PLACED ON RE CORD. 3. THE RELEVANT FACTS ARE THAT THE ASSESSEE IS AGRICULTURAL P RODUCE MARKET COMMITTEE OF CHALISGAON WHICH IS CONTROLLED BY THE GOV ERNMENT OF MAHARASHTRA. IT IS STATED TO BE A NON-PROFIT ORGANIZATION FOR THE PURPOSE OF MARKETING THE AGRICULTURAL PRODUCE OF THE LOCAL FARMERS. THE ASSESSEE WAS ENJOYING EXEMPTION UNDER SECTION 10(20) OF THE ACT UPTO THE ASSESSMENT YEAR 2002-03 AND BECAME INELIGIBLE FOR THE SAID EXEMPTION IN VIEW OF THE EXP LANATION INTRODUCED TO THE SECTION 10(20) OF THE ACT WITH EFFECT FROM 1.04.2003 BY THE FINANCE ACT 2002. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS CONTENDE D BY THE ASSESSEE THAT ITS OBJECTS WERE CHARITABLE IN NATURE. HOWEVER THE ASSESSING OFFICER DID NOT ACCEPT THE CLAIM OF THE ASSESSEE AND COMPLETED THE ASSESSMENT BY ADOPTING THE SURPLUS AS PER INCOME & EXPENDITURE ACCOUNT AS TAXABLE I N THE HANDS OF THE ASSESSEE AND DISALLOWED DEPRECIATION ON CERTAIN ASSETS. AGAI NST THIS ACTION OF THE ASSESSING OFFICER ASSESSEE FILED APPEAL BEFORE THE COM MISSIONER OF INCOME-TAX (APPEALS). 4. IT APPEARS FROM THE APPELLATE ORDER THAT ON 5.1.2 009 THE ASSESSEE FILED AN APPLICATION IN FORM NO. 10-A BEFORE THE COMMISSIONER O F INCOME-TAX-II NASHIK FOR REGISTRATION UNDER SECTION 12AA OF THE ACT WHICH WAS REJECTED ON THE GROUND THAT ASSESSEE DID NOT FULFILL THE CONDITIONS FOR REGISTRA TION UNDER SECTION 12AA OF THE ACT. IT WAS ALSO HELD THAT REGISTRATION CANNOT BE G RANTED WITH RETROSPECTIVE EFFECT IN VIEW OF THE PROVISIONS OF SECTION 12A(2) OF TH E ACT. 5. IN VIEW OF THE ABOVE FACTS THE COMMISSIONER OF INCOM E-TAX (APPEALS) UPHELD THE ACTION OF THE ASSESSING OFFICER TAXING THE SURP LUS FOR THE YEARS UNDER CONSIDERATION. AGAINST THIS DECISION OF THE COMMISSIONER O F INCOME-TAX (APPEALS) ASSESSEE HAS TAKEN GROUND NO. 1 OF APPEAL. 6. BEFORE US THE ASSESSEE HAS TAKEN UP FOLLOWING ADDITI ONAL GROUND OF APPEAL WITH A REQUEST TO ADMIT THE SAME FOR ADJUDICA TION: 3 KRUSHI UTPANNA BAZAR SAMITI (APMC) CHALISGAON BEI NG A BODY ESTABLISHED UNDER THE STATE LEGISLATURE I.E. AGRICULTURAL PRODUCE MARKET ING (REGULATIONS) ACT 1963 IS ENTITY OF GOVERNMENT OF MAHARASHTRA AND ACCORDINGLY NOT LIAB LE TO UNION TAXATION AS PER CONSTITUTIONAL PROVISIONS. IT WAS SUBMITTED ON BEHALF OF THE ASSESSEE THAT THE AFOR ESAID ADDITIONAL GROUND BEING A PURE QUESTION OF LAW MAY BE ADMITTED AND AD JUDICATED UPON. 7. ON THE CONTRARY THE LEARNED DEPARTMENTAL REPRESEN TATIVE APPEARING FOR THE REVENUE HAS STRONGLY OBJECTED TO ADMISSION OF THE A FORESAID ADDITIONAL GROUND. HIS FIRST OBJECTION WAS THAT SUCH A GROUND WAS NO T RAISED BY THE ASSESSEE BEFORE THE LOWER AUTHORITIES AND BASED ON THE RE CORDS AND SUBMISSIONS THE ADDITIONAL GROUND NOW RAISED CANNOT BE D ECIDED. RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS: (I) ADDL. CIT V. GURJA GRAVUERS P. LTD (111 ITR 1 (S C); (II) RAMKUMAR JALAN V CIT 108 ITR 301 (BOM); AND (III) NATIONAL THERMAL POWER CORPORATION 229 ITR 38 3 (SC) WITHOUT PREJUDICE TO THE ABOVE OBJECTION THE LEARNED DEPARTMENTAL REPRESENTATIVE FURTHER SUBMITTED THAT TAXABILITY OF A GRICULTURAL PRODUCE MARKET COMMITTEES HAS BEEN CONSIDERED BY THE HONBLE SUPREME C OURT IN APMC NARELA V. CIT 305 ITR 1 (SC). 8. HAVING CONSIDERED THE ORDERS OF THE AUTHORITIES BELO W AND THE MATERIAL ON RECORD IN OUR VIEW IN SO FAR AS THE CLAIM OF THE ASSESS EE FOR EXEMPTION BASED ON SECTION 10(20) OF THE ACT IS CONCERNED THE SAME IS UNTE NABLE HAVING REGARD TO THE AMENDMENT MADE BY THE FINANCE ACT 2002 WITH EFF ECT FROM 1.4.2003 IN THE EXPLANATION BELOW SECTION 10(20) OF THE ACT AND ALSO IN THE LIGHT OF THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF A SIMILAR LY PLACED ENTITY NAMELY APMC NARELA (SUPRA). FURTHER THE CLAIM OF EXEMPTION UNDER SECTIONS 11 AND 12 OF THE ACT AS A CHARITABLE ORGANIZATION IS ALSO UNTENABL E IN THE PRESENT CASE BECAUSE THE ASSESSEE IS NOT REGISTERED WITH THE COMMISSIONER IN TERMS OF SECTION 12AA OF THE ACT WHICH IS A PRE-REQUISITE. THUS BOTH THESE ASPECTS ARE DECIDED AGAINST THE ASSESSEE. 4 9. IN SO FAR AS THE ADDITIONAL GROUND OF APPEAL RAISE D BY THE ASSESSEE IS CONCERNED IT IS SOUGHT TO BE MADE OUT THAT SINCE THE ASSESS EE IS ESTABLISHED UNDER A STATUTE I.E. AGRICULTURAL PRODUCE MARKETING (RE GULATIONS) ACT 1963 AND THEREFORE IT IS NOT LIABLE FOR UNION TAXATION AS PER CONSTITUTIONAL PROVISIONS. ON THIS ASPECT THE APPELLANT HAS NOT REFERRED TO ANY CO NSTITUTIONAL PROVISIONS TO SUPPORT THE PLEA AND THEREFORE WE FIND NO JUSTIFICATIO N TO CONSIDER THE SAME AND THE SAME IS DISMISSED AS MISCONCEIVED. 10. THE ONLY OTHER GROUND RAISED IS WITH REGARD TO TH E DENIAL OF DEPRECIATION ON CERTAIN ASSETS. THE ASSESSING OFFICER DENIED DEPRECIATION ON SHOPPING CENTERS PANTAPARI GODOWNS AND CANTEEN BUILDINGS FOR TH E REASON THAT THE SAME ARE FETCHING RENTALS AND HENCE THESE ASSETS ARE NOT USED BY THE ASSESSEE FOR ITS BUSINESS. THE DEPRECIATION ON PLOT DEVELOPMENT WAS DENIED BY THE ASSESSING OFFICER AS ACCORDING TO HIM THE SAME DID NOT FALL IN THE PURVIEW OF DEPRECIATION. THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS ALSO SUSTAINE D THE DISALLOWANCE. 11. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE VEHE MENTLY ARGUED THAT THE SAID ASSETS WERE ACTUALLY USED BY THE ASSESSEE IN FURTH ERANCE OF ITS OBJECTS AND THAT THE DEPRECIATION ON SUCH ASSETS BE ALLOWED. IT WAS POINTED OUT THAT SHOPPING CENTERS SHOPS ETC. ARE MADE AVAILABLE TO FACILI TATE FARMERS DEALERS ETC. AND THE OBJECT IS NOT TO EARN THE RENTAL INCOME BUT THE SAME ARE PROVIDED IN THE COURSE OF FURTHERANCE OF ITS OBJECTS. IN ANY CASE THE RENTAL INCOME IS TREATED AS BUSINESS INCOME AND THEREFORE THE SAID ASSETS CAN BE SAI D TO HAVE BEEN USED FOR FURTHERANCE OF THE OBJECTS OF THE ASSESSEE. EVEN WITH REGARD TO THE PLOT DEVELOPMENT IT WAS POINTED OUT THAT THE SAME IS NOT TO BE UNDERSTOOD AS OPEN PLOT BUT IS AN AUCTION PLATFORM CONSTRUCTED AND MAINT AINED FOR MARKETING RELATED DAY TO DAY ACTIVITIES. THE AMOUNT SHOWN AGAINST PLOT DEVELOPMENT IN THE BALANCE SHEET IS THE EXPENDITURE INCURRED FOR MAINTENA NCE OF SUCH PLATFORM AND DOES NOT INCLUDE THE VALUE OF LAND/PLOT. IT IS ALSO PO INTED OUT THAT THE SAID EXPENDITURE IS CAPITALIZED KEEPING IN VIEW THE DIRECTIO NS GIVEN BY THE DIRECTOR 5 AGRICULTURAL MARKETING MAHARASHTRA. IT HAS BEEN POINTED OUT WITH REFERENCE TO PAGE 23 OF THE PAPER BOOK THAT WITH REGARD TO SIMILAR OTHER ASSETS NAMELY ANIMAL PLATFORM PARKING LOT ETC. THE DEPRECIATION CLAI MED HAS BEEN ACCEPTED AS SUCH AND NOT DISALLOWED BY THE ASSESSING OFFICER . IT WAS THEREFORE CONTENDED THAT THE ASSESSEE WAS ELIGIBLE FOR DEPRECIATION ON ITS ASS ET PLOT DEVELOPMENT ALSO. 12. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REP RESENTATIVE HAS RELIED UPON THE REASONING TAKEN BY THE ASSESSING OFFICER IN ORDE R TO DENY THE ASSESSEES CLAIM OF DEPRECIATION THE SAME IS NOT REPEATED AS WE HAVE ALREADY NOTED THE SAME IN PARA 10 ABOVE. 13. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. I N OUR CONSIDERED OPINION THE CLAIM OF THE ASSESSEE FOR DEPRECIATION HAS B EEN SUMMARILY REJECTED QUA THE IMPUGNED ASSETS ON INSUFFICIENT CONSIDERATIONS. WITH REGARD TO SHOPPING CENTRE PANTAPARI GODOWN AND CANTEEN BUILDINGS IT IS ASSERTED BY THE ASSESSEE WITHOUT CONTROVERSION THAT THE SAME ARE BEING USED FO R FURTHERANCE OF THE ASSESSEES OBJECTS NAMELY ASSISTING OF FARMERS FOR SELLING OF AGRICULTURAL PRODUCE. IN CARRYING OUT SUCH OBJECTIVES THE CHARGING OF NOMINAL FEE BY THE ASSESSEE UNDER VARIOUS HEADS WOULD NOT ALTER THE NATURE O F USAGE OF THE ASSETS OF THE ASSESSEE AS BEING FOR FURTHERANCE OF ITS OBJECTS. M OREOVER THE INCOME EARNED FROM SUCH ACTIVITY HAS NOT BEEN ASSESSED BY THE A SSESSING OFFICER UNDER ANY SEPARATE HEAD AND THEREFORE THE CLAIM OF DEPRECAT ION HAS BEEN SUMMARILY REJECTED ON INSUFFICIENT GROUNDS. IN SO FAR AS THE DEPRECI ATION ON PLOT DEVELOPMENT IS CONCERNED ON THIS ASPECT ALSO IN OUR VIE W THE NATURE OF THE ASSET HAS NOT BEEN APPROPRIATELY APPRECIATED BY THE LOW ER AUTHORITIES. CONSIDERING THE AFORESAID WE DEEM IT FIT AND PROPER TO RESTORE THE MATTER RELATING TO THE CLAIM OF DEPRECIATION ON THE IMPUGNED ASSETS BACK T O THE FILE OF THE ASSESSING OFFICER WHO SHALL RE-ADJUDICATE THE SAME AFTER CON SIDERING THE 6 SUBMISSIONS PUT-FORTH BY THE ASSESSEE IN ACCORDANCE WITH LA W. THUS ON THIS GROUND ASSESSEE SUCCEEDS FOR STATISTICAL PURPOSES. 15. SINCE THE ISSUES RAISED IN ITA NO 219/PN/11 RELATIN G TO ASSESSMENT YEAR 2007-08 ARE ON IDENTICAL LINES OUR DECISION IN THE APP EAL FOR ASSESSMENT YEAR 2006-07 WOULD APPLY MUTATIS MUTANDIS IN ASSESSMENT YEAR 2007-08 ALSO. 16. IN THE RESULT THE APPEALS OF THE ASSESSEE ARE PARTL Y ALLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON THIS 27 TH DAY OF SEPTEMBER 2011. SD/- SD/- (SHAILENDRAKUMAR YADAV) JUDICIAL MEMBER (G.S. PANNU) ACCOUNTANT MEMBER PUNE: DATED: 27 TH SEPTEMBER 2011 B COPY OF THE ORDER IS FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. THE CIT(A)-II NASHIK 4. THE CIT-II NASHIK 5. THE D.R A BENCH PUNE 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT PUNE BENCHES PUNE