Agricultural Market Committee, Kovur, Nellore v. ITO, Nellore

ITA 1570/HYD/2010 | 2007-2008
Pronouncement Date: 11-03-2011 | Result: Partly Allowed

Appeal Details

RSA Number 157022514 RSA 2010
Assessee PAN AAALS1397J
Bench Hyderabad
Appeal Number ITA 1570/HYD/2010
Duration Of Justice 2 month(s) 29 day(s)
Appellant Agricultural Market Committee, Kovur, Nellore
Respondent ITO, Nellore
Appeal Type Income Tax Appeal
Pronouncement Date 11-03-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 11-03-2011
Assessment Year 2007-2008
Appeal Filed On 13-12-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B' HYDERABAD BEFORE SHRI G.C. GUPTA VICE PRESIDENT AND SHRI AKBER BASHA ACCOUNTANT MEMBER I.T.A. NO. 1569/HYD/2010 (ASSESSMENT YEAR : 2007-08) M/S. AGRICULTURAL MARKET COMMITTEE KAVALI PAN: AAALS1397J VS. INCOME TAX OFFICER WARD-4 NELLORE APPELLANT RESPONDENT I.T.A. NO. 1570/HYD/2010 (ASSESSMENT YEAR : 2007-08) M/S. AGRICULTURAL MARKET COMMITTEE ATMAKUR PAN: AABAS9022N VS. INCOME TAX OFFICER WARD-4 NELLORE APPELLANT RESPONDENT I.T.A. NO. 1571/HYD/2010 (ASSESSMENT YEAR : 2007-08) M/S. AGRICULTURAL MARKET COMMITTEE KOVUR PAN: AABAS9042A VS. INCOME TAX OFFICER WARD-4 NELLORE APPELLANT RESPONDENT APPELLANT BY: NONE RESPONDENT BY: SHRI JAYA SHANKAR/ SHRI K.E. SUNIL BABU O R D E R PER AKBER BASHA AM: ALL THE ABOVE THREE APPEALS FILED BY THE ASSESSEES ARE DIRECTED AGAINST THE SEPARATE ORDERS OF THE CIT(A) GUNTUR DATED 30.08.2010 AND PERTAINS TO THE ASSESSMENT YEAR 2007 -08. SINCE COMMON ISSUES ARE ARISING IN ALL THE THREE AP PEALS THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS I.T.A. NOS. 1569-1971/HYD/2010 AMCS OF KAVALI ATMAKUR AND NELLORE ======================== 2 COMMON ORDER FOR THE SAKE CONVENIENCE. NONE APPEAR ED ON BEHALF OF THE ASSESSEES. WE HAVE HEARD THE LEARNED DR AND DECIDING THESE APPEAL BASED ON THE ARGUMENTS ADVANC ED BY THE LEARNED DR AND THE MATERIAL AVAILABLE ON RECORD. I.T.A. NO. 1569/HYD/2010 AMC KAVALI: 2. FIRST LET US TAKE THE I.T.A. NO. 1569/HYD/2010 I N RESPECT OF AGRICULTURAL MARKET COMMITTEE KAVALI. THE ASSE SSEE RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. BECAUSE THE COMMISSIONER (APPEALS) WAS NOT CORRECT IN CONFIRMING THE ASSESSMENT OF THE SUM OF RS. 1 02 53 974 WHICH WAS EXEMPT EITHER UNDER CLAUSE 26AAB OF SECTION 10 OR UNDER SECTION 11. 2. BECAUSE THE ASSESSING OFFICER HAS ERRED IN ASSESSING THE INCOME AMOUNTING TO RS. 1 02 53 974 WITHOUT CONSIDERING THE EXPENDITURE INCURRED TOWARDS NEW WORKS AMOUNTING TO RS. 1 54 79 345 SPILL OVER WORKS AMOUNTING TO RS. 4 15 566 EXPENDITURE TOWARDS RYTHU BAZAAR AMOUNTING TO RS. 1 98 255 ACQUISITION OF FIXED ASSETS AMOUNTING TO RS. 8 15 382 AND INCOME TAX PAYMENT OF RS. 19 10 069 DURING THE YEAR AS APPLICATION OF INCOME IN ARRIVING AT THE INCOME COMPUTED BY APPLYING THE PROVISIONS OF SECTIONS 11 TO 13. 3. BECAUSE THE ASSESSING OFFICER HAS NOT CONSIDERED THE APPLICATION OF INCOME DURING THE YEAR AS PER THE PROVISIONS OF SECTION 11 WHICH WORKS OUT TO 129% OF THE INCOME OF THE YEAR. 4. BECAUSE THE ASSESSING OFFICER HAS ACTED AGAINST THE LAW BY NOT FOLLOWING THE JUDGEMENT OF JURISDICTIONAL ANDHRA PRADESH HIGH COURTS JUDGEMENT IN THE CASE OF CIT V TRUSTEE OF H.E.H. THE NIZAMS SUPPLEMENTAL RELIGIOUS ENDOWMENT TRUST (1981) 127 ITR 378 WHERE IT WAS HELD THAT INCOME-TAX AND WEALTH TAX PAID DURING THE RELEVANT YEARS THOUGH THOSE PAYMENTS ARE FOR THE PRECEDING ASSESSMENT I.T.A. NOS. 1569-1971/HYD/2010 AMCS OF KAVALI ATMAKUR AND NELLORE ======================== 3 YEARS WOULD CONSTITUTE ITEMS OF EXPENDITURE FOR THE YEAR IN WHICH THEY ARE PAID. SUCH PAYMENTS ARE SAID TO BE OUTGOING AND WOULD CONSTITUTE EXPENDITURE AND THEREFORE THEY ARE LIABLE TO BE DEDUCTED. 3. THE FIRST ISSUE IS EXEMPTION OF INCOME I.E. RS. 1 02 53 974 U/S. 10(26AAB) OF THE ACT. 4. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESS EE IS AN AGRICULTURAL MARKET COMMITTEE (AMC). KAVALI REGISTE RED AS A CHARITABLE INSTITUTION U/S. 12A OF THE INCOME-TAX A CT 1961. THE ASSESSEE FILED ITS RETURN OF INCOME ON 9.7.2008 DEC LARING NIL INCOME CLAIMING EXEMPTION U/S. 11 OF THE INCOME-TAX ACT 1961. BEFORE THE CIT(A) IT WAS SUBMITTED BY THE AR OF THE ASSESSEE THAT OMISSION OF SECTION 10(29) OF THE ACT AND AMEN DMENT BY WAY OF ADDING AN EXPLANATION SECTION 10(2) COMPELL ED THE AMC TO SEEK EXEMPTION OF ITS INCOME UNDER THE PROVISION S OF SECTIONS 11/12A OF THE I.T. ACT. THE AR ALSO QUOTED THE SPE ECH OF FINANCE MINISTER IN LOK SABHA ON 24.9.2008 ON THE F INANCE BILL 2008 WHEREIN THE FINANCE MINISTER STATED THAT CLAUS E 3 OF THE FINANCE BILL 2008 SEEKS TO AMEND THE DEFINITION O F CHARITABLE PURPOSE SO AS TO EXCLUDE ANY ACTIVITY IN THE NATUR E OF TRADE COMMERCE OR BUSINESS FOR A CESS OR FEE OR ANY OTHE R CONSIDERATION IRRESPECTIVE OF THE NATURE OR USE OF APPLICATION OR RETENTION OF THE INCOME FROM SUCH ACTIVITY. THE IN TENTION IS TO LIMIT THE BENEFIT TO ENTITIES WHICH ARE ENGAGED IN ACTIVITIES SUCH AS RELIEF OF POOR EDUCATION MEDICAL RELIEF AND AN Y OTHER GENUINE CHARITABLE PURPOSE AND TO DENY IT TO PURELY COMMERC IAL AND I.T.A. NOS. 1569-1971/HYD/2010 AMCS OF KAVALI ATMAKUR AND NELLORE ======================== 4 BUSINESS ENTITIES WHICH WEAR THE MASK OF CHARITY. T HE AR OF THE ASSESSEE FURTHER SUBMITTED THAT AS PER THE PRINCIPL ES OF STATUTORY INTERPRETATION BY JUSTICE G.P. SINGH ANY DECLARATO RY ACT MAY BE DEFINED AS AN ACT TO REMOVE DOUBTS EXISTING AS TO T HE COMMON LAW OR THE MEANING OR EFFECT OF ANY STATUTE AND SUC H ACTS ARE USUALLY HELD TO BE RETROSPECTIVE. THE ASSESSEES A R ALSO RELIED UPON THE DECISION THE CASE OF K.P. VARGHESE VS. ITO (1981) 131 ITR 597 (SC). THE AR ALSO CITED THE DECISION OF IT AT VISAKHAPATNAM BENCH IN AMC GUNTUR AND ANOTHER 23 A MCS FOR THE AY 2003-04 AND 2004-05 AND PLEADED FOR RELI EF. 5. THE CIT(A) RELYING ON THE DECISION OF THE APEX C OURT IN THE CASE OF AGRICULTURAL PRODUCE MARKET COMMITTEE V S. CITG (305 ITR 3) (SC) HELD THAT THE APEX COURT DID NOT E XTEND THE BENEFIT OF THE EXEMPTION U/S. 10(26AAB) TO THE APMC FOR THE YEARS UNDER CONSIDERATION AND OBSERVED THAT SECTION 10(26AAB) OF THE ACT COMES INTO FORCE FROM APRIL 1 2009. TH E SUPREME COURT THEREFORE DISMISSED THE APPEALS AND HELD TH AT THE ASSESSEE WAS NOT ENTITLED TO EXEMPTION U/S. 10(2) O F THE ACT AFTER THE INSERTION OF THE EXPLANATION BY THE FINAN CE ACT 2002. FOLLOWING THE DECISION OF THE SUPREME COURT THE CI T(A) HELD THAT THE PROVISIONS OF SECTION 10(26AAB) TO DO NOT APPLY RETROSPECTIVELY AND THE INCOME OF THE AMC IS TAXABL E FOR THE YEAR UNDER CONSIDERATION. I.T.A. NOS. 1569-1971/HYD/2010 AMCS OF KAVALI ATMAKUR AND NELLORE ======================== 5 6. THE LEARNED DR SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 7. WE HAVE HEARD THE LEARNED DR AND ALSO PERUSED TH E MATERIAL ON RECORD. THIS TRIBUNAL VIDE ORDER DATED 26 TH MARCH 2010 IN ACIT KHAMMAM VS. APMC MADHIRA AND ORS. IN I.T.A. NO. 542/HYD/09 AND OTHERS HAD DISCUSSED ELABORATEL Y THE ISSUE OF EXEMPTION OF INCOME U/S. 10(26AAB) OF THE ACT. IT WAS HELD THAT THE INCOME-TAX ACT AS IT STANDS AMENDED ON THE FIRST DAY OF APRIL OF ANY FINANCIAL YEAR MUST APPLY TO THE ASSES SMENT OF THAT YEAR AND THAT A PROVISION NOT EXPRESSLY RETROSPECTI VELY IS PROSPECTIVE E. IT WAS HELD THAT THERE IS NO AMBIGU ITY OR LACK OF CLARITY EXISTED PRIOR TO THE INSERTION OF A NEW SEC TION 10(26AAB) IN WHICH THIS PROVISION CAN BE SAID TO HAVE REMEDIE D. THE INTENTION OF THE LEGISLATURE HAS TO BE GATHERED FRO M THE LANGUAGE OF THE STATUTE ITSELF. WHEN THE LANGUAGE O F THE TEXT IS CLEAR AND UNAMBIGUOUS THE LITERAL CONSTRUCTION SHO ULD BE ADOPTED. THIS TRIBUNAL AFTER RELYING ON THE DECISI ON OF THE APEX COURT IN THE CASE OF CIT V. TARA AGENCIES REPORTED IN 292 ITR 444. THIS TRIBUNAL BY FOLLOWING THE DECISION OF THE APEX COURT IN THE CASE OF APMC (SUPRA) ALLOWED ALL THE APPEALS O F THE REVENUE ON THIS ISSUE. RESPECTFULLY FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH THIS ISSUE OF THE ASSESSEE I S DISMISSED. 8. THE SECOND ISSUE RELATES TO APPLICATION OF INCOM E DURING THE YEAR AS PER THE PROVISIONS OF SECTION 11 TO 13 OF THE ACT. I.T.A. NOS. 1569-1971/HYD/2010 AMCS OF KAVALI ATMAKUR AND NELLORE ======================== 6 SINCE THIS ISSUE WAS NOT CONSIDERED BY THE ASSESSIN G OFFICER WE RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION AND DECIDE THE SAME IN ACCORDANCE WIT H LAW. THE ASSESSING OFFICER SHALL AFFORD AN OPPORTUNITY OF BE ING HEARD TO THE ASSESSEE. ACCORDINGLY THIS ISSUE IS ALLOWED FO R STATISTICAL PURPOSES. I.T.A. NOS. 1570 & 1571/HYD/2010 AMCS OF ATMAKUR & KOVUR 9. THE GROUNDS RAISED BY THE ASSESSEES IN THE ABOVE TWO APPEALS ARE IDENTICAL TO THE GROUNDS RAISED BY THE ASSESSEE IN I.T.A. NO. 1569/HYD/2010. WE HAVE ALREADY DECIDED THE ISSUES AROSE IN THIS APPEAL AND THE APPEAL IS PARTLY ALLOW ED FOR STATISTICAL PURPOSES. FOLLOWING THE SAME RATIO THE SE TWO APPEALS OF THE ASSESSEES ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. 10. IN THE RESULT ALL THE THREE APPEALS OF THE ASS ESSEES ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH MARCH 2011. SD/ - (G.C. GUPTA) VICE PRESIDENT SD/ - (AKBER BASHA) ACCOUNTANT MEMBER HYDERABAD DATED 11 TH MARCH 2011 TPRAO I.T.A. NOS. 1569-1971/HYD/2010 AMCS OF KAVALI ATMAKUR AND NELLORE ======================== 7 COPY FORWARDED TO: 1. M/S. AGRICULTURAL MARKET COMMITTEE KAVALI C/O. SHRI C.L. NARAYANA RAO CHARTERED ACCOUNTANT 15/115/2 VENKATARAMAPURAM NELLORE NELLORE DIST. A.P. 2. M/S. AGRICULTURAL MARKET COMMITTEE ATMAKUR C/O . SHRI C.L. NARAYANA RAO CHARTERED ACCOUNTANT 15/115/2 VENKATARAMAPURAM NELLORE NELLORE DIST. A.P. 3. M/S. AGRICULTURAL MARKET COMMITTEE KOVUR C/O. SHRI C.L. NARAYANA RAO CHARTERED ACCOUNTANT 15/115/2 VENKATARAMAPURAM NELLORE NELLORE DIST. A.P. 4. THE INCOME TAX OFFICER WARD-4 O/O. JOINT COMMI SSIONER OF INCOME-TAX DARGAMITTA NELLORE NELLORE DISTRIC T. 5. THE CIT(A) GUNTUR 6 THE CIT GUNTUR 7. THE DR B BENCH ITAT HYDERABAD