DCIT, v. Agriculture Produce Market Committee,

ITA 22/RAN/2011 | 2006-2007
Pronouncement Date: 17-02-2012 | Result: Partly Allowed

Appeal Details

RSA Number 2225114 RSA 2011
Assessee PAN AAALA0691D
Bench Ranchi
Appeal Number ITA 22/RAN/2011
Duration Of Justice 3 month(s) 5 day(s)
Appellant DCIT,
Respondent Agriculture Produce Market Committee,
Appeal Type Income Tax Appeal
Pronouncement Date 17-02-2012
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 17-02-2012
Assessment Year 2006-2007
Appeal Filed On 11-11-2011
Judgment Text
ITA NO18 TO 23/RANCHI/2011 M/S. AGRICULTURAL PRODUC E MARKET COMMITTEE DUMKA ETC. 1 IN THE INCOME TAX APPELLATE TRIBUNAL RANCHI CIRCUIT BENCH RANCHI BEFORE: SHRI B.R. MITTAL JUDICIAL MEMBER AND SHRI SHAMIM YAHYA ACCOUNTANT MEMBER ITA NO. 1 8 / RANCHI / 20 11 ASSESSMENT YEAR : 200 6 - 0 7 D CIT CIRCLE - III DEOGHAR VS. M/S. AGRICULTURAL PRODUCE MARKET COMMITTEE DUMKA (APPELLANT) (RESPONDENT) PAN NO.AAA LA 0691D ITA NO.19/RANCHI/2011 ASSESSMENT YEAR : 2006 - 07 DCIT CIRCLE - III DEOGHAR VS. M/S. AGRICULTURAL PRODUCE MARKET COMMITTEE BARHARWA SAHIBGANJ (APPELLA NT) (RESPONDENT) PAN NO.AAALA 0746P ITA NO.20/RANCHI/2011 ASSESSMENT YEAR : 2008 - 09 DCIT CIRCLE - III DEOGHAR VS. M/S. AGRICULTURAL PRODUCE MARKET COMMITTEE SAHIBGANJ (APPELLANT) (RESPONDENT) PAN NO.AAALT 0734A ITA NO. 21 /RANCHI/2011 ASSES SMENT YEAR : 200 6 - 0 7 D CIT CIRCLE - III DEOGHAR VS. M/S. AGRICULTURAL PRODUCE MARKET COMMITTEE PAKUR (APPELLANT) (RESPONDENT) PAN NO.AAA L A 0715E ITA NO. 22 /RANCHI/2011 ASSESSMENT YEAR : 200 6 - 07 D CIT CIRCLE - III DEOGHAR VS. M/S. AGRICULTURAL PRODU CE MARKET COMMITTEE GODDA (APPELLANT) (RESPONDENT) PAN NO.AA BTA 8659E ITA NO18 TO 23/RANCHI/2011 M/S. AGRICULTURAL PRODUC E MARKET COMMITTEE DUMKA ETC. 2 ITA NO. 23 /RANCHI/2011 ASSESSMENT YEAR : 200 6 - 0 7 DCIT CIRCLE - III DEOGHAR VS. M/S. AGRICULTURAL PRODUCE MARKET COMMITTEE DEOGHAR (APPELLANT) (RESPONDENT) PAN NO. AAALA 0483F APPELLANT BY: SHRI HARSHWARDHAN SR. S.C. RESPONDENT BY: SHRI SHIKESH JHA AR DATE OF HEAR I NG: 1 4 .02.2012 DATE OF PRONOUNCEMENT: 17 .02.2012 ORDER PER BENCH:- THESE APPEALS ARE FILED BY THE DEPARTMENT AGAINST T HE ORDERS OF THE LD. CIT(A) IN THE CASE OF AGRICULTURAL PRODUCE MARK ET COMMITTEE OF VARIOUS PLACES RELATING TO ASSESSMENT YEAR 2006-07 INVOLVIN G COMMON ISSUES AND FOR THE SAKE OF CONVENIENCE AND READY REFERENCE WE REP RODUCE THE GROUNDS OF APPEAL IN ITA NO.18/RANCHI/2011 WHICH ARE AS UNDER: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) DHANBAD IS ERRED IN THE EYE OF LAW ALLOWING THE ASS ESSEE TO ENJOY THE BENEFIT OF REGISTRATION U/S 12AA(3) AS THE SAM E WAS GRANTED BY THE LD. CIT DHANBAD TO M/S. AGRICULTURAL PRODUCE M ARKET COMMITTEE CREATED UNDER BIHAR AGRICULTURAL PRODUCE MARKET ACT 1961. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) DHANBAD IS ERRED IN ALLOWING CONTRIBUTION OF RS.10 66 640/- MADE BY THE ASSESSEE TO JHARKHAND STATE AGRICULTURAL PRODUC E MARKET BOARD IN VIOLATION OF SECTION 13(1)(C) OF THE IT ACT 196 1. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) DHANBAD IS ERRED IN ALLOWING DEPRECIATION ALLOWANCE WITHOUT GIVING ANY OPPORTUNITY TO THE ASSESSING OFFICER TO VERIFY THE GENUINITY OF THE CLAIM OF THE ASSESSEE. 4. THE LD. CIT(A) ERRED IN LAW AS WELL AS IN FACT IN I GNORING THE PROVISIONS OF RULE 46A OF THE IT RULES 1962 AND SE CTION 10(20) OF I.T. ACT 1961 TREATED THE ASSESSEE AS LOCAL AUTHOR ITY. 5. THE LD. CIT(A) ERRED IN LAW AS WELL AS IN FACT IN I GNORING THE PROVISIONS OF RULE 46A OF THE IT RULES 1962 AND SE CTION 10(20) OF I.T. ACT TO TREAT THE METHOD OF ACCOUNTING OF THE ASSESSEE AS CASH INSTEAD OF MERCANTILE SYSTEM. ITA NO18 TO 23/RANCHI/2011 M/S. AGRICULTURAL PRODUC E MARKET COMMITTEE DUMKA ETC. 3 2. IN RESPECT OF GROUND NO.1 OF THE APPEAL THE ASS ESSING OFFICER CONSIDERED THE REGISTRATION GRANTED BY CIT DHANBAD U/S 12A OF THE INCOME- TAX ACT NOT VALID ON THE GROUND THAT THE ASSESSEE W AS GRANTED REGISTRATION U/S 12A OF THE ACT CREATED UNDER BIHAR AGRICULTURAL PRO DUCE MARKETING ACT 1960 AND NOT UNDER THE JHARKHAND AGRICULTURAL PRODUCE MA RKET ACT 2000. 3. DURING THE COURSE OF HEARING THE LD. D.R. RELIE D ON THE ORDER OF THE ASSESSING OFFICER AND WHEREAS THE LD. D.R. RELIED O N THE ORDER OF THE CIT(A). 4. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF AUTHO RITIES BELOW. WE ARE OF THE CONSIDERED VIEW THAT THE REGISTRATION GRANTE D TO THE ASSESSEE U/S 12A OF THE INCOME-TAX ACT BY CIT DHANBAD HAVING JURISDI CTION ON THE ASSESSEE IS VALID AND THE PLEA TAKEN BY THE ASSESSING OFFICER T O DENY THE REGISTRATION ON THE GROUND THAT THE ASSESSEE WAS CREATED UNDER THE BIHAR AGRICULTURAL MARKET PRODUCE ACT 1960 AND NOT UNDER THE JHARKHAND AGRIC ULTURAL MARKET PRODUCE ACT 2000 HAS NO SUBSTANCE BECAUSE THE ASSESSEE WAS CREATED ONLY ONCE AND THAT TOO BEFORE THE STATE OF JHARKHAND CAME INTO EX ISTENCE. THE CREATION OF THE ASSESSEE SOCIETY UNDER THE BIHAR AGRICULTURAL M ARKET PRODUCE ACT 1960 AND CONSEQUENT TO CHANGES MADE BY BIFURCATING THE S TATE OF BIHAR AND JHARKHAND THE BENEFITS AND NOTIFICATION ISSUED TO THE ASSESSEE SOCIETY BEFORE THE STATE OF JHARKHAND CAME INTO EXISTENCE WILL NOT BE EFFECTED. IT WAS NOT NECESSARY FOR THE ASSESSEE TO RE-INCORPORATE ONCE J HARKHAND STATE WAS FORMED UNDER SEPARATE ACT AS APPLICABLE TO THE ASSE SSEE NAMELY `JHARKHAND AGRICULTURAL PRODUCE MARKET ACT 2000. WE HOLD TH AT THE LD. CIT(A) HAS RIGHTLY HELD THAT THE NOTIFICATION ISSUED WITH REFE RENCE TO THE BIHAR ACT MUST BE READ AS REFERENCE TO THE JHARKHAND ACT 2000 IN VIEW OF THE GENERAL CLAUSES ACT 1897. HENCE THE LD. CIT(A) HAS RIGHT LY HELD THAT GRANT OF REGISTRATION U/S 12A OF THE ACT IS IN FORCE. ACCOR DINGLY GROUND NO.1 OF THE APPEAL TAKEN BY THE DEPARTMENT IS REJECTED. 5. IN RESPECT OF GROUND NO.2 OF THE APPEAL THE REL EVANT FACTS ARE THAT A CONTRIBUTION WAS MADE BY THE AGRICULTURAL PRODUCE M ARKET COMMITTEE TO AGRICULTURAL PRODUCE MARKET BOARD I.E. THE PARENT O RGANIZATION AS PER PROVISIONS OF AGRICULTURAL PRODUCE MARKET ACT. THE ASSESSING OFFICER DENIED ITA NO18 TO 23/RANCHI/2011 M/S. AGRICULTURAL PRODUC E MARKET COMMITTEE DUMKA ETC. 4 THE EXEMPTION U/S 11 OF THE ACT BY INVOKING THE PRO VISIONS OF SECTION 13(1)(C) OF THE ACT HOLDING THAT THE PAYMENT MADE TO PARENT ORGANIZATION I.E. MARKETING BOARD FOR SUPERINTENDENCE AND CONTROL IS EXORBITANT AND IT TANTAMOUNTS TO DIVERSIFICATION OF THE FUNDS OF THE ASSESSEE UNDER THE COLOUR OF OBLIGATION. THE ASSESSING OFFICER STATED THAT THE OBJECT IS NOT FULFILLED BY THE ASSESSEE BY MAKING THE CONTRIBUTION TO MARKETIN G BOARD. IN THE CASE OF AGRICULTURAL PRODUCE MARKET COMMITTEE DUMKA ITA NO .18/RANCHI/2011 THE ASSESSING OFFICER DISALLOWED A SUM OF RS.10 66 614/ - OUT OF CONTRIBUTION OF RS.35 87 890/- MADE BY THE ASSESSEES. BEING AGGRIE VED THE ASSESSEE FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. TH E LD. CIT(A) BY FOLLOWING THE DECISION OF ITAT PATNA BENCH IN ITA NO.112/PAT/ 2008 DATED 25.6.2008 IN THE CASE OF AGRICULTURAL PRODUCE MARKET COMMITTEE M UZAFFARPUR VS. DCIT REVERSED THE ORDER OF THE ASSESSING OFFICER AND GRA NTED EXEMPTION U/S 11 OF THE ACT. HENCE DEPARTMENT IS IN APPEAL BEFORE THE TRIBUNAL. AT THE TIME OF HEARING THE LD. D.R. RELIED ON THE ORDER OF THE AS SESSING OFFICER WHEREAS THE LD. A.R. SUBMITTED THAT THE ISSUE IS IN FAVOUR OF T HE ASSESSEE BY ORDER OF ITAT PATNA BENCH DATED 25.6.2008 (SUPRA). 6. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF AUTHO RITIES BELOW AND THE SUBMISSIONS OF LD. REPRESENTATIVE OF THE PARTIES. WE OBSERVE THAT THE ASSESSEE MADE THE CONTRIBUTION TO THE BOARD AS PER SECTION 33C OF BIHAR AGRICULTURAL PRODUCE MARKET ACT 1960. THAT THE MA RKETING BOARD HAS TO APPLY THE AMOUNT SO RECEIVED BY IT AS PER PROVISION S OF THE ACT TO MEET EXPENSES OF ITS ESTABLISHMENT AND ALSO TO INCORPORA TE IN THE INTEREST OF THE MARKETING COMMITTEES I.E. THE ASSESSEES. THEREFORE THE PAYMENTS MADE BY THE ASSESSEE TO THE MARKETING BOARD IS AS PER STATU TE UNDER WHICH THE ASSESSEE AS WELL AS THE MARKETING BOARD HAVE BEEN I NCORPORATED AND THE MARKETING BOARD IS TO SPEND THE AMOUNT SO RECEIVED AS PER THE PROVISIONS OF BIHAR AGRICULTURAL PRODUCE MARKET ACT 1960 TO MEET ITS OBJECT THAT THE OBJECTS OF THE ASSESSEE AS WELL AS BOARD ARE COMPLE MENTARY TO EACH OTHER. THEREFORE WE HOLD THAT THE PAYMENT MADE BY THE ASS ESSEE TO THE MARKETING BOARD IS ALLOWABLE EXPENDITURE BEING STATUTORY LIAB ILITY AS PER THE ACT. SINCE SIMILAR ISSUE WAS CONSIDERED BY ITAT PATNA BENCH BY ITS ORDER DATED 25.6.2008 (SUPRA) WHICH WAS DECIDED BY CONSIDERING THE ORDER OF THE ITAT ITA NO18 TO 23/RANCHI/2011 M/S. AGRICULTURAL PRODUC E MARKET COMMITTEE DUMKA ETC. 5 JABALPUR BENCH IN THE CASE OF DCIT VS. KRISHI UPAJ MANDI SAMITI KATNI BY ORDER DATED 12.10.2007 AND RESPECTFULLY FOLLOWING T HE SAME WE UPHOLD THE ORDER OF THE LD. CIT(A) AND REJECT THE GROUND NO.2 AND THE APPEAL TAKEN BY THE DEPARTMENT. 7. IN RESPECT OF GROUND NO.3 OF THE APPEAL THE ASS ESSING OFFICER MADE A DISALLOWANCE OF DEPRECIATION OF RS.2 96 596/-. IT IS RELEVANT TO STATE THAT THERE IS NO DISCUSSION IN THE ORDER. HOWEVER LD. CIT(A) HAS DELETED THE SAID DISALLOWANCE STATING THAT THIS ISSUE IS DEALT IN TH E ASSESSEES BRANCH AT DHANBAD I.E. AGRICULTURAL PRODUCE MARKET COMMITTEE DHANBAD VIDE ORDER DATED 22.7.2011 AND ACCORDINGLY DELETED THE DISALLO WANCE MADE BY THE ASSESSING OFFICER. IT IS RELEVANT TO STATE THAT TH E APPEAL IN THE SAID CASE FILED BY THE DEPARTMENT WAS ALSO HEARD ALONG WITH THESE A PPEALS AND IN THE SAID CASE THE LD. CIT(A) DELETED THE DISALLOWANCE OF DE PRECIATION VIDE PARA-9 BY FOLLOWING THE DECISION OF ITAT PATNA BENCH (SUPRA). THE PARA-9 OF THE SAID ORDER OF CIT(A) READS AS UNDER: GROUND OF APPEAL NO.7 IS REGARDING DISALLOWANCE OF DEPRECIATION. THIS ISSUE IS ALSO COVERED BY THE ORDER OF MY PREDECESSO R IN A.Y. 2006-07 IN THE CASE OF THE APPELLANT IN WHICH RELIANCE WAS PLACED ON THE DECISION OF HONBLE ITAT PATNA BENCH IN THE CASE OF APMC MUZAFFARPUR VS. DCIT IN ITA NO.112/PAT/2008 DATED 25.06.2008. IN THIS ASSESSME NT YEAR ALSO THE ISSUE IS THE SAME. DURING THE COURSE OF HEARING IT HAS BEEN CLARIFIED BY THE A/R OF THE APPELLANT THAT SUCH DEPRECIATION HAS NOT BEEN C LAIMED ON ASSETS ACQUISITION OF WHICH HAS BEEN CLAIMED AS APPLICATIO N OF INCOME. THEREFORE THERE IS NO DOUBLE DEDUCTION OR DOUBLE BENEFIT TO T HE APPELLANT. ACCORDINGLY THE ACTION OF THE A.O. IS HELD AS NOT TENABLE ON TH IS ISSUE ALSO. HENCE THE DEPARTMENT FILED THIS APPEAL BEFORE THE TRIBUNAL. 8. AT THE TIME OF HEARING THE LD. D.R. COULD NOT P OINT OUT AS TO WHY THE A.O. HAS MADE THIS DISALLOWANCE. HOWEVER THE LD. A.R. FILED A COPY OF EARLIER ORDER OF THE TRIBUNAL DATED 25.6.2008 (SUPR A) AND SUBMITTED THAT THE TRIBUNAL DELETED THE DISALLOWANCE OF DEPRECIATION B Y FOLLOWING THE DECISION OF HONBLE KOLKATA HIGH COURT IN THE CASE OF CIT VS. B HARUKA PUBLIC WELFARE TRUST 240 ITR 513 WHEREIN IT WAS OBSERVED THAT EVE N CAPITAL EXPENSES ARE CONSIDERED AS AN OUTGOING AND ON THE SAME PRINCIPLE THE DEPRECIATION IS ALSO A PART OF COMMERCIAL OUTGOING FOR COMPUTATION OF IN COME. THE TRIBUNAL HELD ITA NO18 TO 23/RANCHI/2011 M/S. AGRICULTURAL PRODUC E MARKET COMMITTEE DUMKA ETC. 6 THAT DEPRECIATION CLAIMED IN THE ACCOUNTS BY THE AS SESSEE TRUST WAS AN OUTGOING FOR THE PURPOSE OF DEPRECIATION OF INCOME IN TERMS OF SECTION 11(1) OF THE INCOME-TAX ACT. 9. IN VIEW OF THE ABOVE SUBMISSION OF LD. REPRESEN TATIVE OF THE PARTIES AND CONSIDERING THE FACT THAT CIT(A) HAS ALLOWED TH E DEPRECIATION BY REVERSING THE ORDER OF A.O. BY FOLLOWING THE DECISI ON OF ITAT (SUPRA) WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A). HENCE GROUND NO.3 OF THE APPEAL TAKEN BY THE DEPARTMENT I S REJECTED. 10. IN RESPECT OF GROUND NO.4 THE LD. D.R. HAS NOT MADE ANY SUBMISSION SAVE AND EXCEPT SUBMITTING THAT THE LD. CIT(A) IS N OT JUSTIFIED TO TREAT THE ASSESSEE AS LOCAL AUTHORITY. THE LD. A.R. HAS ALSO NOT MADE ANY SUBMISSION AS TO WHY THE ASSESSEE BE TREATED AS A LOCAL AUTHOR ITY AS HELD BY THE LD. CIT(A). 11. BE THAT AS IT MAY WE HOLD THAT THE HONBLE APE X COURT HAS HELD IN THE CASE OF AGRICULTURAL PRODUCE MARKET COMMITTEE NARE LA VS. CIT AND ANOTHER 305 ITR 1 THAT AGRICULTURAL MARKET COMMITTEE IS NOT A LOCAL AUTHORITY UNDER THE EXPLANATION TO SECTION 10(20) OF THE INCOME-TAX ACT AFTER INSERTION OF EXPLANATION VIDE FINANCE ACT 2002 W.E.F. 1.4.2003. ACCORDINGLY WE HOLD THAT THE ASSESSEE IS NOT A LOCAL AUTHORITY. 12. BEFORE WE PART WITH THIS ISSUE IT IS RELEVANT TO STATE THAT THE ASSESSING OFFICER HAS ASSESSED THE ASSESSEE AS AOP WITHOUT ST ATING ANY REASON. THE LD. CIT(A) WHILE CONSIDERING THIS ISSUE HAS STATED THAT THE ASSESSING OFFICER IS NOT JUSTIFIED TO CHANGE THE STATUS OF THE ASSESSEE AS AOP AND HAS HELD THAT ASSESSEE IS A LOCAL AUTHORITY. WE HAVE MENTIONED T HAT THE ASSESSEE COULD NOT BE TREATED AS A LOCAL AUTHORITY BUT IT IS A BODY IN CORPORATED UNDER THE BIHAR AGRICULTURAL PRODUCE MARKET ACT 1960 AND IS A SEPA RATE LEGAL ENTITY. DURING THE COURSE OF HEARING NO SUBMISSIONS WERE MADE BEF ORE US BY REPRESENTATIVES OF ANY OF THE PARTIES ON THIS ISSUE AND WE CONSIDER IT RELEVANT TO RESTORE THIS ISSUE TO THE FILE OF THE LD. CIT(A) WITH THE DIRECTION TO DECIDE THIS ISSUE AFRESH IN THE LIGHT OF THE DECISION OF T HE HONBLE APEX COURT (SUPRA) ITA NO18 TO 23/RANCHI/2011 M/S. AGRICULTURAL PRODUC E MARKET COMMITTEE DUMKA ETC. 7 AFTER GIVING DUE OPPORTUNITY OF HEARING TO THE PART IES. HENCE GROUND NO.4 OF THE APPEAL TAKEN BY THE DEPARTMENT IS ALLOWED FOR S TATISTICAL PURPOSES. 13. IN RESPECT OF GROUND NO.5 THERE WAS NO SUBMISS ION BY THE REPRESENTATIVES OF ANY OF THE PARTY. HENCE GROUND NO.5 OF THE APPEAL IS REJECTED. 14. IN THE RESULT THE APPEAL BEING ITA NO.18/RANCH I/2011 IS ALLOWED IN PART FOR STATISTICAL PURPOSES. 15. AS MENTIONED THAT THE GROUNDS IN OTHER APPEALS ARE IDENTICAL SAVE AND EXCEPT THE AMOUNT MENTIONED IN GROUND NO.2&3 OF TH E APPEAL WHICH WAS DISALLOWED BY THE ASSESSING OFFICER ON THE GROUND T HAT CONTRIBUTION MADE TO MARKET BOARD IS IN VIOLATION OF SECTION 13(1)(C) OF THE ACT AND DEPRECIATION NOT ALLOWED. FOLLOWING THE SAME REASONINGS FOR ALL THE GROUNDS OF APPEAL WE ALLOW THE OTHER APPEALS BEING ITA NOS.19 TO 23/RANC HI/2011 FILED BY THE DEPARTMENT IN PART FOR STATISTICAL PURPOSES. 16. HENCE ALL THE APPEALS OF THE DEPARTMENT ARE ALLOWED IN PART FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 17.02.2012 SD/ - SD/ - ( SHAMIM YAH Y A ) ( B.R. MITTAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS RANCHI DATED 17 TH FEBRUARY 2012 ITA NO18 TO 23/RANCHI/2011 M/S. AGRICULTURAL PRODUC E MARKET COMMITTEE DUMKA ETC. 8 COPY TO 1 THE D CIT CIRCLE - III DEOGHAR 2 THE AGRICULTURAL PRODUCE MARKET COMMITTEE DUMKA 3 THE AGRICULTURAL PRO DUCE MARKET COMMITTEE BARHARWA SAHIBGANJ 4 THE AGRICULTURAL PRODUCE MARKET COMMITTEE SAHIBGAN J 5 THE AGRICULTURAL PRODUCE MARKET COMMITTEE PAKUR 6 THE AGRICULTURAL PRODUCE MARKET COMMITTEE GODDA 7 THE AGRICULTURAL PRODUCE MARKET COMMITTEE DEOGHAR 8 M/S. AGRICULTURAL PRODUCE MARKET COMMITTEE DHANBAD MARKET COMMITTEE DHANBAD-826 001. 9 CIT DHANBAD (JHARKHAND) 10 THE CIT(A) DHANBAD (JHARKHAND) 11 THE DR ITAT DHANBAD 12 GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL CAMP: RANCHI