The ACIT, Ratlam v. M/s Krishi Upaj Mandi Samiti, Ratlam

ITA 261/IND/2011 | 2004-2005
Pronouncement Date: 01-02-2012 | Result: Dismissed

Appeal Details

RSA Number 26122714 RSA 2011
Assessee PAN AAALK0319A
Bench Indore
Appeal Number ITA 261/IND/2011
Duration Of Justice 4 month(s) 2 day(s)
Appellant The ACIT, Ratlam
Respondent M/s Krishi Upaj Mandi Samiti, Ratlam
Appeal Type Income Tax Appeal
Pronouncement Date 01-02-2012
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 01-02-2012
Assessment Year 2004-2005
Appeal Filed On 29-09-2011
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI R.C. SHARMA ACCOUNTANT MEMBER ITA NO.260/IND/2011 (A.Y. 2004-05) ACIT-1(1) UJJAIN APPELLANT VS. KRISHI UPAJ MANDI SAMITI LOHARDA PAN AAALK 0319 A RESPONDENT DEPARTMENT BY : SHRI ARUN DEWAN SR. DR ASSESSEE BY : SHRI SANJAY AGRAWAL CA ITA NO.261/IND/2011 (A.Y. 2004-05) ACIT-RATLAM APPELLANT VS. KRISHI UPAJ MANDI SAMITI RATLAM PAN AAALK 0365 N RESPONDENT DEPARTMENT BY : SHRI ARUN DEWAN SR. DR ASSESSEE BY : SHRI SANJAY MOONAT CA 2 CROSS-OBJECTION NO. 54/IND/2011 (ARISING OUT OF ITA NO.261/IND/2011) (A.Y. 2004-05) KRISHI UPAJ MANDI SAMITI RATLAM PAN AAALK 0365 N OBJECTOR VS. ACIT-RATLAM RESPONDENT ASSESSEE BY : SHRI SANJAY MOONAT CA DEPARTMENT BY : SHRI ARUN DEWAN SR. DR ITA NO.262/IND/2011 (A.Y. 2007-08) ACIT-1(1) UJJAIN APPELLANT VS. KRISHI UPAJ MANDI SAMITI KHATEGAON PAN AAALK 0250 E RESPONDENT DEPARTMENT BY : SHRI ARUN DEWAN SR. DR ASSESSEE BY : SHRI SANJAY AGRAWAL CA ITA NO.263/IND/2011 (A.Y. 2006-07) ACIT-1(1) UJJAIN APPELLANT VS. KRISHI UPAJ MANDI SAMITI KHATEGAON PAN AAALK 0250 E RESPONDENT DEPARTMENT BY : SHRI ARUN DEWAN SR. DR ASSESSEE BY : SHRI SANJAY AGRAWAL CA 3 ITA NO.264/IND/2011 (A.Y. 2006-07) ACIT-RATLAM APPELLANT VS. KRISHI UPAJ MANDI SAMITI MANDSAUR PAN AAAAK 4284 B DEPARTMENT BY : S/SH. KESHAVE SAXENA & ARUN DEWAN ASSESSEE BY : SHRI SANJAY AGRAWAL CA ITA NO.265/IND/2011 (A.Y. 2007-08) ACIT-2(1) UJJAIN APPELLANT VS. KRISHI UPAJ MANDI SAMITI SHAJAPUR PAN AAALK 0245 K RESPONDENT DEPARTMENT BY : SHRI ARUN DEWAN SR. DR ASSESSEE BY : SHRI SANJAY AGRAWAL CA ITA NO.266/IND/2011 (A.Y. 2003-04) ACIT-2(1) UJJAIN APPELLANT VS. KRISHI UPAJ MANDI SAMITI NAGDA PAN AAALK 2286 E RESPONDENT DEPARTMENT BY : SHRI ARUN DEWAN SR. DR ASSESSEE BY : SHRI SANJAY AGRAWAL CA 4 ITA NO.267/IND/2011 (A.Y. 2003-04) ACIT-2(1) UJJAIN APPELLANT VS. KRISHI UPAJ MANDI SAMITI AGAR PAN AAALK 0159 J RESPONDENT DEPARTMENT BY : SHRI ARUN DEWAN SR. DR ASSESSEE BY : SHRI SANJAY AGRAWAL CA ITA NO.268/IND/2011 (A.Y. 2004-05) ACIT-1(1) UJJAIN APPELLANT VS. KRISHI UPAJ MANDI SAMITI AGAR PAN AAALK 0159 J RESPONDENT DEPARTMENT BY : SHRI ARUN DEWAN SR. DR ASSESSEE BY : SHRI SANJAY AGRAWAL CA AND ITA NO.269/IND/2011 (A.Y. 2007-08) ACIT-2(1) UJJAIN APPELLANT VS. KRISHI UPAJ MANDI SAMITI MAKSI PAN AAALK 0361 J ..RESPONDENT DEPARTMENT BY : SHRI ARUN DEWAN SR. DR ASSESSEE BY : SHRI SANJAY AGRAWAL CA 5 DATE OF HEARING : 30.1.2012 DATE OF PRONOUNCEMENT : 01.2.2012 ORDER PER BENCH THIS BUNCH OF TEN APPEALS BY THE REVENUE AND ONE CR OSS- OBJECTION BY THE ASSESSEE IN CASES OF DIFFERENT ASSESS EES IS FILED AGAINST DIFFERENT ORDERS OF THE LEARNED COMMISSIONER OF INCOM E TAX (APPEALS). IN THESE APPEALS THE REVENUE HAS CHALLENGED THE DIREC TION OF LD. CIT(A) THAT EXEMPTION U/S 11 BE ALLOWED AS REGISTRATION HAS BEE N GRANTED TO THE ASSESSEES U/S 12A EVEN THOUGH THE ASSESSEES HAD NO T FULFILLED THE REQUIREMENTS OF SECTION 11(1)(A) & 11(2) OF THE ACT AN D ALSO DIRECTED TO DELETE THE ADDITIONS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCES OF SUBSIDY TO GOSHALA RESEARCH AND IN FRASTRUCTURE NIDHI KISAN SADAK NIDHI ADHOSARANCHANA NIDHI GA USANVARDHAN NIDHI BOARD SHULK AARKSHIT NIDHI AND EXCESS CLAIM OF DEPRECIATION. 2. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND ALSO PERUSED THE MATERIAL AVAILABLE ON THE FILES. THE LEAR NED RESPECTIVE COUNSEL FOR THE ASSESSEES SUBMITTED THAT THE IMPUGNED IS SUES ARE COVERED BY THE ORDERS OF INDORE BENCH IN THE CASE OF KRISHI UPAJ MANDI SAMITIES (COPIES OF THE RELEVANT ORDERS ARE FILED IN P APER BOOKS). THE LD. SR. DR HOWEVER RELIED UPON THE ORDERS OF THE AS SESSING OFFICER BUT 6 COULD NOT CONTROVERT THE ASSERTION OF THE LEARNED COUNSEL S FOR THE ASSESSEES BY BRINGING ANY POSITIVE MATERIAL ON RECO RD. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERU SED THE MATERIAL AVAILABLE ON FILE. SO FAR AS THE ISSUE OF A ARAKSHIT NIDHI IS CONCERNED WE FIND THAT ITAT INDORE HAS DECIDED THIS ISSUE IN THE CASE OF KRISHI UPAJ MANDI SAMITI BURHANPUR IN ITA NOS.27 7 & 278/IND/2008 VIDE ORDER DATED 24.10.2008 (12 ITJ 12 -INDORE TRIBUNAL). THE RELEVANT PORTION OF THE ORDER DATED 24 .10.2008 (SUPRA) IS REPRODUCED HEREUNDER: 6. GROUND NO.2 & 9 : ON GROUND NO.2 ASSESSEE CHALLENGED THE ORDER OF LD. CIT(A) IN NOT EXEMPTING THE INCOME OF RS.38 69 627/- BEING INTEREST ON FDR FROM RESERVE FUND AND ON GROUND NO.9 IN ENHANCING THE INCOME IN RESPECT OF AARAKSHIT NIDHI OF RS.19 25 785/-. THE AO FOUN D THAT ASSESSEE CLAIMED EXEMPTION OF INTEREST OF RS.38 69 627/- RECEIVED ON THE FUNDS DEPOSITED WITH THE BANK FOR T HE PURPOSE OF PENSION GRATUITY AND OTHER RETIREMENT B ENEFITS OF THE EMPLOYEES. THE AO ASKED THE ASSESSEE TO SHOW WH ETHER THE SAID FUND WAS REGISTERED UNDER THE SUPERANNUATI ON FUND U/S 10(25) OF THE IT ACT. IT WAS SUBMITTED BY THE A SSESSEE THAT FUND WAS NOT A SUPERANNUATION FUND. THE AO EXA MINED THE PROVISIONS OF SEC. 10(25) AND HELD THAT PROVISI ONS OF SEC. 10(25) ARE NOT APPLICABLE IN THIS CASE BECAUSE NEIT HER IT IS RELATED TO PF NOR THE FUND WAS APPROVED SUPERANNUAT ION OR GRATUITY FUND. THE SAME WAS THEREFORE ADDED AS INT EREST EARNED TO THE INCOME OF THE ASSESSEE. SIMILAR CLAIM WAS MADE BEFORE LD. CIT(A) HOWEVER THIS GROUND WAS REJE CTED ON THE REASONS THAT THE INTEREST IN SUCH RESERVE FUND WERE NOT EXEMPT SINCE THE FUND CREATED WAS NOT REGISTERED U/ S 10(25) OF THE IT ACT. AS REGARDS AARAKSHIT NIDHI OF RS.19 25 785/- THE ASSESSEE SUBMITTED THAT THE CONTRIBUTION WAS MA DE IN VIEW OF THE PROVISIONS OF RELEVANT ACT AND RULES FR AMED THEREIN. IT WAS NOTED BY THE LD. CIT(A) THAT THE CON TRIBUTION MADE TO THE AARAKSHIT NIDHI WAS ACTUALLY A CONTRIBU TION TO A RESERVE FOR MEETING OUT THE FUTURE LIABILITIES OF P ROVISION GRATUITY ETC. HENCE CANNOT BE ALLOWED AS EXPENDITU RE U/S 36(1)(XII). IT WAS FURTHER NOTED THAT ASSESSEE WAS FOLLOWING CASH SYSTEM OF ACCOUNTING THEREFORE ON MERE PROVIS ION MADE IN THE BOOKS DEDUCTION CANNOT BE ALLOWED. BOTH THE ADDITIONS WERE ACCORDINGLY MADE. 7 7. LD. COUNSEL FOR ASSESSEE SUBMITTED THAT ASSESSEE IS CREATED UNDER MP KRISHI UPAJ MANDI ADHINIYAM AND RU LES THEREIN AND AS PER RULE 10 RESERVE FUND IS TO BE C REATED @5% WHICH PROVIDES LEAVING ASIDE FARMERS ROAD FUND AND AGRICULTURAL AND INFRASTRUCTURAL DEVELOPMENT FUND @5% OF REMAINING AGGREGATE RECEIPT CHIEF ACCOUNTS OFFICER W ILL DEPOSIT IN SEPARATE BANK ACCOUNT EVERY THREE MONTHS IN THE FARMER RESERVE FUND. USE OF RESERVE FUND SHALL BE M ADE FOR THE PAYMENT OF PENSION TO THE MEMBERS OF THE STATE BOARD SERVICE FAMILY PENSION EX-GRATIA GRATUITY GRANT LOAN AND ADVANCE AS PER PROCEDURE PRESCRIBED BY THE BOARD AN D EACH MEMBER OF THE SERVICE BOARD SHALL BE ENTITLED TO RE CEIVE PENSION ON RETIREMENT GRATUITY AND OTHER BENEFITS AS PER RULES AND SEPARATE ACCOUNT OF RESERVE FUND SHALL BE KEPT IN A BANK FOR THE MEMBERS OF SERVICE BOARD POSTED IN MAR KET COMMITTEE (PB-31). HE HAS FURTHER SUBMITTED THAT AA RAKSHIT NIDHI IS LIKEWISE TO BE CREATED @5% OF THE TOTAL RE CEIPT OF THE MANDI FEES WHICH COULD ENHANCE UP TO 10% AS PER SEC . 7 OF MP KRISHI MANDI (STATE MARKETING FUND RULES)(PB-33) . HE HAS ALSO REFERRED TO SEC.25A (6) OF MP KRISHI MANDI ADH INIYAM WHICH PROVIDES THAT MARKET COMMITTEE SHALL MAKE PRO VISION IN THE BUDGET FOR CREDITING THE AMOUNT INTO PERMANE NT FUND @20%. HE HAS SUBMITTED THAT SEC. 43 OF MP KRISHI UP AJ MANDI ADHINIYAM PROVIDES STATE MARKETING DEVELOPMENT FUND AND THE MARKET COMMITTEE SHALL PAY AT SUCH PERCENTAGE O UT OF THE GROSS RECEIPT LICENCE FEE AND MARKET FEES TO TH E STATE GOVT. AND ALL EXPENDITURE INCURRED BY THE BOARD ACC ORDING TO THE BUDGET SECTION SHALL BE DEFRAYED. HE HAS THEREF ORE SUBMITTED THAT THESE ARE THE REASONS THROUGH WHICH THE RESERVE FUND IS CREATED AS STATUTORILY REQUIRED WHI CH WERE PERMANENT FUNDS IN NATURE. HE HAS SUBMITTED THAT IN TEREST IS OUT OF THESE RESERVE FUNDS WHICH CAN BE UTILIZED AS PER DIRECTION OF THE BOARD THEREFORE NO INTEREST ACCRU ED TO THE ASSESSEE EVEN IF THE RESERVE FUNDS WERE IN THE NAME OF THE ASSESSEE. HE HAS SUBMITTED THAT THE SAID INTEREST A ND FUNDS CAN BE USED ONLY FOR PARTICULAR PURPOSE AND THAT AS SESSEE DOES NOT HAVE ANY CONTROL OVER THE SAID STATUTORY F UNDS THEREFORE INTEREST ACCRUED THEREON CANNOT BE ADDED TO THE INCOME OF THE ASSESSEE. IN SUPPORT OF HIS CONTENTIO N HE HAS RELIED UPON FOLLOWING DECISIONS: I. CIT VS. NEW HORISON SUGAR MILLS LTD. 244 ITR 738 IN WHICH MADRAS HIGH COURT HELD THAT THE AMOUNT SET APART BY THE ASSESSEE TOWARDS MOLASSES RESERVE FUND AND REQUIRED BY MOLASSES CONTROL ORDER SHOULD BE EXCLUDED FROM ITS INCOME. THIS DECISION IS CONFIRMED BY SUPREME COURT IN 269 I TR 397. SIMILAR VIEW IS TAKEN BY MADRAS HIGH COURT IN THE CA SE OF CIT VS. SALEM COOPERATIVE SUGAR MILL 229 ITR 285. II. CIT VS. BHOPAL SUGAR INDUSTRIES 221 ITR 449 IN WHIC H MP HIGH COURT HELD THAT THE AMOUNT CREDITED TO CREATE RESERVE FUND GOVT. ORDER ASSESSEE HAD NO CONTROL OVER THE AMOUNT CREDITED AMOUNT NOT INCLUDABLE IN THE TOTAL INCOM E OF THE ASSESSEE. III. MOTILAL CHHADAMLAL VS. CIT 190 ITR 329 IN WHICH HON 'BLE SUPREME COURT HELD EXECUTION OF DEED STATING THAT E XPENSES 8 OF THE TRUST WILL BE MADE FROM INCOME OF CERTAIN PR OPERTIES AND HE WILL HAVE NO RIGHT IN INCOME IT IS A DIVER SION OF INCOME AND NOT TAXABLE IN THE HANDS OF HUF. IV. SIDHESHWAR SAHAKARI SHAKKAR KHARKHANA VS. CIT 270 I TR 1 IN WHICH HON'BLE SUPREME COURT REFERRED TO OTHER DE CISIONS IN WHICH IT WAS OBSERVED THAT THE AMOUNT WAS RETAI NED BY THE ASSESSEE AND UTILIZED ACCORDING TO GUIDELINES I SSUED BY THE GOVT. IT WAS A SPECIFIC LEGAL OBLIGATION FOR SP ENDING MONIES FOR A SPECIFIC PURPOSE. SUCH RECEIPTS CANNOT BE TREATED AS ASSESSEES INCOME. V. SOMAYYA ORGENE CHEMICALS VS. CIT 216 ITR 291 IN WHI CH BOMBAY HIGH COURT HELD MANUFACTURE OF RECTIFIED SPR IT PORTION OF SALE PROCEEDS CREDITED TO A SEPARATE FUN D BY STATUTORY ORDER FOR UTILIZATION FOR A PARTICULAR PU RPOSE AMOUNT DIVERTED AT SOURCE AND REQUIRED TO BE EXCLUD ED U/S 20A OF THE ACT. 8. ON THE OTHER HAND LD. DR SUBMITTED THAT ASSESSE E CANNOT CHANGE ITS STAND IN CLAIMING DEDUCTION ON TH E ABOVE SUBMISSION BECAUSE ADMITTEDLY THE CASE OF THE ASSE SSEE WOULD NOT FALL U/S 10(25) AND SEC. 36(1)(XII) OF TH E IT ACT THEREFORE CLAIM OF THE ASSESSEE WAS RIGHTLY REJECT ED BY THE AUTHORITIES BELOW. HE HAS SUBMITTED THAT THE SUBMIS SION OF THE ASSESSEE REQUIRES RECONSIDERATION BY THE AO BEC AUSE THE MP KRISHI UPAJ MANDI ADHINIYAM AND RULES WERE NOT R EFERRED TO BEFORE THE AO AND LD. CIT(A). HE HAS SUBMITTED TH AT THE ABOVE ACT IS A SUBORDINATE LEGISLATION AND PUBLIC A T LARGE IS NOT BENEFITED AND RESERVE FUNDS CAN BE UTILIZED FOR GIVING LOANS AND ADVANCES ALSO THEREFORE ASSESSEE CANNOT CLAIM THAT IT HAS NO CONTROL OVER THE SAME FUNDS. HE HAS SUBMITTED THAT RESERVE FUNDS ARE CREATED IN THE NAME OF THE A SSESSEE AND THAT ASSESSEE WAS MAINTAINING THE ACCOUNTS ON Y EARLY BASIS THEREFORE SAME ARE NOT RELIABLE AND ASSESSEE HAS CONTROL OVER THE FUNDS THEREFORE ADDITIONS WERE RI GHTLY MADE. 9. WE HAVE HEARD RIVAL SUBMISSIONS AND MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEE DID NOT PRESS HIS CLAIM U/SS 10(25) AND 36(1)(XII) OF T HE IT ACT BEFORE THE TRIBUNAL AS WAS THE CLAIM MADE BEFORE TH E AUTHORITIES BELOW THEREFORE THE CLAIM OF THE ASSES SEE COULD NOT BE CONSIDERED UNDER THOSE PROVISIONS. THE REASO NING GIVEN BY THE AUTHORITIES BELOW ARE JUST AND PROPER IN REJECTING THE CLAIM OF THE ASSESSEE U/SS 10(25) & 3 6(1)(XII) OF THE IT ACT. HOWEVER THE LD. COUNSEL FOR ASSESSEE MA DE A CLAIM THAT SINCE THE RESERVE FUNDS WERE STATUTORILY CREATED UNDER THE MP KRISHI UPAJ MANDI ADHINIYAM AND RULES AND THE FUNDS HAVE BEEN CREATED FOR SPECIFIC PURPOSES THERE FORE ASSESSEE WOULD NOT HAVE CONTROL OVER THE SAID RESER VE FUNDS THEREFORE THE INTEREST ACCRUED THEREON AND THE DEP OSITS COULD NOT HAVE BEEN TREATED AS INCOME OF THE ASSESS EE. ON GOING THROUGH THE RULES REFERRED TO BY THE LD. COUNS EL FOR ASSESSEE WE ARE OF THE VIEW THAT THE RESERVE FUND REMAINED IN THE NAME OF ASSESSEE AND THAT THE RESERVE FUND C OULD BE USED FOR THE PURPOSE OF PAYMENT OF PENSION TO THE M EMBERS OF STATE BOARD OF SERVICE FAMILY PENSION EXGRATIA GRATUITY 9 GRANT LOAN AND ADVANCES AS PER PROCEDURE PRESCRIBE D BY THE BOARD. IT WOULD THEREFORE PROVE THAT THE RESERVE F UNDS REMAINED IN CONTROL POSSESSION AND IN THE NAME OF THE ASSESSEE AND WAS TO BE USED FOR THE PURPOSES OF PRO VIDING PENSION EXGRATIA LOAN AND ADVANCES ETC. THE PROCE DURE IS TO BE PROVIDED BY THE BOARD ONLY FOR LOAN AND ADVANCES . THE ABOVE AMOUNT SHALL BE SPENT FOR THE PERSONS CONNECT ED WITH THE ASSESSEE AND EVEN LOAN AND ADVANCE SHALL BE GIV EN TO THE MEMBERS OF THE SERVICE POSTED IN MARKET COMMITTEE. ADMITTEDLY THE ASSESSEE RECEIVED INTEREST ON THE F UNDS DEPOSITED WITH THE BANK IN THIS REGARD. SINCE THE R ESERVE FUNDS REMAINED WITH THE ASSESSEE THEREFORE INTERES T EARNED ON SUCH FUNDS SHALL BE INCOME OF THE ASSESSEE. THE DECISIONS RELIED UPON BY LD. COUNSEL FOR ASSESSEE ARE THEREFOR E NOT APPLICABLE TO ADVANCE THE CASE OF THE ASSESSEE. GRO UND NO.2 OF THE APPEAL OF THE ASSESSEE IS ACCORDINGLY DISMIS SED. AS REGARDS PART OF GROUND NO.9 WITH REGARD TO AARAK SHIT NIDHI IT IS STATED TO BE CONTRIBUTION MADE FOR MEE TING THE FUTURE LIABILITY ON ACCOUNT OF PENSION GRATUITY ET C. THE ASSESSEE IS ADMITTEDLY MAINTAINING CASH SYSTEM OF ACCOUNTING AND AS SUCH AUTHORITIES BELOW WERE JUST IFIED IN HOLDING THAT THE PROVISION COULD NOT HAVE BEEN ALLO WED UNLESS THE LIABILITY AROSE. THE AUTHORITIES BELOW H AS HOWEVER NOT CONSIDERED THE RULE REFERRED TO BY LD. COUNSEL FOR ASSESSEE IN HIS ARGUMENTS AND HAVE ALSO NOT GIV EN ANY FINDING IF THE ASSESSEE SPENT ANY ACTUAL AMOUNT ON THIS HAND UNDER THE YEAR APPEAL BECAUSE ON PROVISION BAS IS THIS YEAR THE ASSESSEE MIGHT HAVE MADE CLAIM IN EARLIER YEAR FOR WHICH THE AMOUNT COULD HAVE BEEN SPENT BY THE ASSESSEE. LD. COUNSEL FOR ASSESSEE HAS FILED COPY O F THE LETTER DATED 9.7.8 (PB-34) THROUGH WHICH ASSESSEE W AS DIRECTED TO KEEP AARAKSHIT NIDHI IN SUCH A FIND FOR THE PURPOSE OF MAKING THE PAYMENTS. LD. COUNSEL FOR ASS ESSEE ALSO REFERRED TO THE PROCEDURE FOR KEEPING ACCOUNTS ON THIS ISSUE. HOWEVER WE FIND THAT THE SAME IS NOT CONSID ERED BY THE AUTHORITIES BELOW. THIS ISSUE THEREFORE REQUIR ES RECONSIDERATION AT THE LEVEL OF THE AO. WE ACCORDIN GLY SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW ON THIS I SSUE AND RESTORE THE ISSUE TO THE FILE OF THE AO FOR RECONSI DERATION IN THE LIGHT OF THE SUBMISSION MADE BY THE LD. COUN SEL FOR ASSESSEE. THE AO SHALL GIVE REASONABLE SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. AS A RE SULT PART OF THIS GROUND OF THE APPEAL OF THE ASSESSEE I S ALLOWED FOR STATISTICAL PURPOSES. ASSESSEE MAY PROVIDE ADEQ UATE MATERIAL BEFORE THE AO IN SUPPORT OF THE CONTENTION . IN VIEW OF THE ABOVE THE LEARNED COUNSELS FROM BOTH SIDES FAIRLY AGREED TO THE PROPOSITION THAT THE ISSUE OF AARKSHIT NIDHI NEEDS TO BE EXAMINED AFRESH. IT IS ALSO SEEN THAT THE ASSESSEES ARE ALSO FOLLOWING 10 CASH SYSTEM OF ACCOUNTING AND THE PROVISION OF AARAKS HI NIDHI FOR PAYMENT OF PENSION/ GRATUITY TO THE RETIRING/ RETIRED EM PLOYEES CAN ONLY BE MADE WHEN IT IS ACTUALLY TO BE INCURRED THER EFORE WE RESTORE THIS ISSUE TO THE FILE OF THE LD. ASSESSING OFFICER TO EXAMINE THE NATURE AND TIME OF INCURRING SUCH EXPENDITURE AND THEN DECIDE IN ACCORDANCE WITH LAW AFTER PROVIDING DUE OPPORTUNITY OF BEING HEA RD TO THE CONCERNED ASSESSEES CONSEQUENTLY THE ISSUE OF AARAK SHI NIDHI IN CASES OF CONCERNED ASSESSEES IS ALLOWED FOR STATISTICA L PURPOSES ONLY . 4. SO FAR AS THE ISSUES OF KISAN SADAK NIDHI GOSHAL A ANUDHAN ADHOSARANCHANA NIDHI GAUSANVARDHAN NIDHI BOARD SH ULK SUBSIDY TO GOSHALA AND RESEARCH & INFRASTRUCTURE NIDHI ARE CON CERNED THE LD. COUNSELS FOR THE CONCERNED ASSESSEES SUBMITTED THAT THES E ISSUES ARE COVERED BY THE ORDER DATED 24.10.2008 OF THE ITAT I NDORE IN THE CASE OF KRISHI UPAJ MANDI SAMITI BURHANPUR (12 ITJ 12) WHEREIN IDENTICAL ISSUES WERE DECIDED AGAINST THE REVENUE AND THE REASON ING RECORDED IN THAT ORDER WILL ALSO APPLY TO THE CASES OF PRESENT CONCERNED ASSESSEES. ON THE OTHER HAND THE LD. SR. DR RELIED UPON THE ORDERS OF THE A.O. BUT COULD NOT CONTROVERT THE ASSERTION MADE BY TH E LD. COUNSELS FOR THE CONCERNED ASSESSEES. IN VIEW OF THE ABOVE WE NOTE THAT THE FACTS & CIRCUMSTANCES OF THESE ISSUES IN THE PRES ENT CONCERNED APPEALS ARE IDENTICAL TO THE FACTS AND CIRCU MSTANCES OF THE ISSUES IN CASE OF KRISHI UPAJ MANDI SAMITI BURHANPU R (SUPRA). WE 11 FIND THAT THE FINDINGS RECORDED IN THE ORDER DATED 24. 10.2008 (SUPRA) ARE ALSO APPLICABLE TO THESE ISSUES. THE RELEVANT PORTI ON OF THE SAME IS REPRODUCED HEREUNDER: 13. ON GROUND NO.5 ASSESSEE CHALLENGED THE DISALLOWANCE OF RS.1 73 97 154/- BEING STATUTORY PA YMENTS PAID UNDER THE MANDI ACT AND WAS ALLOWABLE U/S 36(1 )(XII) R.W.S. 37 OF THE IT ACT. THE ASSESSEE CLAIMED THE A BOVE AMOUNT AS DEDUCTION IN THE INCOME AND EXPENDITURE A CCOUNT IN THE FORM OF BOARD FEES. THE AO NOTED THAT IT WAS A TRANSFER OF FUND TO THE MOTHER CONCERN AND CANNOT BE ALLOWED . IT WAS SUBMITTED BY THE ASSESSEE THAT BOARD FEES IS PAID A S PER THE ACT WHICH IS STATUTORY PAYMENT. THE LD. CIT(A) REJEC TED THE CLAIM OF THE ASSESSEE BECAUSE FOR CLAIMING THE DEDU CTION THE AMOUNT SHOULD HAVE BEEN AN EXPENDITURE BUT IN THE C ASE OF THE ASSESSEE IT WAS NOT A EXPENDITURE BUT WAS A CO NTRIBUTION THEREFORE LD. CIT(A) REJECTED THE CLAIM OF THE ASSE SSEE AND DISALLOWANCE WAS CONFIRMED. 14. LD. COUNSEL FOR ASSESSEE REITERATED THE SUBMISSI ONS MADE BEFORE AUTHORITIES BELOW AND SUBMITTED THAT AS PER SEC.43(1) OF MP KRISHI UPAJ MANDI ADHINIYAM THE ASSESSEE HAS TO PAY THE BOARD FEES TO THE STATUTORY BOARD TO WHICH THE ASSESSEE IS SUBORDINATE. UNDER THE SAME ACT ASSESSEE RECEIV ED THE RECEIPTS AND SHALL HAVE TO SPEND THE AMOUNT TOWARDS ACHIEVING THE OBJECTS OF THE ASSESSEE INSTITUTION. THE RECEIPTS OF ASSESSEE ARE TREATED AS INCOME THEREFORE THE BO ARD FEES COMPULSORILY PAID TO THE BOARD SHOULD HAVE BEEN CON SIDERED AS AN EXPENDITURE U/S 36(1)(XII) OF THE IT ACT BECA USE IT WAS PAID FOR THE OBJECTS AND PURPOSES OF THE ASSESSEE A UTHORIZED BY THE SPECIAL ACT FOR WHICH THE ASSESSEE WAS CONS TITUTED UNDER THE ACT. LD. COUNSEL FOR ASSESSEE SUBMITTED TH AT THIS ISSUE WAS CONSIDERED BY ITAT JABALPUR BENCH IN THE CASE OF KRISHI UPAJ MANDI SAMITI SINHORA VS. ITO & OTHERS IN ITA NO.280/JAB/2006 AND VIDE ORDER DATED 12.10.2007 TH E DEPARTMENTAL APPEAL ON THIS ISSUE HAS BEEN DISMISSE D. ON THE OTHER HAND LD. DR SUBMITTED THAT FEES IS NOT RELAT ED TO ANY SERVICE RENDERED BY THE BOARD AND ASSESSEE HAS NO C ONTROL OVER THE BOARD. HE HAS SUBMITTED THAT ONE SENTENCE FROM THE ORDER MAY NOT BE PICKED AS RATIO AND RELIED UPON DE CISION IN THE CASE OF SUN ENGG. 198 ITR 297 AND SUBMITTED TH AT IT IS A CASE OF DIVERSION OF INCOME AND RELIED UPON 227 ITR 557 AND 290 ITR (AT) 344. 15. ON CONSIDERATION OF RIVAL SUBMISSIONS WE ARE O F THE VIEW THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR O F THE ASSESSEE BY THE ORDER OF ITAT JABALPUR BENCH IN TH E CASE OF KRISHI UPAJ MANDI SAMITI & OTHERS (SUPRA) IN WHICH IN PARA 12 THE TRIBUNAL HELD WE HAVE CAREFULLY CONSIDERED THE ISSUE. THE VIEW OF THE AO THAT THE PAYMENT MADE TO THE BOA RD FOR ROAD DEVELOPMENT AND AGRICULTURAL RESEARCH WAS FOR CAPITAL EXPENDITURE AND HENCE NOT ALLOWABLE U/S 37 OF THE 12 ACT CANNOT BE CONSIDERED CORRECT BECAUSE THE PAYME NT WAS MADE AS STATUTORY LIABILITY AS PER SEC. 43 OF T HE RELEVANT ACT. SIMILARLY BOARD FEES WERE ALSO MADE AS PER PROVISIONS OF THE RELEVANT STATUTE AND WAS ALLOWABL E EXPENDITURE. THE AO IS THEREFORE NOT CORRECT TO DI SALLOW THE SAME ON THE GROUND THAT THE PAYMENT IN QUESTION WAS IN THE NATURE OF APPLICATION OF INCOME. IN OUR CONS IDERED OPINION THE ORDER OF THE LD. CIT(A) DESERVES NO INTERFERENCE. THE APPEAL OF THE DEPARTMENT IS THERE FORE DISMISSED. WE FIND THAT THE CASE OF THE ASSESSEE IS ON IDENTIC AL FACTS BECAUSE THE BOARD FEES IS PAID AS PER SEC. 43 OF MP KRISHI UPAJ MANDI ADHINIYAM WHICH IS STATUTORY LIABILITY O F THE ASSESSEE TO PAY IN ORDER TO ACHIEVE ITS OBJECTIVES. IT IS THEREFORE ALLOWABLE DEDUCTION AS WAS SPENT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE ASSE SSEE. AS PER SEC. 36(1)(XII) ANY EXPENDITURE INCURRED BY THE CO RPORATION OR BODY CORPORATE BY WHATEVER NAME CALLED CONSTITUT ED OR ESTABLISHED BY CENTRAL STATE OR PROVINCIAL ACT FOR THE OBJECTS AND PURPOSES AUTHORIZED BY THE ACT FOR WHICH IT WA S ESTABLISHED SHALL BE ALLOWED AS DEDUCTION. THE LD. CIT(A) MISUNDERSTOOD THIS ISSUE BY TREATING THE BOARD FEES TO BE THE TRANSFER OF FUNDS. IN THE AFORESAID SEC. 36(1)(XII) IT IS SPECIFICALLY MENTIONED THAT THE EXPENDITURE INCURRE D COULD HAVE ANY NAME WHATSOEVER THEREFORE THE LD. CIT(A) S HOULD HAVE CONSIDERED THE ISSUE IN THE BROAD PERSPECTIVE CONSIDERING THE NATURE AND FUNCTIONING OF THE ASSES SEE INSTITUTION UNDER THE SPECIAL ACT. IN VIEW OF THE A BOVE THE ORDERS OF THE AUTHORITIES BELOW ARE SET ASIDE AND E NTIRE ADDITION IS DELETED. THIS GROUND OF APPEAL OF THE A SSESSEE IS ALLOWED. WE FIND THAT THE CASE OF THE PRESENT CONCERNED ASSESSEES ON THE ISSUES OF KISAN SADAK NIDHI GOSHALA ANUDHAN ADHOSARANCHA NA NIDHI GAUSANVARDHAN NIDHI BOARD SHULK SUBSIDY TO GOSHAL A AND RESEARCH & INFRASTRUCTURE NIDHI IS ON IDENTICAL FACTS AND CIRCUMSTANCES TO THAT OF THE CASE OF KRISHI UPAJ MANDI S AMITI BURHANPUR (SUPRA) ON WHICH THE ABOVEMENTIONED FINDI NGS WERE RECORDED BY THE ITAT INDORE WHEREAS THE IDENTICAL ISS UES WERE DECIDED IN FAVOUR OF THE ASSESSEE AS HAS BEEN DISCUSSED IN PARA 15 OF THE ORDER DATED 24.10.2008(SUPRA). BY FOLLOWING THE SAME REASON ING WE DO NOT 13 FIND ANY INFIRMITY IN THE ORDERS OF THE LD. CIT(A) ON THESE ISSUES AND DECIDE THE SAME AGAINST THE REVENUE. 5. SO FAR AS THE ISSUE OF EXCESS CLAIM OF DEPRECIATIO N IN ITA NO.268/IND/2011 IN CASE OF KRISHI UPAJ MANDI SAMITI AGAR IS CONCERNED THE LD. COUNSEL FOR THE ASSESSEE RELIED UP ON THE ORDER OF THE LD. CIT(A) WHEREAS THE LD. SR. DR SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE REVENUE BY THE ORDER OF ITAT INDORE IN THE CASE OF KRISHI UPAJ MANDI SAMITI BURHANPUR (12 ITJ 12). IN VIEW OF THE ABOVE WE FIND THAT AFTER INSERTION OF EXPLANATION 5 TO SECTION 32(1) OF THE ACT THE ASSESSEE HAS NOT REDUCED THE ORI GINAL COST OF ASSET BY THE AMOUNT OF DEPRECIATION FOR WHICH IT WAS ELIGIBLE FOR EARLIER YEARS ACCORDINGLY LD. CIT(A) WAS NOT JUSTIFIED IN A LLOWING CLAIM OF DEPRECIATION WITHOUT DEDUCTING THE DEPRECIATION OF EARLI ER YEARS FROM THE ORIGINAL COST OF ASSET. THIS ISSUE IS ALSO COVERED IN FAVOUR OF THE REVENUE BY THE DECISION OF ITAT INDORE BENCH IN THE CASE OF KRISHI UPAJ MANDI SAMITI BURHANPUR (12 ITJ 12) (SUPRA). TH E RELEVANT PORTION OF THIS ORDER IS REPRODUCED HEREUNDER: 20. GROUND NO.8 : ON GROUND NO.8 THE ORDER OF THE LD. CIT(A) IS CHALLENGED IN NOT ALLOWING THE DEPRECIATION AS C LAIMED BY THE ASSESSEE ON THE BASIS OF ACTUAL COST INCURRED BY TH E ASSESSEE WITHOUT DEDUCTING THE DEPRECIATION WHICH IS NOT CLAIMED AND ALLOWED IN THE EARLIER YEARS. LD. REPRESENTATIVES OF BOTH THE PART IES SUBMITTED THAT THE ISSUE IS COVERED AGAINST THE ASSESSEE BY THE OR DER OF ITAT INDORE BENCH IN THE CASE OF KRISHI UPAJ MANDI ETC. IN ITA NO.42 OF 2008 VIDE ORDER DATED 30.9.2008 IN WHICH IT WAS HE LD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES HAV E SUBMITTED THAT THE IDENTICAL ISSUE HAS BEEN DECIDED BY THE ITAT I NDORE BENCH IN THE CASE OF KRISHI UPAJ MANDI SAMITI UNHEL V. ITO IN ITA NO. 457/IND/06 14 REPORTED IN 9 ITJ 593 AND THE ISSUE IS DECIDED IN F AVOUR OF THE REVENUE BY DISMISSING THE APPEALS OF THE ASSESSEE. THE SUB MISSIONS OF THE PARTIES AND THE FINDINGS OF THE TRIBUNAL IN THAT CA SE FROM PARA 9 TO 16 ARE REPRODUCED AS UNDER :- 9. THE LD. COUNSEL FOR THE ASSESSEE REITERATED T HE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND S UBMITTED THAT THE ASSESSING OFFICER IS NOT JUSTIFIED IN MAKING THE DI SALLOWANCE OUT OF DEPRECIATION ON NOTIONAL DEDUCTION AND DEPRECIATION AND THAT AS PER SECTION 43(6) THE MEANING OF WRITTEN DOWN VALUE ME ANS (B) IN CASE OF ASSETS ACQUIRED BEFORE THE PREVIOUS YEAR THE ACTUA L COST OF ASSETS LESS ALL DEPRECIATION ACTUALLY ALLOWED TO HIM UNDER THE ACT. HE SUBMITTED THAT SINCE THE ASSESSEE HAS NOT BEEN ALLOWED DEPRECIATIO N ACTUALLY IN EARLIER YEAR THE LEARNED CIT(A) WAS NOT JUSTIFIED IN CONF IRMING THE ORDER OF THE ASSESSING OFFICER. HE HAS FURTHER SUBMITTED THAT E XPLANATION 5 TO SEC. 32(1)(II) IS APPLICABLE WITH EFFECT FROM 1.4.2002. THEREFORE IT IS NOT RETROSPECTIVELY APPLICABLE. THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE FOLLOWING DECISIONS :- 1. 55 ITR 329 DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF DHARAMPUR LEATHER CLOTH COMPANY LTD. IN WHICH IT WA S HELD THAT UNLESS AND UNTIL DEPRECIATION HAS BEEN ACTUALLY ALLOWED IN ANY ASSESSMENT OF PREVIOUS YEARS WRITTEN DOWN VALUE OF THE MACHINERY OR ASSETS CONTINUES TO REMAIN THE COST PRICE INCURRED BY THE ASSESSEE I N ACQUIRING THE MACHINERY OR ASSETS. 2. 80 TTJ 539 ORDER OF THE ITAT PUNE BENCH IN T HE CASE OF G.C. ASSOCIATES V. DCIT IN WHICH IT WAS HELD THAT WDV HA S BEEN DEFINED U/S 43(6) TO MEAN IN CASE OF ASSETS ACQUIRED IN THE PRE VIOUS YEAR ACTUAL COST TO THE ASSESSEE AND IN THE CASE OF ASSETS ACQUIRED PRIOR TO PREVIOUS YEAR ACTUAL COST TO THE ASSESSEE LESS ALL THE DEPRECIATI ON ACTUALLY ALLOWED TO HIM UNDER THE ACT. IF THE ASSESSEE HAS NOT FILED RETURN OF INCOME THE FACT IT HAS COMPUTED ITS INCOME OR ITS BOOKS OF HAS NO RELEVANC E SO FAR AS COMPUTATION OF WDV UNDER THE ACT IS CONCERNED BECAU SE WHAT THE ASSESSEE HAS DONE IN THE BOOKS OF ACCOUNTS CANNOT B E EQUATED WITH DEPRECIATION ACTUALLY ALLOWED UNDER THE INCOMETAX A CT. 3. 17 ITR 130 DECISION OF THE HONBLE CALCUTTA HI GH COURT IN THE CASE OF KAMALA MILLS LIMITED V. CIT IN WHICH IT WAS HELD WRITTEN DOWN VALUE ACTUALLY ALLOWED MEANING OF WRITTEN DOWN VALUE WH EN UNABSORBED DEPRECIATION IS CARRIED FORWARD. 4. 62 ITD 398 ORDER OF THE ITAT BANGALORE BENCH IN THE CASE OF TRITON VALUES LIMITED IN WHICH IT WAS HELD THAT THE ASSESSEE HAD NOT CLAIMED DEPRECIATION FROM THE ASSESSMENT YEAR 1983- 84 TO 1987-88 BUT CLAIMED DEPRECIATION IN THE ASSESSMENT YEAR 1988-89 WHETHER ASSESSEE WOULD BE ENTITLED TO DEPRECIATION ON WRITTEN DOWN V ALUE FIXED FOR THE YEAR 1982-83 HELD YES 5. 204 ITR 719 DECISION OF THE HON'BLE CALCUTTA H IGH COURT IN THE CASE OF CIT V. SUMAN TEA & PLYWOOD INDUSTRIES (P) LIMITED I N WHICH ALSO SAME LEGAL PROPOSITION IS HELD AS NOTED ABOVE. 15 6. 197 ITR 13 DECISION OF THE HON'BLE KERALA HIGH COURT IN THE CASE OF JOSE KURUVILLA IN WHICH IT WAS HELD ACTUAL COST OF CAR FOR CALCULATING DEPRECIATION WAS THE PRICE PAID IN 1978 BECAUSE THE ASSESSEE HAS NOT CLAIMED DEPRECIATION TILL ASSESSMENT YEAR 1982-83. 7. 98 ITR 209 DECISION OF THE HON'BLE SUPREME COU RT IN THE CASE OF MADEVA UPENDRA SINAI V. UOI IN WHICH IT WAS HELD TH AT CONNOTATION OF THE PHRASE ACTUALLY ALLOWED IS THUS LIMITED TO DEPRECIA TION ACTUALLY TAKEN INTO ACCOUNT OR GRANTED AND GIVEN EFFECT TO I.E. DE BITED BY THE ITO AGAINST THE INCOMINGS OF BUSINESS IN COMPUTING THE TAXABLE INCOME OF THE ASSESSEE BUT CANNOT BE STRETCHED TO MEAN NOTIONALLY ALLOWED OR MERELY ALLOWABLE ON NOTIONAL BASIS. 8. 146 ITR 28 DECISION OF THE HON'BLE KARNATAKA H IGH COURT IN THE CASE OF CIT V. SOCIETY OF THE SISTERS OF STATISTICAL PUR POSES. ANNE. 9. 180 ITR 579 DECISION OF THE HON'BLE HIGH COURT O F MADHYA PRADESH IN THE CASE OF RAIPUR PALLOTTINE SOCIETY. THE LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT ITAT SMC BENCH INDORE IN THE CASE OF KRISHI UPAJ MANDI SAMITI SH AJAPUR DISALLOWED THE CLAIM OF THE ASSESSEE ON THE IDENTICAL FACTS VIDE O RDER DATED 3 RD NOVEMBER 2006 BUT THE ABOVE DECISIONS AS RELIED UPON ABOVE WERE NOT CONSIDERED. THEREFORE THE SAME IS NOT APPLICABLE TO THIS CASE . 10. ON THE OTHER HAND THE LD. DR RELIED UPON THE O RDERS OF THE AUTHORITIES BELOW. 11. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND TH E MATERIAL AVAILABLE ON RECORD INCLUDING WRITTEN SUBMISSIONS F ILED BY THE LD. COUNSEL FOR THE ASSESSEE. BEFORE CONSIDERING THE SUBMISSIO NS OF THE PARTIES IT WOULD BE RELEVANT TO NOTICE CERTAIN CERTAIN RELEVAN T PROVISIONS OF LAW. 12. SECTION 32(1) OF THE ACT PROVIDES DEPRECIATION IN RESPECT OF DEPRECIATION OF (I) BUILDINGS MACHINERY PLANT OR FURNITURE BEING TANGIBLE ASSETS (II) KNOW-HOW PATENTS COPYRIGHTS TRADE MA RKS LICENCES FRANCHISE OR ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMIL AR NATURE BEING INTANGIBLE ASSETS ACQUIRED ON OR AFTER THE IST DAY OF APRIL 1998 OWNED WHOLLY OR PARTLY BY THE ASSESSEE AND USED FOR THE P URPOSE OF THE BUSINESS OR PROFESSION THE FOLLOWING DEDUCTIONS SHALL BE AL LOWED (I) IN THE CASE OF ASSETS OF AN UNDERTAKING ENGAGE D IN GENERATION OR GENERATION AND DISTRIBUTION OF POWER SUCH PER CENTAGE ON THE ACTUAL COST THEREOF TO THE ASSESSEE AS MAY B E PRESCRIBED (II) IN CASE OF ANY BLOCK OF ASSETS SUCH PERCENTA GE ON THE WRITTEN DOWN VALUE THEREOF AS MAY BE PRESCRIBED : PROVIDED . EXPLANATION 5 TO SECTION 32(1)(II) PROVIDES FOR TH E REMOVAL OF DOUBTS IT IS HEREBY DECLARED THAT THE PROVISIONS OF THIS SUB-SECTION SHALL APPLY WHETHER OR NOT THE ASSESSEE HAD CLAIME D THE DEDUCTION IN RESPECT OF DEPRECIATION IN COMPUTING HIS TOTAL INC OME. 16 THE ABOVE EXPLANATION 5 IS INSERTED IN THE INCOMETA X ACT BY THE FINANCE ACT 2001 WITH EFFECT FROM 1.4.2002. 13. SECTION 43(6) PROVIDES THE MEANING OF WRITTEN D OWN VALUE AND READS - 43 (6) WRITTEN DOWN VALUE MEANS (A) IN THE CASE OF ASSETS ACQUIRED IN THE PREVIOUS YEAR THE ACTUAL COST TO THE ASSESSEE. (B) IN THE CASE OF ASSETS ACQUIRED BEFORE THE PREVIOUS YEAR THE ACTUAL COST TO THE ASSESSEE LES S ALL DEPRECIATION ACTUALLY ALLOWED TO HIM UNDER THIS ACT OR UNDER TH E INDIAN INCOMETAX ACT 1922 (11 OF 1922) OR ANY ACT REPEALED BY THAT ACT OR UNDER ANY EXECUTIVE ORDERS ISSUED WHEN THE INDIAN INCOMETAX ACT 1886 ( 2 OF 1886) WAS IN FORCE : PROVIDED THAT IN DETERMINING THE WRITTEN DO WN VALUE IN RESPECT OF BUILDINGS MACHINERY OR PLANT FOR THE PU RPOSE OF CALUSE (II) OF SUB- SECTION (1) OF SECTION 32 DEPRECIATION ACTUA LLY ALLOWED SHALL NOT INCLUDE DEPRECIATION ALLOWED UNDER SUB-CLAUSES (A) (B) AND () OF CLAUSE (VI) OF SUB- SECTION (2) OF SECTION 10 OF TH E INDIAN INCOMETAX ACT 1922 (11 OF 1922) WHERE SUCH DEPRECIATION WAS NOT DEDUCTIBLE IN DETERMINING THE WRITTEN DOWN VALUE FOR THE PURPOSES OF THE SAID CLAUSE (VI); SECTION 10(20) PROVIDES THE INCOME WHICH DO NOT FOR M PART OF THE TOTAL INCOME IN RESPECT OF LOCAL AUTHORITY. HOWEVER BY INSERTING EXPLANATION WITH EFFECT FROM 1.4.2003 THE DEFINITION OF LOCAL A UTHORITY IS RESTRICTED TO ONLY 4 ITEMS. THEREFORE THE ASSESSEES CASE WOUL D NOT FALL WITHIN THE DEFINITION OF THE LOCAL AUTHORITY AS PER THE ABOVE AMENDMENT IN THE PROVISIONS OF SECTION 10(20). THE LD. DEPARTMENTAL REPRESENTATIVE THEREFORE RIGHTLY CONTENDED THAT SECTION 10(20) P ROVIDES EXEMPTION OF INCOME OF THE LOCAL AUTHORITY AS IN THE CASE OF THE ASSESSEE PRIOR TO 1.4.2003. 14. CONSIDERING THE ABOVE LEGAL PROVISIONS I AM OF THE VIEW THAT THE LEARNED CIT(A) IS JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE WITH REGARD TO CLAIM OF EXCESSIVE DEPRECIATION. THE INC OME OF THE ASSESSEE BEING LOCAL AUTHORITY WAS EXEMPT PRIOR TO 1.4.2003 AND AS PER SETTLED ACCOUNTING PRINCIPLES AND THE METHOD OF ACCOUNTING GENERALLY ADOPTED THE INCOME IS TO BE COMPUTED BY REDUCING THE EXPEND ITURE FROM THE RECEIPTS. THE ASSESSEE WHILE PREPARING THE ACCOUNTS BEING IN THE STATUS OF LOCAL AUTHORITY SHALL HAVE TO PREPARE THE ACCOUNTS AS PER ACCOUNTING STANDARDS AND HAVE TO REDUCE THE DEPRECIATION ON TH E WRITTEN DOWN VALUE OF THE EARLIER YEARS. THE LD. DEPARTMENTAL REPRE SENTATIVE THEREFORE RIGHTLY CONTENDED THAT AS PER SECTION 10(20) THE IN COME OF LOCAL AUTHORITY WAS EXEMPT AND NOT THE TOTAL RECEIPTS. THEREFORE EVEN IF THE ASSESSEE HAS NOT CLAIMED DEPRECIATION IN EARLIER YEAR WOULD BE O F NO CONSEQUENCE BECAUSE ULTIMATELY THE VALUE OF ASSETS WOULD REDUCE ON BEING THE USER OF THE SAME FOR BUSINESS PURPOSES OF THE ASSESSEE. HO N'BLE HIGH COURT OF 17 MADHYA PRADESH IN THE CASE OF CIT V. RAIPUIR PALLOT TINE SOCIETY; 180 ITR 579 HELD - DEPRECIATION IS THE EXHAUSTION OF THE EFFECTIVE LI FE OF A FIXED ASSET OWING TO USE OR OBSOLESCENCE. IT MAY BE COMPUTED AS THAT PART OF THE COST OF THE ASSET WHICH WILL NOT BE RECOVERED W HEN THE ASSET IS FINALLY PUT OUT OF USE. THE OBJECT OF PROVIDING FOR DEPRECI ATION IS TO SPREAD THE EXPENDITURE INCURRED IN ACQUIRING THE ASSET OVER IT S EFFECTIVE LIFETIME AND THE AMOUNT OF PROVISION MADE IN RESPECT OF AN ACCO UNTING PERIOD IS INTENDED TO REPRESENT THE PROPORTION OF SUCH EXPEND ITURE WHICH HAS EXPIRED DURING THAT ERIOD. IF DEPRECIATION IS NOT ALLOWED AS A NECESSARY DEDUCTION IN COMPUTING THE INCOME OF A CHARITABLE T RUST THEN THERE WOULD BE NO WAY TO PRESERVE THE CROPUS OF THE TRUST. A C HARITABLE TRUST IS THEREFORE ENTITLED TO DEPRECIATION IN RESPECT OF THE ASSETS OWNED BY IT. 15. AS PER SECTION 32(1)(II) THE ASSESSEE WOULD BE ENTITLED TO DEPRECIATION ON THE ASSETS OWNED BY IT IN CASE OF ANY BLOCK OF A SSETS ON THE WRITTEN DOWN VALUE AND THE EXPLANATION 5 TO THE ABOVE SECTI ON PROVIDES THAT THE PROVISION OF THIS SUB-SECTION SHALL APPLY WHETHER O R NOT THE ASSESSEE HAS CLAIMED THE DEDUCTION IN RESPECT OF HIS DEPRECIATIO N IN COMPUTING THE TOTAL INCOME. EXPLANATION 5 IS APPLICABLE WITH EFFECT FRO M 1.4.2002 AND THE ASSESSMENT YEAR INVOLVED IN APPEAL IS ASSESSMENT YE AR 2003-04. THEREFORE EVEN AS PER EXPLANATION 5 TO SECTION 32(`1)(II) THE ASSESSEE SHALL HAVE TO MAKE ADJUSTMENTS WITH REGARD TO DEPRECIATION OF TH E EARLIER YEARS INCLUDING THE PREVIOUS ASSESSMENT YEAR 2002-03. TH E ASSESSEE THUS CANNOT ESCAPE FROM THE LIABILITY IN MAKING PROPER ADJUSTME NT ENTRIES IN THE BOOKS OF ACCOUNTS AND THE ACCOUNTS OF THE ASSESSEE EVEN I F INCOME WAS EXEMPT U/S 10(20) OF THE ACT BECAUSE THE INCOME COULD BE C OMPUTED ONLY BY DEDUCTING THE EXPENDITURE AND THE STATUTORY DEDUCTI ONS ALLOWABLE TO THE ASSESSEE INCLUDING THE DEPRECIATION. SECTION 43(6) (B) IS APPLICABLE IN THIS CASE AND THE MEANING OF THE WRITTEN DOWN VALUE IN T HE CASE OF ASSETS ACQUIRED BEFORE THE PREVIOUS YEAR THE ACTUAL COST TO THE ASSESSEE LESS ALL DEPRECIATION ACTUALLY ALLOWED TO HIM UNDER THIS ACT OR UNDER THIS INCOMETAX ACT. IF THE PROVISIONS OF EXPLANATION 5 T O SECTION 32(1)(II) ARE READ TOGETHER WITH SECTION 43(6)(B) OF THE INCOMETA X ACT IT WOULD MAKE IT CLEAR THAT EVEN IF THE ASSESSEE HAS NOT CLAIMED DEP RECIATION ON THE ASSETS WHILE COMPUTING THE INCOME OF THE ASSESSEE THE DEP RECIATION SHALL HAVE TO BE DEDUCTED WHILE COMPUTING THE INCOME AND WRITT EN DOWN VALUE. EXPLANATION 5 IS MANDATORY IN NATURE AND SHALL HAVE TO GIVE EFFECT WHETHER OR NOT THE ASSESSEE HAS CLAIMED DEDUCTION IN RESPEC T OF DEPRECIATION IN COMPUTING HIS TOTAL INCOME. THEREFORE WHILE INTER PRETING PROVISIONS OF SECTION 43(6)(B) THE WORD ALL DEPRECIATION ACTUALLY ALLOWED WOULD HAVE TO BE READ AS IF WHETHER THE ASSESSEE CLAIMED DEPRE CIATION OR NOT WHILE CLAIMING THE DEDUCTION THE ASSESSING OFFICER SHAL L HAVE TO DEDUCT THE DEPRECIATION WHILE COMPUTING THE TOTAL INCOME OF TH E ASSESSEE. EXPLANATION 5 THUS SHALL HAVE THE EFFECT WHILE COMP UTING THE TOTAL INCOME OF THE ASSESSEE AND SHALL HAVE TO BE APPLIED STRICT LY. THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE IS THAT UNLESS THE ACT UAL DEPRECIATION IS ALLOWED AND CLAIMED BY THE ASSESSEE IN EARLIER YEAR THE ASSESSING OFFICER CANNOT DEDUCT NOTIONAL DEPRECIATION AND RELIED UPON CERTAIN DECISIONS REFERRED TO ABOVE IN SUPPORT OF HIS CONTENTION. HO WEVER I FIND THAT ALL 18 THE DECISIONS RELIED UPON BY THE LD. COUNSEL FOR TH E ASSESSEE ARE PRIOR TO INSERTION OF EXPLANATION 5 IN THE ACT AND AS SUCH H AVE BEEN GIVEN OUT OF THE CONTEXT OF EXPLANATION 5 TO SECTION 32(1)(II) O F THE ACT. THEREFORE THE SAME ARE NOT APPLICABLE TO THE CASE OF THE PRESENT ASSESSEE. THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE IS THEREFORE REJECTED BEING AGAINST THE MANDATORY PROVISIONS CONTAINED IN EXPLA NATION 5 TO SECTION 32(1)(II) OF THE ACT. THE ITAT SMC BENCH INDORE IN THE CASE OF KRISHI UPAJ MANDI SHAJAPUR AND OTHERS IN ITA NOS. 524 AND 525/ IND/06 FOR THE SAME ASSESSMENT YEAR 2003-04 ON THE IDENTICAL FACTS AND THE SUBMISSIONS DISMISSED THE APPEAL OF THE ASSESSEE VIDE ORDER DAT ED 3.11.2006. THEREFORE THE DECISION IS SQUARELY APPLICABLE TO THE PRESENT CASE. 16. CONSIDERING THE ABOVE DISCUSSION I DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) IN MAKING THE DISALLOW ANCE OUT OF DEPRECIATION. THUS THE ORDER OF THE LEARNED CIT(A ) TO THAT EXTENT IS CONFIRMED AND THE GROUND NO. 1 OF THE APPEAL OF THE ASSESSEE IS ACCORDINGLY DISMISSED. 6. THE LEARNED COUNSELS FOR THE ASSESSEES HAVE HOW EVER SUBMITTED THAT CERTAIN POINTS WERE NOT BROUGHT TO THE NOTICE OF TH E TRIBUNAL WHILE PASSING THE AFORESAID DECISION AND THEY TRIED TO DISTINGUIS H THE CASES BY MAKING FURTHER SUBMISSIONS. THE LEARNED COUNSEL FOR THE A SSESSEES REFERRED TO EXPLANATION 6 TO SECTION 43(6) EXPLANATION 6.- WHERE AN ASSESSEE WAS NOT REQUIRED TO COMPUTE HIS TOTAL INCOME FOR THE PURPOSES OF THIS ACT FOR ANY P REVIOUS YEAR OR YEARS PRECEDING THE PREVIOUS YEAR RELEVANT TO THE ASSESSM ENT YEAR UNDER CONSIDERATION - (A) THE ACTUAL COST OF AN ASSET SHALL BE ADJUSTED BY TH E AMOUNT ATTRIBUTABLE TO THE REVALUATION OF SUCH ASSE T IF ANY IN BOOKS OF ACCOUNT (B) THE TOTAL AMOUNT OF DEPRECIATION ON SUCH ASSET PROVIDED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE IN RESPECT OF SUCH PREVIOUS YEAR OR YEARS PRECEDING THE PREVIO US YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION SHALL BE DEEMED TO BE THE DEPRECIATION ACTUALLY ALLOWED U NDER THIS ACT FOR THE PURPOSES OF THIS CLAUSE; AND (C) THE DEPRECIATION ACTUALLY ALLOWED UNDER CLAUSE (B) SHALL BE ADJUSTED BY THE AMOUNT OF DEPRECIATION ATTRIBUTABLE TO SUCH REVALUATION OF THE ASSET. WHICH IS INSERTED BY THE FINANCE ACT 2008 I N THE ACT WITH EFFECT FROM 1.4.2003 AND SUBMITTED THAT SINCE THE ASSESSEES HAV E NOT CLAIMED DEPRECIATION FOR THE EARLIER YEARS AS THE INCOME WA S EXEMPT UNDER SECTION 10(2) OF THE ACT PRIOR TO 1.4.2003 THEREFORE NO ADJUSTMENT WAS MADE FOR CLAIMING DEPRECIATION AND AS SUCH THE WDV SHOULD NO T BE REDUCED BY REDUCING THE DEPRECIATION OF THE EARLIER YEARS AND THE DEPRECIATION SHOULD HAVE BEEN ALLOWED BY THE ASSESSING OFFICER ON THE A CTUAL COST OF THE ASSET. THEY HAVE ALSO REFERRED TO DEFINITION OF ACTUAL CO ST UNDER SECTION 43(1) AND SUBMITTED THAT THE ASSESSING OFFICER WAS NOT JU STIFIED IN REDUCING THE DEPRECIATION OF THE EARLIER YEARS WHILE CONSIDERIN G THE DEPRECIATION OF THE YEAR UNDER CONSIDERATION. 19 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE HOWEVER OBJECTED TO THE SUBMISSIONS OF THE LEARNED COUNSELS FOR THE ASSESSE ES ON THE GROUND THAT THE ISSUE IS SQUARELY COVERED AGAINST THE ASSESSEES AND THAT THE AFORESAID EXPLANATION 6 TO SECTION 43(6) WAS INSERTED IN THE ACT IN ORDER TO NULLIFY THE EFFECT OF THE ORDER OF THE ITAT RAJKOT BENCH IN TH E CASE OF KANDLA PORT TRUST V. ACIT; 104 ITD 1. 8. ON CONSIDERATION OF THE RIVAL SUBMISSIONS OF THE PARTIES AND THE MATERIAL ON RECORD WE ARE OF THE VIEW THAT EXPLANATION 6 TO SECTION 43(6) WOULD BE OF NO HELP TO THE CASES OF THE ASSESSEES AS RIGHTLY POINTED OUT BY THE LD DEPARTMENTAL REPRESENTATIVE BECAUSE THE SAME WAS IN SERTED IN THE ACT WITH A VIEW TO NUTRALISE THE JUDGMENT IN THE CASE O F KANDLA PORT TRUST (SUPRA). WE FIND THAT IN THAT CASE THE ASSESSEE PO RT TRUST WAS EXEMPTED FROM INCOMETAX UNDER SECTION 10(2) TILL 31 ST MARCH 2002 AND WITH EFFECT FROM 1.4.2002 THE INCOME BECAME TAXABLE AND THE ASS ESSEE FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2003-04 FOR THE FIRS T TIME. IN COMPUTATION OF TOTAL INCOME THE ASSESSEE CLAIMED DEPRECIATION WHICH WAS COMPUTED ON THE ORIGINAL COST OF ASSETS I.E. THE ASSESSEE HAS T AKEN OPENING WDV OF ASSETS AS ON 1.4.2002 AS AGAINST ORIGINAL COST OF ASSETS. THE ASSESSING OFFICER HELD THAT THE DEPRECIATION COULD NOT BE ALLOWED ON THE O RIGINAL COST SINCE IN ALL THESE YEARS THE ASSETS HAD DEPRECIATED FOR WHICH PR OVISION HAD BEEN MADE IN THE BOOKS OF ACCOUNTS. HE FURTHER ALLOWED DEPRE CIATION ON THE BLOCK VALUE OF ASSET WHICH WAS ARRIVED AT AFTER REDUCING FROM THE ORIGINAL COST OF ASSETS DEPRECIATION PROVIDED IN THE BOOKS OF ACCOU NTS TILL 31 ST MARCH 2002. THE TRIBUNAL CONSIDERING THIS ISSUE HELD THAT MERE PASSING OF THE ACCOUNTING ENTRY MADE FOR DEPRECIATION IN THE BOOKS OF ACCOUNT S WAS NOT DEPRECIATION ACTUALLY ALLOWED AS THERE WAS NO LIABILITY TO TAX A ND AS THERE WAS NO ASSESSMENT TILL THE ASSESSMENT YEAR 2002-03. THUS THE WDV AS ON 1.4.2002 WOULD BE ORIGINAL COST LESS NIL I.E. ORIGINAL COST. THE AFORESAID EXPLANATION 6 TO SECTION 43(6) WAS THEREFORE INSERTED IN THE AC T IN ORDER TO UNTRALISE THE ABOVE DECISION OF THE RAJKOT BENCH OF THE TRIBUNAL IN THE CASE OF KANDLA PORT TRUST. IT WOULD HAVE THEREFORE NO BEARING ON THE ISSUE WHICH IS ALREADY DECIDED BY THIS BENCH IN THE CASE OF KRISHI UPAJ MA NDI SAMITI UNHEL. 9. THE LEARNED COUNSELS FOR THE ASSESSEES HAVE REFE RRED TO THE DECISION OF THE HONBLE HIGH COURT OF KERALA IN THE CASE OF KER ALA ELECTRIC LAMP WORKS LIMITED; 183 CTR 182 IN WHICH IT WAS HELD THAT THE ASSESSEE HAVING NOT CLAIMED DEPRECIATION FOR THE ASSESSMENT YEARS 1989- 90 AND 1990-91 THE ASSESSING OFFICER WAS NOT JUSTIFIED IN ALLOWING THE SAME BY GIVING EXPLANATION 5 TO SECTION 32(1) A RETROSPECTIVE EFFE CT. THEY HAVE ALSO RELIED UPON THE DECISION OF THE HON'BLE HIGH COURT OF MADR AS IN THE CASE OF COMMISSIONER OF INCOMETAX V. SREE SENHAVALLI TEXTIL ES (P) LTD.; 183 CTR 453 FOR THE ASSESSMENT YEAR 1988-89 DEPRECIATION COUL D NOT BE COMPUTED WHEN THE ASSESSEE GAVE UP THE CLAIM FOR FILING REVI SED RETURN. EXPLANATION 5 TO SECTION 32(1) APPLIED ONLY FROM 1.4.2002. 10. CONSIDERING THE ABOVE DECISIONS WE RESPECTFULL Y NOTE THAT IN ALL THE DECISIONS OF THE HONBLE HIGH COURTS THE ASSESSMEN T YEARS UNDER REFERENCE WERE 1989-90 AND 1990-91 AND ASSESSMENT YEAR 1988-89 WHICH WERE PRIOR TO INSERTION OF EXPLANATION 5 TO SECTION 32(1) OF THE INCOMETAX ACT. THE ASSESSMENT YEARS UNDER APPEAL BEFORE US ARE ASSESSMENT YEARS 2003-04 AND 2004-05 I.E. AFTER INSERTION OF EXPLANA TION 5 TO SECTION 32(1) IN 20 THE ACT. THE RATIO OF THESE DECISIONS WOULD THUS N OT BE APPLICABLE TO THE MATTERS IN ISSUE BEFORE THE TRIBUNAL. THE LEARNED COUNSELS FOR THE ASSESSEES HAVE ALSO RELIED UPON THE ORDER OF THE ITAT CHANDI GARH BENCH IN THE CASE OF MOREPEN LABORATORIES LIMITED V. JCIT; 95 TTJ 404 I N WHICH IT WAS HELD THAT IN THE SET ASIDE ASSESSMENT THE ASSESSEE CANNOT RA ISE THE CLAIM OF DEPRECIATION DURING THE ASSESSMENT PROCEEDINGS CONS EQUENT TO THE ACTION UNDER SECTION 263 OF THE ACT AS THE ASSESSING OFFIC ER HAS TO PASS THE ORDER AS PER THE DIRECTIONS OF THE CIT. THE LEARNED COUNS ELS FOR THE ASSESSEES HAVE ALSO RELIED UPON THE DECISION OF THE ITAT MUMBAI B ENCH IN THE CASE OF PLASTIBLENDS INDIA LTD. V. ITO; 95 TTJ 1062 IN WHIC H IT WAS HELD THAT THE ASSESSEE HAVING NOT CLAIMED DEPRECIATION THE SAME CANNOT BE THRUST UPON HIM FOR THE PURPOSES OF COMPUTING THE DEDUCTION UND ER SECTION 80IA OF THE ACT. THIS CASE PERTAINED TO THE ASSESSMENT YEAR PRI OR TO INSERTION OF EXPLANATION 5 TO SECTION 32 OF THE ACT. BOTH THE D ECISIONS ARE THEREFORE CLEARLY DISTINGUISHABLE ON FACTS. THE LEARNED COUNS ELS FOR THE ASSESSEES ALSO RELIED UPON THE DECISION OF THE HON'BLE HIGH COURT OF MADHYA PRADESH IN THE CASE OF COMMISSIONER OF INCOMETAX V. G.M. MITTAL ST AINLESS STEEL LIMITED; 271 ITR 219. HOWEVER IT IS NOT RELEVANT TO THE M ATTER IN ISSUE. 11. CONSIDERING THE ABOVE DISCUSSION WE ARE OF THE VIEW THAT THE ISSUE IS SQUARELY COVERED BY OUR EARLIER ORDER IN THE CASE O F KRISHI UPAJ MANDI SAMITI UNHEL AS AGREED BY THE LEARNED REPRESENTATI VES OF BOTH THE PARTIES. THE SUBMISSIONS OF THE LEARNED COUNSELS FOR THE ASS ESSEES NOTED ABOVE COULD NOT DISTINGUISH THE EARLIER DECISION. WE THER EFORE DO NOT FIND ANY MERIT IN ALL THE APPEALS OF THE ASSESSEES. THE SAM E ARE ACCORDINGLY DISMISSED. 21. BY FOLLOWING THE ABOVE ORDER THIS GROUND OF AP PEAL OF ASSESSEE IS DISMISSED. IN VIEW OF THE ABOVE WE FOLLOWING THE ORDER OF KRI SHI UPAJ MANDI SAMITI BURHANPUR (SUPRA) AND FINDINGS RECORDED HERE INABOVE REVERSE THE ORDER OF THE LD. CIT(A) ON THE ISSUE OF EXCESS CLA IM OF DEPRECIATION AND DECIDE THE SAME IN FAVOUR OF THE REVENUE. 6. SO FAR AS THE ISSUE OF DIRECTION OF LD. CIT(A) THAT EXEMPTION U/S 11 BE ALLOWED AS REGISTRATION HAS BEEN GRANTED U/S 12 A TO THE CONCERNED ASSESSEES EVEN THOUGH THE ASSESSEES HAD NOT FULFILLED THE REQUIREMENTS OF SECTION 11(1)(A) & 11(2) OF THE ACT IS CONCERNED THE LD. COUNSELS FOR THE CONCERNED ASSESSEES SUBMITTED THAT THE I SSUE IS 21 COVERED AGAINST THE REVENUE BY THE DECISION OF ITAT INDORE IN THE CASE OF M/S. KRISHI UPAJ MANDI SAMITI DEWAS (ITA N O.248/IND/2009 ORDER DATED 25.3.2010). ON THE OTHER HAND LD. SR. D R RELIED UPON THE ORDERS OF THE A.O. BUT COULD NOT CONTROVERT THE ASSERTION OF THE LD. COUNSELS FOR THE CONCERNED ASSESSEES BY BRINGING ANY POSITIVE MATERIAL ON RECORD. IN VIEW OF THE ABOVE WE ARE RE PRODUCING THE RELEVANT PORTION OF ORDER DATED 25.3.2010 (SUPRA) HER EUNDER: THE FIRST GROUND RAISED IS THAT THE LD. FIRST APPELLATE AUTHORITY ERRED IN REJECTING THE REVISED RETURN FILED BY THE ASSESSEE FOR CLAIMING EXEMPTION U/S 11 OF THE ACT IN VIEW OF THE REGISTRATION U/S 12A/12AA OF THE ACT RECEIVED BY THE ASSESSEE ON 23.12.2006. DURING HEARING WE HAVE HEARD THE LD. REPRESENTATIVES FROM BOTH SIDES. AT THE OUTSET IT WAS CLAIMED BY THE LD. COUNSEL FOR THE ASSESSEE THAT THE IMPUGNED ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF TRIBUNAL IN THE CASE OF KRISHI UPAJ MANDI SAMITI KHATEGOAN VS. ITO (ITA NO.250/IND/2009). THIS FACTUAL MATRIX WAS NOT CONTROVERTED BY THE REVENUE. IN VIEW OF THIS ASSERTION WE ARE REPRODUCING HEREUNDER THE RELEVANT PORTION OF THE ORDER DATED 27.11.2009: 3. GROUND NO.1 READS AS UNDER :- THAT THE LD. CIT(A) HAS ERRED IN REJECTING REVISED RETURN FILED BY THE ASSESSEE FOR CLAIMING THE EXEMPTION U/S 11 OF THE INCOME-TAX ACT 1961 IN VI EW OF THE REGISTRATION U/S 12A/12AA RECEIVED BY THE ASSESSEE ON 23.12.2006. 4. THE FACTS IN BRIEF ARE THAT INSPITE OF ORDER OF THE TRIBUNAL DIRECTING THE LD. CIT(A) TO GRANT REGISTRATION TO THE ASSESSEE UNDER SECTION 12A BEIN G COMPLIED WITH BY THE LD. CIT THE A.O. HAS HELD TH AT 22 THE ASSESSEE SAMITI WAS NOT ENTITLED FOR EXEMPTION U/S 11 IN VIEW OF THE FACT THAT THE DEPARTMENT HAD NOT ACCEPTED THE SAID DECISION OF THE TRIBUNAL AND APPEAL HAD BEEN FILED BEFORE THE HON'BLE HIGH COURT U/S 260A AND HAD BEEN ADMITTED ALSO. ON A QUERY FROM US THE LD. DEPARTMENTAL REPRESENTATIVE COULD NOT PRODUCE THE COPY OF STAY IF ANY GRANTED BY TH E HON'BLE HIGH COURT AGAINST THE SAID ORDER OF THE TRIBUNAL. THUS IN OUR VIEW THE ACTION OF THE A.O. WHICH HAS ALSO BEEN CONFIRMED BY THE CIT(A) IS NOT CORRECT IN LAW AS AT THE RELEVANT POINT OF TIME T HE ORDER OF THE TRIBUNAL IS BINDING ON BOTH SUCH AUTHORITIES. ACCORDINGLY WE HOLD THAT THE ASSESSEE S INCOME SHOULD BE COMPUTED ON THE BASIS THAT THE ASSESSEE IS ENTITLED TO EXEMPTION U/S 11OF THE ACT. THUS GROUND NO.1 OF THE ASSESSEES APPEAL IS ALLOWED. IN THE LIGHT OF THE ARGUMENTS PUT FORTH BY THE LD. RESPECTIVE COUNSEL AND THE AFORESAID DECISION OF TH E TRIBUNAL AND ALSO THE FACT THAT THE GROSS RECEIPTS OF THE ASSESSEE ARE TO THE TUNE OF RS.5 69 29 352/- OUT OF WHICH THE ASSESSEE APPLIED THE INCOME TO THE TUNE OF RS.5 24 50 886/- (92%) THEREFORE THE ASSESSEE HAS APPLIED MORE THAN 85% OF THE INCOME CONSEQUENTLY THE CONDITIONS LAID DOWN FOR GETTING EXEMPTION U/S 11 OF THE ACT IS FULFILLED THEREFORE IN VIEW OF THE DECISION IN CIT VS. PROGRAMME FOR COMMUNITY ORGANISATION (2001) (116 TAXMAN 608) (SC) THE AFORESAID DECISION OF THE TRIBUNAL WHEREI N BOTH OF US ARE SIGNATORY TO THE ORDER AND IN THE ABSENCE OF ANY CONTRARY DECISION BROUGHT TO OUR NOTICE THIS GROUND OF THE ASSESSEE IS ALLOWED. IN VIEW OF THE ABOVE SINCE THE ISSUE OF EXEMPTION U/ S 11 IS COVERED AGAINST THE REVENUE BY THE ORDER DATED 25.3.2010 (SUPR A) WE DECIDE THIS ISSUE AGAINST THE REVENUE. 23 7. SO FAR AS THE CROSS-OBJECTION NO.54/IND/2011 FIL ED BY THE ASSESSEE IS CONCERNED WE FIND THAT THE SAME IS INFRU CTUOUS IN VIEW OF THE FACT THAT IT WAS MERELY FILED IN SUPPORT OF THE ORDER OF THE LD. CIT(A) AND THE ISSUES ARISING FROM THE ORDER OF THE LD. CIT(A ) HAVE ALREADY BEEN DECIDED HEREINABOVE WHILE DISPOSING OF THE APPE AL OF THE REVENUE THEREFORE CROSS-OBJECTION NO.54/IND/2011 F ILED BY THE ASSESSEE IS DISMISSED. FINALLY THESE DEPARTMENTAL APPEALS ARE DISPOSED OF I N TERMS AS INDICATED HEREINABOVE WHEREAS THE CROSS-OBJECTION FIL ED BY THE RESPECTIVE ASSESSEE IS DISMISSED BEING INFRUCTUOUS. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 1.2.201 2. SD SD (R.C. SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: IST FEBRUARY 2012 COPY TO: APPELLANT/RESPONDENT/CIT/CIT(A)/DR/GUARD FIL E