ITO, JHALAWAR v. KRISHI UPAJ MANDI SAMITI,

ITA 429/JPR/2011 | 2004-2005
Pronouncement Date: 10-11-2014 | Result: Allowed

Appeal Details

RSA Number 42923114 RSA 2011
Assessee PAN AAALK0403D
Bench Jaipur
Appeal Number ITA 429/JPR/2011
Duration Of Justice 3 year(s) 6 month(s) 4 day(s)
Appellant ITO, JHALAWAR
Respondent KRISHI UPAJ MANDI SAMITI,
Appeal Type Income Tax Appeal
Pronouncement Date 10-11-2014
Appeal Filed By Department
Order Result Allowed
Bench Allotted A
Tribunal Order Date 10-11-2014
Assessment Year 2004-2005
Appeal Filed On 06-05-2011
Judgment Text
IN THE INCOMETAX APPELLATE TRIBUNAL JAIPUR BENCH: JAIPUR (BEFORE SHRI R.P. TOLANI AND SHRI T.R. MEENA) I.T.A. NO. 429/JP/2011 ASSTT. YEAR- 2004-05 PAN NO. AAALK 0403 D THE I.T.O. M/S KRISHI UPAJ MANDI SAMITI JHALAWAR. VRS. BHAWANIMANDI RAJASTHAN. (APPELLANT) (RESPONDENT) DEPARTMENT BY :- SHRI RAJESH OJHA ASSESSEE BY :- SHRI RAGHAV KUMAR BAJAJ. DATE OF HEARING : 10/09/2014 DATE OF PRONOUNCEMENT : 10/11/2014 O R D E R PER: T.R. MEENA A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 10/03/2011 OF THE LEARNED C.I.T.(A) KOTA FOR THE A. Y. 2004-05. THE SOLE GROUND OF APPEAL IS AGAINST DELETING THE DEPRECIATI ON ON ASSETS OF RS. 23 88 052/- WHEN THE SAME WAS ALREADY ALLOWED AS APPL ICATION OF INCOME WITH GRANT OF REGISTRATION U/S 12AA(1) OF THE INCOME TAX ACT 1961 (HEREINAFTER REFERRED AS THE ACT). 2. THE ASSESSEE FILED RETURN FOR A.Y. 2004-05 ON 27/ 3/2006 WHICH WAS SCRUTINIZED U/S 143(3) OF THE ACT ON 11/12/2006 ON THE TOTAL INCOME OF RS. 1 13 92 710/-. THE ASSESSEE PREFERRED APPEAL BEFORE THE LEARNED ITA 429/JP/2011 ITO VS. M/S KRISHI UPAJ MANDI SAMITI 2 CIT(A) KOTA AND THE LEARNED CIT(A) KOTA PARTLY AL LOWED THE APPEAL VIDE ORDER DATED 26/2/2007. THE DEPARTMENT AS WELL AS THE ASSESSEE WAS AGGRIEVED WITH THE ORDER OF THE LEARNED CIT(A) AN D FILED FURTHER APPEAL BEFORE THE HONBLE ITAT JAIPUR BENCH JAIPUR . THE HONBLE ITAT JAIPUR DECIDED BOTH THE APPEALS OF DEPARTMENT AND A SSESSEE VIDE ORDER DATED 31/3/2008 WITH DIRECTION TO MAKE THE ASSESSMEN T FOR THE PERIOD UNDER CONSIDERATION AFRESH AFTER AFFORDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE UNDER THE REGISTRATION U/S 12 AA OF THE ACT. THE LEARNED ASSESSING OFFICER GAVE REASONABLE OPPORTUNI TY OF BEING HEARD TO MAKE COMPLIANCE OF HONBLE ITAT. KRISHI UPAJ MANDI S AMITI BHAWANIMANDI DERIVED INCOME FROM MANDI FEE RENTAL I NCOME AND INTEREST OF BANK DEPOSITS. DURING THE YEAR UNDER CO NSIDERATION THE ASSESSEE SAMITI HAD SHOWN SURPLUS OF RS. 5 57 900/- OVER THE EXPENDITURE. THE ASSESSEE SAMITI HAD CLAIMED EXEMPTI ON U/S 10(20)/12A OF THE ACT IN COMPUTATION OF INCOME. THE ASSESSEE SA MITI HAD FILED ITS RETURN ASSUMING ITS STATUS AS AOP-TRUST BUT THE REGI STRATION U/S 12AA GRANTED IN COMPLIANCE TO HONBLE ITAT JAIPUR BENCH JAIPUR ORDER WHICH HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND FILED A PPEAL BEFORE THE HONBLE RAJASTHAN HIGH COURT JAIPUR. THEREFORE HE TREATED ASSESSEES STATUS AS ARTIFICIAL JURIDICAL PERSON. THE ASSESSEE SUBMITTED BEFORE THE ASSESSING OFFICER THAT AS PER SECTION 17 OF THE RAJ ASTHAN AGRICULTURAL ITA 429/JP/2011 ITO VS. M/S KRISHI UPAJ MANDI SAMITI 3 PRODUCE MARKET BOARD ACT 1961 IT EMPOWERS THE MARK ET COMMITTEE TO COLLECT MARKET FEES FROM THE LICENSEE IN THE PRESCR IBED MANNER ON AGRICULTURAL PRODUCE BROUGHT OR SOLD BY THEM IN THE MARKET AREA AT SUCH RATE AS MAY BE SPECIFIED IN THE OFFICIAL GAZETTE. A LTHOUGH THE FEES IS NOT A TAX IT IS A FEE CORRELATED TO THE SERVICES RENDER ED BY THE MARKET COMMITTEE IN THE MARKET AREA. THE SOURCE OF THE APPL ICANT IS FEES COLLECTED ON THE TRANSACTION MADE IN MANDI AREA. KR ISHI UPAJ MANDI SAMITI BHAWANIMANDI HAS BEEN GRANTED REGISTRATION U /S 12AA W.E.F. 01/4/2003 I.E. DATE OF ESTABLISHMENT OF THE SAMITI. THE LEARNED ASSESSING OFFICER REPRODUCED THE SUBMISSION MADE BY THE APPLICANT ON PAGE NOS. 4 TO 8 OF THE ASSESSMENT ORDER. AFTER CON SIDERING THE ASSESSEES REPLY IT HAS BEEN HELD THAT BURDEN OF P ROOF IS ON THE REVENUE TO SHOW THAT THE INCOME IS LIABLE TO TAX UNDER THE S TATUTE BUT THE ONUS OF SHOWING A PARTICULAR CLASS OF INCOME IS EXEMPT FROM TAXATION IS ON THE ASSESSEE. THE LEARNED CIT KOTA HAS GIVEN A CATEGORI CAL FINDING THAT THE ACTIVITIES OF THE SAMITI ARE NOT CHARITABLE AND NOT WITHIN THE FOUR CORNERS OF SECTION 11 READ WITH SECTION 2(15) OF THE ACT. TH EREFORE THE LEARNED CIT HAS RIGHTLY DENIED REGISTRATION U/S 12A OF THE A CT. THE LEARNED ASSESSING OFFICER HAS COMMENTED ON THE ORDER OF THE ITAT ON PAGE 10 PARAGRAPH-C THAT THE HONBLE ITATS ORDER IS ERRONEO US FOR THE REASONS THAT THE SAMITI HAS BEEN ESTABLISHED FOR THE PURPOS E OF STOPPING ITA 429/JP/2011 ITO VS. M/S KRISHI UPAJ MANDI SAMITI 4 EXPLOITATION OF THE FARMERS. HE FINALLY ANALYSED AL L THE AIMS AND OBJECTS OF THE KRISHI UPAJ MANDI SAMITI BHAWANIMANDI IN HIS ASSESSMENT ORDER AS WELL AS ORDER OF THE ITAT AND RELIED UPON THE VARI OUS CASE LAWS. HE ALSO FOUND THE ACTIVITIES OF THE SAMITI CHARITABLE GAVE THE FINDING ON STATUTORY CONTRIBUTION AND EXPENDITURE TOWARDS CONST RUCTION/REPAIR OF THE LINK ROAD. HE DISALLOWED THE DEPRECIATION CLAIME D BY THE SAMITI AT RS. 23 83 052/- AND ASSESSED THE SAMITIS INCOME AT RS. 1 13 92 710/-. 3. BEING AGGRIEVED BY THE ORDER OF THE LEARNED ASSE SSING OFFICER THE ASSESSEE CARRIED THE MATTER TO THE LEARNED CIT(A) W HO HAD ALLOWED THE APPEAL BY CONSIDERING THE HONBLE JURISDICTIONAL HI GH COURT DECISION IN THE CASE OF K.U.M.S. JAISALMER 216 CTR 277 KUMS M ORENA 308 ITR 380 (MP) KUMS GONGALAI 218 CTR 512 (MP) SECTION 1 0 (26AAB) KUMS SRIMADHOPUR I.T. APPEAL NO. 167/2010 ORDER DAT ED 18/8/2010 (RAJASTHAN HIGH COURT) AND HELD AS UNDER: 4.0 IN VIEW OF THIS LEGAL POSITION AND RESPECTFULLY FOLLOWING DECISIONS OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASES OF KUMS JAISALMER AND KUMS GAJSINGHPUR AND KUMS SRIMADHOPUR I HOLD THAT APPELLANT IS ELIGIBLE FOR REGISTRATION U/S 12A BEING EXISTING FOR ANY OTHER OBJECT OF GE NERAL PUBLIC UTILITY. A.O. IS NOT JUSTIFIED TO DENY STAT US OF CHARITABLE INSTITUTION TO THE APPELLANT. A.O. IS AL SO NOT JUSTIFIED IN COMPLETING THE ASSESSMENT WITHOUT GRANT ING ITA 429/JP/2011 ITO VS. M/S KRISHI UPAJ MANDI SAMITI 5 EXEMPTION U/S 11 AND 12 OF THE I.T. ACT TO THE APPEL LANT. GROUND NO. 1 OF APPEAL IS THUS ALLOWED. 4.1 SINCE I HAVE HELD THAT APPELLANT IS A CHARITAB LE INSTITUTION U/S 12A OF THE I.T. ACT THE ENTIRE INCOME OF THE AP PELLANT IS EXEMPT. A.O. IS THEREFORE NOT JUSTIFIED IN COMPLE TING THE ASSESSMENT AT TOTAL INCOME OF RS. 1 13 92 710/-. TH E A.O. IS THEREFORE DIRECTED TO ACCEPT THE RETURN FILED BY T HE APPELLANT IN THE STATUS OF CHARITABLE INSTITUTION. IN VIEW OF THIS DECISION GROUND NOS. 2 TO 8 HAVE BECOME INFRU CTUOUS. FOR STATISTICAL PURPOSE GROUND NOS. 2 TO 8 ARE THU S ALLOWED. 4. NOW THE REVENUE IS IN APPEAL BEFORE US. THE LEARNE D SR. D.R. ARGUED THAT THE ASSESSEE HAS CLAIMED DEPRECIATION A T RS. 23 88 052/- THAT ALL COST OF ASSETS WERE CLAIMED IN THE YEAR OF ACQUISITION ITSELF WHICH IS NOT PERMITTED UNDER THE LAW. 5. AT THE OUTSET THE LEARNED AR FOR THE ASSESSEE S UBMITTED THAT THE ASSESSEE SAMITI IS ENTITLED TO CLAIM DEPRECIATION E VEN ASSETS WRITTEN OFF ON ACCOUNT OF APPLICATION FOR FUND ON COMMERCIAL PR INCIPLE. THERE IS NO DOUBLE DEDUCTION THE ASSESSEE REDUCED DEPRECIATION FROM THE TOTAL INCOME. HE RELIED FOR THE PURPOSE THE FOLLOWING CASE LAWS: (I) CIT VS. TINY TOTS EDUCATION SOCIETY (2011) 330 ITR 21 (P&H). (II) CIT VS. MARKET COMMITTEE PIPLI (2011) 330 ITR 16. (III) CIT VS. SHETH MANILAL RANCHHODDAS VISHRAM BHA WAN TRUST ITA 429/JP/2011 ITO VS. M/S KRISHI UPAJ MANDI SAMITI 6 (1992) 105 CTR (GUJ) 303. (IV) CIT VS. DEVI SAKUNTALA THARAL CHARITABLE FOUNDAT ION BHOPAL CAMPION SCHOOL SOCIETY SHRI SATYA SAI TRUST AND SH RINIVAS EDUCATION SOCIETY MANU/MP/2234/2013. (V) DIRECTOR OF INCOME TAX VS. VISHWA JAGRITI MISSION (2013) 262 CTR (DEL) 558. (VI) CIT VS. RAIPUR PALLOTTINE SOCIETY (1989) 80 CTR (MP) 127. (VII) EIGHTH INCOME TAX OFFICER VS. TRUSTEES OF MARA THI MISSION (1982) 1 ITD (BOM) 539. (VIII) CIT VS. DESH BHAGAT MEMORIAL EDUCATION TRUST ( 2012) 54 SOT 141 (DELHI). THE HON'BLE SUPREME COURT RECENTLY HAS ADMITTED THE REFERENCE FILED AGAINST THE DECISION OF HONBLE KERALA HIGH COURT I N THE CASE OF LISSIE MEDICAL INSTITUTIONS VS. CIT VIDE ORDER DATED 02/7/2 013 ON THIS ISSUE. THEREFORE HE PRAYED TO ALLOW THE DEPRECIATION CLAIME D BY THE ASSESSEE. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE DE CISIONS OF VARIOUS COURTS REFERRED BY THE ASSESSEE ON THIS ISSUE HAS H ELD THAT DEPRECIATION IS TO BE REDUCED FROM THE INCOME FOR DETERMINING TH E PERCENTAGE OF FUND WHICH HAVE TO BE APPLIED FOR THE PURPOSES OF THE TRU ST. THERE IS NO DOUBLE DEDUCTION CLAIMED BY THE ASSESSEE. THE INCOME OF THE ASSESSEE SHOULD BE COMPUTED ON COMMERCIAL PRINCIPLE AND DEPR ECIATION ON FIXED ASSETS UTILIZED FOR THE CHARITABLE PURPOSE SHOULD B E ALLOWED. THEREFORE ITA 429/JP/2011 ITO VS. M/S KRISHI UPAJ MANDI SAMITI 7 WE DIRECT THE ASSESSING OFFICER TO RECONSIDER THIS I SSUE AFTER PROVIDING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. 7. IN THE RESULT APPEAL OF THE REVENUE IS ALLOWED F OR STATISTICAL PURPOSES ONLY. ORDER PRONOUNCED IN THE OPEN COURT ON 10/11/2014. SD/- SD/- (R.P. TOLANI) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR DATED : 10 TH NOVEMBER 2014 * RANJAN COPY FORWARDED TO :- 1. THE ITO JHALAWAR. 2. M/S KRISHI UPAJ MANDI SAMITI BHAWANIMANDI . 3. THE CIT (A) 4. THE CIT 5. THE D/R GUARD FILE (I.T.A. NO. 429/JP/2011) BY ORDER AR ITAT JAIPUR.