ACIT, Khammam v. Agrilcultural Market Committee, Khammam

ITA 543/HYD/2009 | 2004-2005
Pronouncement Date: 26-03-2010 | Result: Allowed

Appeal Details

RSA Number 54322514 RSA 2009
Assessee PAN CEACT2002W
Bench Hyderabad
Appeal Number ITA 543/HYD/2009
Duration Of Justice 11 month(s) 3 day(s)
Appellant ACIT, Khammam
Respondent Agrilcultural Market Committee, Khammam
Appeal Type Income Tax Appeal
Pronouncement Date 26-03-2010
Appeal Filed By Department
Order Result Allowed
Bench Allotted B
Tribunal Order Date 26-03-2010
Date Of Final Hearing 03-03-2010
Next Hearing Date 03-03-2010
Assessment Year 2004-2005
Appeal Filed On 23-04-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B HYDERABAD BEFORE SHRI N.R.S.GANESAN JUDICIAL MEMBER AND SHRI AKBER BASHA ACCOUNTANT MEMBER ITA/CO NO. ASST. YR. APPELLANT RESPONDENT COUNSEL FOR THE ASSESSEE 542/H/09 2003-04 ACIT CIR-1 KHAMMAM. AGRICULTURAL MARKET COMMITTEE MADHIRA SRI V. SIVA KUMAR C.O.13/H/09 -DO- AGRICULTURAL MARKET COMMITTEE MADHIRA ACIT CIR-1 KHAMMAM. -DO- 543/HYD/09 2004-05 ACIT CIR-1 KHAMMAM. AGRICULTURAL MARKET COMMITTEE MADHIRA -DO- C.O.14/H/09 -DO- AGRICULTURAL MARKET COMMITTEE MADHIRA ACIT CIR-1 KHAMMAM. -DO- 544- 545/H/09 2003-04 & 04-05 ACIT CIR-1 KHAMMAM. AGRICULTURAL MARKET COMMITTEE NELAKONDAPALLY. -DO- C.O15- 16/H/09 -DO- AGRICULTURAL MARKET COMMITTEE NELAKONDAPALLY. ACIT CIR-1 KHAMMAM. -DO- 550 &551/H/09 -DO- ACIT CIR-1 KHAMMAM. AGRICULTURAL MARKET COMMITTEE DAMMAPETA. -DO- C.O. NOS. 21 & 22/H/09 -DO- AGRICULTURAL MARKET COMMITTEE DAMMAPETA. ACIT CIR-1 KHAMMAM. -DO- 552 & 553/H/09 -DO- ACIT CIR-1 KHAMMAM. AGRICULTURAL MARKET COMMITTEE BURGAMPAHAD -DO- C.O NOS. 23 & 24/H/09 -DO- AGRICULTURAL MARKET COMMITTEE BURGAMPAHAD ACIT CIR-1 KHAMMAM. -DO- 558 & 559/H/09 -DO- ACIT CIR-1 KHAMMAM. AGRICULTURAL MARKET COMMITTEE KHAMMAM. -DO- C.O.NOS. 29 & 30/H/09 -DO- AGRICULTURAL MARKET COMMITTEE KHAMMAM. ACIT CIR-1 KHAMMAM. -DO- 560 & 561/H/09 -DO- ACIT CIR-1 KHAMMAM. AGRICULTURAL MARKET COMMITTEE NAGURCHARLA. -DO- C.O. NOS. 31 & 32/H/09 -DO- AGRICULTURAL MARKET COMMITTEE NAGURCHARLA. ACIT CIR-1 KHAMMAM. -DO- 739/H/09 2003-04 DDIT(E)-I HYDERABAD. AGRICULTURAL MARKET COMMITTEE KARIMNAGAR. SRI S. RAMA RAO 914/HYD/09 2004-05 DDIT(E)-I HYDERABAD. AGRICULTURAL MARKET COMMITTEE NARAYANPET. -DO- 2 925/HYD/09 2003-04 DDIT(E)-2 HYDERABAD. AGRICULTURAL MARKET COMMITTEE VALIGONDA. SRI K. RAGHUNATH 949/HYD/09 952/HYD/09 2003-04 -DO- ITO WARD- 2 NIZAMABAD. AMC BANSWADA. AMC GANDHARI. SRI S. RAMA RAO 950/HYD/09 2003-04 ITO WARD- 2 NIZAMABAD AGRICULTURAL MARKET COMMITTEE PITLAM. -DO- 951/H/09 2003-04 ITO WARD- 1 NIZAMABAD AGRICULTURAL MARKET COMMITTEE YELLA REDDY. -DO- 1055/HYD/09 -DO- DCIT CIR- 5(1) HYD. AGRICULTURAL MARKET COMMITTEE BADEPALLI. SRI K. RAGHUNATH DEPARTMENT BY: SMT. VASUNDHARA SINHA AND SRI E.S. NAGENDR A PRASAD ASSESSEES BY : S/SHRI S. RAMA RAO V. SIVA KUMAR & K. RAGHUNATH O R D E R PER BENCH: A BATCH OF APPEALS (ITA NO. 542-543/HYD/2009 FILED BY THE REVENUE AND CROSS-OBJECTIONS NO.13 AND 14/HYD/2009 THE REIN FILED BY THE ASSESSEE VIZ. AGRICULTURAL MARKET COMMITTEE MADHIR A (KHAMMAM DISTRICT); ITA NO.544-545/HYD/09 AND C.O.NOS.15 AND 16 /HYD/09 THEREIN FIELD BY THE ASSESSEE VIZ. AGRICUTLURAL MAREKT COMMITTEE NELAKONDAPALLI KHAMMAM DIST.); ITA NO. 550-551/HYD/2 009 FILED BY THE REVENUE AND CROSS-OBJECTIONS NO.21 AND 22/HYD/2009 T HEREIN FILED BY THE ASSESSEE VIZ. AGRICULTURAL MARKET COMMITTEE DAM MAPETA KHAMMAM DSIT.); ITA NO. 552-553/HYD/2009 FILED BY THE REVENUE AND CROSS-OBJECTIONS NO.23 AND 24/HYD/2009 THEREIN FILED BY THE ASSESSEE VIZ. AGRICULTURAL MARKET COMMITTEE BURGAMPAHAD KHA MMAM DIST.); 3 ITA NO. 558-559/HYD/2009 FILED BY THE REVENUE AND C ROSS-OBJECTIONS NO.29 AND 30/HYD/2009 THEREIN FILED BY THE ASSESSEE VIZ . AGRICULTURAL MARKET COMMITTEE KHAMMAM); AND ITA NO. 560-561/HYD/ 2009 FILED BY THE REVENUE AND CROSS-OBJECTIONS NO.31 AND 32/HYD/2009 T HEREIN FILED BY THE ASSESSEE VIZ. AGRICULTURAL MARKET COMMITTEE NUG URUCHARLA KHAMMAM DIST) ITA 739/HYD/09 914/HYD/09 951/HYD/09 925/HYD/09 949 & 952/HYD/09 950/HYD/09 AND 1055/HYD/0 9 AS MENTIONED IN THE CAUSE LIST CAME UP FOR HEARING BEFORE US ON 3-3-2010. SINCE COMMON AND IDENTICAL ISSUES ARE INVOLVED IN ALL TH E ABOVE APPEALS AND CROSS OBJECTIONS THESE ARE HEARD TOGETHER AND DISPOS ED OFF BY THIS COMBINED ORDER FOR THE SAKE OF CONVENIENCE. FOR THE SAKE OF BREVITY AMC KARIMNAGAR IN ITA NO.739/HYD/2009 AND OTHERS IN THOSE CASES SRI S. RAMA RAO HAS APPEARED WAS TAKEN UP AS MAIN APPEALS FOR HEARING. THE OTHER TWO COUNSELS S/SHRI V.SIVA KUMAR AND K. RA GHUNATH AGREED THAT THE FACTS CONSIDERED BY THE LOWER AUTHORITIES IN TH E OTHER GROUP OF CASES ARE IDENTICAL AND MERE APPLICATION OF THE DECISION I N THE INSTANT CASE WOULD BE SUFFICIENT TO DISPOSE OF ALL OTHER CASES LIST ED IN THE CAUSE- TITLE (SUPRA) AND THEY WILL FULLY AGREE WITH THE ARG UMENTS ADVANCED BY THE LEARNED COUNSEL SRI S. RAMA RAO IN ADDITION TO TH EIR ARGUMENTS ADVANCED. 2. ON BEHALF OF THE REVENUE SMT. VASUNDHRA SINHA AN D SRI NAGENDRA PRASAD APPEARED AND ARGUED. ON BEHALF OF T HE ASSESSEES I.E. AMCS S/SHRI S. RAMA RAO V. SIVA KUMAR AND K. RAGHU NATH APPEARED AND ARGUED FOR THEIR RESPECTIVE CASES. 3. THE BRIEF FACTS OF THE CASE IN ITA NO.739/HYD/2009 AR E AS FOLLOWS. THE ASSESSEE IS AN AGRICULTURAL MARKET COMMITTEE (AMC IN SHORT). IT 4 WAS CONSTITUTED BY A NOTIFICATION ISSUED BY GOVERNMENT O F ANDHRA PRADESH UNDER THE PROVISIONS OF ANDHRA PRADESH (AGRICULT URAL PRODUCE AND LIVE STOCK) MARKET ACT 1966. THE STATUTE AUTHORI ZES THE AMCS TO PURCHASE AND SELL AGRICULTURAL PRODUCE LIVE STOCK OR PR ODUCTS OF LIVE STOCK IN THE AREA AS SPECIFIED IN THE NOTIFICATION. THE AMC COLLECT MARKET FEES PERIODICALLY IN THE COURSE OF TRANSACTION OF PURCHASE AND SALE OF AGRICULTURAL PRODUCE AFFECTED IN THE MARKET. U P TO THE ASSESSMENT YEAR 2003-04 THE AMCS WERE TREATED AS LOCAL AU THORITY AND THUS INCOME EARNED BY THE AMCS WAS NOT LIABLE TO TAX. WITH EFFECT FROM 1-4-2003 AN EXPLANATION WAS INCORPORATED BY THE FI NANCE ACT 2002 BELOW TO SECTION 10(20) OF THE INCOME-TAX ACT WHEREBY EXPRESSION 'LOCAL AUTHORITY' WAS CLARIFIED THEREBY DENYING THE BE NEFIT OF EXEMPTION TO MARKET COMMITTEES U/S 10(20) OF THE INCOME-TAX ACT. HENCE THE ASSESSEE FILED RETURN OF INCOME SHOWING NIL INCOME ON 10T H AUGUST 2004 IN RESPONSE TO NOTICE U/S 142(1) OF THE ACT CLAI MING EXEMPTION U/S 10(20) OF THE ACT. THE ASSESSEE CONTENDED THAT THE S URPLUS OF THE AMC DID NOT CONSTITUTE INCOME LET ALONE TAXABLE INCOME FOR THE REASON THAT THE COLLECTIONS MADE BY THE AMC ARE BURDENED WIT H AN OVER-RIDING STATUTORY OBLIGATION CASTE UPON IT BY THE ANDHRA PRADE SH (AGRICULTURAL PRODUCE AND LIVE STOCK) MARKET ACT 1966 AND THE RULE MADE THERE UNDER. THE CONTENTION OF THE ASSESSEE IS THAT ITS INCOME CONTINUES TO BE EXEMPT U/S 10(20) OF THE INCOME-TAX ACT DESPITE INSERTI ON OF AN EXHAUSTIVE LIST OF THE LOCAL AUTHORITIES WHICH ARE MADE ELIGIBLE FOR EXEMPTION. THE ASSESSING OFFICER HELD THAT THE EXPLANATO RY NOTE EXPLAINING THE PROVISIONS OF FINANCE ACT 2002 WITH THE HEADING 'INCOME OF CERTAIN LOCAL AUTHORITIES TO BECOME TAXABLE' MADE IT CLEAR THAT THE INTENTION OF THE LEGISLATURE THAT AMC NO LONGER ENJO YED THE TAX EXEMPTION. COMING TO THE ASSESSEE'S CLAIM FOR EXEMPTION U/S 11 OF THE 5 ACT THE ASSESSING OFFICER HELD THAT SINCE THE APPLICATION F OR REGISTRATION U/S 12A BY THE AMC WAS REJECTED BY THE DIRECTOR OF INCOM E-TAX (EXEMPTION) THE QUESTION OF CONSIDERING FOR EXEMPTIO N U/S 11 DOES NOT ARISE. FINALLY THE ASSESSING OFFICER ARRIVED AT THE TAX ABLE INCOME OF THE AMC AT RS.1 13 23 621. 4. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER THE ASSESSEE WENT IN APPEAL BEFORE THE CIT (A). THE CIT (A) AFTER CON SIDERING THE SUBMISSIONS OF THE ASSESSEE FOLLOWED THE VIEW TAKEN BY THE ITAT VISAKHAPATNAM BENCH AND ALLOWED THE EXEMPTION U/S 10(2 6AAB) OF THE ACT AND DIRECTED THE ASSESSING OFFICER TO EXAMINE THE CLAIM OF THE ASSESSEE UNDER THE SAID SECTION AND GRANT EXEMPTION ACCORDIN GLY. AGGRIEVED BY THE ORDER OF THE CIT (A) THE REVENUE IS IN APPEAL BEFORE US. 5. THE EFFECTIVE ISSUES WHICH ARE COMMON IN ALL THESE AP PEALS THAT CAME UP FOR CONSIDERATION OUT OF THE ARGUMENTS P UT FORTH BY THE PARTIES ARE AS FOLLOWS- 1] WHETHER THE PROVISION OF SECTION 10[26AAB] CAME INT O EFFECT ONLY ON 1.4.2009 AS EVIDENT FROM THE PLAIN READING O F THE ABOVE PROVISION? 2] WHETHER THE CIT [A] ERRED IN RELYING ON THE DECI SION OF THE ITAT VISAKHAPATNAM BENCH IN THE CASE OF AGRICULTURAL MARKET COMMITTEE VS. ACIT IN ITA NO.90/VIZAG/2007 W HICH HELD THAT THE NEWLY INSERTED SECTION 10 [26AAB] WAS RETROSPECTIVE AND APPLICABLE TO EARLIER YEARS WHEREAS T HE 6 STATUTE IS VERY CLEAR THAT THE NEWLY INSERTED SECTION OPE RATES ONLY PROSPECTIVELY FROM 1.4.2009 AND UNLESS OTHERWISE STATED EVERY NEW LEGISLATION IS ONLY PROSPECTIVE IN NA TURE. 3] WHETHER THE DECISION IN THE CASE OF AGRICULTURAL P RODUCE MARKET COMMITTEE VS. CIT REPORTED IN [305 ITR 1] REN DERED BY THE APEX COURT ON 21ST AUGUST 2008 EXPRESSED ITS CANDID VIEW WITH REGARD TO THE MEANING OF THE EXPRESSION 'LOCAL AUTHORITY' IN THE LIGHT OF THE EXPLANATION INSERTED BELOW SECTION 10 [20] OF THE INCOME TAX ACT 1961 BY THE FIN ANCE ACT 2002. WHETHER AS PER THE SAID DECISION OF THE APEX COURT IN THE CASE OF AGRICULTURAL PRODUCE MARKET COMMI TTEE VS. CIT [(SUPRA)] SECTION 10[26AAB] OPERATES ONLY FROM 1.4.2009 AND IS NOT RETROSPECTIVE IN NATURE AND THAT T HE TAXABILITY OF AMCS UNDER THE INCOME TAX ACT WITH EFFECT FROM 1.4.2003 WAS NO LONGER RES INTEGRA. 4. WHETHER THE INTENSION OF THE AMENDMENT MADE IN FINANCE ACT 2002 WAS TO EXCLUDE THE AMCS FROM THE DEFINITION O F 'LOCAL AUTHORITY' AND TO TAX THE INCOME OF THE AMC'S F ROM THE ASSESSMENT YEAR 2003-04 ONWARDS. 5. WHETHER THE APEX COURT DECISION IN THE CASE OF AGRI CULTURAL PRODUCE MARKET COMMITTEE V/S. CIT (SUPRA) OVERRIDES TH E DECISION OF THE VISAKAPATNAM BENCH IN THE CASE OF AGRICULTURAL MARKET COMMITTEE VS. ACIT (SUPRA) AND IS PER IN CURIAM. 7 6. WHETHER THE FEES COLLECTED BY THE AMCS FELL WITHI N THE DEFINITION OF THE WORD 'INCOME' AND HENCE TAXABLE AS THERE IS NO SPECIFIC EXEMPTION IN RESPECT OF MARKET FEES AND LICENSE FEES COLLECTED BY THE AMCS IN THE INCOME-TAX ACT. 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE SMT. VA SUNDHARA SINHA SUBMITTED THAT THE DECISION OF THE VISAKHAPATI NAM BENCH IN THE CASE OF AGRICULTURAL MARKET COMMITTEE VS. ACIT (SUPRA) I S PER IN CURIUM IN AS MUCH AS IT HAS NOT CORRECTLY INTERPRETED THE STATUTO RY PROVISIONS AND THE DECISION OF THE APEX COURT IN THE CASE OF AGR ICULTURAL PRODUCE MARKET COMMITTEE (SUPRA) ALSO APPEARS TO HAVE NOT BEEN PROPERLY APPRECIATED. THE LEARNED DEPARTMENTAL REPRESENTATIVE FURTHER SUBMITTED THAT THE QUESTION OF THE RETROSPECTIVE STATUS O F SECTION 10(26AAB) HAS BEEN ANSWERED BY THE SUPREME COURT IN A GRICULTURAL PRODUCE MARKET COMMITTEE (SUPRA). THE OBSERVATIONS OF T HE SUPREME COURT ARE AS FOLLOWS: SINCE WE ARE OF THE VIEW THAT AMC(S) IS NEITHER A MU NICIPAL COMMITTEE NOR A DISTRICT BOARD UNDER THE SAID EXPLANAT ION TO SECTION 10(20) OF THE 1961 ACT WE REFRAIN FROM GOING INTO THE QUESTION : WHETHER THE AMC(S) IS LEGALLY ENTITLED TO THE CONTROL OF THE LOCAL FUND NAMELY MARKET FUND UNDER THE SAI D 1998 ACT. THERE IS ONE MORE REASON WHY WE DO NOT WISH TO EX PRESS ANY OPINION ON THE SAID QUESTION. VIDE THE FINANCE AC T 2008 INCOME OF AMC(S) IS EXEMPT. SUB-SECTION (26AAB) OF SECTI ON 10 COMES INTO FORCE WITH EFFECT FROM APRIL 1 2009. THEREFORE WE DO NOT WISH TO EXPRESS ANY OPINION ON THE QUESTION AS TO WHETHER AMC(S) IS LEGALLY ENTITLED TO THE CONTROL OF THE LOCAL FUND. WE HOLD THAT AMC(S) IS THEREFORE NOT ENTITLED TO EXEMPTION UNDER SECTION 10(20) OF THE 1961 ACT AFTER THE INSERTIO N OF THE SAID EXPLANATION VIDE THE FINANCE ACT 2002 WITH EFF ECT FROM APRIL 1 2003. 8 8. IT IS FURTHER SUBMITTED THAT ITAT VIZAG BENCH HAS HELD THAT THE ISSUE WHETHER AMC IS A LOCAL AUTHORITY WITHIN THE M EANING OF SECTION 10(20) OF THE ACT HAS BEEN ADDRESSED ELABORATELY BY THE APEX COURT IN THE CASE OF APMC (SUPRA) AND THAT WHAT REMAINED TO BE CONSIDERED WAS WHETHER INSERTION OF SECTION 10(26AAB) WAS A DECLARATOR Y ACT TO REMOVE DOUBTS EXISTING WITH REGARD TO THE EFFECT OF PRE-EXISTI NG STATUTE AND CONSEQUENTLY RETROSPECTIVE IN OPERATION. WHILE DOING SO THE BENCH HAS FAILED TO TAKE COGNIZANCE OF THE FACT THAT THE SUPREME COURT HAS ALREADY CONSIDERED THIS ISSUE IN THE CASE OF APMC (SUPRA) AND THE A PEX COURT HAS TAKEN DUE COGNIZANCE OF THE EXISTENCE OF SECTION 10( 26AAB) OF THE ACT. THE PRONOUNCEMENT OF THE SAID APEX COURT ORDER WAS ON 21ST AUGUST 2008 WHEREAS THE FINANCE ACT 2008 RECEIVED THE PRESIDENTS ASSENT ON 10.05.2008 AND THEN AFTER HAVING TAKEN COGN IZANCE OF THE EXISTENCE OF THIS PROVISION ABSTAINED FROM EXTENDING ITS BENEFIT TO THE ASSESSEE FOR THE INTERVENING PERIOD FROM 1.4.2003 TO 1. 4.2009. 9. IT IS FURTHER SUBMITTED THAT ORDER OF THE APEX COURT HAD TWO PARTS- [A] THAT THE AMC'S ARE NOT ENTITLED TO EX EMPTION UNDER SECTION 10(20) OF THE ACT AFTER INSERTION OF EXPLANATIO N VIDE THE FINANCE ACT 2002 WITH EFFECT FROM 1.4.2003 AND [B] THAT TH E INCOME OF AMC'S ARE EXEMPT UNDER SECTION 10(26AAB) OF THE ACT WHICH COME S INTO FORCE WITH EFFECT FROM 1.4.2009. IN VIEW OF THE ABOVE THE QUESTION OF THE DECLARATORY AND RETROSPECTIVE NATURE OF SEC. 10(26AAB) WAS NOT OPEN FOR ADJUDICATION BY THE TRIBUNAL. ELEMENTARY PRINCIP LES OF JUDICIAL DISCIPLINE WARRANT THAT SUPERIOR WISDOM OF THE TIER BEL OW HAS TO GIVE WAY TO HIGHER WISDOM OF THE TIER ABOVE. AN ORDER NOT FO LLOWING THE DECISION OF THE SUPREME COURT CANNOT BE SAID TO HAVE BINDING FORCE. RELIANCE IS PLACED IN THIS REGARD BY THE DECISION OF THE APEX COUR T IN THE CASE OF 9 ASST. COLLECTOR OF CENTRAL EXCISE VS. DUNLOP INDIA LIMIT ED REPORTED IN 154 ITR 172 AND THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. B.R. COLLECTIONS REPORTED IN 202 ITR 222. HE NCE THE ORDER OF THE ITAT VIZAG BENCH RELIED ON BY THE ASSESSEE IS THER EFORE NOT A BINDING PRECEDENT. 10. AS PER THE EXPLANATORY NOTES TO THE FINANCE ACT 2008 REPORTED IN 310 ITR (ST.) 54 VIDE PARA 7.2 THE IN TENTION OF THE LEGISLATURE IS VERY CLEAR. THE SAME IS REPRODUCED HEREIN BELOW: 7.2 APPLICABILITY THIS AMENDMENT HAS BEEN MADE APPLICABLE WITH EFFECT FROM 1 ST APRIL 2009 AND SHALL ACCORDINGLY APPLY FOR THE ASSESSMENT YEAR 2009-10 AND SUBSEQUENT ASSESSMENT YEARS. THERE APPEARS TO BE SOME CONTRADICTION IN THE DATE OF E XPLANATORY NOTES AND THE INTERPRETATION OF THE REPLY WAS ON 29.04.200 8 WHEREAS ERRONEOUSLY TYPED AS 24.09.2008 IN THE TRIBUNAL ORDER . IT IS SUBMITTED THAT THE VIZAG BENCH OF THE TRIBUNAL HAS NOT APPRECIAT ED THE CONTEXT IN WHICH THE FINANCE MINISTER HAD MADE THE COMMENTS. IN TH E RELEVANT PARA THE FINANCE MINISTER HAD REFERRED TO CLAUSE 3 OF THE FINANCE BILL 2008 PERTAINING TO AMENDMENT TO SECTION 2(15) OF THE ACT WITH EFFECT FROM 01.04.2009. THE ANTICIPATED HARDSHIP TO AMCS IS CONSEQUENTIAL TO THE AMENDMENT TO SECTION 2(15) OF THE ACT AND HAS NO R ELATION TO SECTION 10(20) OF THE ACT AND ITS AMENDMENT BY THE FI NANCE ACT 2002 WITH EFFECT FROM 01.04.2003. THE DOUBTS SOUGHT TO B E REMOVED ARISE FROM THE AMENDMENT TO SEC. 2(15) WHICH CAME INTO EFFECT FROM 01.04.2009. THEREFORE THE CONSEQUENTIAL INSERTION OF THE NEW SECTION 10[26AAB] OF THE ACT CAN BE SAID TO BE TAKEN PLACE ONLY FROM 1ST APRIL 2009. IT IS WELL SETTLED THAT THE INCOME TAX ACT AS IT S TANDS AMENDED ON 10 THE FIRST DAY OF APRIL OF ANY FINANCIAL YEAR MUST APP LY TO THE ASSESSMENT OF THAT YEAR AND THAT A PROVISION NOT EXPRESSLY RETROSP ECTIVE IS PROSPECTIVE. IN SUPPORT OF THE SAME SHE PLACED RELIANCE ON VARIOUS CASE LAWS REFERRED IN WRITTEN SUBMISSIONS FILED BY HER BEFORE US. 11. IT IS SUBMITTED THAT NO AMBIGUITY OR LACK OF CLA RITY EXISTED PRIOR TO THE INSERTION OF A NEW SECTION 10(26AAB) OF THE ACT IN WHICH THIS PROVISION CAN BE SAID TO HAVE REMEDIED. IT IS WELL SETTLED LAW THAT THE INTENTION OF THE LEGISLATURE HAS TO BE GATHERED FROM THE LANGUAGE OF THE STATUTE ITSELF. WHEN THERE IS A CLEAR PROVISION OF L AW ONE CANNOT RESORT TO THE LIBERAL OR FAVORABLE INTERPRETATION OF THE ASSUMED DOUBT. WHEN THE LANGUAGE OF THE TEXT IS CLEAR AND UNAMBIGUOU S THE COURT HAS TO ADOPT THE LITERAL CONSTRUCTION AND NOT DO VIOLENCE T O THE LANGUAGE ADOPTING A LIBERAL OF FAVORABLE CONSTRUCTION OF THE ST ATUTORY PROVISIONS. SHE RELIED ON THE DECISION OF THE APEX COURT IN THE CASE OF CIT V TARA AGENCIES REPORTED IN 292 ITR 444 AND DECISION OF THE AHAMEDBAD SPECIAL BENCH IN THE CASE OF ACIT VS. GOLD MINE SHARES & FINANCE REPORTED IN 302 ITR AT 208. SHE ALSO REFERRED THE VI EW EXPRESSED BY JUSTICE G.P.SINGH IN 'PRINCIPLES OF STATUTORY INTERPRET ATION. THE INTENTION OF THE LEGISLATURE THUS ASSIMILATES TWO ASPECTS: IN ONE ASPECT IT CARRIES THE CONCEPT OF MEANING I.E. WHAT THE WORDS MEAN AND IN ANOTHER ASPECT IT CONVEYS T HE CONCEPT OF PURPOSE AND OBJECT OR THE REASON AND SPIRI T PERVADING THROUGH THE STATUTE. THE PROCESS OF CONSTRUCTION THEREFOR E COMBINES BOTH LITERAL AND PURPOSIVE APPROACHES. IN OTHE R WORDS THE LEGISLATIVE INTENTION I.E. THE TRUE OR LEGAL ME ANING OF AN ENACTMENT IS DERIVED BY CONSIDERING THE MEANING OF THE WORDS USED IN THE ENACTMENT IN THE LIGHT OF ANY DISCERNIBLE P URPOSE OR OBJECT WHICH COMPREHENDS THE MISCHIEF AND ITS REMEDY TO WH ICH THE ENACTMENT IS DIRECTED. THIS FORMULATION HAS NOW RECE IVED THE APPROVAL OF THE SUPREME COURT AND HAS BEEN CALLED THE CARDINAL PRINCIPLE OF CONSTRUCTION. 11 IN ALL ORDINARY CASES AND PRIMARILY THE LANGUAGE EMPLO YED IS THE DETERMINING FACTOR OF INTENTION. THE FIRST AND PRIMA RY RULE OF CONSTRUCTION SAID GAJENDRAGADKAR J. IS THAT THE INTE NTION OF THE LEGISLATURE MUST BE FOUND IN THE WORDS USED BY THE LEGISLATURE ITSELF. THE QUESTION IS NOT WHAT MAY BE SUPPOSED TO HAVE BEEN INTENDED BUT WHAT HAS BEEN SAID. I DO NOT CARE WHAT THEIR INTENTION WAS. SAID MR. JUSTICE HOLMES IN A LETTER : I ONLY WANT TO KNOW WHAT THE WORDS MEAN. LORD BROUGHAM HAS MORE EMPHATICALLY STATED THE IMPORTANCE OF THE TEXT OF THE STATUTE IN THE FOLLOWING WORDS: IF THE LEGISLATURE DID INTEND THAT WHICH IT HAS NOT EXPRESSED CLEARLY; MUCH MORE IF THE LEGISLATURE INTENDE D SOMETHING VERY DIFFERENT; IF THE LEGISLATURE INTENDED PRETTY NEARLY THE OPPOSITE OF WHAT IS SAID IT IS NOT FOR JUDGES TO IN VENT SOMETHING WHICH THEY DO NOT MEET WITHIN THE WORDS OF T HE TEXT ( AIDING THEIR CONSTRUCTION OF THE TEXT ALWAYS OF COURSE BY THE CONTEXT). THESE AND LIKE OPINIONS LAY STRESS ON ONE ASPECT OF INTENTION I.E. WHAT THE WORDS MEAN; AND UNDOUBTEDL Y TO THE EXTENT THE REFERENT IS CLEARLY INDICATED AND THE WO RDS HAVE A PLAIN MEANING THE COURTS ARE NOT TO BUSY THEMSELVES W ITH SUPPOSED INTENTION OR WITH THE POLICY UNDERLYING TH E STATUTE. SHE FINALLY CONCLUDED THAT WHEN THE LANGUAGE OF THE STATURE IS CRYSTAL CLEAR AS IN THIS CASE UNDER CONSIDERATION IN RESPE CT OF SECTION 10(26AAB) OF THE ACT REFERENCE TO THE FINANCE MINISIT ERS REPLY IS UNWARRANTED TO UNCOVER THE INTENTION OF THE LEGISLAT URE. IN VIEW OF THE ABOVE THE LEARNED DR ARGUED THAT THE ORDER OF THE CIT (A) MAY BE SET ASIDE AND THE REVENUES APPEAL MAY BE ALLOWED. SHE RE LIED ON THE FOLLOWING DECISIONS IN SUPPORT OF HER ARGUMENTS ADVANCED BEFORE US. I) KARIMTHARUVI TEA ESTATE LTD. VS. STATE OF KERALA (60 ITR 262) (SC) II) RISHI ROOP CHEMICAL CO. LTD. (P) LTD. VS. ITO (36 ITD 35 (DEL) (SB) III) AIR 1970 (SC) PAGE 349 IV) GOVINDDAS AND OTHERS VS. ITO AND ANOTHER (103 ITR 123 (PAGE 132 (SC) V) CONTROLLER OF ESTATE DUTY GUJARAT VS. M.A. MERCHANT (177 ITR 490) (SC) 12 VI) R. RAJAGOPAL REDDY AND OTAHERS VS. PADMINI CHANDRASEKHARAN (213 ITR 340 (SC) VII) CIT VS. HIRA LAL MEHRA (205 ITR 122 (P & H ) VIII) CIT VS. NATIONAL AGRICULTURAL CO-OPERATIVE MARKETING FEDERATION OF INDIA LTD. (236 ITR 766 (DEL). IX) CIT VS. SHRIRAM BEARINGS LTD. (251 ITR 156 (MAD) X) CIT VS. KERALA ELECTRIC LAMP WORKS LTD. (261 ITR 721 ( KER.) XI) ITO VS. RANISATI FABRIC MILLS P.LTD. (309 ITR (AT) 117 (MUM.) 12. ON THE OTHER HAND THE LEARNED COUNSELS FOR THE ASSESSEE SUBMITTED THAT THE MAIN ISSUE IN QUESTION VIZ. WHETHER THE PROVISIONS OF SUB-SECTION 26AAB IN SECTION 10 OF THE ACT INSERTED BY T HE FINANCE ACT 2008 BY WHICH THE AMCS ARE EXEMPTED FROM INCOME-TAX ACT ARE RETROSPECTIVE IN OPERATION OR NOT IS COVERED IN FAVOR OF THE ASSESSEE BY THE DECISION OF THE VISAKHAPATNAM BENCH OF THE TRIBUNAL IN THE CASE OF AGRICULTURAL MARKET COMMITTEE VS. ACIT IN ITA NO.90/V IZAG/2007 AND THE SAME IS BINDING. IT IS SUBMITTED THAT THE TRIBUNAL WHILE DECIDING THE ISSUE ALSO CONSIDERED THE DECISION OF THE SUPREME COURT IN THE CASE OF APMC (SUPRA) WHEREIN IT WAS HELD THAT THE PROVISIONS OF SEC.10 (26AAB) ARE RETROSPECTIVE IN NATURE AND ARE APPLICABLE FOR THE ASSESSMENT YEARS 2003-04 ON ONWARDS. IN COMING TO SUCH CONCLUSION THE TR IBUNAL TOOK INTO CONSIDERATION THE FOLLOWING FACTS. THE STATEMENT O F THE FINANCE MINISTER ON THE FLOOR OF THE PARLIAMENT MENTIONING T HAT THERE WAS NO INTENTION TO TAX THE AGRICULTURAL MARKET COMMITTEES AND THE PROVISIONS OF SECTION 10(20) OF THE ACT WERE AMENDED WITH EFFECT FROM THE ASSESSMENT YEAR 2003-04 BY INTRODUCTION OF AN EXPLANATI ON AND BASED ON SUCH EXPLANATION THE AMCS BECAME LIABLE FOR TAXATIO N AND CAUSED UNINTENDED HARDSHIP. WHEN THE PROVISIONS OF SECTION 10( 20) OF THE ACT ARE WITHDRAWN THERE WAS A NEED FOR INTRODUCTION OF E XEMPTION FOR AMCS WITH EFFECT FROM THE ASSESSMENT YEAR 2003-04 AS THE LEGI SLATURE NEVER 13 INTENDED TO TAX THE AGRICULTURAL MARKET COMMITTEES A ND THEREFORE THE NEW PROVISIONS OF SECTION 10(26AAB) WAS INTRODUCED. THE DECISION OF THE APEX COURT IN THE CASE OF APMC (SUPRA) IS VERY CLEA R THAT THE ISSUE BEFORE THEM NEED NOT BE GONE INTO AS A NEW PROVISION AS COME INTO PLAY. EVEN THE APEX COURT IS OF THE VIEW THAT THE PR OVISIONS OF SECTION 10(26AAB) ARE SUBSTITUTING THE SECTION 10(20) OF THE A CT EXEMPTING THE INCOME OF THE AMC(S) AND THEREFORE SUCH A QUESTION NEE D NOT BE ANSWERED. IT IS SUBMITTED THAT A DIVISION BENCH CAN NOT T AKE A DIFFERENT VIEW ON THE SAME SAID FACTS WHEN DECISION OF ANOTHER BE NCH IS AVAILABLE. RELIANCE IS PLACED ON THE DECISION OF THE MADHYA PRADESH HIGH COURT IN THE CASE OF AGARWAL WAREHOUSING AND LEASING LTD. VS. CI T REPORTED IN 257 ITR 235. HE ALSO RELIED ON THE FOLLOWING DECISION S IN SUPPORT OF HIS ARGUMENTS. 1) PRADIP CHANDRA PARIJA AND OTHERS VS. PRAMOD CHANDR A PATNAIK AND OTHERS [254 ITR 99-SC] 2) SAYAJI IRON AND ENGG. CO. VS. CIT [ 253 ITR 749 -GUJ] 3) ARIHANT BUILDERS DEVELOPERS AND INVESTORS PVT. LTD . VS. ITAT AND OTHERS [277 ITR 239-MP] IN VIEW OF THE ABOVE IT IS SUBMITTED THAT A DIFFERE NT VIEW THAN THE VIEW EXPRESSED BY THE ITAT VISAKHAPATNAM BENCH CAN NOT BE TA KEN WITHOUT REFERRING THE MATTER TO THE SPECIAL BENCH AND IN THE INTERESTS OF JUSTICE DECISION OF THE ITAT VISAKHAPATNAM BENCH IS TO BE FOLLO WED. IT CAN BE SEEN FROM THE ORDER THAT THIS IS THE ONLY QUESTION REF ERRED TO THE APEX COURT AND THE QUESTION WHETHER THE PROVISIONS OF SEC.10 (26AAB) ARE RETROSPECTIVE OR NOT? IS NOT DECIDED BY THE APEX COURT. IT IS ONLY A PASSING REMARK AND NOT EVEN ABITER DICTA MADE BY THE A PEX COURT. A MENTION IS MADE ABOUT SECTION 10 (26AAB) ONLY TO CONSI DER WHETHER A 14 PARTICULAR ISSUE HAS TO BE GONE INTO OR NOT. THE OBSERV ATIONS WOULD CLEARLY INDICATE THAT THE APEX COURT DID NOT LIKE TO G O INTO A PARTICULAR ASPECT AS THE PROVISIONS OF SECTION 10(26AAB) OF THE ACT WERE INTRODUCED. 13. IT IS FURTHER SUBMITTED THAT THE PROVISIONS OF T HE AMENDED LAW AND THE EXPLANATORY NOTE WERE AVAILABLE BEFORE THE TRIBUNAL AT THE TIME OF DECIDING THE ISSUE AND WHEN THE SUPREME COURT DID NOT DECIDE THE ISSUE AND THE JUDICIAL PRINCIPLE IS NOT INFRINGED BY THE TRIBUNAL. IT IS SUBMITTED THAT IN SO FAR AS THE FINANCE MINISTERS SPEECH I S CONCERNED IT IS CLEAR THAT THE GOVERNMENT NEVER INTENDED TO TAX TH E AGRICULTURAL MARKET COMMITTEES. HE MADE IT CLEAR THAT THERE WAS NO INTENTION FOR THE GOVERNMENT TO TAX THE AGRICULTURAL MARKET COMMITTEES. FURTHER THE ASSURANCE GIVEN BY THE FINANCE MINISTER ON THE FLOOR OF THE PARLIAMENT IS TO BE CONSIDERED FOR THE PURPOSE OF APPLYING ANY PROVI SION OF LAW. IT IS ONLY IN THE CONTEXT OF EXEMPTING THE INCOME OF AN AMC . THEREFORE THE STATEMENT OF THE FINANCE MINISTER IS MUCH RELEVANT IN TH E CIRCUMSTANCES. THE BENEFICIAL PROVISIONS CAN BE RETROSPECTIVE IN NATURE. THEREFORE THE DECISIONS CITED BY THE LEARNED DR ON THIS ISSUE HAVE NO APPLICATION TO THE FACTS OF THE CASE. 14. IT IS SUBMITTED THAT THE PROVISIONS OF SECTION 10( 26AAB) WAS INTRODUCED ONLY TO CURE THE DEFECTS CAUSED BECAUSE OF THE A MENDMENT TO SECTION 10(20) WITH EFFECT FROM THE ASSESSMENT YEAR 2 003-04. FURTHER IT IS MADE CLEAR THAT THERE WERE NO INTENTION TO TAX THE AGRICULTURAL MARKET COMMITTEES BY THE FINANCE MINISTER. IN THIS CONTEXT THE PROVISIONS OF SEC.10 (26AAB) ARE TO BE UNDERSTOOD T O BE RETROSPECTIVE IN NATURE. THEREFORE IT IS SUBMITTED THA T THE DECISION OF 15 THE TRIBUNAL VIZAG BENCH IS TO BE CONSIDERED AS A BIND ING PRECEDENCE. HE RELIED ON THE FOLLOWING DECISIONS TO SUPPORT HIS ARG UMENTS AS MENTIONED ABOVE. 1. GWALIOR RAYON SILK MANUFACTURING CO. LTD. (196 IT R 149 (SC) 2. BAJAJ TEMPO LIMITED (196 ITR 188) 3. FIRST LEASING CO. OF INDIA LTD (216 ITR 455) 4. MAHINDRA AND MAHINDRA LIMITED AND OTHERS (144 ITR 225 (SC) 5. SALEM TEXTILES LTD. (237 ITR 662) 6. MYSORE MINERALS LIMITED (239 ITR 775) 7. JAMMU AND KASHMIR TOURISM DEVELOPMENT CORPORATION (248 ITR 94) 8. IMPERIAL CHIT FUNDS PVT. LTD. (219 ITR 498) 9. GIAN CHAND ASHOK KUMAR AND COMPANY AND OTHERS (187 ITR 188) 10. SHASHIKANT LAXMAN KALE AND ANOTHER (185 ITR 104) 11. INDIAN HOTELS COMPANY LIMITED AND OTHERS (245 ITR 538) 12. BHAGWATI PRASAD KEDIA (248 ITR 562) 13. RAJENDRA KUMAR SETHIYA VS. CWT (194 ITR 218) 14. K. P. VARGHESE VS. ITO (131 ITR 597) 15. KERALA STATE INDUSTRIAL DEVELOPMENT CORPORATI ON LTD (259 ITR 51) 16. ALLIED MOTORS P. LTD ( 224 ITR 677) 17. M.K.VAIDYA (224 ITR 186) 15. ON CAREFUL CONSIDERATION OF THE MATTER IN THE LI GHT OF THE SUBMISSIONS OF BOTH THE SIDES WE FIND THAT THE CIT(A) A DJUDICATED TAHE 16 ISSUE ONLY WHETHER THE INSERTION OF SUB-SECTION 26AAB TO SECTION 10 WAS A DECLARATORY ACT TO REMOVE DOUBTS EXISTING WITH REGAR D TO THE EFFECT OF PRE-EXISTING STATUTE AND HENCE WHETHER IT IS RETROSPECTIV E ACTION OR NOT. THE CIT (A) ALLOWED THE APPEAL OF THE ASSESSEE HOLDING THAT THE AMCS ARE ELIGIBLE FOR EXEMPTION U/S 10(26AAB) OF THE ACT B Y FOLLOWING THE DECISION OF THE VISAKHAPATNAM BENCH OF ITAT. WE ALSO REST RICT OUR VIEW ONLY WITH RESPECT TO WHETHER THE INSERTION OF SUB-SECTIO N 26AAB TO SECTION 10 OF THE ACT IS IN RETROSPECTIVE NATURE OR NOT A ND AMCS ARE ELIGIBLE FOR EXEMPTION U/S 10(26AAB) OF THE ACT FOR T HE YEARS UNDER CONSIDERATION OR NOT. WE REFRAIN FROM GOING TO OTHER GROUNDS RAISED IN THE APPEALS FILED BY THE REVENUE. WHILE DOING SO WE FIND SOME FORCE IN THE ARGUMENTS OF THE LEARNED DEPARTMENTAL REPRESENTAT IVE WHICH CRYSTALLIZED IN THE ISSUES NOTED ABOVE. WE FIND THAT THE VISAKHAPATNAM BENCH OF THE TRIBUNAL IN THE CASE OF AGRICULTURAL MARKE T COMMITTEE (SUPRA) NOTED THAT THE APEX COURT IN AGRICULTURAL PRO DUCE MARKET COMMITTEE'S CASE (SUPRA) RENDERED A DECISION ON 21.8.200 8 BY EXPRESSING ITS CANDID VIEW WITH REGARD TO MEANING OF TH E EXPRESSION 'LOCAL AUTHORITY' IN THE LIGHT OF THE EXPLANATION IN SERTED BELOW SECTION 10(20) OF THE ACT BY THE FINANCE ACT 2002. HOWEVER ADDRESSING TO THE CONCERNS EXPRESSED IN THE LIGHT OF THE TAXABILITY O F AMCS THE HON'BLE FINANCE MINISTER CLARIFIED THE POSITION BY INTRODUCIN G NEW SUB-SECTION 26AAB TO SECTION 10 OF THE INCOME-TAX ACT WHICH CATEGOR ICALLY PROVIDES EXEMPTION TO ANY INCOME OF AMC CONSTITUTED UNDER ANY L AW FOR THE TIME BEING IN FORCE AND FOR THE PURPOSE OF REGULATING THE MARKETING OF AGRICULTURAL PRODUCE. THIS SUB-SECTION WAS CLARIFIED BY T HE VISAKHAPATNAM BENCH OF THE TRIBUNAL IN THE CASE CITED AB OVE TO HAVE BEEN INSERTED TO CURE THE UNINTENDED CONSEQUENCES ARISING OUT OF THE INSERTION OF EXPLANATION TO SECTION 10(20) OF THE ACT. FINALLY IT WAS HELD 17 BY THE VISAKHAPATNAM BENCH IN THAT CASE THAT THE PROVI SIONS OF SECTION 10 (26AAB) OF THE INCOME-TAX ACT ARE INTENDED TO BE RETROACTIVE IN OPERATION. 16. HOWEVER WE FIND THAT THE APEX COURT IN THE CASE OF AGRICULTURAL PRODUCE MARKET COMMITTEE (SUPRA) HELD THA T THE AMC(S) ARE NEITHER A MUNICIPAL COMMITTEE NOR A DISTRICT BOARD UN DER THE EXPLANATION TO SECTION 10 (20) OF THE ACT AND IT WAS CATEGORICALLY CONCLUDED THAT AS PER SUB-SECTION 26AAB OF SECTION 10 OF T HE ACT INCOME OF THE AMC(S) IS EXEMPT AND THE SAME COMES INTO FO RCE ONLY WITH EFFECT FROM 1.4.2009. EVEN THOUGH THE LEARNED COUNSEL FOR THE ASSESSEE CONTENDED THAT THE OBSERVATIONS OF THE APEX COURT ARE ONLY A PASSING REMARK AND NOT EVEN ABITER DICTA MADE BY THE APEX COURT WE MAY NOTE THAT WHETHER IT IS A PASSING REMARK OR A SPECIF IC OBSERVATION MADE BY THE APEX COURT AND EVEN IF THE RELEVANT QUE STION BEFORE THE APEX COURT IS NOT SPECIFICALLY IN RELATION TO THE POINT AT ISSUE THE SAID OBSERVATIONS/REMARKS AS CONTENDED BY THE LEARNED COUNSEL FOR THE ASSESSEE OF THE APEX COURT ARE BINDING ON US. IN THAT CA SE THE APEX COURT CLEARLY HELD THAT SUB-SECTION 26AAB OF SECTION 10 COMES INTO FORCE WITH EFFECT FROM 1ST APRIL 2009 AND THERE IS NO AMBIG UITY IN THIS REGARD. THE PRONOUNCEMENT OF THE SAID APEX COURT ORDER WAS ON 2 1ST AUGUST 2008 WHEREAS THE FINANCE ACT 2008 RECEIVED THE PRESIDEN TS ASSENT ON 10.05.2008 AND AFTER HAVING TAKEN COGNIZANCE OF THE E XISTENCE OF THIS PROVISION ABSTAINED FROM EXTENDING ITS BENEFIT TO TH E ASSESSEE FOR THE INTERVENING PERIOD FROM 1.4.2003 TO 1.4.2009. THE E LEMENTARY PRINCIPLES OF JUDICIAL DISCIPLINE WARRANT THAT SUPERIOR WISDOM OF THE TIER BELOW HAS TO GIVE WAY TO HIGHER WISDOM OF THE TIER OF THE ABOV E. 18 17. AN ACT MAY BE SAID TO BE DECLARATORY AND HELD TO BE RETROSPECTIVE OR RETROACTIVE WHEN IT IS ASSUMED TO REMOVE DOUBTS EXISTING AS TO THE COMMON LAW OR THE MEANING OR EFFE CT OF ANY STATURE FOR EXAMPLE THE PROVISO ADDED TO SECTION 43B OF THE ACT WITH EFFECT FROM 1.4.1988 WAS GIVEN RETROSPECTIVE EFFECT IN ALLIED MOTORS (P) LTD V CIT (BY THE SUPREME COURT (AIR 1997 SC 1361) ON THE REASONING THAT THE PROVISO WAS ADDED TO REMEDY UNINTENDED CONSEQUENCES AND SUPPLY AN OBVIOUS OMISSION AND THAT THE AMENDMENT TO INSERT TH E PROVISO WOULD NOT SERVE ITS PURPOSE UNLESS IT IS CONSTRUED AS RETROSP ECTIVE. SIMILARLY IN CIT V PODAR CEMENTS PVT LTD. (226 ITR 625(SC)) IT WAS HELD THAT THE AMENDMENTS INTRODUCED BY THE FINANCE ACT 1987 IN SO FAR AS THEY RELATED TO SEC.27(III) (IIIA) AND (IIIB) WHICH REDEFINED THE EXPRESSION OWNER OF HOUSE PROPERTY IN RESPECT OF WHIC H THERE WAS A SHARP DIVERGENCE OF OPINION AMONGST THE HIGH COURTS W AS CLARIFICATORY AND DECLARATORY IN NATURE. 18. AS PER THE EXPLANATORY NOTES TO THE FINANCE ACT 2008 REPORTED IN 310 ITR (ST.) 54 VIDE PARA 7.2 THE IN TENTION OF THE LEGISLATURE IS VERY CLEAR STATING THAT THE AMENDMENT IS WITH EFFECT FROM 1ST APRIL 2009. THE FINANCE MINISTER APPEARS TO HAVE REFERRED TO CLAUSE 3 OF THE FINANCE BILL 2008 PERTAINING TO AMENDMENT TO SECTION 2(15) OF THE ACT WITH EFFECT FROM 01.04.2009. THE ANTICIPATED HARDSHIP TO AMCS IS CONSEQUENTIAL TO THE AMENDMENT TO SECTION 2(15) OF THE ACT AND HAS NO RELATION TO SECTION 10(20) OF THE ACT AND ITS AMENDME NT BY THE FINANCE ACT 2002 WITH EFFECT FROM 01.04.2003. THE DOUBTS SO UGHT TO BE REMOVED ARISE FROM THE AMENDMENT TO SEC. 2(15) WHICH CA ME INTO EFFECT FROM 01.04.2009. THEREFORE THE CONSEQUENTIAL I NSERTION OF THE 19 NEW SECTION 10[26AAB] OF THE ACT CAN BE SAID TO BE TAKE N PLACE ONLY FROM 1ST APRIL 2009. 19. IT IS WELL SETTLED THAT THE INCOME TAX ACT AS IT STA NDS AMENDED ON THE FIRST DAY OF APRIL OF ANY FINANCIAL Y EAR MUST APPLY TO THE ASSESSMENT OF THAT YEAR AND THAT A PROVISION NOT EXPRESSLY RETROSPECTIVE IS PROSPECTIVE. WE DO NOT SEE ANY AMBIGUITY OR LACK OF C LARITY EXISTED PRIOR TO THE INSERTION OF A NEW SECTION 10(26AAB) OF THE ACT IN WHICH THIS PROVISION CAN BE SAID TO HAVE REMEDIED. THE INTEN TION OF THE LEGISLATURE HAS TO BE GATHERED FROM THE LANGUAGE OF THE STATUTE ITSELF. WHEN THERE IS A CLEAR PROVISION OF LAW ONE CANNOT RESOR T TO THE LIBERAL OR FAVORABLE INTERPRETATION OF THE ASSUMED DOUBT. WHEN THE LANGUAGE OF THE TEXT IS CLEAR AND UNAMBIGUOUS WE ARE BOUND TO AD OPT THE LITERAL CONSTRUCTION AND NOT DO VIOLENCE TO THE LANGUAGE ADOPTI NG A LIBERAL OF FAVORABLE CONSTRUCTION OF THE STATUTORY PROVISIONS. OUR V IEW IS FORTIFIED BY THE DECISION OF THE APEX COURT IN THE CASE OF CIT V TARA AGENCIES REPORTED IN 292 ITR 444. IN VIEW OF THE ABOVE RESPE CTFULLY FOLLOWING THE DECISION OF THE APEX COURT IN THE CASE OF APMC (SUPRA) T HE CIT [A] IS NOT CORRECT IN HOLDING THAT THE ASSESSES ARE ELIGIBLE FOR EXEMPTION UNDER SECTION 10 [26AAB] OF THE ACT FOR THE ASSESSMENT YEARS UNDE R CONSIDERATION. IN THE RESULT ALL THE APPEALS OF THE RE VENUE ARE ALLOWED. 20. NOW WE WILL TAKE UP THE CROSS OBJECTIONS FILED B Y THE ASSESSEES. FOR THE SAKE OF BREVITY WE WILL DEAL WITH THE CROSS OBJECTION FILED BY THE ASSESSEE IN C.O. NO.13/HYD/09 ARISING OUT O F ITA NO. 542/HYD/09 AS THE GROUNDS INVOLVED IN ALL THESE CROSS OBJ ECTIONS RAISED BY THE ASSESSEES AS MENTIONED IN THE CAUSE TITLE ARE QUITE SIMILAR AND 20 IDENTICAL. HENCE THE GROUNDS ARISING OUT OF THIS CROSS OB JECTION ARE AS FOLLOWS:- I. THE ORDER OF THE LEARNED CIT (A) VIJAYAWADA IS E RRONEOUS IN LAW AND ON THE FACTS OF THE CASE. II. THE LEARNED CIT (A) ERRED IN DIRECTING THE EXCLUSION OF THE INCOME OF THE ASSESSEE ONLY FROM MARKET FEES AND LICENCE FEES ON THE GROUND THAT THE HON'BLE ITAT VISAKHAPATNA M IN ITS ORDER IN ITA NOS. 83 TO 93 111 159 160 305 335 352 356 TO 359 AND 367 TO 369/VIZAG/2007 DATED 28-11-2008 ALLOWED THE APPEAL ONLY IN RESPECT OF MARKET FEES & LICENCE FEES. III. THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THAT TH E HON'BLE ITAT VISAKHAPATNAM IN ITS AFORESAID ORDER HEL D THAT INSERTION OF SEC.10(26AAB) WAS ESSENTIALLY INTENDED TO DECLARE THE INTENTION OF THE LEGISLATURE OF NOT TAXIN G THE INCOMES OF AMCS AND ACCORDINGLY SHOULD HAVE HELD THAT THE ENTIRE INCOME OF THE ASSESSEE IS EXEMPT FROM INCOME-TAX. IV. WITHOUT PREJUDICE TO THE GROUNDS TAKEN ABOVE THE ASSESSE E PLEADS THAT ONCE REGISTRATION HAS BEEN GRANTED U/S 12A IT SHOULD BE EFFECTIVE FOR ALL THE YEARS FOR WHICH THE CONSTITUTION HAD REMAINED THE SAME AND ACCORDINGLY DIRECTED THAT IN THE LIGHT OF THE FACT THAT REGISTRATI ON U/S 12A HAS BEEN GRANTED BY THE LEARNED CIT VIJAYAWADA TO T HE 21 ASSESSEE VIDE HIS ORDER DATED 15-12-2008 THE ASSESSEE IS ENTITLED TO THE BENEFITS OF EXEMPTION U/S 11 AND 12 F OR THE IMPUGNED ASSESSMENT YEAR ALSO. V. FOR THE ABOVE GROUNDS AND SUCH OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING THE ASSESSEE PRAYS THAT T HE APPEAL BE ALLOWED. THE ASSESSEE CRAVES LEAVE TO ADD AMEND OR MODIFY THE ABOVE GROUNDS OF APPEAL EITHER B EFORE OR AT THE TIME OF HEARING OF THE APPEAL IF IT IS CON SIDERED NECESSARY'. 21. GROUND NOS. 1 AND 5 RAISED IN THE CROSS OBJECTIONS FI LED BY THE ASSESSEES ARE GENERAL IN NATURE AND NO ADJUDICATION IS RE QUIRED. SINCE WE HELD THAT THE EXEMPTION UNDER SECTION 10(26AAB) OF THE INCOME-TAX ACT IS NOT RETROSPECTIVE IN NATURE BY ALLOWING THE REVE NUE'S APPEAL THE GROUNDS NOS. 2 AND 3 RAISED IN CROSS OBJECTIONS FILED BY THE ASSESSEES BECOME INFRUCTUOUS AND THEREFORE THEY ARE REJECTED AS SUCH. 22. THE GROUND NO.4 RAISED IN THE CROSS OBJECTIONS FILED BY THE ASSESSEES IS WHETHER AMCS ARE ENTITLED TO THE BENEFITS OF E XEMPTION U/S 11 AND 12 OF THE INCOME-TAX ACT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION IS NOT. THIS ISSUE WAS NOT RAISED BEFORE THE CIT (A) AND ACCORDINGLY THERE WAS NO DISCUSSION BY THE CIT (A) ON TH IS ISSUE. UNDER THESE CIRCUMSTANCES WE FEEL IT PROPER TO RESTORE TH IS ISSUE TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER IS DIRECT ED TO VERIFY THE REGISTRATION U/S 12A OF THE ACT GRANTED TO THE AMC BY THE DIT (EXEMPTION) AND PASS AN ORDER IN ACCORDANCE WITH LAW AFT ER AFFORDING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE ON THIS ISSUE . 22 23. HENCE ALL THE CROSS OBJECTIONS FILED BY THE ASSESSEES AR E PARTLY ALLOWED FOR STATISTICAL PURPOSES. 24. IN THE RESULT ALL THE APPEALS FILED BY THE REVEN UE ARE ALLOWED AND CROSS OBJECTIONS FILED BY THE ASSESSEE ARE PARTLY ALLOWED F OR STATISTICAL PURPOSE. ORDER WAS PRONOUNCED IN THE COURT ON 26-3-2010 SD/- (N.R.S. GANESAN) SD/- (AKBER BASHA) JUDICIAL MEMBER ACCOUNTANT MEMBER. DT/- 26TH MARCH 2010. COPY FORWARDED TO: 1. ALL ASSESSEES AS MENTIONED IN CAUSE-TITLE. 2. ACIT CIR-3(2) HYDERABAD. 3. CIT(A) IV HYDERABAD. 4. CIT AP HYDERABAD 5. DR ITAT HYDERABAD. JMR*