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2013 (10) TMI 971 - AT - Income TaxAllowability of registration u/s 12AA of the income tax act – Held that:- Relying upon the judgment of the Hon’ble High Court in the case of Agricultural Market Committee [2011 (3) TMI 1265 - Andhra Pradesh High Court], held that the assessees have to be granted registration – In the abovementioned case it was held that Agricultural Marketing Acts provide for establishment of notified market areas/yards for purchase and sale of agricultural produce and livestock and for better regulation of such markets. The purpose of marketing legislation is to enable purchasers to get a fair price for the commodities by eliminating middlemen and provide a regulating market with facilities for correct weighments, storage, accommodation and equal powers of bargain for reasonable price to the growers and the consumers. Agricultural marketing committees discharge an important duty and function of protecting the interest of a large body of persons, namely, agriculturists, farmers and growers of agricultural produce and livestock. Further, in the said judgment it was held that Agricultural marketing committees were entitled to seek exemption under section 10(20) read with section 10(29) till March 31,2003 but by reason of amendment to section 10(20) and deletion of section 10(29) with effect from April 1, 2003, they, for the purpose of the Act, ceased to be "local authorities". This itself would not disqualify them from claiming exemption under sections 11(1) and 12 provided they are considered as institutions established for advancement of objects of general public utility, because the Parliamentary benefit under section 10(20) is altogether different from the benefit granted By the tax machinery subject to statutory conditions contained in sections 11 to 13. An agricultural marketing committee is constituted under the State Act for the sole purpose of protecting the interest of agriculturists, farmers and growers. Secondly, the agricultural marketing committee is under legal obligation to provide all necessary infrastructure and market facilities within the market place/yard in a notified market area, including water, electricity, auction/trading platforms, facilities for receiving, paying and depositing money, and resolving disputes. Thirdly, the income of the agricultural marketing committee from different sources- licence fees, market fees, loans, etc., which is derived without any profit motive is to be used to meet the expenditure for providing market facilities. Fourthly, all the income has to be deposited in the market committee fund, out of which ten per cent. shall be, contributed to the Central Market Fund which shall vest in the Government, which exercises power of supervision and superintendence over the market committees. The Government administers and applies the Central Market Fund, inter alia, for providing grants to needy agricultural marketing committees. Fifthly, agricultural marketing committees serve an important aspect of rural economy, i.e., providing facilities for marketing agricultural produce and products of livestock. Section 14(1) of the Agricultural Marketing Committee Act read with rule 8 of the Rules mandate that "all moneys received by an agricultural marketing committee shall be deposited in a single banking account with the nearest Government treasury, or with the sanction of the Government in a bank" out of which all the expenditure of the agricultural marketing committee shall be defrayed. Under section 11 (5)(iii), deposit of the moneys in a scheduled bank is substantial compliance with the law – Therefore, agricultural marketing committee is entitled to be registered under section 12A/12AA – Decided in favor of Assessee.
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