TMI Blog2006 (12) TMI 181X X X X Extracts X X X X X X X X Extracts X X X X ..... -04, 2004-05 and 2005-06 and holding that it is mandatory requirement for grant of registration. 1.4 That the learned CIT erred in (sic-not) condoning the delay and in holding that the application had to be made within one year from the date of establishment. 1.5 That the learned CIT erred in drawing adverse inference on account of surplus of income over expenditure during different years and because income of the appellant is by way of collection of market fees/fines, etc. and that its income is not as prescribed under the provisions of ss. 11 and 12 of the Act. 1.6. That the learned CIT erred in not following the view expressed by the Delhi Bench of Tribunal, though its copy was duly placed before him and further erred in not granting registration when similar boards and Samitees are being granted registrations under s. 12A of the Act." 2. There is no dispute on facts of the case which, as per the learned Authorised Representative, are as under: "1. M/s Rajasthan State Agricultural Marketing Board is a service organ of the State of Rajasthan. It was constituted in exercise of the powers conferred under s. 22A(1) of the Rajasthan Agricultural Produce Markets Act,1961 by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s treated the Board and Agricultural Marketing Samitees as local authority and its income exempt under s. 10(20) of the Act. An Explanation has been added by the Finance Act, 2002 to take effect from 1st April, 2003 i.e. with effect from the asst. yr. 2003-04. The IT Department is of the view that the Agricultural Marketing Board and Agricultural Marketing Samitees are not entitled to any exemption from income-tax under the said section or any other section and are liable to income-tax on and from the asst. yr. 2003-04. The IT Department issued notices to some of the Samitees including Krishi Upaj Mandi Samitee, Kota. The said Samitee filed a DB Civil Writ Petn. No. 1493 of 2005 before the Hon'ble High Court of judicature, Rajasthan at Jaipur on 26th Feb., 2005 challenging legality, validity, propriety, jurisdiction to assess under the IT Act and claiming that it is in violation of Art. 289 r/w Art. 265 of the Constitution. The Hon'ble Court heard on 3rd March, 2005 provided time to the respondents to file the reply, time to the petitioner's counsel to file the rejoinder and thereafter to fix for final disposal at admission stage. The writ is still pending. 4. Punjab State Agricu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s rejected the application for condonation of delay in filing the application under s. 12A on 16th July, 2005 on the basis that the application for registration had to be made within one year from the date of establishment and there was no reasonable cause on the part of the assessee for the delay. 3.2 The submission of learned Authorised Representative in this regard remained that the assessee was under the bona fide belief that the income in the case of assessee is not taxable under s. 10(20) of the Act as the Board was exempted of the income-tax liability under s. 10(20) of the IT Act prior to amendment vide Finance Act, 2002. The Department also did not issue any notice till asst. yr. 2002-03 to the assessee in this regard. As per Art. 289(1) of the Constitution of India income of property of a State cannot be taxed. He placed reliance on the decision of Hon'ble Allahabad High Court in the case of Krishi Utpadan Mandi Samiti vs. Union of India Anr. (2004) 188 CTR (All) 556 : (2004) 267 ITR 460 (All). The learned Authorised Representative submitted further that decision of Delhi Bench of the Tribunal in the case of Market Committee, Sullar Gharat Ors. vs. CIT (2005) 94 TTJ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of Hon'ble Supreme Court in the case of Motilal Padampat Sugar Mills Co. Ltd. vs. State of Uttar Pradesh Ors. (1979) 118 ITR 326 (SC). 3.5 After considering the above arguments advanced by the parties in view of order of the learned CIT and the decisions relied upon by them, we find substance in the aforesaid submissions of learned Authorised Representative. The applicant had to explain the delay from 1st April, 2003 to 19th July, 2005 in filing the application for registration under s. 12A. The explanation of the applicant in this regard remained that till asst. yr. 2002-03 the applicant was under this belief that the applicant was exempt under s. 10(20) of the Act i.e. prior to amendment by Finance Act, 2002. The Explanation was introduced to s. 10(20) of the Act w.e.f. 1st April, 2003 i.e. asst. yr. 2003-04. Thereafter the decision dt. 14th March, 2005 in the case of Market Committee, Sullar Gharat Ors. vs. CIT came to the notice of applicant that the exemption enjoyed by the applicant under s. 10(20), taken away by inserting Explanation in s. 10(20) by Finance Act, 2002 can be enjoyed by such assessee by claiming exemption under s. 11 on fulfilment of certain co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the return of income for the relevant assessment years whereas applicant has not filed the audited accounts with relation to the financial years 2001-02, 2002-03 and 2003-04, even though the surplus of income over expenditure was much higher than the limit of Rs. 50,000 laid in s. 12A(b). 4.3 In support of this ground the learned Authorised Representative submitted that audited account signed on 1st Feb., 2006 for asst. yr. 2003-04 was filed on 7th Feb., 2006, a copy whereof has been placed at page Nos. 7 to 12 of the paper book-I. The learned Authorised Representative also referred page Nos. 49 to 82 of the paper book-II i.e. copy of the return and audited account for asst. yr. 2005-06 filed on 10th April, 2006. He pleaded that audit report can be furnished any time before the assessment and referred the CBDT circular dt. 9th Feb., 1978 in this regard placed at page Nos. 15 to 17 of the paper book Vol. I, wherein it has been made clear that in case where for reasons beyond the control of the assessee some delay has occurred in filing the auditors' report, the exemption as available to such trust under ss. 11 and 12 may not be denied merely on account of delay in furnishing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... option left with the assessee was to apply for registration under s. 12A for exemption under ss. 11 and 12 of the IT Act. The learned Departmental Representative referred the objects of the Samiti shown in ss. 3, 17 and 18 of the Rajasthan Krishi Upaj Mandi Adhiniyam, 1961 with the submission that assessee is acting like a share broker to purchase produce on charging fee, which has no nexus or connection with any charitable purpose. The word in statute is to be strictly construed as per the established position of law, submitted the learned Departmental Representative. 4.5 The learned Authorised Representative submitted in rejoinder that the requirements laid down under s. 12A should not be examined at this stage and what are to be examined at this stage of registration are the requirements laid down under s. 12AA of the IT Act. It is not consequential that after registration under s. 12A, there would be no check of the Department on the assessee. The fee was collected by the applicant from the farmers to regulate purchases and sales in the market. The learned Authorised Representative referred ss. 18, 19 and 22J of the Rajasthan Krishi Upaj Mandi Adhiniyam, 1961 while throwing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itution (in the present case, boards or committees) and thereafter pass an order in writing registering the institution if he is satisfied about the objects of the trust or institution and genuineness of its activities. In the present appeals, CIT has not brought any material nor recorded any finding to hold that activities of asses sees were not genuine. In our opinion, it is not easy, in case of statutory body like market board or market committee controlled by Governments to hold that activities of such bodies are not genuine. We are, therefore, unable to agree that these cases were not fit cases for recording satisfaction as required under s. 12AA of the IT Act. About object of the institutions, we have already held that those are genuine and are of charitable nature." 4.7 We, thus, do not find substance in the objection raised by the learned CIT that auditors' report on the accounts was not filed with the return for the relevant assessment years hence registration cannot be granted on the application moved by the applicant in this regard as at the stage of registration the learned CIT has only to record his satisfaction about the genuineness of activities of institution an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s advanced by him opposing ground No. 1.5 hereinabove. 4.11 After having gone through different provisions of the Rajasthan Agricultural Produce Markets Act, 1961, we find that the whole object of the Act is the supervision and control of the transactions of purchase by the traders from the agriculturist in order to prevent exploitation of the latter. Under s. 22J the purposes for which the marketing development fund shall be utilized have been explained and cl. (v) thereof states as "undertaking education and publicity in relation to matters connected with regulated marketing of agricultural produce in the State". Under the similar set of facts and circumstances, the Delhi Bench of the 'Tribunal in the case of Market Committee, Sullar Gharat Ors. vs. CIT held as "....... the object to establish market committee and board is to regulate purchase, sale, storage and processing of agricultural produce through establishment of market committees, market yards and trusts. The dominant objects of board and committees are to save agriculturists from exploitation of middleman and to provide remunerative price to the agriculturists. It is further to provide better facilities for storage ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
