TMI Blog2006 (12) TMI 182X X X X Extracts X X X X X X X X Extracts X X X X ..... arkets Act, which consists of 15 members elected directly or indirectly by the inhabitants of the area, i.e., 7 by agriculturists, 2 by traders, 2 by co-operative societies or the agencies and remaining are the representatives of the Panchayat or Municipal Council or Municipal Board or the State Government. Alternatively, the State Government can appoint the administrator under s. 27A. The secretary is also a whole-time employee of the Government. Being a State organ, the income or surplus, if any, of the applicant was immuned from Union taxation in view of the Art. 289 of the Constitution of India. Since the date of coming into existence of it, i.e., 1965, neither it was called for to file return of income-tax, nor any income-tax was levied on it by the IT authorities till the asst. yr. 2002-03. In asst. yr. 2003-04, the IT authorities called the assessee to file return of income on the basis that in view of insertion of an Explanation to s. 10(20) of the IT Act, 1961, by the Finance Act, 2002, w.e.f. 1st April, 2003 defining the expression "local authority", exemption under cl. (20) of s. 10 of the IT Act is, therefore, not available to the applicant-samiti. The applicant made an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i was considere1 to be a 'local authority' within the meaning of s. 10(20) of the Act entitling exemption from the payment of income-tax and consequently, the Revenue never called the assessee for filing of the return of income since the date of its establishment. But, after insertion of the Explanation to s. 10(20) by the Finance Act, 2002, w.e.f. 1st April, 2003, the assessee was called for to file the same for the first time for the asst. yr. 2003-04. Ultimately, the assessment was made, which was subjected to the appeal No. 355/2004-05 pending for disposal before the learned CIT(A). The first appeal was decided while giving part relief of Rs. 19,20,000 to the assessee. A second appeal has been preferred against this order, which is pending before the Tribunal. The officials of the assessee-samiti were in utter pressurizing situations in facing the recovery proceedings of the Revenue and the matter was being discussed at high level, i.e., at the marketing board level. Ultimately, the decision of the board to claim the charitable exemption by filing the above referred application under s. 12A of the Act was received by the officials on or about 25th Sept., 2005 and having complet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hartered accountant for the asst. yr. 2005-06. The applicant also filed the copies of the audit reports under s. 12A(b) in prescribed Form No. 10B for asst. yrs. 2003-04, 2004-05 and 2005,.06 duly certified evidencing the application of income for charitable purposes. 1.7 The learned Departmental Representative, on the other hand, opposed the arguments advanced by the learned Authorised Representative in support of the application for condonation of delay. He submitted that there was no reasonable cause for condonation of delay as the applicant had failed to explain the delay and the reason shown. that they were not aware of the law is no excuse. The unawareness of law is not sufficient reason for the delay. 1.8 After considering the above arguments advanced by the parties and the decision relied upon by the learned Authorised Representative, we are of the view that there was reasonable cause for delay in filing the application under s. 12A of the Act as earlier the applicant was entitled for exemption from the payment of income-tax being considered to be a 'local authority' Within the meaning of s. 10(20) of the Act and, thus, Revenue never called the assessee for filing of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecifically in its constitution. Le., in the Agricultural Produce Markets Act, 1961 in terms of preamble as follows: "An Act to provide for the better regulation of buying and selling of agricultural produce and the establishment of markets for agricultural produce in the State of Rajasthan." For the attainment of the said objects, the Mandi committees including assessee-samiti have been constituted in the State of Rajasthan. Regarding accumulation of income in the last three years, the learned Authorised Representative submitted that the applicant-samiti is not maintaining any reserve fund for the purposes of accumulation. The figures of the closing cash and bank balances, income and its application in last three years are as under: ------------------------------------------------------ F.Y. Cash Bank IMP Total ------------------------------------------------------ 2001-02 36,733.00 4,39,423.71 200.00 4,76,356.71 ------------------------------------------------------ 2002-03 37,018.04 15,17,016.81 200.00 15,54,234.85 ------------------------------------------------------ 2003-04 1,403.00 30,47,109.20 200.00 30,48,712.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rding activities filed earlier. Even, the activities of the assessee-samiti cannot be said to be business activities merely on the basis that some profits arise out from its activities. In alternative, he submitted that the activities of the assessee-samiti in regularizing the agricultural market in its defined area and realizing of Mandi fee are incidental to the attainment of its predominant objectives, hence the same is entitled to the exemption under s. 11 of the Act in view of s. 11(4) and 11(4A) of the IT Act. He places reliance on the decision of Hon'ble jurisdictional High Court in the case of Umaid Charitable Trust vs. CIT (1980) 15 CTR (Raj) 217 : (1980) 125 ITR 55 (Raj). He also referred Circular No. 642, F. No. 133/260/92-TPL, dt. 15th Dec., 1992, reported in [(1993) 109 CTR (St) 1 : (1993) 199 ITR (St) 7] in this regard, a copy whereof has been placed at page No. 6 of the paper book. 2.3 The learned Authorised Representative submitted further that with the application under s. 12A, audit report is not required to be filed, it is to be filed under s. 12A(b) of the IT Act with return of income having obtained the certificate. In this regard, he referred the CBDT Instru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1st June, 1993 and the only 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 Act, 1961, with the submission that assessee is acting like a share broker to purchase produce on charging fee, which has no nexus or correlation with any charitable purpose. The words in statute are to be strictly construed as per the established position of law, submitted the learned Departmental Representative. 2.5 After considering the above arguments of the parties, in view of the decisions relied upon by them and different provisions laid down under the Rajasthan Agricultural Produce Markets Act, 1961, we are of the view that the Krishi Upaj Mandi Samiti constituted under the Rajasthan Agricultural Produce Markets Act, 1961, as per its constitution, the applicant-samiti has been burdened with legal obligation to regulate the markets for agriculturists in order to secure better and adequate prices for their produce and to protect them from being exploited by the middlemen and profiteers and als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the markets; (xi) Construction of market yards and sub-yards and leading or transferring these to the market committees; (xii) Sanction of loans and advances to its employees in the manner prescribed; (xiii) Establishment and maintenance of the office of the Board; (xiv) Expenditure on audit of the accounts of the Board; and (xv) With the prior approval of the Government, any other purpose connected with agricultural marketing. 2.6 The applicant-samiti works through a committee constituted under s. 7 of the Markets Act which consists of 15 members elected directly or indirectly by the inhabitants of the area, i.e., 7 by agriculturists, 2 by traders, 2 by cooperative societies or the agencies and remaining are the representatives of the Panchayat or Municipal Council or Municipal Board or the State Government. Alternatively, the State Government can appoint the administrator under s. 27A. The Hon'ble jurisdictional High Court in the case of Narayan Harishankar vs. State 1977 RLW 485 has been pleased to hold the Markets Act to be meant for public purposes and the Hon'ble Madras High Court in the case ILR (1968) 2 Mad 449 also held the similar statute and the committee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of delay in furnishing the auditor's report and the ITO should record reasons for accepting a belated audit report, The Hon'ble Madhya Pradesh High Court in the case of CIT vs. Devradhan Madhavlal Genda Trust was pleased to hold that the requirement is directory and the Tribunal was justified in holding that filing of the audit report in Form No. 10B with the return of income was not mandatory and it was sufficient compliance with s. 12A(b), if the same was filed during the course of assessment proceedings. The Hon'ble Punjab and Haryana High Court in the case of CIT vs. Shahzedanand Charity Trust has been pleased to hold that by showing sufficient cause, the auditor's report could be produced at any later stage either before the ITO or before the appellate authority, It was further held that it is not mandatory to furnish the auditor's report under s. 12A(b) along with the return and the same could be furnished at a later date and the delay can be condoned after recording reasons. Under these facts and circumstances and keeping in view the decisions of Delhi and Nagpur Benches of the Tribunal in the cases of Market Committee, Sullar Gharat Ors. vs. CIT and Agriculture Produc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the applicant was set up. The assessee had complied with the requirements of s. 12AA of the IT Act and provisions under this section are independent of those of s. 12A. Besides other decisions furnished by him in the written submission, he also placed reliance on the decision in the case of Keshavji Ravji Co. vs. CIT (1990) 82 CTR (SC) 123 : (1990) 183 ITR 1 (SC). 4.4 The learned Departmental Representative, on the other hand, argued further that as per Art. 243 of the Constitution of India, the definition of 'local body' has now been restricted to panchayat and municipality, etc. 4.5 We have already decided the identical issue under the similar set of facts and circumstances of the case hereinabove in ITA No. 641/Jp/2006. Following the decision taken therein, we condone the delay in filing application under s. 12A by the applicant for the registration with direction to the learned CIT to allow the registration applied for by the applicant from the asst. yrs. 2003-04 to 2005-06, for which it has applied for. We would like to mention over here the decision of Nagpur Bench of the Tribunal in the case of Agriculture Produce Market Committee, Telhara Ors. vs. CIT, wherein a ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
