TMI Blog2009 (1) TMI 781X X X X Extracts X X X X X X X X Extracts X X X X ..... bunch of appeals arise out of a common order dt. 15th April, 2008 passed by the Income-tax Appellate Tribunal, Jodhpur Bench, Jodhpur (in short "Tribunal" hereinafter), whereby the appeals preferred by the Revenue against the orders passed by the Commissioner of Income-tax (Appeals) [in short "CIT(A)" hereinafter] have been dismissed and some of the appeals preferred by the assessee, stand partly allowed. According to the learned counsel for the Revenue following substantial questions of law as set out in the appeals arising out of the orders passed by the learned Tribunal, require adjudication by this Court : "1. Whether the learned Tribunal was justified in confirming the order of CIT(A) directing the AO to adopt the status of assessee as charitable trust in accordance with order of the Tribunal dt. 14th Sept., 2007 notwithstanding that the issue of registration under s. 12A is under challenge by the Revenue ? 2. Whether the learned Tribunal is justified in confirming the order of CIT(A) directing the AO to compute the income of the assessee after verifying the application of income as per the provisions of s. 19 of the Rajasthan Agriculture Produce Marketing Act, 1961 wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted to grant registration to the assessees under s. 12A of the IT Act. All the assessees were granted registration under s. 12A with retrospective effect i.e., from 1st April, 2002. Accordingly, the assessees acquired the status of "public charitable institution" as against the status of "local authority"., 5. Aggrieved by the assessment orders, the assessees preferred appeals before the concerned CIT(A). Since during the pendency of the appeals before the CIT(A), the assessees' appeals against the rejection of the applications for grant of registration under s. 12A were allowed by the learned Tribunal and the status of the assessees as "public charitable institution" was accepted therefore, the learned CIT(A) was requested to accept the status of the assessees as "public charitable institution" instead of "local authority" as adopted by the AO while passing the assessment orders. The CIT(A) while accepting the stand taken by the assessees as aforesaid directed the AOs to recompute the income after taking the status of assessees as "public charitable institution" as per the provisions of ss. 11, 12 and 13 of the IT Act. It was further directed that while computing the income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eduction claimed by the assessees on account of expenditure incurred on construction and repair works, the CIT(A) directed the AO to allow all expenditure whether revenue or capital if the expenditure was incurred to meet the objects of the charitable institutions. Regarding contribution to the Board in terms of provisions of s. 18A of the Act of 1961, the CIT(A) observed that the amount taken away from the income of the market committee in the form of mandatory contribution is not available for application for charitable purpose with the market committee therefore, the AO should allow the deduction of contribution to the Board from the income of agricultural produce marketing committee to compute income available for application to the charitable purpose. 6. Further, appeals preferred by the Revenue aggrieved by the aforesaid orders dt. 25th Oct., 2007 passed by the CIT(A) have been dismissed by the learned Tribunal by the common order dt. 15th April, 2008 relying upon its earlier decisions in the matters involving identical issues. 7. At the outset, the learned counsel appearing apprised the Court that an appeal preferred by the Revenue assailing the validity of the order pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered as application irrespective of the fact that the amount has been actually spent by the Board in the relevant year or not and further that even the fund spent by the Board outside the local jurisdiction of the market committee would also make the assessee entitled to claim as application of income. The learned counsel submitted that mere crediting of the amount in the account of the Board is not enough, the amount so credited must be spent by the Board within the relevant year only else the assessee cannot claim benefit of exemption under s. 11 of the Act of 1961. It is submitted by the learned counsel that the learned Tribunal has seriously erred in holding that even the fund spent by the Board outside the local jurisdiction of the market committee concerned would also make the assessee entitled to claim as application of income. 10. We have considered the submissions of the learned counsel for the appellant. 11. It is not in dispute that the application of the fund by the market committee and its overall functions are regulated by the provisions of the Act of 1961, which has been enacted by the legislature to provide for better regulation of buying and selling of agricul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ides for creation of the marketing development fund to be administered by the Board. Sec. 22J specifies the purposes for which the marketing development fund shall be utilised by the Board which inter alia includes construction of the market, roads and approach roads to the markets, construction of market yards and sub-yards and leasing or transferring these to the market committees. 14. For the purposes of carrying out the provisions of the Act of 1961, in exercise of power conferred by s. 36 of the Act of 1961, the State Government has framed the rules namely, "The Rajasthan Agriculture Produce Market Rules, 1963" (in short "the rules of 1963" hereinafter). As per r. 45 of the Rules of 1963, all money received by the market committee shall be credited to the fund called the market committee fund. Rule 52 provides that all works to be taken up by the market committees shall be executed and carried out by the Board in such manner as may be decided by the Board from time to time. That apart, the Board is empowered to specify the limits upto which the market committee may be allowed to carry out the construction works. 15. Thus, keeping in view the scheme underlying the Act of 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication". In this view of the matter, we are in complete agreement with the finding arrived at by the learned Tribunal relying upon the decision of the Hon'ble Supreme Court in the matter of CIT v. Thanthi Trust [1999] 156 CTR (SC) 605 : [1999] 239 ITR 502 (SC) that the crediting of the amount in the account of the Board is enough and the Revenue cannot insist that the amount so given by the assessee must be spent within a relevant year only. In our considered opinion, the market committee having put its income to use in conformity with the provisions of the Act of 1961 for charitable purpose, it has to be treated as the application of the income for the charitable purpose in the relevant year. 18. The next question which comes for consideration is as to whether the assessee can claim the utilization of the fund by the Board including fund spent outside its market area as application of the income. 19. From bare perusal of the provisions of s. 11(1)(a) of the IT Act, it is manifestly clear that it does not contain any such inhibition that the application of the income for charitable purposes should be restricted to a particular place or the specified area. The words "to such pu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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