TMI Blog2014 (3) TMI 251X X X X Extracts X X X X X X X X Extracts X X X X ..... of Assessee - Assessee's claim for exemption has to be considered with reference to the provisions of section 11of the Act - the entire assessment has to be reconsidered afresh in the light of the various decisions of the Hon'ble High Court and Tribunal on this issue - The issue of claim of exemption u/s 11 of the Act and taxation of various incomes and its application has to be re-examined by the AO in the light of the facts of the case and law on the issue – the matter is remitted back to the AO for fresh adjudication – Decided in favour of Assessee. - TA 83 to 93, 111,159,160,305,335,352,356 to 359, 367 to 369/Viz/200 - - - Dated:- 13-12-2013 - B Ramakotaiah And Saktijit Dey, JJ. For the Appellants : Shri P Gopikrishna, CA Shri Y Suryachandra Rao, CA For the Respondent : Shri K V N Charya, CIT(DR) ORDER:- PER : Bench The appeals filed by Assessees stated above are directed against the orders passed by learned CIT(A), in their respective hands for the years mentioned in the caption against their names. These appeals were disposed of by the Tribunal by holding that the exemption provided under section 10(26AAB) of the Act shall apply to these Assessees for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ten submissions were filed at pages 21 to 25 of the paper book to explain the nature of the receipt and the restrictions on the use of such funds. Though each market committee is a body corporate, in essence, it has no independent say which could be noticed from the fact that there are no independent byelaws for any independent market committees and the so called discretion vested in the committee is circumscribed by so many limitations, rules byelaws, which makes the independence, a mere myth i.e., independence is provided to the committees without actually there being any right to incur the expenditure for specified purposes. Ld. Counsel has also given certain examples to highlight that as per the directions of the Government, the amount were collected from a particular market committee. Considering the nature of the duties and services rendered by the market committees, the Legislature never intended to levy tax on the market committees. Only on account of restrictive definition of local authority' in Section 10(20) of the Income tax Act, with effect from 1.4.2003, the dispute arose as to whether market committees were liable to tax under the Income Tax Act. Omission of Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture Development and Finance Corporation [2006] 284 ITR 582 (Karn.), the amount so utilized cannot be brought to tax. 6. After this Ld. Counsel also placed on record the applications made to CIT u/s 12A/12AA for the registration of Assessee which are stated to be still pending for consideration. It was urged that if the Ld. CIT grants the registration, then issue of examination of exemption of income under the provisions of section 11 is to be examined by the assessing officer. It was requested that for the above reasons, the assessment be restored to the file of the AO for consideration u/s 11 of the Act. The Ld. Counsel referred to the orders of the Hon'ble High Court with reference to the charitable nature of the society and granting registration to the society. In view of the above legal and factual position, it was the prayer that all the assessments in these impugned cases be restored to the file of the A.O. for fresh consideration according to the law. 6.2 The Ld. D.R. however submitted that license fee is taxable and referred to the findings of the Hon'ble jurisdictional High Court in the case of Agricultural Market Committee, Giddalur which were extracted in the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , were alone brought within the expression "local authority". The immediate effect is that from the financial year 2003-2004 onwards all AMCs were barred from claiming exemption as local authorities under Section 10(20) of the Act. AMCs constituted under the AMC Act, or AMCs situated in other places constituted under other relevant statutory enactments, could not claim the benefit of exemption under Section 10(20) of the Act with effect from 01.4.2003. In Narela AMC, the Supreme Court while rejecting the plea that Parliament had bodily lifted the term "local authority" under Section 3(31) of the General Clauses Act while inserting an Explanation to Section 10(20) of the Act, and AMCs continued to be local authorities even after the amendment to Section 10(20) of the Act, ruled that "all the AMCs at different places were enjoying exemption from income tax under Section 10(20) of the Act prior to its amendment by the Finance Act, 2002 with effect from 01.4.2003 ; the entire definition of "local authority" from Section 3(31) of the General Clauses Act was not bodily lifted and incorporated deliberately by Parliament in the Explanation to Section 10(20) of the Act; AMCs are neithe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the decision of the Supreme Court in CIT v Gujarat Maritime Board wherein it was held that, even if the said Board ceased to be a local authority', it was not precluded from claiming exemption under Section 11(1) of the Act; and, if the primary purpose and predominant object of an assessee is to promote welfare of the general public, the purpose would be charitable purpose. This Court, in Commissioner of Income Tax, Guntur v Agricultural Market Committee, Giddalur, considered the question of registration of an AMC under Section 12A of the Act. It was held as follows. ......we are convinced that an AMC, constituted under the enactment of the State legislature, is deriving income from the property held under legal obligation for a charitable purpose to wit the advancement of general object of utility. It is, therefore, entitled to be registered under Section 12A/12AA to enable AMC to claim exemption as per law. We have reasons for this conclusion which are as follows. AMC is constituted under the State Act for the sole purpose of protecting the interest of 'agriculturists, farmers and growers. The purpose of marketing legislation is to enable purchasers to get a fair pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 10 of the Act, no assessing authority can deny them the benefit. The same is not case when an assessee claims exemption under Section 11(1) of the Act which can be denied when the conditions of registration are violated or when Section 13 is attracted. It is not possible to countenance the plea that Section 10(26AAB) of the Act is declaratory in nature. Before its enactment, there was no doubt or ambiguity in understanding the nature of exemption from income tax availed by the AMCs. After insertion of the Explanation to Section 10(20) of the Act, with effect from 01.4.2003, an AMC ceased to be a 'local authority'. There cannot be any doubt or ambiguity on this score. Thereafter, before insertion of Section 10(26AAB) of the Act, an AMC could claim exemption, under Section 11(1) of the Act, as a charitable institution. Here also there is no ambiguity or doubt, nor is it a case of Parliament supplying an omission to redress, a hardship. In the pre-2003 period, it may be reiterated, AMCs were- treated as local authorities, but post 01.4.2009 they are not treated as local authorities but are grouped as a separate category of statutory creations entitled to the benefit unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchasers to get a fair price for the commodities by eliminating middlemen and provide regular market with all necessary facilities. Secondly, the AMC is under legal obligation to provide ail necessary infrastructure and market facilities within the market place/yard in notified market area, including water, electricity, auction/trading platforms, facilities for receiving, paying and depositing money, and resolving disputes. Thirdly, the income of AMC 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 named supra. 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 Central Market Fund inter alia for providing grants to needy AMCs. Fifthly, AMCs serve an important aspect of rural economy, i.e., providing facilities for marketing agricultural produce and products of livestock. 11. As can be seen from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iling Form No.10 as per sec. 11(2) of the Act. We notice that the Hon'ble Supreme Court in the case of Nagpur Hotel Owners' Association (Supra) has held that the Form No. 10 could be filed before the assessing officer completes the assessment. The Hon'ble Gujarat High Court in the case of CTT Vs. Mayur Foundation (2005)(274 ITR 562), held that, where the assessment is in appeal, the assessment should be treated as pending, so that it could be filed even at the stage of appeal by way of additional ground. The co-ordinate bench of the Tribunal has followed the decision of Mayur Foundation (Supra), in the case of Agricultural Market Committee, Polavaram, referred (Supra). Thus, the view entertained by the Assessing Officer is not in accordance with the judicial decisions. Hence, we do not find any infirmity in the action of the assessees in filing the Form No. 10 before the Assessing Officer during the course of assessment proceeding. 8. The third defect pointed out by the Assessing Officer is regarding accumulation of funds u/s 11(5) of the Act. We are of the view that the Assessing Officer may consider this issue also afresh, since we have already set aside the issue relating t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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