TMI Blog2014 (9) TMI 491X X X X Extracts X X X X X X X X Extracts X X X X ..... osts for making assessee unnecessarily coming up in appeal – Decided in favour of assessee. - ITA. No. 400/Hyd/2014 - - - Dated:- 5-9-2014 - Shri B. Ramakotaiah And Shri Saktijit Dey,JJ. For the Petitioner : Mr. S. Rama Rao For the Respondent : Mr. D. Sudhakar Rao ORDER Per B. Ramakotaiah, A.M. This appeal by the assessee is directed against the order of DIT(E) rejecting registration of the assessee society under section 12A of the I.T. Act. 2. Briefly stated, assessee an Agricultural Market Committee ('AMC' in short), Achampet, has earlier filed an application in Form No.10A on 30.05.2007 seeking registration u/s 12A of the Income Tax Act, 1961 ('the Act' in short). However; as during the course of proceedings, the applicant AMC failed to furnish complete and satisfactory reply to the questionnaire dt.17-9-2007 issued to them seeking information on various points and could not produce the books of accounts and bills vouchers for verification and also the balance sheet as at the end of different accounting years, pointing out the same and stating other reasons in that regard, the said application was rejected by the then Director of Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the only object of the AMC is to provide facilities to the agriculturists for marketing their produce. Such an object merely to provide facilities for marketing of their produce to agriculturists, may not be charitable, having regard to the meaning of 'Charitable Purpose' as defined in Section 2(15) of the Act. Further, when during the course of present proceedings, the assessee has not been able to furnish complete Income Expenditure Account for whole of those three financial years and has not been able to produce its books of accounts and bills vouchers for the said financial years for verification and also has not been able to produce the balance sheet as at the end of the said three accounting years, it is not possible to verify the actual activities undertaken by the assessee AMC and hence, under that circumstance, it cannot be granted registration u/s.12AA of the Act. Further, when in the said letter filed on 27.01.2014, it has been stated that the receipts of the market committee represents the receipts on behalf of the government, under that circumstance, the above AMC, in my view, cannot be considered as a public charitable institution and hence, cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A of the Act, is refused to the above AMC. Thus, the said application in Form NO.10A filed by the above AMC is rejected. 5. At this stage, it may be further mentioned here that, the present order passed in the case of the above AMC, is within the period of time limitation and is legally valid, having regard to the provisions contained in Sec.12AA of the Act. Reliance in this regard is placed on the decision of Hon'ble Orissa High Court in M/s. Srikhetra, A.C. Bhaktivedanta Swami Charitable Trust Vs. ACIT, Circle-l, vide judgement dated 9.5.2006 in W~P.(C)No.12437 of 2005 reported in Orissa Law Report (2006)(II)-Vol.20, page 75, and the decisions of Hon'ble Madras High Court in CIT vs. Sheela Christian Charitable Trust (2013) 354 ITR 478 CIT vs. Karimangalam Onriya Pengal Sempu Amaipu Ltd., (2013) 354 ITR 482, wherein, it has been held that the time frame provided under sub- section (2) of section 12AA of the Income Tax Act, 1961, is only directory . 4. Assessee is contesting the above. It was the submission that the jurisdictional High Court in the batch of cases in the cases of Agriculture Market Committee has considered the issue and directed the Revenue to allow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der ss. 2(31)(i) to (vi), it certainly falls within the scope of artificial juridical person. By Finance Act, 2002, w.e.f. 1st April, 2003, an Explanation was inserted to s. 2(31) which makes it clear that inter alia an artificial juridical person shall be deemed to be a person whether or not it is established or incorporated with the object of deriving income, profits or gains. As per s. 4 of the AMC Act, AMC constituted by the Government for every notified area shall be a body corporate having perpetual succession and a common seal with power to acquire, hold and dispose of the property and may by its corporate name sue and be sued. It is settled law that a body corporate is a person. Asstt. CIT vs. Valliappa Textiles Ltd. AIR 2004 SC 86 applied. It is not the case of the AMC that they are not institutions of charity prior to the amendment of s. 10(20) by the Finance Act, 2002. All those statutory, non-statutory entities, concerns and institutions, specified in s.10 subject to prescribed conditionalities and legal requirements--are automatically exempted from payment of tax and those who were not included therein were only required to obtain registration under s. 12A so as to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ositing 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. 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.--CIT vs. Gujarat Maritime Board (2008) 214 CTR (SC) 81 : (2008) 1 DTR (SC) 1 : (2007) 295 ITR 561 (SC), The Trustees of The Tribune, In re (1939) 7 ITR 415 (PC), CIT vs. Andhra Chamber of Commerce (1965) 55 ITR 722 (SC) and Addl. CIT vs. Surat Art Silk Cloth Manufacturers Association (1979) 13 CTR (SC) 378 : (1980) 121 ITR 1 (SC) relied on. The exemption under s. 11(1) inter alia is subject to complying with s. 11(5). This pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... context, we have to observe that learned DIT(E) is wholly bent on refusing registration on various extraneous considerations in almost all cases which have come up before him. This Forum has been observing regularly and also some times passing adverse remarks that DIT(E) was exceeding his jurisdiction and not following the jurisdictional High Court direction/ITAT Orders while considering the issues. Even though ITAT directs the DIT(E) to grant registration in many cases, he is making some other conditions applicable which are beyond his purview. This Forum cannot ignore such blatant violations of judicial proprietary. Even though there is a direct jurisdictional High Court judgment in the case of AMCs for grant of registration under section 12A of the Act, learned DIT(E) took recourse to the judgment of another High Court decision given in the context of sec.10(23C) so as to deny the registration under section 12A which, in fact, was granted to the said Seed Certification Agency by the DIT(E) as can be seen from the facts of that case. This may call for contempt of Court, but since that is not before us, we can only observe that learned DIT(E) should be visited with costs for maki ..... X X X X Extracts X X X X X X X X Extracts X X X X
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