TMI Blog2013 (12) TMI 1716X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act, the assessing officer did not agree on the claim/ benefit for accumulation of income as the relevant form no.10 was filed belatedly. The Ld. CIT(A) following the principles laid down by the Hon ble Supreme Court in the case of CIT Vs. Nagpur Hotel Owners Association 247 ITR 20(SC), wherein it was held that the notice for accumulation of income could be given any time before the conclusion of the assessment proceedings, allowed the assessee s contention with a direction to accept the form no.10. However, the Ld. CIT(A) upheld the assessing officer s contention that the notice for accumulation has not specified any specific purpose and the general purpose which was mentioned in form no.10 cannot be termed as specific and concrete purpose and as such there exists incurable infirmity with regard to the purpose for which the accumulation of its income has been sought. Therefore, despite the grant of registration u/s 12AA, the assessing officer and CIT held that assessee failed in complying with the provisions of section 11(2) of the Act in so far as failing to indicate specific purpose for accumulation of its income. 4. It was fairly admitted that this issue was covered by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts Association (2003) 182 CTR (Del) 374 : (2003) 261 ITR 190 (Del) and Director of IT (Exemption) vs. Daulat Ram Education Society (2005) 278 ITR 260 (Del) followed; CIT vs. M.Ct. Muthaiah Chettiar Family Trust . Ors. (2000) 162 CTR (Mad) 63 and Director of IT (Exemption) vs. Trustees of Singhania Charitable Trust (1993) 199 ITR 819 (Cal) dissented from. Conclusion: While specifying the purposes of accumulation of income under s.11(2), a charitable trust can mention all its objects without being specific. 6. Further, Hon ble Punjab Haryana High Court in the case of CIT Vs. Market Committee 201 Taxman 235 also considered similar issue and held as under: Where in the application for accumulation of income, the assessee had stated that accumulation of the funds has been made for development of works and Tribunal clearly found that the purpose stood specified and it was statutory purpose for utilizing the amount i.e. development as per s. 28 of Punjab Agriculture Produce Marketing Act, no substantial question of law arose from the order of the Tribunal allowing exemption under s.11(2). 7. The Hon ble High Court vide para 2 of its judgement discussed the issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lied, to charitable or religious purposes in India during the previous year but is accumulated or set apart, either in whole or in part, for application to such purposes in India, such income so accumulated or set apart shall not be included in the total income of the previous year of the person in receipt of the income, provided the following conditions are complied with, namely : (a) such person specifies, by notice in writing given to the AO in the prescribed manner, the purpose for which the income is being accumulated or set apart and the period for which the income is to be accumulated or set apart, which shall in no case exceed ten years; (b) ** 8. Respectfully following principles laid down by the above, we direct the assessing officer to consider the claim of section 11(2) afresh in the light of the judgements on the issue. Therefore, the issue of accumulation of income as per provisions of section 11(2) is restored to the file of the assessing officer with a direction to examine and allow the claim after affording due opportunity of being heard to the assessee. 9. The second issue for consideration is with reference to grant of relief of various paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e term 'market' as defined in s. 2(vi) means a market established under sub-s. (3) of s. 4 and includes market yard and any building therein. The expression 'notified area' as defined in s. 2(xi) means any area notified s. 3, and 'notified market area' in cl. (xii) means any area declared to be a market area by notification under s. 4. Under s. 3 of the Act, the State Government is empowered to declare their intention of regulating the purchase and sale of such agricultural produce, livestock or products of livestock in such area as may be specified in such notifications. After considering the objections and suggestions, if any, the State Government is authorised to publish a final notification under sub-s. (3) thereof declaring such area to be a notified area. By sub-s. (1) of s. 4, the State Government is empowered to constitute a market committee for every notified area which shall be a body corporate having perpetual succession and a common seal. The duty of enforcing the provisions of the Act and the rules and bye-laws is entrusted to a market committee under sub-s. (2) thereof. Sub-s. (3) of s. 4 empowers the market committee to establish such number o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and maintenance of standard weights and measures; (v) the pay, pensions, leave allowance, gratuities, compassionate allowances and contribution towards leave allowances, pensions or provident fund of officers and servants employed by the market committee; (vi) the payment of interest on loans that may be raised for purposes of the market and the provisions of a sinking fund in respect of such loans; (vii) the collection and dissemination of information regarding all matters relating to crop statistics and marketing in respect of notified agricultural produce, livestock and products of livestock; (viii) schemes for the extension or cultural improvement of notified agricultural produce, livestock and products of livestock within the notified area, including the grant, subject to the approval of the Government, of financial aid to the schemes for such extension or improvement within such area, undertaken by other bodies or individuals; (ix) propaganda for the improvement of agriculture, livestock and products of livestock and thrift; (x) the expenses of, and incidental to, the conduct of elections; (xi) the promotion of grading services; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chieve the object for which it was enacted. In order to make effective such legislation for the control of a market, it would be reasonable for the legislature to control transactions between traders and also the sale of produce grown outside the market area, if sold in the market area...,...... 18. Sec. 7 of the AMC Act requires every person to obtain a licence from the market committee to set up, establish and use any place in the notified area for the purchase, sale, storage or weighment processing or pressing of any notified agricultural produce. Sec. 12 empowers the market committee to levy fees on agricultural produce, purchase or sale in the notified market area. These monies form the market committee fund and shall have to be spent in accordance with the provisions of s. 14 and the Andhra Pradesh (Agricultural Produce and Livestock) Markets Rules, 1969 (the Rules, for brevity). 19. It may, therefore, be taken as well accepted that the AMCs discharge an important duty and function of protecting the interest of a large body of persons, namely, agriculturists, farmers and growers of agricultural produce and livestock. A market committee is a platform to facilitate equa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ets from the income of charitable trust for determining the quantum of funds which have to be applied for the purpose of trust in terms of section 11 of the Act. The Hon ble High Court of Punjab Haryana in the case of CIT Vs. Market Committee, Pipli has considered the issue recently and in their judgement reported in 330 ITR 16, held as under:- Depreciation-Allowability-Charitable trust Depreciation is allowable on capital assets from the income of charitable trust for determining the quantum of funds which have to be applied for the purposes of the trust in terms of s. 11-It cannot be said that double benefit is given in allowing depreciation for computing income for purposes of s. 11-CIT vs. Sheth Manilal Ranchhoddas Vishrarn Bhavan Trust (1992) 105 CTR (Guj) 303 : (1992) 198 ITR 598 (Guj), CIT Vs. Institute of Banking Personnel Selection (2003) 185 CTR (Bom) 492 : (2003) 131 Taxman 386 (Bom), CIT vs. Rao Bahadur Calavala Cunnan Chetty Charities (1982) 135 ITR 485 (Mad), CIT vs. Society of the Sisters of St. Anne (1984) 39 CTR (Kar) 9 : (1984) 146 ITR 28 (Kar) and CIT vs. Raipur Pallottine Society (1989) 80 CTR (MP) 127 : (1989) 180 ITR 579 (MP) concurred with; Escorts Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to AO. Ground is allowed for statistical purposes. 15.5 Ground No.9: The ground is for consideration alternately under section 36(1)(xiii). Since we are considering the issue u/s 11 of the Act, provisions of section 36(1)(xiii) of business computation do not apply. Ground rejected 15.6 Ground no.10: This ground is on allowance of depreciation. For the reasons discussed in paras 11 12 above, we allow the ground for statistical purposes. 15.7 Ground no.11: This ground is on reopening the assessment u/s 148. This ground is not pressed and accordingly, treated as withdrawn. 15.8 AO is directed to consider the issues accordingly. 15.9 Appeal by assessee is partly allowed for statistical purposes. 16. ITA Nos.228 229 of 2009: 16.1 Ground No.1: This ground is general in nature. 16.2 Ground nos.2,3 4: These grounds are with reference to the claim of local authority and exemption u/s 10(26AAB) on the reason that the amended provision is retrospective and retroactive in its operation. This issue is already considered against the assessee by the Hon ble High Court of Andhra Pradesh in the batch of appeals in various AMC s which was referred to in ITA Nos.421,52 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Director, Marketing not allowed. Issue was discussed in paras 9 10 above. For the reasons stated above, the matter is restored to AO. Ground is allowed for statistical purposes. 17.5 Ground No.9: The ground is for consideration alternately under section 36(1)(xiii). Since we are considering the issue u/s 11 of the Act, provisions of section 36(1)(xiii) of business computation do not apply. Ground rejected. 17.6 Ground no.10: This ground is on allowance of depreciation. For the reasons discussed in paras 11 12 above, we allow the ground for statistical purposes. 17.7 Ground no.11: This ground is on reopening the assessment u/s 148. This ground is not pressed and accordingly, treated as withdrawn. 17.8 AO is directed to consider the issues accordingly. 17.9 Appeal by assessee is partly allowed for statistical purposes. 18. ITA Nos.231 232/Vizag/2009: 18.1 Ground No.1: This ground is general in nature. 18.2 Ground nos.2,3 4: These grounds are with reference to the claim of local authority and exemption u/s 10(26AAB) on the reason that the amended provision is retrospective and retroactive in its operation. This issue is already considered against th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the A.O. for fresh consideration. 19.4 Ground no.8: The ground is on allowance of various expenditures paid on the directions of Director, Marketing not allowed. Issue was discussed in paras 9 10 above. For the reasons stated above, the matter is restored to AO. Ground is allowed for statistical purposes. 19.5 Ground No.9: The ground is for consideration alternately under section 36(1)(xiii). Since we are considering the issue u/s 11 of the Act, provisions of section 36(1)(xiii) of business computation do not apply. Ground rejected. 19.6 Ground no.10: This ground is on allowance of depreciation. For the reasons discussed in paras 11 12 above, we allow the ground for statistical purposes. 19.7 Ground no.11: This ground is on reopening the assessment u/s 148. This ground is not pressed and accordingly, treated as withdrawn. 19.8 AO is directed to consider the issues accordingly. 19.9 Appeal by assessee is partly allowed for statistical purposes. 20. ITA No.235/Vizag/2009: 20.1 Ground No.1: This ground is general in nature. 20.2 Ground nos.2,3 4: These grounds are with reference to the claim of local authority and exemption u/s 10(26AAB) on the reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f exemption u/s 11 of the Act. For the reasons stated in para-8 on first issue discussed above, the claim is restored to the file of the A.O. for fresh consideration. 21.4 Ground no.7 is on allowance of various expenditures paid on the directions of Director, Marketing not allowed. Issue was discussed in paras 9 10 above. For the reasons stated above, the matter is restored to AO and ground is allowed for statistical purposes. 21.5 Ground nos.8 9 are regarding levy of interest u/s 234A B of the Act, which is consequential in nature. 21.6 AO is directed to consider the issues accordingly. 21.6 Appeal by assessee is partly allowed for statistical purposes. 22. ITA Nos.270 271/Vizag/2009: 22.1 Ground no.1: This ground is general in nature. 22.2 Ground nos.2,3,5 6 are with reference to the claim of local authority and exemption u/s 10(26AAB) on the reason that the amended provision is retrospective and retroactive in its operation. This issue is already considered against the assessee by the Hon ble High Court of Andhra Pradesh in the batch of appeals in various AMC s which was referred to in ITA Nos.421,523 to 529 of 2010 and ITA Nos.2, 3, 4, 6, 7, 11, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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