TMI Blog2008 (1) TMI 367X X X X Extracts X X X X X X X X Extracts X X X X ..... Samiti, Ambah. Misc. Appeal (IT) 14/2007 CIT v. Krishi Upaj Mandi Samiti, Porsa. Misc. Appeal (IT) 15/2007 CIT v. Krishi Upaj Mandi Sarniti, Sabalgarh. Misc. Appeal (IT) 16/2007 CIT v. Krishi Upaj Mandi Samiti, Joura. Misc. Appeal (IT) 17/2007 CIT v. Krishi Upaj Mandi Samiti, Mehgaon Misc. Appeal (IT) 18/2007 CIT v. Krishi Upaj Mandi Samiti, Lahar. Misc. Appeal (IT) 19/2007 CIT v. Krishi Upaj Mandi Samiti, Bhind. Misc. Appeal (IT) 20/2007 CIT v. Krishi Upaj Mandi Samiti, Alampur. Misc. Appeal (IT) 21/2007 CIT v. Krishi Upaj Mandi Samiti, Mau. Misc. Appeal (IT) 22/2007 CIT v. Krishi Upaj Mandi Samiti, Gohad. Misc. Appeal (IT) 23/2007 CIT v. Krishi Upaj Mandi Samiti, Rannod District Shivpuri. Misc. Appeal (IT) 24/2007 CIT v. Krishi Upaj Mandi Samiti, Karera, District Shivpuri. Misc. Appeal (IT) 25/2007 CIT v. Krishi Upaj Mandi Samiti, Shivpuri, District Shivpuri. Misc. Appeal (IT) 26/2007 CIT v. Krishi Upaj Mandi Samiti, Vijaipur, District Sheopur Kalan. Misc. Appeal (IT) 27/2007 CIT v. Krishi Upaj Mandi Samiti, Khaniyadhana, District Shivpuri. Misc. Appeal (IT) 28/2007 CIT v. Krishi Upaj Mandi Samiti, Magroni, District Shivpuri. Misc. Appeal (IT) 29/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Upaj Mandi Adhiniyam, 1972. Powers and functions of the said market committees are under section 19 of the said Adhiniyam which empowers the market committee to collect market fee from the agricultural produce brought and sold in the market area. The powers to levy market fee is provided under section 19 of the Adhiniyam. Section 38 provides for constitution of market committee fund, and all the moneys received by the committee is paid into a fund called market committee fund. Section 39 of the Adhiniyam provides for application of the committee fund and as per the said provisions, the funds can be utilised only for the purposes laid down under section 39, which are as under: (i) the acquisition of a site or sites for the market yards; (ii) the maintenance and improvement of the market yards; (iii) the construction and repairs of buildings necessary for the purposes of the market and for convenience or safety of the persons using the market yard; (iv) the maintenance of standard weights and measures; (v) the meeting of establishment charges including payments and contributions towards provident fund, pension and gratuity of the officers and servants employed by a market ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nition of local authority is restricted only for the aforesaid local authorities for the purpose of section 10(20) of the Income-tax Act. 6. Simultaneously, while adding the same Explanation, sub-section (29) of section 10 was omitted with effect from April 1, 2003. The said omitted sub-section (29) reads as under: "In the case of an authority constituted under any law for the time being in force for the marketing of commodities, any income derived from the letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities." 7. Thus, due to omission of sub-clause (29), the exemption of market committee from payment of tax was withdrawn. In view of these amendments, the Commissioner rejected the application for registration under sections 12A and 12AA of the Income-tax Act. This order was challenged by the marketing committees by filing an appeal before the Tribunal and those appeals were allowed by the impugned judgment, hence the present appeals. 8. The present appeals are admitted for final hearing on the following substantial two questions of law: "(1) Whether the Income-tax Appellate Tribunal was justified in directing the Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evious year, the accounts of the trust or institution for that year have been audited by an accountant as defined in the Explanation below sub-section (2) of section 288 and the person in receipt of the income furnishes along with the return of income for the relevant assessment year the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed. 12AA. Procedure for registration. - (1) The Commissioner, on receipt of an application for registration of a trust or institution made under clause (a) of section 12A, shall— (a) call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about the genuineness of activities of the trust or institution and may also make such inquiries as he may deem necessary in this behalf; and (b) after satisfying himself about the objects of the trust or institution and the genuineness of its activities, he- (i) shall pass an order in writing registering the trust or institution; (ii) shall, if he is not so satisfied, pass an order in writing refusing to register the trust or institution, and a cop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and, therefore, merely because section 10 is amended, market committees cannot be deprived of the benefit available to it under sections 11 and 12 of the Act. 13. The hon'ble apex court in case of State of M. P. v. Krishi Upaj Mandi Samiti [1998] 8 SCC 430 after considering the provisions of section 7(3) of the Adhiniyam rejected the contention of market committee and held that the Explanation for all the purposes under section 7(3) will apply to other Acts. In the aforesaid case, the apex court was considering the liability of the marketing committee to pay tax under the M. P. Nagriya Sthawar Sampatti Kar Adhiniyam, 1964. 14. The Punjab and Haryana High Court has considered the said question in its judgment in the case of CIT v. Market Committee [2007] 294 ITR 563 (P H), held that (page 577): "It is not possible for us to accept that section 10(20) of the Income-tax Act, after the same came to be amended so as to exclude 'local authority' from the benefit of tax exemption would render the market committees ineligible for the exemption under other provisions of the Income-tax Act. Although market committees are not entitled to (or eligible for) tax exemption unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mption it is necessary that the income must be applied for charitable or religious purpose in India to the extent of 85 per cent. of the income derived during that year from the property held under trust. In the present case, the Commissioner while rejecting the application for registration has held that the committee charges 2 per cent. from the farm houses come to mandi for sale of their produce, as a mandi fees and out pf 2 per cent., 1.2 per cent. is directly transferred to the State Government;. Thus, the committee is not applying 80 per cent. of its income towards charitable purposes. This finding is reversed by the tribunal. 23. The Punjab and Haryana High Court in the matter of CIT v. Market Committee [2007] 294 ITR 563 has held that by virtue of section 28 of the Act of Punjab, the market committee is required to spend entire amount for public utility. Similar is the position with our Adhiniyam. 24. Section 39 of the Adhiniyam pertains to the purposes for which the amount can be spent by the market committees and the said amount is utilised only for public amenities. Section 2(15) of the Income-tax Act defines charitable purposes which includes relief of the po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntention raised by the counsel for the appellant is that the intention of the Legislature in deleting clause (29) of section 10 and introduction of section 10 sub-clause (20) itself shows that the Legislature did not want to extend the benefit of exemption to krishi upaj mandi samiti. This argument is without any force because sections 10(20) and 10(29) of the Income-tax Act provide for exemption to all the local authorities and exemption under this section was a blanket exemption without fulfilling any condition. Section 11 provides for exemption on fulfilment of certain conditions. Thus, the intention behind the amendment was to remove the blanket exemption to the local authorities and provide exemption only if they fulfil the conditions under section 11. As per section 11, the exemption can be granted to the marketing committees provided that they spend amount for charitable purposes as required by sub-section (2) of section 11. Marketing committees are bound to spend their income as per section 39 of the 1972 Adhiniyam and as per the said section, the amount could be spent only for public amenities like construction of roads, market, etc. Section 2(15) of the Income-tax Act pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
