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TMI Blog2008 (1) TMI 367X X X X Extracts X X X X X X X X Extracts X X X X ..... l (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) 29/2007 CIT v. Krishi Upaj Mandi Samiti, Sheopur Kalan. Misc. Appeal (IT) 30/2007 CIT v. Krishi Upaj Mandi Samiti, Khatora, District Shivpuri. Misc. Appeal (IT) 31/2007 CIT v. Krishi Upaj Mandi Samiti, Kolaras, District Shivpuri. Misc. Appeal (IT) 32/2007 CIT v. Krishi Upaj Mandi Samiti, Baroda, District Sheopur Kalan. Misc. Appeal (IT) 33/2007 CIT v. Krishi Upaj Mandi Samiti, Pichhore, District Shivpuri. Misc. Appeal (IT) 34/2007 CIT v. Krishi U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und. 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 committee; (vi) the payment of interest on the loans that may be raised for the purpose of the market and provisions of sinking fund in respect of such loans; (vii) the collection and dissemination or information relating to crops statistics and marketing of agricultural produce; (viii) (a) the expenses incurred in auditing the accounts of the market committee; (b) payment of honorarium to chairman, travelling allowance of chairman, vice-chairman and other members of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ouses 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 Commissioner of Income-tax to permit the registration of the respondent/assessee under section 12AA of the Income-tax Act without considering the omission of sub-section (29) of section 10 of the Income-tax Act with effect from April 1, 2003?" "(2) Whether in the light of omission of sub-section (29) of section 10, the respondent-krishi upaj mandi samiti. is entitled to exemption of certificate under section 12AA of the Income-tax Act without examining whether the respondent-krishi upaj mandi samiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication 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 copy of such order shall be sent to the applicant: Provided that no order under sub-clause (ii) shall be passed unless the applicant has been given a reasonable opportunity of being heard............ (2) Every order granting or refusing registration under clause (b) of sub-section (1) shall be passed before the expiry of six months from the end of the month in which the application was received under clause (a) of section 12A. (3) Where a trust or an institution has been granted registration under clause (b) of sub-s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 under section 10(20) of the Income-tax Act, yet a claim of exemption is still open to consideration under an alternate provision if made out." 15. Thus, the Punjab and Haryana High Court has held that market committees are not entitled for exemption under section 10. 16. Another judgment on this issue is the judgment of the Delhi High Court in the matter of Agricultural Produce Market Committee v. CIT [2007] 294 ITR 549. In that case, the Delhi High Court has held that section 10(20) of the Income-tax Act, 1961, was amended with effect from April ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble 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 poor, education, medical relief and the advancement of any other object of general public utility. 25. Relying on this definition, the contention of learned counsel for the respondent is that as the amount was spent only on public utility the krishi upaj mandi committees are applying entire income towards charitable purposes and hence the Tribunal has rightly allowed the appeal and reversed the findings of the Commissioner. 26. Applying the entire income towards charitable purposes is not the sole requirement of the Act. The provision further requires that the income must be derived from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 provides that if the amount is spent towards public amenities, it will be deemed that the amount is spent for charitable purposes. Hence, by virtue of section 2(15) of the Income-tax Act, it will have to be deemed that the amount spent by the marketing committees is spent towards public purposes. 31. The apex court in the case of CIT v. A. P. State Road Transport Corporation [1986] 159 ITR 1 has considered this aspect and held that by virtue of section 2(15) of the Income-tax Act, the amount spent by the Road Transport Corporation towards public amenities is a charitable purpose. In view of the aforesaid, we hold ..... X X X X Extracts X X X X X X X X Extracts X X X X
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