Commissioner Of Income Tax, Muzaffarpur v. Agricultural Produce Market Committee, Motihari

IN THE HIGH COURT OF JUDICATURE AT PATNAMiscellaneous Appeal No.457 of 2006 ====================================================== Commissioner Of Income Tax, Muzaffarpur ... ... Appellant/s Versus Agricultural Produce Market Committee, Motihari ... ... Respondent/s ======================================================withMiscellaneous Appeal No. 382 of 2009 ======================================================Assistant Commissioner Of Income Tax Circle-1, Muzaffarpur ... ... Appellant/s Versus M/S Agricultural Produce Market Committee, Muzaffarpur ... ... Respondent/s ====================================================== with Miscellaneous Appeal No. 813 of 2010 ======================================================Agricultural Produce Market Committee, Lakhisarai ... ... Appellant/s Versus The Commissioner Of Income Tax, Bhagalpur ... ... Respondent/s ====================================================== with Miscellaneous Appeal No. 820 of 2010 ====================================================== Agricultural Produce Market Committee (Dissolved), Saharsa ... ... Appellant/s Versus Commissioner Of Income Tax, Bhagalpur ... ... Respondent/s ====================================================== with Miscellaneous Appeal No. 821 of 2010 ====================================================== Agricultural Produce Market Committee (Dissolved), Jamui ... ... Appellant/s Versus Commissioner Of Income Tax CORAM: HONOURABLE THE CHIEF JUSTICE and HONOURABLE MR. JUSTICE RAJIV ROYORAL JUDGMENT(Per: HONOURABLE THE CHIEF JUSTICE) Date : 12-12-2023 Heard learned counsel Sri Sadashiv Tiwari, AmicusCuriae and Smt. Archana Sinha, learned Senior StandingCounsel for the respondent. 2. The above appeals are on the very same issue butfrom different orders of the Tribunal. The identical issue raisedis the eligibility of the Agricultural Produce MarketingCommittees, created under a statute; the Bihar AgriculturalProduce Market Act, 1960 for exemption from levy of tax underSection 11 and 12 of the Income Tax Act. The appeals of the Department, M.A. No. 457 of 2006 and M.A. No.382 of 2009,are from orders of the Tribunal which respectively allowed theexemption and remanded the same for consideration afterobserving that the exemption is possible; in the case of twoagricultural produce marketing committees in two separatedistricts; different entities assessed individually. 3. M.A. Nos.813 of 2010, 820 of 2010 and 821 of2010 are filed by the Agricultural Produce MarketingCommittees of Lakhisarai, Saharsa and Jamui respectively. Inthe orders of the Tribunal from which the appeals arose, theTribunal rejected the claim of the assessees finding favor withthe orders of the Commissioner of Income Tax (CIT) whichrejected the application for exemption under Section 12 on theground that they were delayed. 4. Admittedly, as seen from the various impugned orders itself, the various Agricultural Produce MarketCommittees of the different districts were exempted from thelevy of income tax in the years prior to the assessment year2003-04 by virtue of Section 10(20) of the Income Tax Act.Subsequent to the assessment year 2003-04, from theassessment year 2004-05 onwards, which is relatable to thefinancial year 2003-04, the Agricultural Produce Marketing Committees were granted exemption under Section 12 based ontheir respective application in that financial year. The rejectionwas only in respect of assessment year 2002-03. 5. In M.A. No.457 of 2006, the order challengeddeals with the appeals of 6 committees and the appeal filedbefore this Court from the said common order, is only againstthe order passed in favor of the Agricultural Produce MarketCommittee, Motihari. For that reason alone, the appeal is to bedismissed. Committees were granted exemption under Section 12 based ontheir respective application in that financial year. The rejectionwas only in respect of assessment year 2002-03. 5. In M.A. No.457 of 2006, the order challengeddeals with the appeals of 6 committees and the appeal filedbefore this Court from the said common order, is only againstthe order passed in favor of the Agricultural Produce MarketCommittee, Motihari. For that reason alone, the appeal is to bedismissed. 6. We also see that the Tribunal had relied on adecision of the Income Tax Appellate Tribunal, Delhi, whichpermitted the Market Committees to avail of such exemption,finding them to be charitable institutions. As has been found bythe Tribunal, the object of the establishment of the MarketCommittee is to regulate, purchase, sale, store and processagricultural produce, with the intention to protect agriculturistsfrom exploitation of middle men and to provide them withcompetitive price. The Market Committees also provide betterfacilities for storage and transportation of food grains. 7. The Commissioner of Income Tax in theimpugned order before the Tribunal, has opined that theAgricultural Produce Market Committees do not come under the definition of either a trust or institution. An Institution, as seenfrom the provision, has not been defined and in suchcircumstances, the object has to be looked at. The MarketCommittees are statutory bodies created for the purposes afore-mentioned. They are not profit earning establishments and theirobject is also to facilitate proper disposal of the agriculturalproduce of individual farmers. We find the reasoning of theTribunal to be perfectly in order. It is also to be noticed that inall the subsequent years, the Agricultural Produce MarketCommittees were granted exemption under Section 11 and 12. 8. Insofar as M.A. No. 382 of 2009, the Tribunalthough having found that there is no reason for denial ofexemption, solely in the assessment year 2003-04, remanded thematter to the lower authority. Though it is not an appeal of theassessee, we find no valid reason to uphold the remand,especially since the Market Committees are now no more inexistence. The reasoning in the impugned order in M.A. No. 457of 2006 squarely applies in this case also. As we noticed earlier,insofar as M.A. No.457 of 2006, there is no separate appealfrom the common order against the other five AgriculturalProduce Market Committees, whose appeals were also disposedof by the Tribunal on the above reasoning. 9. We find no question of law arising from M.A.No.457 of 2006 and reject the same. 10. In M.A. No. 382 of 2009, we find the remandto be unnecessary. Upholding the order of the Tribunal insofaras the finding that there is no valid reason to decline exemptionto the appellant-assessee, which is the Agricultural ProduceMarket Committee at Muzaffarpur, the order is intefered withonly to the extent of setting aside the remand. The reasoningupheld in M.A. No.382 of 2009 squarely applies in this appealalso. 11. Insofar as the appeals by the assessees areconcerned, three District Committees have filed it, again from acommon order which disposed of 10 appeals before theTribunal. Since each of the district committees are separatelyassessed, we have to necessarily consider the appeals filed bythe individual, different District Committees. The reasonassigned by the CIT to reject the application was delay, whichstood upheld by the Tribunal also. 12. In this context, we notice Section 12(A)(a) asit stood then and extract it below:- 12A. The provisions of Section 11 and 12shall not apply in relation to the income of anytrust or institution unless the following conditionsare fulfilled, namely:- 11. Insofar as the appeals by the assessees areconcerned, three District Committees have filed it, again from acommon order which disposed of 10 appeals before theTribunal. Since each of the district committees are separatelyassessed, we have to necessarily consider the appeals filed bythe individual, different District Committees. The reasonassigned by the CIT to reject the application was delay, whichstood upheld by the Tribunal also. 12. In this context, we notice Section 12(A)(a) asit stood then and extract it below:- 12A. The provisions of Section 11 and 12shall not apply in relation to the income of anytrust or institution unless the following conditionsare fulfilled, namely:- (a) the person in receipt of the income hasmade an application for registration of the trust orinstitution in the prescribed form and in theprescribed manner to the [***] Commissionerbefore the 1[st] day of July, 1973, or before the expiryof a period of one year from the date of thecreation of the trust or the establishment of theinstitution[whichever is later and such trust orinstitution is registered under section 12AA]: [Providedthat where an application forregistration of the trust or institution is made afterthe expiry of the period aforesaid, the provisions ofsections 11 and 12 shall apply in relation to theincome of such trust or institution,- (i) from the date of creation of the trust orthe establishment of the institution if the [***]Commissioner is, for reasons to be recorded inwriting, satisfied that the person in receipt of theincome was prevented from making the applicationbefore the expiry of the period aforesaid forsufficient reasons. (ii) from the 1[st] day of the financial year inwhich the application is made, if the [***]Commissioner is not so satisfied;] 13. Hence, the limitation insofar as newly created Trusts or Institutions, is within one year from the date of suchcreation or establishment. Admittedly, the Agricultural ProduceMarket Committees were created by the statute in the year 1960.The were also entitled to exemption under Section 10(20) of theAct as a local authority. By an amendment in the year 2002, thewords ‘local authority’ was deleted from the aforesaid provision.This resulted in the market committees being no longer entitled to exemption from levy of tax by virtue of the aforesaidprovision. It has to be pertinently noticed that from the nextassessment year onwards, i.e. assessment year 2004-05, theexemption was granted seamlessly under Section 11 and 12. 14. In the relevant assessment year, subject matterof the case, as per the table extracted by the Tribunal, theMarket Committees did not file the application within thefinancial year and hence, the same was rejected. The aforesaidrejection was based on clause-(ii) of the proviso which indicatesthat if the Commissioner is not satisfied by the reasons statedfor the delay, then the application can be considered only fromthe first day of the financial year in which the application ismade. Hence, the delay condonation is subject to the satisfactionof the Commissioner, as per clause-(i) of the proviso. TheCommissioner has not considered the reason for the delay andhas merely rejected it based on clause-(ii) of the proviso. 15. We are of the opinion that there is sufficientcause for condonation of delay since prior to the subjectassessment year, the market committees were entitled toexemption Section 10(20); which was dis-entitled only byreason of the amendment of the year 2002 made with effectfrom 01.04.2002. The Agricultural Produce Market Committees 15. We are of the opinion that there is sufficientcause for condonation of delay since prior to the subjectassessment year, the market committees were entitled toexemption Section 10(20); which was dis-entitled only byreason of the amendment of the year 2002 made with effectfrom 01.04.2002. The Agricultural Produce Market Committees had filed the applications as soon as the amendments came totheir notice. The context in which the change was brought inand the eligibility for exemption from levy of tax under the Actfor the earlier years and the subsequent years are reasonablegrounds to enter into the required satisfaction for condonation ofdelay. We find the order of the Commissioner as confirmed bythe Tribunal to be bad in law. We are of the opinion that theorder of the Commissioner which was affirmed by the Tribunalis perverse in the facts and circumstances of the case and hence,we allow the appeals permitting the appellant-assessee to havethe exemption under Section 12 for the subject assessment year,i.e. 2003-04. 16. Ordered accordingly. (K. Vinod Chandran, CJ) ( Rajiv Roy, J) sharun/- AFR/NAFRNAFRCAV DATEUploading Date03.01.2024Transmission Date