The Commissioner Of Income Tax, Kota v. Krishi Upaj Mandi Samiti, Newai, Tonk

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 614 / 2008 The Commissioner of Income Tax, Kota. ----Appellant Versus Krishi Upaj Mandi Samiti, Newai, Tonk. ----Respondent _____________________________________________________ For Appellant(s) : Mrs. Parinitoo Jain _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VINIT KUMAR MATHURJudgment Per Hon’ble Jhaveri J.01/02/2017 1.By way of this appeal, the appellant has challenged thejudgment and order of the Tribunal whereby the Tribunal haspartly allowed the appeals preferred by both the sides forstatistical purposes. 2.This Court while admitting the appeal on 11.12.2008 hasframed the following substantial questions of law: “(i)Whether under the facts andcircumstances of the case, the Tribunal isjustified in holding that the appeals of theassessee and the appeals of the revenuehave become infructuous since the assesseeSamiti has been allowed registrationu/s.12A of the Act whereas the issue beforethe Tribunal was that whether the assesseeSamiti falls under the four corners ofExplanation to Section 10(20) of the Act?(ii)Whether the income of Krishi UpajMandi Samiti can be held to be exemptfrom the tax under the facts andcircumstances of the case?(iii)Whether under the facts and circumstances of the case, the Tribunal haserred in not deciding the legal issues andhas simplicitor held that the income of theassessee Samiti is not liable to tax?” 3.Counsel for the respondent is not present. 4.However, the issue is squarely covered by the decision of this Court in the case of Commissioner of Income Tax vs. KrishiUpaj Mandi Samiti, Shrimadhopur reported in [2011] 331 ITR 174 (Raj.)] wherein it has been held as under: “10. We have considered the rivalsubmissions and we are in agreement withlearned Counsel for the Respondents that sofar as the case before the hon'ble SupremeCourt of Agricultural Produce MarketCommittee, Narela's case [2008] 305 ITR 1is concerned, the present controversy withregard to the registration under Section 12Aof the agricultural produce marketingcommittees and the consequent exemptionas a result thereof under Sections 11and 12of the Income-tax Act, 1961 was notinvolved in the said case. Independent ofthe registration under Section 12A, the saidjudgment would have been applicable to thefacts and circumstances in case theRespondents-Assessees were claiming theexemption under Section 10(20)of theIncome-tax Act, 1961 as they had beendoing, prior to the amendment by virtue ofthe Finance Act, 2002, when the Explanationwas added below Clause (20) of Section 10of the Income-tax Act, 1961 which cameinto force on April 1, 2003 i.e. theassessment year 2002-03. 11. In the present case, however, theK.U.M.S. have applied for being registeredunder Section 12Aand for the grant ofconsequent exemption under Section 11asa result of having been registered as acharitable institution. In case suchregistration is valid and the K.U.M.S. areentitledtosuchregistration,theconsequence thereof provided underChapter III of the Income-tax Act by virtueof Sections 11 and12 are bound to follow onthe satisfaction of the required grounds. In 11. In the present case, however, theK.U.M.S. have applied for being registeredunder Section 12Aand for the grant ofconsequent exemption under Section 11asa result of having been registered as acharitable institution. In case suchregistration is valid and the K.U.M.S. areentitledtosuchregistration,theconsequence thereof provided underChapter III of the Income-tax Act by virtueof Sections 11 and12 are bound to follow onthe satisfaction of the required grounds. In support of the judgment of the learnedTribunal, learned Counsel for theRespondents-Assessees submitted that thisCourt in several cases has upheld the ordersof the learned Income-tax Appellate Tribunalupholding the registration of the K.U.M.S.under Section 12Aof the Income-tax Actand holding them entitled for the grant ofconsequent exemption under the provisionsof Section 11of the Income-tax Act.Learned senior counsel Mr. N. M. Rankafurther submitted that several other HighCourts have also taken the same view.Learned Counsel for the Assessees-Respondents submitted that the DivisionBench of this Court in the case of CIT v. K.U. M. S., Jaisalmer reported in (Raj) 331 ITR135 (Raj) : 2008 216 CTR 277 has upheldthe contention of the Assessees that theagriculturalproducemarketboardsconstituted under the Rajasthan AgriculturalProduce Markets Act, 1961 are entitled to beregistered under Section 12Aof the Income-tax Act, 1961 looking to the nature of thework which these boards are performingunder the provisions of the RajasthanAgricultural Produce Markets Act, 1961 andon being so registered under Section 12Athey would be entitled to claim the benefit ofthe exemption under the provisions ofSections 11 and 12of the Income-tax Act,1961.” The court further held as under:- “21. There is, therefore, no substance in theaforesaid objection of the learned Counselfor the Revenue that the Assessees havingalready claimed exemptions prior to April 1,2003 under Section 10(20) of the Income-tax Act, 1961 as a local authority it couldnot apply for registration as a charitableinstitution under Section 12Aof the Income-tax Act, 1961 and claim consequentexemption on that basis. Similar views withregard to the registration under Section 12Ahave been taken by the Allahabad HighCourt in the case of CIT v. Krishi UtpadanMandi Samiti reported in [2011] 331 ITR154 (All) : 231 CTR 505 (All)(I.T. AppealNos. 80 to 83 of 2007 decided on December2, 2009). 22. In the light of the aforesaid discussion,we are of the view that these appealspreferred by the Revenue against the decision of the learned Income-tax AppellateTribunal, in the facts and circumstances,deserve to be dismissed. Our answer to thequestion, therefore, is that the learnedIncome-tax Appellate Tribunal has rightlyheld that looking to the activities of theAssessees-K.U.M.S. and the Rajasthan StateAgriculture Marketing Board enshrined underthe Rajasthan Agricultural Produce MarketsAct, 1961 and the Rules framed thereunderare such which would bring theseinstitutions, namely the samitis within thepurview of "charitable institutions" so as toentitle them for being registered ascharitable institutions under Section 12Aofthe Income-tax Act, 1961 and entitle themfor exemption under the provisions ofSections 11 and 12of the Income-tax Act,1961.” 5.In that view of the matter, the issue is answered in favour of the assessee and against the department. 6.The appeal stands dismissed. (VINIT KUMAR MATHUR)J. (K.S. JHAVERI)J. bblm/63