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

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 663 / 2008 The Commissioner of Income Tax,, Kota ----Appellant Versus Krishi Upaj Mandi, Samiti, Tonk. ----Respondent _____________________________________________________ For Appellant(s) : Ms. Parinitoo Jain ____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VINIT KUMAR MATHURJudgment 25/01/2017 1. By way of this appeal, the appellant has challenged thejudgment and order of the Tribunal whereby the Tribunal hasallowed the appeal of the original assessee reversing the order of AO. 2.This Court while admitting the matter on 21.1.2009 framedthe following substantial questions of law: “(i) Whether under the facts and in thecircumstances of the case, the Tribunal is justifed inholding that the appeals of the assessee and theappeals of the revenue have become infructuoussince the assessee Samiti has been allowedregistration u/s 12A of the Act whereas the issuebefore the Tribunal was that whether the assesseeSamiti falls under the four corners of Explanation toSection 10(20) of the Act? (ii) Whether the Income of Krishi Upaj Mandi Samitican be held to be exempt from tax under the factsand circumstances of the case? (iii) Whether under the facts and circumstances ofthe case, the Tribunal has erred in not deciding thelegal issues and has simplicitor held that the income of the assessee Samiti is not liable to tax? 3.We have heard the counsel for the parties. 4.The counsel for the appellant contended that the view taken by the Tribunal is contrary to law. The view taken by the CIT (A)is required to be affirmed in view of the fact that while consideringthe matter, the defects which were pointed out by the AO were notconsidered by the Tribunal. 5.However, in view of the decision of this Court inCommissioner of Income Tax vs. Krishi Upaj Mandi Samiti,Shrimadhopur reported in (2011) 331 ITR 174 (Raj.) wherein ithas been held as under:- “10. We have considered the rival submissions and weare in agreement with learned Counsel for theRespondents that so far as the case before the hon'bleSupreme Court of Agricultural Produce MarketCommittee, Narela's case [2008] 305 ITR 1 isconcerned, the present controversy with regard to theregistration under Section 12Aof the agriculturalproduce marketing committees and the consequentexemption as a result thereof under Sections 11and12of the Income-tax Act, 1961 was not involved in thesaid case. Independent of the registration under Section12A, the said judgment would have been applicable tothe facts and circumstances in case the Respondents-Assessees were claiming the exemption under Section10(20)of the Income-tax Act, 1961 as they had beendoing, prior to the amendment by virtue of the FinanceAct, 2002, when the Explanation was added belowClause (20) of Section 10of the Income-tax Act, 1961which came into force on April 1, 2003 i.e. theassessment year 2002-03. 11. In the present case, however, the K.U.M.S. haveapplied for being registered under Section 12Aand forthe grant of consequent exemption under Section 11asa result of having been registered as a charitableinstitution. In case such registration is valid and theK.U.M.S. are entitled to such registration, theconsequence thereof provided under Chapter III of theIncome-tax Act by virtue of Sections 11and 12arebound to follow on the satisfaction of the requiredgrounds. In support of the judgment of the learned 11. In the present case, however, the K.U.M.S. haveapplied for being registered under Section 12Aand forthe grant of consequent exemption under Section 11asa result of having been registered as a charitableinstitution. In case such registration is valid and theK.U.M.S. are entitled to such registration, theconsequence thereof provided under Chapter III of theIncome-tax Act by virtue of Sections 11and 12arebound to follow on the satisfaction of the requiredgrounds. In support of the judgment of the learned Tribunal, learned Counsel for the Respondents-Assessees submitted that this Court in several cases hasupheld the orders of the learned Income-tax AppellateTribunal upholding the registration of the K.U.M.S.under Section 12Aof the Income-tax Act and holdingthem entitled for the grant of consequent exemptionunder the provisions of Section 11of the Income-taxAct. Learned senior counsel Mr. N. M. Ranka furthersubmitted that several other High Courts have alsotaken the same view. Learned Counsel for theAssessees-Respondents submitted that the DivisionBench of this Court in the case of CIT v. K. U. M. S.,Jaisalmer reported in (Raj) 331 ITR 135 (Raj) : 2008216 CTR 277 has upheld the contention of theAssessees that the agricultural produce market boardsconstituted under the Rajasthan Agricultural ProduceMarkets Act, 1961 are entitled to be registered underSection 12Aof the Income-tax Act, 1961 looking to thenature of the work which these boards are performingunder the provisions of the Rajasthan AgriculturalProduce Markets Act, 1961 and on being so registeredunder Section 12Athey would be entitled to claim thebenefit of the exemption under the provisions ofSections11and12of the Income-tax Act, 1961.” The court further held as under:- “21. There is, therefore, no substance in the aforesaidobjection of the learned Counsel for the Revenue thatthe Assessees having already claimed exemptions priorto April 1, 2003 under Section 10(20)of the Income-taxAct, 1961 as a local authority it could not apply forregistration as a charitable institution under Section 12Aof the Income-tax Act, 1961 and claim consequentexemption on that basis. Similar views with regard tothe registration under Section 12Ahave been taken bythe Allahabad High Court in the case of CIT v. KrishiUtpadan Mandi Samiti reported in [2011] 331 ITR 154(All) : 231 CTR 505 (All)(I.T. Appeal Nos. 80 to 83 of2007 decided on December 2, 2009). 22. In the light of the aforesaid discussion, we are ofthe view that these appeals preferred by the Revenueagainst the decision of the learned Income-tax AppellateTribunal, in the facts and circumstances, deserve to bedismissed. Our answer to the question, therefore, isthat the learned Income-tax Appellate Tribunal hasrightly held that looking to the activities of theAssessees-K.U.M.S. and the Rajasthan State AgricultureMarketing Board enshrined under the RajasthanAgricultural Produce Markets Act, 1961 and the Rulesframed thereunder are such which would bring theseinstitutions, namely the samitis within the purview of"charitable institutions" so as to entitle them for being registered as charitable institutions under Section 12Aof the Income-tax Act, 1961 and entitle them forexemption under the provisions of Sections 11and12ofthe Income-tax Act, 1961.” 6.The view taken by this Court is required to be followed. 7.In that view of the matter, both the issues are answered in favour of assessee against the Department. Consequently, the appeal stands dismissed. (VINIT KUMAR MATHUR)J. (K.S. JHAVERI)J. /bm gandhi 84