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Income Tax Appellate Tribunal - Hyderabad

Agricultrual Market Committee,, ... vs Assessee on 3 April, 2014

        IN THE INCOME TAX APPELLATE TRIBUNAL
          HYDERABAD BENCHES "A" : HYDERABAD

 BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER
                      AND
   SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER


                  ITA.No.1663/Hyd/2013
                 Assessment Years 2004-05


Agricultural Market
Committee, Armoor,       vs. ITO, Ward-1
Nizamabad Dt.                Nizamabad.
PAN AABTA 2584J
(Appellant)                  (Respondent)


                  ITA.No.1664/Hyd/2013
                 Assessment Years 2006-07


Agricultural Market
Committee, Bodhan,       vs. ITO, Ward-2
Nizamabad Dt.                Nizamabad.
PAN AAALA 0787C
(Appellant)                  (Respondent)


     For Assessee           : Mr. S. Rama Rao
     For Revenue            : Mr. B. Yadagiri


           Date of Hearing : 03.04.2014
     Date of pronouncement : 16.04.2014


                         ORDER

PER B. RAMAKOTAIAH, A.M.

These two appeals are by the assessee for assessment years 2004-05 and 2006-07.

ITA.No.1663 & 1664/Hyd/2013, Agricultural Market Committee, Armoor & Bodhan, Nizamabad Dist.

2. Brief facts are that the assessee Agricultural Market Committee, Armoor claimed exemption under section 10(20) of the I.T. Act as local authority up to the A.Y. 2002-03. Consequent to the insertion of Explanation below sec.10(20) by Finance Act, 2002 w.e.f. 01.04.2003, incomes of 'Local Authority' not specified in the said explanation are no longer exempt. Hence, notice u/s.142(1) was issued to the Agricultural Market Committee (in short "AMC"), Armoor. It was the contention of the assessee that Market Committee did not constitute "income" let alone "taxable income" for the reasons that the collections made by the assessee were burdened with an overriding statutory obligation cast upon it by the Andhra Pradesh (Agricultural Produce and Live Stock) Markets Act, 1966 and the Rules made thereunder. The contention of the assessee is that its income continues to be exempt u/s. 10(20) of the I.T. Act, 1961, despite insertion of an exhaustive 'list' of local authorities which are made eligible for exemption. According to the Learned A.R. Clause (iii) of the Explanation below Section 10(20) of the Act is not as definitive as the other clauses are and thus, is capable of encompassing even the Agricultural Market Committees to in its meaning. The A.O. observed that in the case of Agricultural Produce Market Committee vs. CIT 173 Taxman 115 (SC) it has been held that "since an Agricultural Market Committee is neither a Municipal Committee nor a District Board" under the said Explanation to section 10(20) inserted in the Finance Bill 2002 w.e.f. 01.04.2003, thus, the A.O. has disallowed Rs.25,25,600/- and added back to the taxable income.

ITA.No.1663 & 1664/Hyd/2013, Agricultural Market Committee, Armoor & Bodhan, Nizamabad Dist.

3. Aggrieved, the assessee filed appeal before the Ld. CIT(A). The Ld. CIT(A) while relying on the decision of the jurisdictional High Court in the case of CIT vs. Agricultural Market Committee 337 ITR 299 wherein it was held that assessees are entitled for exemption but section 10(26AAB) inserted by Finance Act, 2008 w.e.f. 01.04.2009 cannot be applied retrospectively, dismissed the assessees contention that assessees are eligible for claim of exemption under section 11 in the absence of Registration under section 12A of the act. Assessee submitted that the application for registration under section 12A was filed, but DIT(E) rejected the same and appeal filed before ITAT was pending. The Ld. CIT(A) on the facts as available at that point of time of passing the order did not accept the assessee's contention and rejected the grounds.

4. At the outset, Ld. Counsel submitted that the Hon'ble ITAT in its orders in ITA.No.928/Hyd/2013 dated 23.09.2013 and also orders in ITA.No.44/Hyd/2007 and ITA.No.156/Hyd/2008 dated 24.11.2008 directed the DIT(E) to grant registration under section 12A. Since the ITAT in its order dated 23.09.2013 followed the jurisdictional High Court decision in the case of Agricultural Market Committee, Kubir, Adilabad 336 ITR 641 wherein the Hon'ble High Court of A.P. held that Agricultural Market Committees are entitled for registration under section 12A/12AA and directed the DIT(E) to grant registration. Since this orders of ITAT on the issue of granting registration are yet to be implemented by the DIT(E), in the interest of justice, we set aside both the assessment orders and restore the issue to the file of the A.O. to allow exemption under section 11, after the DIT(E) grants 4 ITA.No.1663 & 1664/Hyd/2013, Agricultural Market Committee, Armoor & Bodhan, Nizamabad Dist.

registration under section 12A. Therefore, the grounds are considered as allowed for statistical purposes.

5. In the result, appeals of the assessee are allowed.

Order pronounced in the open Court on 16.04.2014.

  Sd/-                                Sd/-
(ASHA VIJAYARAGHAVAN)                (B. RAMAKOTAIAH)
   JUDICIAL MEMBER                  ACOUNTANT MEMBER

Hyderabad, Dated 16th April, 2014

VBP/-
Copy to :

1. Agricujltural Market Committee, 3-1-81, Opp. Bus Stand, Armoor, Nizamabad Dist.,

2. Agricujltural Market Committee, 1-3-3, Azam Gunz, Bodhan, Nizamabad Dist., C/o. S. Rama Rao, Advocate, Flat No. 102, Shriya's Elegance, H.No.3-6-643, Street No.9, Himayatnagar, Hyderabad - 500 029.

3. Income Tax Officer,Ward-2, Nizamabad.

4. CIT(A)-18, Room No.20, 3rd Floor, B-Wing, Mittal Court, Nariman Point, Mumbai - 400 020.(Having concurrent jurisdiction of CIT(A)-VI, Hyderabad)

5. CIT(A)-VI, Hyderabad 6 & 7. CIT-5 & 6, Hyderabad

8. D.R. ITAT, 'A' Bench, Hyderabad.