AGRICULTURAL MARKET COMMITTEE,,AKIVIDU vs. THE INCOME TAX OFFICER(EXEMPTIONS),, RAJAHMUNDRY

The order in ITA No.10057/GNT/CIT(A)-2/2015-16 dt.29.01.2020 of the Commissioner of Income Tax (Appeals)-2, Guntur in PAN : AAKFA8420C, for the asst.year 2006-07 is contrary to law, the weight of evidence and probabilities of the case.

The Ld.Commissioner of Income Tax (Appeals) erred in denying the benefits of registration u/s 12A and exemption u/s 11 and 12 of the Act to the appellant.

The Ld.Commissioner of Income Tax (Appeals) ought to have seen that the income derived by the appellant for charitable purposes during the previous year was Rs.2,11,98,654/- and the income applied to such purposes during the year was Rs.3,16,67,572/-. Hence there is no violation of the provisions of sec.11(2) as the appellant spent more than 85% of its income during the year itself and hence there are no accumulations and there is no obligation on the appellant to file Form No.10. 4. The Ld.Commissioner of Income Tax (Appeals) failed to see the submissions of the appellant made before her and the AO in this regard during the proceedings.

The Ld.Commissioner of Income Tax (Appeals) ought to have seen that there is no accumulation of income and hence specification of the purposes would not arise.

The Ld.Commissioner of Income Tax (Appeals) should have seen that the revised form No.10 and 10B clearly indicated that there were no accumulations.

The Ld.Commissioner of Income Tax (Appeals) should have seen that the Hon’ble ITAT order does not contain any direction with respect to filing of Form 10B or its examination and the AO travelled beyond the directions of the Hon’ble ITAT with regard to the filing of Form 10B, Form No.10 and spending of the accumulated surplus as per section 11(2).

Without prejudice to the above, the Ld.Commissioner of Income Tax (Appeals) having observed that Form No.10B was filed along with the return, should have allowed time to rectify the mistakes in it, if any.

Without prejudice to the above, Ld.Commissioner of Income Tax (Appeals) should have seen that there is no violation of section 13 of the Act and hence the adoption of maximum marginal rate of tax on the total income is not called for.

The Ld.Commissioner of Income Tax (Appeals) should have seen that the total income assessed of Rs.1,29,23,361 has no relevance.

For these and others that may be urged at the time of appeal hearing, appellant prays the appeal be allowed.

All the grounds of appeal are related to denying the benefits of registration u/s 12A and exemption u/s 11 and 12 of the Income Tax Act, 1961 (in short ‘Act’). The assessee is an agricultural market committee, filed its return of income admitting loss of Rs.1,28,72,720/- and the assessment was completed on 31.12.2008 determining total income of Rs.1,37,17,180/-. The assessee went on appeal and the matter travelled to the Income Tax Appellate Tribunal and the ITAT, Visakhapatnam in it’s

As directed by the ITAT in its order dated 11.12.2013, the AO passed consequential order u/s 143(3) r.w.s. 254 on 30.03.2015 and completed the assessment on total income of Rs.1,29,23,361/-. The AO made the addition of Rs.1,29,23,361/- relating to income over expenditure but not furnished the details for arriving at the taxable income of Rs.1,29,23,361/- in the assessment order.

Against the order of the AO, the assessee went on appeal before the Ld.CIT(A) and in appeal grounds in ground No.5 the assessee raised the issue relating to mismatch of receipts relating to charitable purpose and income applied for charitable purposes during the year and submitted that there was no case for addition. Ground No.5 raised before the Ld.CIT(A) reads as under :

The Assessing Officer should have seen that the income derived by the appellant for charitable purposes during the previous year was Rs.2,11,98,654/- and the income applied to such purposes during the year was Rs.3,16,67,572/-. Hence, more than 85% of the income derived was spent during the year and hence there is no accumulation during the year.

Though the Ld.CIT(A) dismissed the appeal of the assessee, but not adjudicated the issue raised in Ground No.5. 6. Against the order of the Ld.CIT(A), the assessee filed appeal before this Tribunal. Assailing ground No.3 in this appeal relating to computing the income, the Ld.AR of the assessee submitted that the receipts received during the year for charitable purpose was Rs.2,11,98,654/- as against the expenditure incurred by the assessee amounting to Rs.3,16,67,572/- and there was no violation of section 11(2) of the Act. The Ld.AR further submitted that the assessee has spent more than 85% of the income during the year itself, and hence, there were no accumulations and no obligation on the assessee to file Form No.10 before the income tax authorities.

Per contra, the Ld.DR vehemently placed reliance on the orders of lower authorities.

We have heard both the parties and perused the material placed on record. From perusal of the assessment order dated 17.03.2015 passed u/s 143(3) r.w.s. 254 of I.T. Act, in para No.5 of page No.5, it is found that the AO had allowed the claim of the assessee and given a finding that the assessee has spent the sum of Rs.2,33,06,707/- and accordingly held that the assessee has spent the amount as per the direction of the Director Marketing, thus, the claim of the assessee was allowed. For the sake of clarity and convenience, we extract relevant part of the order of the AO in para No.5 which reads as under :

From the order of the AO, there is no dispute that the AO had accepted the claim of the assessee with regard to spending the sum of Rs.2,33,06,707/- and the same was allowed. On perusal of the statement of receipts and payments, it is seen that the total receipts of the assessee for the year under consideration was Rs.2,11,98,654/- and the total payments were Rs.3,16,67,572/- and the AO had accepted the claim of the assessee. Thus, the assessee has spent more than the actual receipts, accordingly, it is 7 ITA No.169/Viz/2020, A.Y.2006-07 Agricultural Market Committee, Akiveedu

In the result, appeal of the assessee is allowed.

The Pr.Commissioner of Income Tax-2, Visakhapatnam

The Commissioner of Income Tax (Appeals)-2, Guntur 5. तवभधगीय प्रतितितर्, आयकर अिीिीय अतर्करण, तवशधखधिटणम/DR, ITAT, Visakhapatnam 6.गधर्ाफ़धईि / Guard file आदेशधिुसधर / BY ORDER ////