C I T vs. MARKET COMMITTEE SIWAN

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ITA/284/2009HC Punjab & HaryanaPHHC01084375200914 July 2009Author: MR. JUSTICE ADARSH KUMAR GOEL,MRS JUSTICE DAYA CHAUDHARY4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal filed by the Revenue. The Court noted that the learned counsel for the Revenue did not dispute that the matter was covered by an earlier judgment of the same High Court in CIT v. Market Committee, (2007) 294 ITR 563. Therefore, without delving into the merits of the substantial questions of law raised, the appeal was disposed of based on the precedent. The specific findings or reasoning of the ITAT or the CIT(A) on the issues of whether the Market Committee qualified as a charitable trust, its income sources, or its entitlement to registration under Section 12AA were not discussed by the High Court, as the appeal was decided on the basis of the earlier judgment. No issue was expressly left undecided.

What were the facts?

The Revenue, Commissioner of Income Tax, Panchkula, filed an appeal under Section 260A of the Income Tax Act, 1961, against the order of the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench. The ITAT had dismissed the Revenue's appeal against an order passed by the CIT(A). The CIT(A) had directed the Assessing Officer (AO) to assess the income of the assessee, Market Committee, Siwan District Kaithal, in the status of a charitable trust as per Sections 11 to 13 of the Income Tax Act. The assessment year in question is 2003-04. The Revenue's appeal to the High Court was filed after a delay, which was condoned.

What were the issues?

The High Court was asked to decide the following substantial questions of law: 1. Whether the ITAT was correct in dismissing the Revenue's appeal and directing the AO to assess the Market Committee's income as a charitable trust under Sections 11 to 13, despite the Market Committee not being a trust or charitable institution, as its income was not derived from property held under trust for charitable purposes or from voluntary contributions. 2. Whether the ITAT was correct in dismissing the Revenue's appeal and directing the AO to assess the Market Committee's income as a charitable trust under Sections 11 to 13, considering that its income from market fees, composition fees, license fees, and land sale was derived from commercial activity and outside the scope of Sections 11 to 13. 3. Whether the ITAT was correct in holding the Market Committee as a charitable trust, especially after the amendment to Section 10(20) by the Finance Act 2002, which excluded Market Committees from the definition of local authority and withdrew the exemption under Section 10(20). 4. Whether the Market Committee is entitled to registration under Section 12AA, as it does not carry out charitable activities as defined in Section 2(15). The Revenue contended that the Market Committee is neither a trust nor a charitable institution, and its income is derived from commercial activities. It also argued that the Market Committee was excluded from the definition of a local authority and that it does not carry out charitable activities. The judgment does not record specific arguments from the assessee.

Which sections of the Income-tax Act were involved?

Section 260A,Section 11,Section 12,Section 13,Section 10(20),Section 2(15),Section 12AA

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH.

Date of decision: 14.7.2009 The Commissioner of Income Tax, Panchkula -----Appellant Vs. Market Committee, Siwan District Kaithal Respondent CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOEL HON'BLE MRS. JUSTICE DAYA CHAUDHARY Present:- Mr.Yogesh Putney, Sr.Standing Counsel for the revenue. Adarsh Kumar Goel,J. Delay condoned. The revenue has preferred this appeal under section 260A of the Income Tax Act, 1961 against the order of Income Tax Appellate Tribunal, Chandigarh Bench (SMC) Chandigarh dated 31.5.2007, in ITA No.130/Chandi/2007, for the assessment year 2003-04, proposing to raise following substantial questions of law for opinion of this Court:- (i) Whether on the facts and in the circumstances of the case, the ld. ITAT was right in law in dismissing the appeal of the Revenue, against the order of the CIT(A), directing the AO to assess the income of the assessee, in the status of charitable trust, as per Sections 11 to 13 of the Income Tax Act, ignoring the fact that Market Committee is neither a trust nor a charitable institution, as the income neither derived from the property, held under trust, wholly for charitable or religious purposes nor from voluntary contributions? (ii) Whether on the facts and in the circumstances of the case, the ld. ITAT was right in law in dismissing the appeal of the Revenue, against the order of the CIT(A) directing the AO to assess the income of the assessee, in the status of charitable trust, as per Sections 11 to 13 of the Income Tax Act, ignoring the fact that income derived by the Market Committee from collection of market fee, composition fee and license fee as well as from purchase of land and sale of plots is purely derived from commercial activity and the same does not come within the ambit of sections 11 to 13 of the Income Tax Act?

(iii) Whether on the facts and in the circumstances of the case, the Ld. ITAT was right in law in holding that the Market Committee is a charitable trust particularly when after insertion to amendment under section 10(20) by the Finance Act 2002, the Market Committee has been excluded from the definition of local authority and exemption under section 10(20) has been withdrawn? (iv) Whether in the facts and circumstances of the case the Market Committee is entitled to registration under section 12AA of the Income Tax Act, 1961 as it does not carry charitable activities within the meaning of Section 2(15) of the Income tax Act, 1961?”

Learned counsel for the revenue does not dispute that the matter is covered by earlier judgment of this Court in CIT v. Market Committee, (2007) 294 ITR 563. Accordingly, this appeal is dismissed. (Adarsh Kumar Goel) Judge July 14, 2009 (Daya Chaudhary) ‘gs’ Judge 4

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