M/s. PCL-STICCO Joint Venture vs. The Deputy Commissioner of Income Tax

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 389 / 2011 Commissioner Of Income Tax Jaipur ----Appellant Versus Krishi Upaj Mandi Samiti Chaksu ----Respondent _____________________________________________________ For Appellant(s) : Mr. Daksh Pareek on behalf of Mr. Sammer Jain For Respondent(s) : Ms. Sumati Bishnoi _____________________________________________________ HON'BLE MR. JUSTICE K.S.JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS Judgment 20/09/2017 1. By way of this appeal, the appellant has challenged the judgment and order of the Tribunal whereby the Tribunal has dismissed the appeal of the department. 2. This court while admitting the appeal on 03.05.2012 framed the following question of law:- “Whether the Appellate Authorities were right in law in granting exemption to the assessee inspite of the fact that the application in Form No. 10 under Rule 17 was filed after 3 years of assessment u/s 143(3) i.e. on 24.11. 2006 under remand proceedings on a fresh evidence contrary to directions of I. T. A. T. remand order dated 13.04.2007” 3. The counsel for the respondent has relied on the decision of this Court in Income Tax Appeal No. 167/2010 in the case of same

(2 of 4) [ITA-389/2011] assessee decided 18th August, 2010 wherein it was granted benefit of Section 12A holding as under:- “ In view of the above referred law that has developed, we are inclined to hold that the K.U.M.S. constituted under the Rajasthan Act of 1961 are entitled for registration under Section 12A of the Income Tax Act, 1961 as it is the considered opinion of this Court earlier and of the other High Courts, referred to above, that the Samities/Boards constituted under the Statute of various States for the purpose of regulating the marketing of agriculture produce are entitled for registration under Section 12A of the Income Tax Act, 1961 as charitable institutions for the purposes of the Income Tax Act, 1961 Chapter-III. Learned Senior Counsel Shri Ranka also cited before us a judgment of the Hon’ble Supreme Court in the case of CIT Vs. Gujarat Maritime Board reported in (2007) 295 ITR 561 (SC) wherein their Lordships of the Hon’ble Supreme Court dealing with the case of Gujarat Maritime Board which had prior to the Finance Act, 2002 been enjoying the exemption under Section 10(20) of the Income Tax Act, 1961, as in the case of the present Samities. The Gujarat Maritime Board as a consequence of the amendment introduced by the Finance Act, 2002 w.e.f. 01.04.2003 submitted an application for claiming exemption as a charitable Institution under Section 11 of the Income Tax Act, 1961. An objection came to be raised interalia that the Gujarat Maritime Board was claiming exemption as a ‘local authority’ under Sectio 10(20) of the Income Tax Act. 1961 and therefore, it could not claim any exemption by having the Board registered under Section 12A of the Income Tax Act. 1961 as a Trust for seeking exemption under Section 11 of the Income Tax Act, 1961 on the basis of the activities of the said Board.

the

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(3 of 4) [ITA-389/2011] learned counsel for the appellant had sought to contend that since the agricultural produce marketing committees, the assessees herein, have been claiming the benefit of Section 10(20) of the Income Tax Act, 1961 as a ‘local authority’, they could not seek registration as a charitable institution under Section 12A. The aforesaid objection was negated by the Hon’ble Supreme Court in Gujarat Maritime Board’s case (supra) and it was held that despite the fact that an assessee may have been claiming exemption as a loal authority under Section 10(20) of the Income Tax Act, 1961 prior to 01.04.2003 it was not precluded from claiming exemption under Section 11 of the Income Tax Act, 1961. It was held by the Hon’ble Supreme Court as follows:- “…..we may point out that section 10(20) and section 11 of the 1961 Act operate in totally different spheres. Even if the Board has ceased to be a “local authority”, it is not precluded from claiming exemption under section 11(1) of the 1961 Act. Therefore, we have to read section 11(1) in the light of the definition of the words “charitable purposes” as defined under section 2(15) of the 1961 Act.” There is, therefore, no substance in the aforesaid objection of the learned counsel for the revenue that the assesses having already claimed exemptions prior to 01.04.2003 under Section 10(20) of the Income Tax Act, 1961 as a local authority it could not apply for registration as a charitable institution under Section 12A of the Income Tax Act, 1961 and claim consequent exemption on that basis. Similar views with regard to the registration under Section 12A have been taken by Allahabad High Court in the case of CIT Vs. Krishi Utpadan Mandi Samiti, Purva,

Unnao

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(4 of 4) [ITA-389/2011] CTR 505 (All) (IT Appeal Nos. 80 to 83 of 2007 decided on 02.12.2009)”. In the light of the aforesaid discussion, we are of the view that these appeals preferred by the revenue against the decision of the learned I.T.A.T., in the facts and circumstances, deserves to be dismissed. Our answer to the question, therefore, is that the learned I.T.A.T. has rightly held that looking to the activities of the assessees-K.U.M.S. and the Rajasthan State Agriculture marking Board enshrined under the Rajasthan Agricultural Produce Markets Act, 1961 and the Rules framed thereunder are such while would bring these institutions, namely the Samities within the purview of “Charitable Institutions” so as to entitle them for being registered as Charitable Institutions under Section 12A of the Income Tax Act, 1961 and entitle them for exemption under the provisions of Section 11 and 12 of the Income Tax, 1961. As a consequence of the aforesaid answer, the second set of appeals against the order of learned I. T. A.T. as was conceded by the learned counsel for the revenue would also stand dismissed.” 4. In view of the above, the question raised in this appeal iis of academic interest and the issue is answered in favour of the assessee against the department. 5. The appeal stands dismissed. (VIJAY KUMAR VYAS)J. (K.S.JHAVERI)J. B.M.G/Gourav-166