2005 (6) TMI 259 - AT - Income Tax

Application for grant of registration u/s 12AA - Charitable Purpose - Purchase and sale - advancement of General Public utility as contemplated u/s 2(15) - marketing of agricultural commodities - Whether the objects and activities of the assessee-institution are for the advancement of the objects of general public utility and covered within the definition of Charitable purpose as defined in section 2(15) of the Act - HELD THAT - The Agricultural Produce Market Committees for different specified market areas in the State of Maharashtra are established by the State Government under the provisions of The Maharashtra Agricultural Produce Marketing (Regulation) Act 1963. The objects of the Agricultural Produce Market Committees as gathered from the Preamble of the Act and other sections and particularly section 29(1) and (2) are mainly to provide necessary facilities for the marketing of agricultural produce within the market area to regulate and supervise auction of notified agricultural produce to regulate sales weighment delivery payment and allied matters to take steps to prevent adulteration and to promote and organize grading and standardization of agricultural produce to prevent purchase and sale below the minimum support price fixed by the Government to collect maintain disseminate and supply information in respect of production sale storage processing prices of notified agricultural produce including information relating to crop statistics to give fitness certificate to provide settling of disputes arising out of marketing of agricultural produce to keep a set of standard weights and measures to provide storage and warehousing facilities in the market area and take any other activity conducive to the promotion and regulation of agricultural marketing. Thus no doubt in my mind that the objects of appellant-institution are the advancement of the object of general public utility. The object of providing facility for marketing of agricultural produce of agriculturist help them in sale of their produce provide facility for storage marketing etc. as enumerated in section 29 are definitely the objects of general public utility. In this case the APMCs have been established by the State Government by notification under the relevant provisions of the Maharashtra Agricultural Produce Marketing (Regulation) Act 1963 and each of the appellant has filed the copy of the notification published in the Official Gazette. Thus the institutions have filed the documents evidencing their creation. It is not the requirement of rule 17A to file a certificate of registration with Charity Commissioner nor is there any necessity that the institution claiming registration u/s 12A/12AA should be registered with Charity Commissioner. The grievance of the respondent is just casual and futile and deserves to be rejected. Thus I am of the considered opinion that the assessees have fulfilled the requirements of law for registration u/s 12A/12AA of the Income-tax Act 1961 because the aims and objects of the assessee are accepted for charitable purpose and objects of the advancement of general public utility within the meaning of section 2(15) of the Act. Therefore the impugned orders passed by the Commissioners of Income-tax in all these cases are set aside with a direction to them to grant the registration to the assessees under section 12A/12AA of the Act as claimed by them. In the result all the appeals of the assessees are allowed with above direction.

Issues Involved:
1. Rejection of the application under section 12AA of the Income-tax Act, 1961.
2. Interpretation of "advancement of general public utility" under section 2(15) of the Income-tax Act, 1961.
3. Evaluation of the activities of the Agricultural Produce Market Committees (APMCs) as charitable or commercial.
4. Relevance of the Bombay High Court decision in the case of President ADMC, Tumsar v. Murari.
5. Consideration of the Finance Minister's letter dated 18-11-2002 regarding tax exemption for APMCs.
6. Requirement of registration with the Charity Commissioner for eligibility under section 12A/12AA.
7. Consistency in the application of norms by different Commissioners of Income-tax.

Issue-wise Detailed Analysis:

1. Rejection of the application under section 12AA of the Income-tax Act, 1961:
The appeals were filed by different assessees against the orders of the Commissioners of Income-tax (CIT) who refused to register them as charitable institutions under section 12A/12AA of the Income-tax Act, 1961. The CITs concluded that the activities of the APMCs were purely commercial in nature and did not qualify as charitable purposes.

2. Interpretation of "advancement of general public utility" under section 2(15) of the Income-tax Act, 1961:
The term "charitable purpose" includes relief of the poor, education, medical relief, and advancement of any other object of general public utility. The Tribunal referred to several Supreme Court cases to interpret this term, emphasizing that an object beneficial to a section of the public is an object of general public utility. The Tribunal concluded that the APMCs' activities, such as regulating the marketing of agricultural produce and protecting sellers, fall within this definition.

3. Evaluation of the activities of the Agricultural Produce Market Committees (APMCs) as charitable or commercial:
The Tribunal examined the activities of the APMCs, which included providing facilities for marketing agricultural produce, regulating auctions, preventing adulteration, and ensuring fair prices for farmers. These activities were deemed to be for the benefit of the general public and not driven by profit motives. The Tribunal held that charging fees for these services does not negate their charitable nature, as any surplus is used to further the APMCs' objectives.

4. Relevance of the Bombay High Court decision in the case of President ADMC, Tumsar v. Murari:
The CITs relied on this decision to classify APMCs as commercial establishments. However, the Tribunal noted that this decision was made in the context of the Bombay Shop and Establishment Act, 1948, and does not apply to the determination of charitable status under the Income-tax Act. The Tribunal distinguished the two contexts and rejected the CITs' reliance on this case.

5. Consideration of the Finance Minister's letter dated 18-11-2002 regarding tax exemption for APMCs:
The Finance Minister's letter clarified that APMCs could claim tax exemption as charitable institutions if they worked for the advancement of an object of general public utility without a profit motive. The Tribunal found that the APMCs met these conditions and thus were eligible for registration under section 12A/12AA.

6. Requirement of registration with the Charity Commissioner for eligibility under section 12A/12AA:
The Tribunal clarified that there is no requirement under section 12A/12AA for an institution to be registered with the Charity Commissioner. The APMCs had provided the necessary documentation to prove their establishment under the Maharashtra Agricultural Produce Marketing (Regulation) Act, 1963.

7. Consistency in the application of norms by different Commissioners of Income-tax:
The Tribunal highlighted that the CIT Pune had granted registration to APMC Pune under identical facts. It held that different Commissioners must apply the same norms and parameters consistently. The Tribunal directed the CITs to grant registration to the appellant APMCs, ensuring uniform application of the law.

Conclusion:
The Tribunal concluded that the APMCs fulfilled the requirements for registration under section 12A/12AA of the Income-tax Act, 1961. The orders of the CITs were set aside, and the CITs were directed to grant registration to the APMCs as charitable institutions. The appeals were allowed with this direction.

← Previous Next →