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2016 (1) TMI 661 - AT - Income TaxGrant of registration u/s. 12A rejected - Held that - The assessee has been established under the provisions of section 11 of The Maharashtra Agricultural Produce Marketing (Development and Regulation) Act 1963. Thus it is a creation of statute the assessee derives its power to levy fee/cess from section 31 of the Act of 1963. The assessee levy and collect fees/penalty in the prescribed manner at the rates within the rate band fixed by the State Government. Thus the assessee does not have unfettered power to charge fee/cess. Further the assessee has power of entry inspection search and seizure u/s. 32A of the Act 1963. The assessee can ask any person carrying business in the market area to produce the accounts and other documents and to furnish information relating to the stock of such agricultural produce and also relating to the payment of market fee and payment to the seller The assessee draws it s power from the statute and has regulatory functions to perform. The assessee has law enforcing powers to conduct its duties and to accomplish the objects for which it has been established. Charging of nominal fee/cess in course of performance of its duties would not make the assessee a commercial/business establishment. The activities of the assessee are undoubtedly charitable in nature falling in last limb of section 2(15) i.e. advancement of any object of general public utility and at the same time is not adversely hit by proviso to section 2(15) of the Act. Thus the assessee is entitled for registration u/s. 12A of the Act. - Decided in favour of assessee
Issues Involved
1. Whether the assessee's application for registration under Section 12A of the Income Tax Act, 1961 should be granted. 2. Whether the assessee's activities are commercial in nature and thus not eligible for registration under Section 12A. 3. Whether the assessee is entitled to registration under Section 12A despite already availing exemption under Section 10(26AAB). Detailed Analysis 1. Application for Registration under Section 12A The assessee, a Market Committee formed by the Government of Maharashtra, filed an application for registration under Section 12A of the Income Tax Act, 1961. The Commissioner of Income Tax-I, Pune, rejected this application, stating that the activities of the assessee are commercial in nature and thus, not charitable under Section 2(15) of the Act. 2. Commercial Nature of Activities The Commissioner of Income Tax held that the activities of the assessee, which include the development of Market Yards, regulation of marketing of agricultural produce, and charging various fees and penalties, are commercial. Therefore, these activities are hit by the first proviso to Section 2(15) of the Act. However, the Tribunal noted that the assessee is an extended arm of the State Government, providing various facilities to farmers, and thus, its activities are charitable in nature. The Tribunal cited several judicial precedents, including CIT Vs. Agricultural Produce and Market Committee, Hinganghat & Ors., and Bureau of Indian Standards Vs. Director General of Income Tax (Exemptions), to support this view. 3. Entitlement to Registration under Section 12A Despite Exemption under Section 10(26AAB) The Commissioner of Income Tax argued that since the assessee is already availing exemption under Section 10(26AAB), the application for registration under Section 12A is infructuous. However, the Tribunal disagreed, stating that there is no bar on seeking registration under Section 12A even if the assessee is enjoying benefits under another section. The Tribunal referred to the judgment of the Hon'ble Andhra Pradesh High Court in CIT Vs. Agricultural Market Committee, Giddalur & Ors., which held that the benefits under Section 10 and Section 12A operate in different spheres and are independent of each other. Conclusion The Tribunal concluded that the assessee is entitled to registration under Section 12A of the Act. The activities of the assessee are charitable in nature, falling under the last limb of Section 2(15) - 'advancement of any object of general public utility.' The Tribunal set aside the impugned order of the Commissioner of Income Tax and allowed the appeal of the assessee. Order pronounced on Thursday, the 29th day of October, 2015.
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