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TMI Blog2010 (8) TMI 516X X X X Extracts X X X X X X X X Extracts X X X X ..... entitled to consequential exemption under section 11 of the Income-tax Act, 1961. The second set of appeals which is there in this batch is of cases where the learned Income-tax Appellate Tribunal condoned the delay for the purposes of moving application for registration under section 12A of the Income-tax Act, 1961 and has directed the Commissioner of Income-tax to grant registration to the assessee under section 12A of the Income-tax Act, 1961. 2. The common question involved in all these cases is : "Whether the Krishi Upaj Mandi Samiti constituted under the Rajasthan Agricultural Produce Markets Act, 1961 is such an institution which is entitled for registration under section 12A of the Income-tax Act and as a consequence thereof is entitled to exemption under section 11 of the Income-tax Act ?" 3. The background in which this set of litigation has arisen is that all the agricultural produce marketing committees, i.e., K.U.M.S. which were constituted under the Rajasthan Agricultural Produce Markets Act, 1961 were enjoying the benefit under the Income-tax Act. Under sub-section (20) of section 10 of Chapter III of the Income-tax Act, 1961, the aforesaid benefit was be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12A read with section 12AA. Under these cases, the learned Income-tax Appellate Tribunal directed the Commissioner of Income-tax to allow the applications and grant registration, with effect from the inception of these samitis under the Rajasthan Agricultural Produce Markets Act, 1961 and further to grant them the exemption under section 11 on the basis of the aforesaid registration. 6. In another set of cases, the assessees-K.U.M.S. continued to claim the benefit under section 10(20) of the Income-tax Act, 1961 despite amendment which the learned Income-tax Appellate Tribunal held was not permissible but permitted the assessees to move the applications under the provisions of section 12A of the Income-tax Act, 1961 with a direction to the Commissioner of Income-tax to register these samitis under section 12A of the Income-tax Act and grant the benefit of exemption as a consequence thereof. 7. Thus, in any event the main question that calls for consideration is whether the learned Income-tax Appellate Tribunal was right in directing the Commissioner of Income-tax to register the K.U.M.S. under section 12A of the Income-tax Act, 1961 and grant them the benefit under the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Supreme Court where it has been held as follows (page 23) : "Since we are of the view that Agricultural Market Committee(s) is neither a Municipal Committee nor a District Board under the said Explanation to section 10(20) of the 1961 Act, we refrain from going into the question : whether the Agricultural Market Committee(s) is legally entitled to the control of the local fund, namely, market fund, under the said 1998 Act. There is one more reason why we do not wish to express any opinion on the said question. Vide the Finance Act, 2008, income of Agricultural Market Committee(s) is exempt. Sub-section (26AAB) of section 10 comes into force with effect from April 1, 2009. Therefore, we do not wish to express any opinion on the question as to whether Agricultural Market Committee(s) is legally entitled to the control of the local fund. We hold that Agricultural Market Committee(s) is, therefore, not entitled to exemption under section 10(20) of the 1961 Act after the insertion of the said Explanation, vide the Finance Act, 2002, with effect from April 1, 2003." 10.We have considered the rival submissions and we are in agreement with learned counsel for the respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are performing under the provisions of the Rajasthan Agricultural Produce Markets Act, 1961 and on being so registered under section 12A they would be entitled to claim the benefit of the exemption under the provisions of sections 11 and 12 of the Income-tax Act, 1961. 12. The aforesaid judgment in K. U. M. S., Jaisalmer's case [2008] 216 CTR 277 (Raj) ; [2011] 331 ITR 135 (Raj) was relied upon by another Division Bench of this court in the case of CIT v. Krishi Upaj Mandi Samiti reported in [2009] 227 CTR 79 (Raj) where after quoting from para 5 of the judgment in Krishi Upaj Mandi Samiti, Jaisalmer's case (supra), the Division Bench held in para 17 of the report as follows : "In our considered opinion, the market committee having put its income to use in conformity with the provisions of the Act of 1961 for charitable purpose, it has to be treated as the application of the income for the charitable purpose in the relevant year." 13. As has been stated above, the learned Division Bench of this court took into consideration the judgment in K. U. M. S., Jaisalmer's case [2008] 216 CTR 277 (Raj) ; [2011] 331 ITR 135 (Raj) and more particularly para 7 thereof in its judgme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... keting committees that these "committees fulfil all the requirements under section 11 to get exemption and, therefore, are entitled to reg- istration under sections 12, 12A and 12AA of the Income-tax Act". A similar view was taken by the Indore Bench of the Madhya Pradesh High Court in the case of CIT v. Krishi Upaj Mandi Samiti (No. 2) reported in [2009] 308 ITR 401 (MP), the question before the Division Bench of the Madhya Pradesh High Court was as follows (page 403) : "(1) Whether, Income-tax Appellate Tribunal was justified in setting aside the order passed by the Commissioner which has refused to grant registration to the assessee (krishi upaj mandi samiti) who had applied by them under section 12A of the Income-tax Act, 1961, for registration as provided in section 12A ibid ? (2) Whether the respondent-assessee-mandi is entitled to claim registration under section 12A of the Act, and if so, whether it satisfies the requirement both on facts and at law for obtaining registration as provided under sections 12A and 12AA of the said Act ?" 18. The Division Bench after considering the submissions made before it, as also taking into consideration the decision of the Gwa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion was negated by the hon'ble Supreme Court in CIT v. Gujarat Maritime Board [2007] 295 ITR 561 and it was held that despite the fact that an assessee may have been claiming exemption as a local authority under section 10(20) of the Income-tax Act, 1961 prior to April 1, 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 (page 567) : " . . . 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." 21. There is, therefore, no substance in the aforesaid objection of the learned counsel for the Revenue that the assessees having already claimed exemptions prior to April 1, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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