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TMI Blog2012 (10) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... es within the meaning of Section 11(1)(a) of the Income Tax Act, 1961?" M/s. Krishi Utpadan Mandi Samiti, respondent-assessee herein, is a Market Committee incorporated and registered under the Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964 ["1964 Adhiniyam", for short]. The assessee carries out its activities in accordance with Section 16 of 1964 Adhiniyam under which it is required to provide facilities for sale and purchase of specified agricultural produce in the Market Area. The Members of the said Market Committee consist of producers, brokers, agriculturists, traders, commission agents and arhatiyas. The source of income of the assessee is in the form of receipt collected as market fee from buyers and their agents, development ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee Fund and its utilization. Section 19(1) stipulates that all monies received by Mandi Samiti shall be credited to a fund called "Market Committee Fund". Section 19(2), inter alia, states that all expenditure incurred by the Committee in carrying out the purposes of 1964 Adhiniyam shall be defrayed out of Market Committee Fund and surplus, if any, shall be invested in such manner as may be prescribed. The expenses to be incurred and debited are indicated in Section 19(3). Section 19-B of 1964 Adhiniyam deals with establishment of Market Development Fund. Under Section 19-B, the Mandi Samiti shall establish a fund to be called "Market Development Fund" to which amounts shall be credited as may be directed from time to time by Mandi Parisha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Central Mandi Fund shall be utilized by Mandi Parishad [Board] for rendering assistance to financially weak and under- developed Market Committees; that the Funds would be used for construction, maintenance and repairs of link roads, market yards and other development works in the Market Area and such other purposes as may be directed by the State Government or the Board. It is not in dispute that both, the Mandi Samiti and the Mandi Parishad, are duly registered under Section 12AA of the Income Tax Act, 1961 ["1961 Act", for short]. It is also not in dispute that, after the amendment of Section 10(20) and Section 10(29) by Finance Act No.2 of 2002 with effect from 1st April, 2003, that the word "Local Authority" has lost its restricted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... constitute application of income for charitable purposes under Section 11(1)(a) of 1961 Act?" Even after the amendment of Section 10(20) and Section 10(29) of 1961 Act, the assessee continues to enjoy the registration under Section 12AA of 1961 Act for the reason that the assessee is a Market Committee statutorily established under Section 12 of 1964 Adhiniyam for the advancement of the object of general public utility in terms of Section 2(15) of 1961 Act. [See also Section 16 of 1964 Adhiniyam]. Moreover, it is always open to the Department to verify and find out whether the Mandi Parishad has utilized the amounts for the purposes of 1964 Act. The question is what do we mean by "application of income"? This judgment is confined to the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of Section 11(1)(a) of 1961 Act. The income derived by the assessee [which is an institution registered under Section 12AA of 1961 Act] from its property has been applied for charitable purposes which includes advancement of an object of general public utility. Consequently, we see no reason to interfere with the impugned judgement of the High Court. Before concluding, one point needs to be highlighted. In one of the matters, the Assessing Officer has held that, on the facts and circumstances of the case, the assessee was not entitled to avail the benefits of exemption under Section 12(1) of 1961 Act, despite the fact that it was registered under Section 12AA of 1961 Act, because the assessee was statutorily obliged to contribute to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s with the fourth item of income. Section 11(1)(d), inter alia, refers to income in the form of voluntary contributions made with a specific direction that it shall form part of the corpus of the Trust or Institution whereas Section 12(1) refers to non-corpus voluntary contribution. In the present case, neither Section 11(1)(d) nor Section 12(1) of 1961 Act is attracted. In the present case, the narrow controversy is, whether, in the facts and circumstances of the case, the amounts statutorily transferred to Rajya Krishi Utpadan Mandi Parishad would constitute application of income for charitable purposes under Section 11(1)(a) of 1961 Act? Looking to the provisions of 1964 Adhiniyam we hold that the transfer of the amounts by Mandi Samiti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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