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TMI Blog2009 (12) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 11 and 12 are not fulfilled. - 80 of 2007 - - - Dated:- 2-12-2009 - C.K.Prasad C.J. and Dr. Satish Chandra, JJ. D.D. Chopra for the appellant. Amit Shukla for the respondent. JUDGEMENT 1. All the appeals have been filed by the department under Section 260-A of the Income Tax Act against the consolidated judgment and order dated 28.2.2007 passed by the Income Tax Appellate Tribunal, Lucknow. 2. The brief facts of the case are that Krishi Utpadan Mandi Samitis i.e. assessees were created by a Notification in exercise of power under Section 12 of the Krishi Utpadan Mandi Adhiniyam, 1964 with the object to regulate the sale and purchase of the agricultural produce and also to develop the facilities for the farmers, so that the farmers can get best price of their produce without middle man. It was provided by the said Act that in every market area, there shall be a committee to be called 'Krishi Utpadan Mandi Samiti' of that area. Section 13 of the U.P. Krishi Utpadan Mandi Adhiniyam, 1964 provides for the constitution of the committee. The committee was authorized to charge the fee as 'Mandi Shulk' and also other charges for providing the warehousing facilities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstitution unless the following conditions are fulfilled, namely:- (a) the person in receipt of the income has made an application for registration of the trust or institution in the prescribed form and in the prescribed manner to the Commissioner before the 1st day of July, 1973, or before the expiry of a period of one year from the date of the creation of the trust or the establishment of the institution, [whichever is later and such trust or institution is registered under section 12AA]: [Provided that where an application for registration of the trust or institution is made after the expiry of the period aforesaid, the provisions of sections 11 and 12 shall apply in relation to the income of such trust or institution,- (i)from the date of the creation of the trust or the establishment of the institution if the Commissioner is, for reasons to be recorded in writing, satisfied that the person in receipt of the income was prevented from making the application before the expiry of the period aforesaid for sufficient reasons;" 7. According to him, the first condition is that an application in the prescribed form and in the prescribed manner is to be submitted before the expi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He submitted that prior to the assessment year 2003-04, question of filing the return or getting the registration under Section 12-A had not arisen. The applications for registration under Section 12-A were supposed to be filed w.e.f. 1.4.2003 relating to the Assessment Year 2003-04 but the same was filed belatedly. For condoning the delay, the Tribunal has relied on various decisions given by the different Benches of the Tribunal. He also submitted that prior to 1.4.2003, assessees were not required to file income-tax return and there was no necessity for filing application for registration u/s 12A of the Act. When the approval of the competent authority was obtained only then applications for registration u/s 12A along with the prayer of condonation of the delay were filed. The delay in filing application was bona fide and Tribunal has rightly condoned it. Thus, there were sufficient reasons for condoning the delay. Lastly, he justified the impugned order passed by the Tribunal. 10. We have heard the learned counsel for both the parties at length and gone through the material available on record. 11. Section 12(2) of the U.P. Krishi Utpadan Mandi Adhiniyam, 1964 states that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 91 and provides that if an application for registration of the trust is made after the specified period, the Commissioner may register the trust or institution from the date of creation of the trust or the establishment of the institution if he is satisfied, for reasons to be recorded, that the person was prevented from making the application before the expiry of the period for sufficient reasons. If he is not so satisfied, the registration would take effect from first day of the financial year in which the application is made as per (ii) proviso to Section 12(A)(1) (a) which reads as under: (ii)"from the 1st day of the financial year in which the application is made, if the Commissioner is not so satisfied. Provided further that the provisions of this clause shall not apply in relation to any application made on or after the 1st day of June, 2007." 15. In the instant cases, prior to 1.4.2003 registration u/s 12A of the Act was not needed for the reason that the respondent assessees were enjoying the exemption by virtue of Section 10(20) as well as Section 10(29) of the Act before its deletion. After the amendment in Section 10(20) brought by the Finance Act, 2002, the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly when Section 10(20) was amended, then the assessees were supposed to make a necessary application for seeking the registration under Section 12-A of the Act. But some officers were under bona fide belief that status quo was continuing and there was no need to obtain registration u/s 12A of the Act or they were not aware of the requirement of registration. So, the delay appears due to bona fide belief. 19. Undoubtedly, the assessees are statutory bodies. For this purpose, they will have to seek permission from their controlling authority and only after having the approval from the authority and legal advice which takes considerable time in case of public bodies, the assessees have filed the application for registration under Section 12A of the Act. Hence, we are of the view that there was sufficient reason for condoning the delay and the Tribunal has rightly condoned the delay in the instant cases. 20. In the light of above discussion and by considering the totality of the facts and circumstances of the case, we find no reason to interfere with the order of the Tribunal who has rightly condoned the delay for the above mentioned three assessment years. 21. This question of l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ublic utility by providing services to farmers for selling their agricultural produce at the best price without any middle man. Hence, the registration was rightly granted by the Tribunal under Section 12-A of the Act w.e.f. 1.4.2003. Further, he read out the impugned order passed by the Tribunal where it was observed that- We have carefully considered the impugned order(s) of the C.I.T.(s) passed in the cases of the above assessee(s), the earlier order(s) of the Tribunal and have also carefully considered the submission of the ld. D.R. There is no dispute to the fact that the nature and objects of these assessee(s) are identical to the case of those assesse(s) which have been considered by I.T.A.T., Allahabad Bench as well as I.T.A.T., Lucknow. A Bench in the appeal(s) (supra) and also order(s) passed by C.I.T. (s) giving same reasons as have been given by the CIT(s) in the impugned order(s) while refusing registration u/s 12AA of the Act. Not only this, the ld. D.R. has also not disputed the fact that on similar facts and circumstances, some of the C.I.T.(s) to the similar Mandi Samitis of other areas in the State of U.P. have granted registration u/s. 12AA of the Act consideri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollows:- "16. Function and duties of the Committee.-(1) A Committee shall enforce the provisions of this Act, the rules and bye-laws made thereunder in the Market Area, provide such facilities for sale and purchase of specified agricultural produce therein, [as may be specified in any directions given by Board to the Committee from time to time] or considered necessary by the Committee and do such other acts as may be necessary for regulating sale and purchase of specified agricultural produce in that Market Area, and for that purpose may exercise such powers and perform such duties, and discharge such functions as may be provided by or under this Act. (2) Without prejudice to the generality of the provisions contained in sub-section (1), a Committee shall- (I)ensure fair dealing between the producers and persons engaged in the sale or purchase of specified agricultural produce; (II)ensure prompt payment to the [sellers] in respect of specified agricultural produce sold by them in the Principal Market Yard or Sub-Market Yards; (III)grade and standardize specified agricultural produce; (IV)check and verify weights, measures, weighing and measuring instruments used in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by or for it; (III)expenses of and incidental to elections under this Act; (IV)the principal amount of or interest on loans and advances referred to in clause (x) of sub-section (2) of Section 16; (iv-a) the rent of and taxes on any land and building in possession of the Committee;] (v)expenses on collection, maintenance, dissemination and supply of all such information as may be of interest to the producers and other persons engaged in sale and purchase of agricultural produce including that relating to crop statistics and market intelligence; (vi)cost of land or buildings acquired for the purposes of this Act; (vii)cost of construction and repairs of buildings necessary for the Market Yards and for the health, convenience and safety of the persons using them; (viii)cost of maintenance, development and improvement of the Market Yards; (ix)expenses in providing facilities and comforts such as shelter, shed, parking accommodation and water for persons, draught-cattle, pack animals and vehicles coming to the Market Area and on agricultural improvement and development of agricultural marketing in the Market Area including the construction, maintenance and repair of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... blished under sub-section(1), shall subject to the provisions of this Act, be utilized by the Board for the following purposes, namely; (i) facilities to the agriculturists, other producers and payers of market fee in the market area; (ii)development of principal market yards, sub-market yards, hats and painths and construction of new Market Yards in the market area; (iii)construction, maintenance and repairs of link roads, market lanes and other development works in the market area; (iv)market survey and research, grading and standardization of specified agricultural produce; (v)propaganda, publicity and extension services and the matters relating to the general improvement of the conditions of buying and selling of specified agricultural produce; (vi)aid to financially weak and under-developed committees in the form of loans and grants; (vii)acquisition or construction, or hiring on lease or otherwise of buildings or land for performing the duties of the Boards; (viii)better development of market areas and control of market committees. (ix)Meetings and legal expenses; (x)training of officers and staff of the market committees in the State; (xi)technical assi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eneral public utility: Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity;] 35. As mentioned earlier, the object to establish market committee and board is to regulate purchase, sale, storage and processing of agricultural produce through establishment of market committees, market yards and trusts. The dominant objects of board and committees are to save agriculturists from exploitation of middleman and to provide remunerative price to the agriculturists. It is further to provide better facilities for storage and transportation of food grain. Accordingly, we hold that the object of the boards and committees is to advance objects of general public utility. The learned CIT's in the impugned orders have not brought any material on record to show that the assessees were non-charitable institutions, estab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in the hands of the settlor. So, dealing with the exclusion of any income from out of total income on the ground that it belongs to a charitable or religious trust, an inquiry should in the first instance be made whether any portion of the income arising from the settled properties or from properties otherwise transferred is includible in the total income of the charitable or religious trust. If it is found by keeping in view the provisions of sections 60 to 63 that it is not so includible then such income does not qualify for any relief, in limine, under this section. It shall have to be discarded altogether in the calculation of the fifteen per cent of the income eligible of being accumulated. 37. It may also be mentioned that similar market committees were set up in Punjab and Haryana, Maharashtra, Madhya Pradesh, Rajasthan and other States. In every State, the arrangement for funds and its bifurcation/allotment collected by and utilization of the same are almost identical. Their Boards or persons, who exercised the control and superintendence of Mandi Samiti are the same in all States. 38. In the similar facts and circumstances of the case, the Income Tax Department has f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 03] 259 ITR 280 where the dominant purpose of a trust/institution is charitable, incidentally if some profit is made and the said profit is used for charitable purposes, the said trust/institution does not cease to be established for charitable purposes. In the case of the assessees, the dominant object is to regulate procurement and supply of agricultural and some other produce and to meet the expenses required for achieving the said object, the Legislature has empowered the assesses to levy cess/fees. Moreover, surplus remaining in the market fund are ploughed back for carrying out the object for which these Mandi Samitis are established. Thus, the surplus remaining in the market fund is neither distributed nor accumulated as profits. In these circumstances, it cannot be said that the assesses are established with profit motive so as to deny registration under Section 12A/12AA of the Act. 42. It is pertinent to note that prior to April 1, 1984, the words used in Section 2(15) of the Income Tax Act were "advancement of any other object of general public utility not involving the carrying on of any activity for profit". By the Finance Act, 1983 with effect from 1st April, 1984, L ..... X X X X Extracts X X X X X X X X Extracts X X X X
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