TaxTMI 
TaxTMI 
2012 (11) TMI 744
X X X X Extracts X X X X
X X X X Extracts X X X X
....ubmitted that the impugned issues are covered by the orders of Indore Bench in the case of Krishi Upaj Mandi Samities (copies of the relevant orders are filed in paper books). The ld. Sr. DR, however, relied upon the orders of the Assessing Officer but could not controvert the assertion of the learned counsel for the assessee by bringing any positive material on record. 3. We have considered the rival submissions and perused the material available on file. So far as the issue of Aarakshit Nidhi is concerned, we find that ITAT, Indore has decided this issue in the case of Krishi Upaj Mandi Samiti, Burhanpur in ITA Nos.277 & 278/Ind/2008 vide order dated 24.10.2008 (12 ITJ 12-Indore Tribunal). The relevant portion of the order dated 24.10.2008 (supra) is reproduced hereunder: "6. Ground No.2 & 9: On ground no.2, assessee challenged the order of ld. CIT(A) in not exempting the income of Rs.38,69,627/- being interest on FDR from Reserve Fund and on ground no.9, in enhancing the income in respect of "Aarakshit Nidhi" of Rs.19,25,785/-. The AO found that assessee claimed exemption of interest of Rs.38,69,627/- received on the funds deposited with the bank for the purpose of pension....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 10% as per Sec. 7 of MP Krishi Mandi (State Marketing Fund Rules)(PB-33). He has also referred to sec.25A (6) of MP Krishi Mandi Adhiniyam which provides that market committee shall make provision in the budget for crediting the amount into permanent fund @20%. He has submitted that sec. 43 of MP Krishi Upaj Mandi Adhiniyam provides state marketing development fund and the market committee shall pay at such percentage out of the gross receipt licence fee and market fees to the state govt. and all expenditure incurred by the board according to the budget section shall be defrayed. He has therefore, submitted that these are the reasons through which the reserve fund is created as statutorily required which were permanent funds in nature. He has submitted that interest is out of these reserve funds which can be utilized as per direction of the board therefore, no interest accrued to the assessee even if the reserve funds were in the name of the assessee. He has submitted that the said interest and funds can be used only for particular purpose and that assessee does not have any control over the said statutory funds therefore, interest accrued thereon cannot be added to the income ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ances also therefore, assessee cannot claim that it has no control over the same funds. He has submitted that reserve funds are created in the name of the assessee and that assessee was maintaining the accounts on yearly basis therefore, same are not reliable and assessee has control over the funds therefore, additions were rightly made. 9. We have heard rival submissions and material available on record. It is not in dispute that the assessee did not press his claim u/ss 10(25) and 36(1)(xii) of the IT Act before the Tribunal as was the claim made before the authorities below therefore, the claim of the assessee could not be considered under those provisions. The reasoning given by the authorities below are just and proper in rejecting the claim of the assessee u/ss 10(25) & 36(1)(xii) of the IT Act. However, the ld. Counsel for assessee made a claim that since the reserve funds were statutorily created under the MP Krishi Upaj Mandi Adhiniyam and Rules and the funds have been created for specific purposes therefore, assessee would not have control over the said reserve funds therefore, the interest accrued thereon and the deposits could not have been treated as income of th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... level of the AO. We accordingly set aside the orders of the authorities below on this issue and restore the issue to the file of the AO for reconsideration in the light of the submission made by the ld. Counsel for assessee. The AO shall give reasonable sufficient opportunity of being heard to the assessee. As a result, part of this ground of the appeal of the assessee is allowed for statistical purposes. Assessee may provide adequate material before the AO in support of the contention." In view of the above, the learned counsel from both sides fairly agreed to the proposition that the issue of Aarkshit Nidhi needs to be examined afresh. It is also seen that the assessee is also following cash system of accounting and the provision of Aarakshi Nidhi for payment of pension/ gratuity to the retiring/ retired employees can only be made when it is actually to be incurred, therefore, we restore this issue to the file of the ld. Assessing Officer to examine the nature and time of incurring such expenditure and then decide in accordance with law after providing due opportunity of being heard to the concerned assessees, consequently, the issue of Aarakshi Nidhi is allowed for statistic....
X X X X Extracts X X X X
X X X X Extracts X X X X
....oard and assessee has no control over the board. He has submitted that one sentence from the order may not be picked as ratio and relied upon decision in the case of Sun Engg., 198 ITR 297 and submitted that it is a case of diversion of income and relied upon 227 ITR 557 and 290 ITR (AT) 344. 15. On consideration of rival submissions, we are of the view that the issue is squarely covered in favour of the assessee by the order of ITAT, Jabalpur Bench in the case of Krishi Upaj Mandi Samiti & Others (Supra) in which, in para 12 the Tribunal held "We have carefully considered the issue. The view of the AO that the payment made to the board for road development and agricultural research was for capital expenditure and hence not allowable u/s 37 of the Act, cannot be considered correct because the payment was made as statutory liability as per sec. 43 of the relevant Act. Similarly, board fees were also made as per provisions of the relevant statute and was allowable expenditure. The AO is therefore, not correct to disallow the same on the ground that the payment in question was in the nature of application of income. In our considered opinion, the order of the ld. CIT(A) deserves no....