TaxTMI 
TaxTMI 
2016 (1) TMI 661
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....ssessee are: a) Development of Market Yard for Marketing of Agri. Produce. b) Regulation of Marketing of agri. Produce & safe guard to agriculturist form the bad practices in market. c) Issue Licenses to all functionaries i.e. Adtya (Commission Agents) Traders, Mathadi (Hamal, weightman ) ware house, cold storages. d) Keep Market Yard clean, Provide security and amenities like drinking water, street light etc. e) Provide Ancillary facilities like banking services, canteen, post office, parking place for supporting activities to Agricultural Marketing. f) Help Market intervention scheme when price of Agri. Produce collapse. g) Encourage the grading & parking of Agri. produce. h) Give incentives to export of Agri. produce. i) Try to eliminate Middleman as far as possible. j) Try to give best price to farmers & market available agricultural produce at reasonable rates to consumers. 3. The assessee filed an application in the prescribed form before the Commissioner of Income Tax, Pune for grant of registration u/s. 12A of the Act. The Commissioner of Income Tax vide impugned order held that the activities of the assessee are commercial in nature, therefore, it is h....
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....arrying out commercial/business activity and is not eligible for registration u/s. 12A of the Act. In support of his submissions, the ld. AR placed reliance on the following decisions: i. CIT Vs. Agricultural Produce and Market Committee, Hinganghat & Ors., 291 ITR 419 (Bom); ii. CIT Vs. Agricultural Market Committee, Giddalur & Ors., 336 ITR 641 (AP); iii. Bureau of Indian Standards Vs. Director General of Income Tax (Exemptions), 358 ITR 78 (Delhi); iv. Market Committee, Sullar Gharat & Ors. Vs. CIT, 94 TTJ (Del) 692; v. Agricultural Produce & Market Committee, Telhara & Ors. Vs. CIT, 97 TTJ (Nag) 165; and vi. Rajasthan State Agricultural Marketing Board Vs. CIT, 106 TTJ (Jp) 1109. 5. On the other hand Smt. Harshvardhini Buty representing the Department vehemently supported the order of Commissioner of Income Tax in rejecting the application of the assessee for grant of registration u/s. 12A of the Act. The ld. DR submitted that the charitable activities carried on by the assessee are of general public utility. The activities of the assessee include development of Market Yards facilitating disposal of agricultural produce, regulating the Market, etc. by charging vari....
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....obody's case before us. When the statute confers the benefit, there was no necessity for AMCs to seek registration under section 12A. By reason of the amendments by the Finance Act, 2002, when they were denied the exemption by reason of losing the status of "local authority" for the purpose of the Income-tax Act, so as to claim exemption it was necessary for AMCs to apply for registration under section 12A/12AA. Even though the object of adding the Explanation to section 10(20) was to restrict the benefit under section 10(20), it was never the intention of Parliament to deny the benefit to a juridical person which was otherwise entitled to seek exemption from payment of tax de hors section 10(20). The Punjab and Haryana High Court, in Market Committee [2007] 294 ITR 563 (P&H), considered the question as to whether an AMC can claim exemption under sections 11 and 12 even after the benefit under section 10(20) was withdrawn by the Finance Act, 2002. While rejecting the contention of the Revenue that, by being removed from the ambit of being local authority, the AMC became ineligible for claiming exemption under sections 11 and 12, the court observed as under (page 577) : "The ....
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....t granted by the tax machinery subject to statutory conditionalities contained in sections 11 to 13 of the Income-tax Act." Thus, in the light of the judgment of Hon'ble Andhra Pradesh High Court, the observations of the Commissioner of Income Tax that the application of the assessee for grant of registration u/s. 12A deserves to be considered as infructuous in view of assessee availing exemption under the provisions of section 10(26AAB) are not justified and are thus, liable to be set aside. 8. The next issue is whether the assessee is entitled for registration u/s. 12A as charitable institution. The Hon'ble Bombay High Court, Nagpur Bench while dealing with similar controversy has held that from the scheme of The Maharashtra Agricultural Produce Marketing (Development and Regulation) Act, 1963, it is evident that the assessees are established to regulate the marketing of agricultural and other produce with the object of protecting the interests of the producers and the activities carried on by the assessees are charitable in nature, squarely covered within the meaning of the expression 'advancement of object of general public utility'. The Hon'ble High Court in par....
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....t. As held by the apex court in the cases of Surat Art Silk Cloth Manufacturers Association [1980] 121 ITR 1 and in the case of Bharat Diamond Bourse [2003] 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 to be met with in achieving the said object, the Legislature has empowered the assessees to levy cess/fees. Moreover, surplus remaining in the market fund are ploughed back for carrying out the object of the 1963 Act. Thus, the surplus remaining in the market fund is neither distributed nor accumulated as profits. In these circumstances, it cannot be said that the assessees are established with profit motive so as to deny registration under Section 12A/12AA of the Act. 22. It is pertinent to note that prior to April 1,1984, the words used in Section 2(15) of the Act were "advancement of any other object of general publi....
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....ral produce and to protect the interest of farmers. 12. The Hon'ble Delhi High Court in the case of Bureau of Indian Standards Vs. Director General of Income Tax (Exemptions) (supra) while dealing with the issue, where Bureau of Indian Standards, a statutory body established under the Indian Bureau Act, 1963 was denied exemption u/s. 10(23C) has held: "16. What survives to be determined is whether any of BIS's activities fall within the latter and larger category of "involved in the carrying on of any activity of rendering any service in relation to any trade, commerce or business". The expressions "any activity,"" "rendering any service" and "in relation to any trade, commerce or business"" imply that the intention of the legislature was to make the latter part of the exception broad and inclusive. It seems that the exception (the first proviso) is intended to catch with its ambit any and all commercial activity, except what falls within the second proviso (which bars application of the exception in cases where the aggregate value of the receipts from the activities mentioned therein is less than ten lakh rupees in the relevant previous year). The Bureau, it would appear at....