Commissioner of Income Tax (Central), Kanpur vs Krishi Utpadan Mandi Samiti

We have heard Sri Dhananjai Awasthi for the appellant-department. Sri Ashish Bansal appears for the respondent-Mandi Samiti. This Income Tax Appeal u/s 260A of the income tax Act, 1961 (the Act) is directed against the order dated 11.05.2007, passed by the Income Tax Appellate Tribunal, SMC Bench, Allahabad in income tax Appeal No. 112 (Alld.)/2007, by which the Tribunal has condoned the delay u/s 12(A)(a) of the Act and directed grant of registration u/s 12A of the Act w.e.f. 1.4.2003.

In this income tax Appeal, the department-appellant has raised the following substantial questions of law, for consideration by the Court:--

Whether on the facts and in the circumstance of the case, the Tribunal is justified in condoning the delay in filing the application or registration u/s. 12AA of the Act without assigning any reason for condoning the delay?

Whether on the facts and in the circumstance of the case, the Tribunal is justified in directing the Commissioner of income tax to grant Registration u/s. 12AA of the Act to the assessee Mandi Samiti with retrospective effect from 1.4.2003?

Whether the Tribunal is justified in relying upon its earlier decision in ITA No. 445/A/06, Krishi Utpadan Mandi Samiti Mau v. CIT despite the fact that an appeal u/s. 260A of the Act is pending before the Hon''ble High Court against that order and the controversy/issue involved is sub-judice?

Whether the Tribunal is justified in ignoring the decision of the Hon''ble Supreme Court in the case of Assistant Commissioner of Income Tax Vs. Thanthi Trust, which has been referred by the CIT while rejecting the application for Registration u/s. 12A of the Act?

Sri Ashish Bansal, appearing for the respondent Mandi Samiti informs the Court that the questions raised in this appeal have been decided, and are covered by judgment of the Court in Commissioner of Income Tax Vs. Krishi Utpadan Mandi Samiti, in which this Court held that registration of mandi samities, as in the present case, established by notification in exercise of powers u/s 12 of the Krishi Utpadan Mandi Adhiniyam 1964, as statutory body, with the object to regulate the sale and purchase of the agricultural produce and also to develop the facilities for the farmers, are entitled for registration u/s. 12A of the Act as a trust, even if the application for registration was submitted belatedly, to claim tax exemption, as prior to 1.4.2003, registration u/s. 12A of the Act was not needed. The respondent assessee was enjoying the exemption by virtue of Section 10(20) as well as Section 10(29) of the Act before its deletion, and they were required to get registration u/s 12A of the Act only after amendment in Section 10(20) was brought by the Finance Act 2002. Some officers were under bonafide belief that status quo was continuing, and that there was no need to obtain registration. They also need approval of Controlling Authority, to apply for registration.

We do not find any error in the judgment of the Tribunal by which the delay in submitting application for registration has been condoned and the department has been directed to registration of the respondent. We are also informed that SLP against the judgment of the Court in Krishi Utpadan Mandi Samiti (supra) has been dismissed by the Apex Court.

Following the judgment of the Court in Krishi Utpadan Mandi Samiti (supra), the questions framed are decided in favour of respondent assessee and against the revenue. The income tax Appeal is dismissed.