- (1.) THIS appeal has been filed by the Revenue against the order of the learned Tribunal. The appeal was admitted vide order dt. 23rd July, 2007 by framing following substantial questions of law: 1. Whether on the facts and in the circumstances of the case as well as in the law the learned Tribunal was justified in condoning the delay in filing the application moved by the assessee samiti under Section 12A of the IT Act, 1961? 2. Whether on the facts and in the circumstances of the case as well as in the law the learned Tribunal was justified in directing to grant the registration under Section 12A of the Act of 1961 to the assessee? 3. Whether on the facts and in the circumstances of the case as well as in the law the activities of the samiti are charitable as defined in Section 2(15) r/w Sections 11 and 12 of the Act of 1961?
(2.) FROM a look at the order it transpires that earlier the respondent samiti was enjoying exemption by virtue of it being the local authority but that has been taken away, and therefore, the respondent seek registration under Section 12A. The question as to whether the Krishi Upaj Mandi Samiti is entitled to registration under Section 12A in substance is the precise question requiring to be gone into for deciding three questions as framed. Before proceeding further we may gainfully quote the provisions of Section 12A, and for that matter the provisions of Section 12AA as well which prescribes the procedure for registration: 12A. (1) The provisions of Section 11 and Section 12 shall not apply in relation to the income of any trust or institution unless the following conditions are fulfiled, 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 CIT 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 CIT 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; (ii) from the 1st day of the financial year in which the application is made, if the CIT 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; (aa) the person in receipt of the income has made an application for registration of the trust or institution on or after the 1st day of June, 2007 in the prescribed form and manner to the CIT and such trust or institution is registered under Section 12AA; (b) where the total income of the trust or institution as computed under this Act without giving effect to the provisions of Section 11 and Section 12 exceeds the maximum amount which is not chargeable to income -tax in any previous year, the accounts of the trust or institution for that year have been audited by an accountant as defined in the Explanation below Sub -section (2) of Section 288 and the person in receipt of the income furnishes along with the return of income for the relevant assessment year the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed. (c) ... Where an application has been made on or after the 1st day of June, 2007, the provisions of Sections 11 and 12 shall apply in relation to the income of such trust or institution from the assessment year immediately following the financial year in which such application is made. 12AA. Procedure for registration. - -(1) The CIT, on receipt of an application for registration of a trust or institution made under Clause (a) or Clause (aa) of Sub -section (1) of Section 12A, shall (a) call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about the genuineness of activities of the trust or institution and may also make such inquiries as he may deem necessary in this behalf; and (b) after satisfying himself about the objects of the trust or institution and the genuineness of its activities, he (i) shall pass an order in writing registering the trust or institution; (ii) shall, if he is not so satisfied, pass an order in writing refusing to register the trust or institution, and a copy of such order shall be sent to the applicant: Provided that no order under Sub -clause (ii) shall be passed unless the applicant has been given a reasonable opportunity of being heard.(1A) All applications, pending before the Chief CIT on which no order has been passed under Clause (b) of Sub -section (1) before the 1st day of June, 1999, shall stand transferred on that day to the CIT and the CIT may proceed with such applications under that sub -section from the stage at which they were on that day. (2) Every order granting or refusing registration under Clause (b) of Sub -section (1) shall be passed before the expiry of six months from the end of the month in which the application was received under Clause (a) or Clause (aa) of Sub -section (l) of Section 12A. (3) Where a trust or an institution has been granted registration under Clause (b) of Sub -section (1) and subsequently the CIT is satisfied that the activities of such trust or institution are not genuine or are not being carried out in accordance with the objects of the trust or institution, as the case may be, he shall pass an order in writing cancelling the registration of such trust or institution:Provided that no order under this sub -section shall be passed unless such trust or institution has been given a reasonable opportunity of being heard. A look at the above provision does show that the exemption is available in relation to income of any trust or institution if the conditions mentioned therein are fulfiled viz. that the object of the institution should be, that the income under trust should be held wholly for charitable and religious purpose, and expression charitable purpose has been defined in Section 2(15) of the Act to include advancement of any other object of general public utility.
(3.) MAY be that the income received by the Samiti by way of cess or Mandi fees is not shown to be spent wholly for the purpose of relief of the poor, education, or medical relief, but under the scheme of the Act, being the Rajasthan Agricultural Produce Markets Act, 1961, the entire amount received by the samiti is required to be spent for the purpose mentioned therein, which obviously include advancement of 'any other object of general public utility'. In that view of the matter, Samiti is entitled to be registered under Section 12A. In our above view, we are fortified by the judgments of Punjab and Haryana High Court in CIT v. Market Committee (2007) 294 ITR 563 , and CIT v. Agricultural Produce and Market Committee (2007) 36 SITC 278.;