Charitable purpose- object of general public utility-Market committee

The assessee was a market committee constituted under the Punjab Agricultural Produce Markets Act 1961. Its object was to help agriculturists and consumers. The object was of a general public utility. It was entitled to registration under s.12A of the Income Tax Act 1961.

Citation 294 ITR 563

High Court of Punjab and Haryana

CIT vs Market Committee

I.T.A. No. 654 of 2005

J.S. Khehar and S.D. Anand, JJ

14 March 2007

N.L. Sharda and Sanjiv Bansal for the Appellant
M.L. Garg, Rajesh Garg and Jatin Sabharwal for the Respondent

JUDGMENT

The judgment of the court was delivered by

J.S. Khehar, JA market committee is incorporated in terms of the provisions of section 18 of the Punjab Agricultural Produce Markets Act, 1961 (hereinafter referred to as the Markets Act). A market committee, incorporated under the Markets Act, has a perpetual succession, and a common seal. Such a committee, may sue, and can also be sued, in its corporate name. A market committee is also authorised, to acquire and hold property, movable, as well as immovable, subject to the provisions of section 32 of the Markets Act.

Market Committee, Dhariwal, was incorporated under the provisions of the Markets Act, on September 22, 1961.

The duties of a market committee have been laid down in section 13 of the Markets Act, which is being reproduced hereunder :

"13. Duties and power of committee.(1) It shall be the duty of a committee,

(a) to enforce the provisions of this Act and the rules and the bye-laws made thereunder in the notified market area and, when so required by the Board, to establish a market therein providing such facilities for persons visiting it in connection with the purchase, sale, storage, weighment and processing of agricultural produce concerned as the Board may from time to time direct ;

(b) to control and regulate the admission to the market, to determine the conditions for the use of the market and to prosecute or confiscate the agricultural produce belonging to person trading without a valid licence ;

(c) to bring, prosecute or defend or aid in bringing, prosecuting or defending any suit, action, proceeding, application or arbitration, on behalf of the committee or otherwise when directed by Board.

(2) Every person licensed under section 10 or section 13 and every person exempted under section 6 from taking out licence, shall on demand by the committee or any person authorised by it in this behalf furnish such information and returns, as may be necessary for proper enforcement of Act or the rules and bye-laws made thereunder.

(3) Subject to such rules as the State Government may make in this behalf, it shall be the duty of a committee to issue licences to brokers, weighmen, measurer, surveyors, godown keepers and other functionaries for carrying on their occupation in the notified market area in respect of agricultural produce and to renew, suspend or cancel such licences.

(4) No broker, weighman, measurer, surveyor, godown-keeper or other functionary shall, unless duly authorised by licence, carry on his occupation in a notified market area in respect of agricultural produce :

Provided that nothing in sub-sections (3) and (4) shall apply to a person carrying on the business of warehouseman who is licenced under the Punjab Warehouses Act, 1957 (Punjab Act No. 2 of 1958)."

A perusal of section 13 of the Markets Act reveals, that it is the duty of a market committee to establish a market in a market area. It is also the duty of a market committee to provide facilities for the sale and purchase of agricultural products, besides the weighment and processing thereof. A market committee is also vested with the responsibility of issuing licences to persons authorised to function as brokers, weighmen, measurers, surveyors, godown keepers, and such like other activities in the market area. In other words, a market committee provides facilities to persons who come to a market area, whether for sale or for purchase, of agricultural products.

The funds available with a market committee are to be used only for the purposes specified in section 28 of the Markets Act. Section 28 of the Markets Act is being extracted hereunder :

"28. Purposes for which the market committee funds may be expended.Subject to the provisions of section 27, the Market Committee funds shall be expended for the following purposes :

(i) acquisition of sites for the market ;

(ii) maintenance and improvement of the market ;

(iii) construction and repair of buildings which are necessary for the purposes of the market and for the health, convenience and safety of the persons using it ;

(iv) provision and maintenance of standard weights and measures ;

(v) pay, leave allowances, gratuities, compassionate allowances and contributions towards leave allowances, compensation for injuries and death resulting from accidents while on duty, medical aid, pension or provident fund of the persons employed by the committee ;

(vi) payment of interest on loans that may be raised for purposes of the market and the provisions of a sinking fund in respect of such loans ;

(vii) collection and dissemination of information regarding all matters relating to crop statistics and marketing in respect of the agricultural produce concerned ;

(viii) providing comforts and facilities, such as shelter, shade, parking accommodation and water for the persons, drought cattle, vehicles and pack animals coming or being brought to the market or on construction and repair of link roads, approach roads, culverts, bridges and other such purposes ;

(ix) expenses incurred in the maintenance of the offices and in auditing the accounts of the committees ;

(x) propaganda in favour of agricultural improvements and thrift;

(xi) production and betterment of agricultural produce ;

(xii) meeting any legal expenses incurred by the Committee ;

(xiii) imparting education in marketing or agricultural ;

(xiv) payments of travelling and other allowances to the members and employees of the committee, as prescribed ;

(xv) loans and advances to the employees ;

(xvi) expenses of and incidental to elections ; and

(xvii) with the previous sanction of the Board, any other purpose which is calculated to promote the general interest of the committee or the notified market area or with the previous sanction of the State Government, any purpose calculated to promote the national or public interest."

A perusal of section 28 of the Markets Act shows that while indicating the purposes for which the funds available to a market committee can be used, it also delineates further, the activities of a market committee. These activities include, the purchase of land for setting up market in a market area, and the construction of buildings, sheds, plinths etc. on such land. In case of existing markets, a market committee is vested with the responsibility of effecting improvements therein, besides the repair and maintenance of the existing infrastructure. Illustratively, a market committee is required to provide for shelter, shade and parking at the market area. A market committee has also to look after the safety, health and convenience of persons who visit the market area. Illustratively, a market committee is expected to provide water to persons, drought cattle and pack animals at the market. Section 28 of the Markets Act also requires a market committee to engage itself in educating agriculturists so as to enable them to produce more and better products, and such like other activities, for the general interest of the market area, and of the persons associated with activities connected therewith.

A part of the funds earned by a market committee, has to be paid to the Market Board, as contributions under section 27 of the Markets Act. Section 27 of the Markets Act is being extracted hereunder :

"27. Market committee fund.(1) All moneys received by a committee shall be paid into fund to be called the market committee fund and all expenditure incurred by the committee under or for the purposes of this Act shall be defrayed out of such fund, and any surplus remaining after such expenditure has been met shall be invested in such manner as may be prescribed.

(2)(a) Every committee shall, out of its funds pay to the Board as contribution such percentage of its income derived from licence fee, market fee and fines levied by the courts as is specified below to defray expenses of the office establishment of the Board and such other expenses incurred by it in the interest of the committees generally and also pay to the State Government the cost of any special or additional staff employed by the State Government in consultation with the committee for giving effect to the provisions of this Act.

(b) The State Government shall determine the cost of such special or additional staff and shall, where the staff is employed for the purposes of more committees than one apportion such cost among the committees concerned in such manner as it thinks fit. The decision of the State Government determining the amount payable by any committee shall be final." All the funds contributed by the market committees to the Market Board, constitute the market development fund. The market development fund can be utilised by the Market Board only for the purposes specified in section 26 of the Markets Act. Section 26 of the Markets Act is also be reproduced hereunder :

"26. Purpose for which the market development fund may be expended.The marketing development fund shall be utilised out of following purposes :

(i) better marketing of agricultural produce ;

(ii) marketing of agricultural produce on co-operative lines ;

(iii) collection and dissemination of market rates and news ;

(iv) grading and standardisation of agricultural produce ;

(v) general improvements in the markets or their respective notified market areas ;

(vi) maintenance of the office of the Board and construction and repair of its office buildings, rest-house and staff quarters ;

(vii) giving aid to financially weak committees in the shape of loans and grants ;

(viia) repayment of loans and payment of interest thereon.

(viii) payment of salary, leave allowance, gratuity, compassionate allowance, compensation for injuries or death resulting from accidents while on duty, medical aid, pension or provident fund to the persons employed by the Board and leave and pension contribution to Government servants on deputation ;

(ix) travelling and other allowances to the employees of the Board, its members and members of advisory committees ;

(x) propaganda, demonstration and publicity in favour of agricultural improvements ;

(xi) production and betterment of agricultural produce ;

(xii) meeting any legal expenses incurred by the Board ;

(xiii) imparting education in marketing or agriculture directly by the Board or through Punjab Agricultural University, Ludhiana or other body as may be specified by the State Government by notification.

(xiv) construction of godowns and construction or repair of link roads, approach roads, culverts, bridges and other such purposes.

(xv) loans and advances to the employees ;

(xvi) expenses incurred in auditing the accounts of the Board ;

(xvii) with the previous sanction of the State Government, any other purposes which is calculated to promote the general interests of the Board and the committee or the national or public interest :

Provided that if the Board decides to give aid of more than five thousands rupees to a financially weak committees under clause (vii), the prior approval of the State Government to such payment shall be obtained."

A perusal of section 26 of the Markets Act reveals that the funds contributed by market committees to the market development fund, are also used for allied purposes, as the market committee fund. Illustratively, the market development fund is to be used for activities leading to production and betterment of agricultural produce, as well as, the marketing thereof. These activities include the encouragement of such activities on co-operative lines, with an over all emphasis on betterment in agricultural and its related activities, and facilities at the market area. The market development fund is also used for specified and unspecified welfare measures, like giving loans to financially weak communities, as well as helping agriculturists and other financially weak, communities in the repayment of such loans and interest thereon. For the aid and assistance of agriculturists, one of the foremost activities and responsibilities of the Market Board is to collect information in connection with agricultural activities and to bring it to the notice of agriculturists, besides the function of educating agriculturists so that they can obtain more yields and get higher returns from the sale thereof. One of the specified activities for the use of the market development fund is the construction and repair of link roads, approach roads, culverts and bridges, etc.

It is apparent from the preceding paragraphs, that the funds collected by the market committees can be utilised only for the purposes expressed in sections 26 and 28 of the Markets Act. It is also apparent, that these activities are in the nature of welfare activities for the benefit of agriculturists in particular and the public generally, as these activities are not only aimed at better quality, more production and higher price for the sale of agricultural produce (which benefit agriculturists) but also providing of facilities and conveniences for the purchase of agricultural, produce (which benefit the public generally).

The Market Committee, Dhariwal, submitted an application in Form 10A, under section 12A of the Income-tax Act, 1961 (hereinafter referred to as the Income-tax Act) on August 6, 2003, seeking registration, under section 12AA of the Income-tax Act. In the aforesaid application, the market committee expressly certified that the objects of the Market Committee, Dhariwal, fall within the purview of "general public utility". It was, therefore claimed that the Market Committee, Dhariwal, should be considered as an institution/trust set up for charitable purposes. In this behalf, it was also the contention of the Market Committee, Dhariwal, that it was engaged in activities delineated hereinabove, while analysing the provisions of sections 11, 13, 26 and 28 of the Markets Act. It was, therefore, the contention of the Market Committee, Dhariwal, in its application under section 12A of the Income-tax Act, that all the objects of the market committee fall within the purview of the phrase "general public utility", without any motive for profit, and as such, the market committee deserved to be registered as a charitable trust under section 12AA of the Income-tax Act. Additionally, it was mentioned, that the Market Committee, Dhariwal, had spent huge amounts of funds to promote causes of general public interest, in the shape of development of link roads, water arrangements, shed arrangements and compensation to victims of agricultural accidents. According to the Market Committee, Dhariwal, all its activities are primarily promotional and protective of the interest of the agriculturists and traders, dealing in agricultural products.

While considering the aforesaid application, the Commissioner of Income-tax-II, Amritsar (hereinafter referred to as the Commissioner of Income-tax (Amritsar) arrived, inter alia, at the conclusion, that the employees of the market committee are public servants within the meaning of section 21 of the Indian Penal Code. He also arrived at the conclusion that the market committee is a semi-government agency, and as such, cannot be treated as an institution or a trust. The Commissioner of Income-tax, Amritsar, was also of the view, that the market committee in question, was working for the economic benefit of a particular section of the society engaged in a particular economic activity, namely, "agriculturists" and "agriculture", respectively, and as such, its activities could not be deemed to be the activities of an institution/trust set up for charitable purposes. In this behalf, the Commissioner of Income-tax, Amritsar, concluded that the benefits and facilities arising out of the market committee, are purely incidental to promote agriculture and its allied activities, and that they do not arise out of a conscious or deliberate decision on the part of the market committee to provide benefits and facilities to the "general public". Accordingly, the Commissioner of Income-tax, Amritsar, arrived at the conclusion, that the activities of the market committee in question, cannot be considered to fall in the category of an institute/trust constituted for charitable purposes. Based on the aforesaid conclusion, the Commissioner of Income-tax, Amritsar, held that the market committee in question did not fulfil the essential ingredients of section 12A of the Income-tax Act.

It would also be pertinent to mention that while justifying the aforesaid conclusion, the Commissioner of Income-tax, Amritsar, also recorded that hithertobefore the income earned by the market committee was not taxable under section 10(20) of the Income-tax Act. The aforesaid exemption for including market committees was, however, omitted with effect from the assessment year 2003-04. Section 10(20) of the Income-tax Act, as it existed prior to its repeal, is being reproduced hereunder :

"Section 10. In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included . . .

(20) the income of a local authority which is chargeable under the head 'Income from house property', 'Capital gains' or 'Income from other sources' or from a trade or business carried on by it which accrues or arises from the supply of a commodity or service (not being water or electricity) within its own jurisdictional area or from the supply of water or electricity within or outside its own jurisdictional area ;

Explanation.For the purposes of this clause, the expression 'local authority' means

(i) Panchayat as referred to in clause (d) of article 243 of the Constitution ; or

(ii) Municipality as referred to in clause (e) of article 243P of the Constitution ; or

(iii) Municipal Committee and District Board, legally entitled to, or entrusted by the Government with, the control or management of a municipal or local fund ; or

(iv) Cantonment Board as defined in section 3 of the Cantonments Act, 1924 (2 of 1924)."

According to the Commissioner of Income-tax, Amritsar, the withdrawal of the exemption from the liability of tax was a sufficient justification to conclude that the framers of the legislative enactment, under reference, were not desirous of exempting income of market committees from the liability of tax. Accordingly, the Commissioner of Income-tax, Amritsar, also held that the withdrawal of the exemption under section 10(20) of the Income-tax Act was by itself sufficient to conclude that the income of the market committees is no longer exemptible from the liability of tax.

On the basis of the aforesaid conclusions, the Commissioner of Income-tax, Amritsar, vide an order passed under section 12AA(b)(ii) of the Income-tax Act, dated November 25/27, 2003, rejected the claim of the petitioner for registration under section 12AA of the Income-tax Act.

Dissatisfied with the order passed by the Commissioner of Income-tax, Amritsar, dated November 25/27, 2003, the petitioner preferred an appeal before the Income-tax Appellate Tribunal, Delhi Bench (hereinafter referred to as the Income-tax Appellate Tribunal, Delhi Bench). The appeal preferred by the petitioner was accepted on March 14, 2005, wherein, the appellate authority arrived at the conclusion that the market committee under reference, was entitled to registration under section 12AA of the Income-tax Act.

Through the instant writ petition, the Commissioner of Income-tax, Amritsar, has impugned the order dated March 14, 2005, passed by the Income-tax Appellate Tribunal, Delhi Bench.

Learned counsel for the petitioner before this court vehemently contends that the Market Committee under reference, is a semi-government agency, working for the economic benefit of a particular section of the society. He also asserts, that the Market Committee, Dhariwal, is neither a "trust" nor an "institution" formed for the advancement of a "charitable purpose", and as such, cannot be deemed to be fulfilling the basic ingredients required for registration under section 12AA of the Income-tax Act. It is also the contention of learned counsel for the petitioner that the market committee in question cannot be treated as a charitable institution/ trust, because it does not discharge functions having "general public utility" and as such, is disentitled to registration under section 12AA of the Income-tax Act. Additionally, it is the contention of learned counsel for the petitioner, that the income of the market committee, in question, is not income envisaged under the provisions of sections 11 and 12 of the Income-tax Act, and as such, the aforesaid provisions are inapplicable in the case of the market committee under reference. It is also the contention of learned counsel for the petitioner that the exemption from income tax was extended to market committees under section 10(20) of the Income-tax Act. Amendment of the same with effect from April 1, 2003, took away the benefit of tax exemption from market committees, which clearly indicates the legislative intent to exclude market committees from tax exemption earlier allowed to them under section 10(20) of the Income-tax Act. According to learned counsel for the petitioner, for the reasons indicated hereinabove, the market committee, in question, is definitely not entitled to registration under section 12AA of the Income-tax Act. Each of the aforesaid contentions, as have been elaborated and projected before us, as well as, the other submissions canvassed during the course of hearing, are being dealt with individually, hereunder.

It is the first and the foremost contention of learned counsel for the petitioner, that market committees, hitherto before, considered themselves as "local authorities", and therefore, sought exemption from payment of income-tax under section 10(20) of the Income-tax Act. In this behalf, learned counsel for the petitioner invited our attention to the decision rendered in CIT v. Agricultural Marketing Produce Committee [2001] 250 ITR 369, wherein a Division Bench of the Delhi High Court, relying on the decision rendered by the Supreme Court in Union of India v. R. C. Jain, AIR 1981 SC 951, as well as, some other subsequent decisions, culled out the following tests to determine whether a market committee is a "local authority" (page 374) :

"(i) The authorities must have separate legal existence as corporate bodies and autonomous status.

(ii) Must function in a defined area and must ordinarily, wholly or partly, directly or indirectly elected by the inhabitants of the area,

(iii) It performs governmental functions such as running a market, providing civic amenities, etc.

(iv) They must have power to raise funds for the furtherance of their activities and the fulfilment of their projects by levying taxes/ fees, this may be in addition to money provided by Government. Control and management of the fund must vest with the authority."

Thereafter, after examining statutory provisions akin to those referred to in the narration above, arrived at the conclusion, that the respondent-Market produce committee, in the concerned matter, was a "local authority". In the aforesaid context, the relevant observations recorded by the High Court, are being reproduced hereunder (page 393) :

"On examination of various provisions referred to above the inevitable conclusion is that the assessee is a body corporate having separate autonomous status. Its operational area is defined, its office bearers are elected and are free to take their own decision. The committee runs a market, providing civic amenities in the market and performs judicial, legislative and executive as well as fiscal functions. It can raise funds, control and manage funds. Therefore, the ratio laid down in R. C. Jain's case [1981] 58 FJR 284 ; AIR 1981 SC 951, as chiselled and honed by other decisions referred to above squarely applies to the facts of the case. As the indicated criteria are fulfilled, we have no hesitation in holding that the assessee is a local authority. The mere absence of a provision on the lines of the Maharashtra and Gujarat Acts would not be the decisive criteria in view of the analysis made supra."

Reliance has also been placed on (I. T. A. No. 749 of 2006 decided on June 2, 2006), Agricultural Produce Market Committee v. CIT [2007] 294 ITR 549 (Delhi), wherein a Division Bench of the Delhi High Court, again examined the same issue, after the amendment of section 10(20) of the Income-tax Act. After the amendment (referred to above), it was held that the assessee-market committee was not entitled to the exemption under section 10(20) of the Income-tax Act. In the aforesaid context, it would be pertinent to mention, that the petitioner therein, i.e., the Agricultural Produce Market Committee, claimed exemption by asserting that its activities were akin to a municipal committee, and as such, it should be allowed the same benefit of tax exemption as had been extended to municipal committees. Rejecting the aforesaid contention, the High Court observed as under (page 555) :

"The appellant-committee is no doubt a statutory committee established under the provisions of a legislative enactment. It has been given a distinct nomenclature with definite statutory functions and powers. There is, therefore, no question of treating the appellant-committee as a municipal committee for it is neither known as a municipal committee under the enactment under which it is created nor recognised by fiction of law as such by the Income-tax Act or by any other enactment for that matter. That being so, the court cannot by a process of interpretation include an entity like the appellant into the provisions of the Explanation by drawing a comparison between the. nature and functions, which a municipal committee is expected to discharge with those discharged by the appellant. Any such process would imply that the court interprets the provision by reference to what in its opinion was intended by Parliament and not by what is specifically stated in the provision. It would also amount to reading something into the provision which is not obvious but which the court may on an interpretation attribute or discover. That approach in matters of interpretation has been eschewed by courts in fiscal statutes unlike beneficial legislations where the court has adopted the principle of liberal interpretation."

It is the vehement contention of learned counsel for the petitioner, on the strength of the amended provision of section 10(20) of the Income-tax Act, as well as, the judgments referred to hereinabove, that the exemption from payment of income-tax, earlier available with market committees was withdrawn with effect from April 1, 2003, and, as such, market committees were not entitled to claim tax exemption (after the said amendment) with effect from April 1, 2003.

As against the aforesaid contention of learned counsel for the petitioner, it is submitted on behalf of the respondents, that the first contention advanced by learned counsel for the petitioner, is foundationally misconceived. In this behalf, the submission advanced is that merely because an assessee has been rendered ineligible for tax exemption under a particular statutory provision, does not mean, that the said assessee is rendered ineligible for tax exemption, ipso facto, under all the other provisions of the Income-tax Act. It is submitted, that an assessee, who fulfils the conditions of eligibility for tax exemption, under any of the provisions of the Income-tax Act, can claim the benefit of tax exemption. Accordingly, it is reiterated, that merely because the respondent-market committee is not entitled to tax exemption under section 10(20) of the Income-tax Act, cannot lead to the conclusion that the respondent has been rendered ineligible for exemption under section 11 or 12 of the Income-tax Act. In this behalf, it is further the contention of learned counsel for the respondents, that the market committee, in question, fulfils all the salient features, stipulated under section 11 of the Income-tax Act, to claim tax exemption and registration under section 12AA of the Income-tax Act. Accordingly, it is asserted that the respondent-market committee must be held to be entitled to tax exemption, irrespective of the fact, that it has now been rendered ineligible for tax exemption under section 10(20) of the Income-tax Act. In order to substantiate his aforesaid contention, learned counsel for the respondents have placed reliance on the decision rendered by the apex court in Kerala State Co-operative Marketing Federation Ltd. v. CIT [1998] 231 ITR 814 wherein, the apex court, inter alia, observed as under (page 819) :

"Whenever a question arises as to whether any particular category of an income of a co-operative society is exempt from tax what has to be seen is whether the income fell within any of the several heads of exemption. If it fell within any one head of exemption, it would be free from tax notwithstanding that the conditions of another head of exemption are not satisfied and such income is not free from tax under that head of exemption..."

Having examined the first contention of the learned counsel for the petitioner, we are of the view, that there is merit in the submission advanced by learned counsel for the respondents. The exemptions from liability of tax under sections 10, 11 and 12 of the Income-tax Act are independent of one another, as well as, other provisions of the Income-tax Act, under which an assessee can claim tax exemption. It is submitted that merely because an assessee is not entitled to claim exemption under one (or even two) of the aforesaid provisions, cannot ipso facto lead to the conclusion that the claim of the assessee cannot be considered for grant of tax exemption under some other provisions of the Income-tax Act. In view of the decision rendered by the apex court in Kerala State Co-operative Marketing Federation Ltd. v. CIT [1998] 231 ITR 814, it is not possible for us to accept that section 10(20) of the Income-tax Act," after the same came to be amended, so as to exclude "local authority" (s) from the benefit of tax exemption, would render the market committees ineligible for tax exemption under other provisions of the Income-tax Act. It must necessarily further be concluded that although market committees are not entitled to (or eligible for) tax exemption under section 10(20) of the Income-tax Act, yet a claim of exemption is still open to consideration under an alternate provision, if made out. We, therefore, conclude that it is open to the respondent-market committee to press and to substantiate its claim for exemption from payment of income-tax under section 11 or 12 of the Income-tax Act, as has been sought on its behalf.

The second contention of learned counsel for the petitioner has a direct nexus to the first contention, noticed hereinabove. Learned counsel for the petitioner invited our attention to the observations recorded by the Income-tax Appellate Tribunal, Delhi Bench, in the impugned order dated March 14, 2005, wherein, the Income-tax Appellate Tribunal, Delhi Bench, relied on the response of the Union Finance Minister to the communication addressed to him by the Chief Ministers of Delhi and Punjab, pointing out the hardship which was likely to be caused to the market committee by an amendment to section 10(20) of the Income-tax Act. According to learned counsel for the petitioner, the Income-tax Appellate Tribunal, Delhi Bench, took into consideration the response of the Union Finance Minister, to record a finding in favour of the assessee, i.e., that the respondent-market committee was entitled to exemption from income-tax, as a charitable institution/trust.

It is not possible for us to accept the aforesaid contention of learned counsel for the petitioner. Having examined the impugned order passed by the Income-tax Appellate Tribunal, Delhi Bench, we are of the view, that the response of the Union Finance Minister, referred to in the appellate order, was to the effect, that charitable institutions, which fulfil the conditions prescribed under section 11 of the Income-tax Act, would be entitled to exemption from the liability of payment of income-tax. In our view, therefore, the response of the Union Finance Minister was subject to the condition that the market committees fulfilled the conditions laid down in section 11 of the Income-tax Act. In other words, for the grant of exemption from the payment of income-tax, even according to the statement of the Union Finance Minister, the market committees would have to establish eligibility under section 11 of the Income-tax Act. It would extend the parameters of statutory interpretation, to unreasonable limits, if such like opinions, are taken into consideration, as suggested by learned counsel for the petitioner. In our considered view, the response of the Union Finance Minister is inconsequential, unless the same is supported by a positive statutory interpretation of the provisions of the Income-tax Act. We, therefore hereby conclude by holding, that the response of the Union Finance Minister cannot be taken into consideration for granting any tax benefit, to the respondent-market committee, unless the market committee can substantiate its claim, independently of the aforesaid response, on the basis of an express provision under the Income-tax Act, entitling it to tax exemption. Stated in other words, the market committee under reference, cannot succeed in claiming exemption from the liability of tax, on the basis of the statement of the Union Finance Minister, unless it can bring itself within the four corners of an exemption clause under the Income-tax Act.

The third contention of learned counsel for the petitioner is that, a market committee is a financial institution and not a charitable institution. In order to substantiate his contention, that a market committee is not an institution of the kind referred to in section 11 of the Income-tax Act, learned counsel for the petitioner submitted that a market committee incorporated under the Markets Act, earns its income by issuing licences, collecting commission, and imposing fines. Such a body, according to learned counsel for the petitioner, cannot be an institution, envisaged under section 11 or 12 of the Income-tax Act. So as to focus, on the kind of an institution, which would be covered under section 11 or 12 of the Income-tax Act, learned counsel for the petitioner illustratively contends, that a university, college or hospital would be such an institution, subject to the condition, that it receives voluntary donations from the public, and provides service to the general public, without profit as a motive. According to learned counsel for the petitioner, it is an institution of the kind referred to above, which can seek registration, under section 12AA of the Income-tax Act.

In order to repudiate the third contention of learned counsel for the petitioner, learned counsel for the respondent-market committee, desires us to first record a finding, that the market committee, under reference, must be deemed to be a trust within the meaning of sections 11 and 12 of the Income-tax Act. Learned counsel for the respondent, therefore, invited our attention to Explanation 1 under section 13(7) of the Income-tax Act. Section 13(7), as well as, Explanation 1 thereunder, is being extracted here-under :

"Section 13.(7) Nothing contained in section 11 or section 12 shall operate so as to exclude from the total income of the previous year of the person in receipt thereof, any anonymous donation referred to in section 115BBC on which tax is payable in accordance with the provisions of that section.

Explanation 1.For the purposes of sections 11,12, 12A and this section, 'trust7 includes any other legal obligation and for the purposes of this section 'relative', in relation to an individual, means

(i) spouse of the individual;

(ii) brother or sister of the individual;

(iii) brother or sister of the spouse of the individual ;

(iv) any lineal ascendant or descendant of the individual;

(v) any lineal ascendant or descendant of the spouse of the individual ;

(vi) spouse of a person referred to in sub-clause (ii), sub-clause (iii), sub-clause (iv) or sub-clause (v) ;

(vii) any lineal descendant of a brother or sister of either the individual or of the spouse of the individual."

On the basis of the aforesaid Explanation, it is the vehement contention of learned counsel for the respondents, that a market committee incorporated under the provisions of the Markets Act, is obliged to discharge legal obligations. Conjunctively, learned counsel for the respondent, has invited our attention to section 13 of the Markets Act (already extracted herein-above), and on the basis thereof, it is submitted, that by a fiction of law, under the mandate of Explanation 1 to section 13(7) of the Income-tax Act, a market committee, must be deemed to be a trust.

It is also sought to be submitted, that the market committee under reference must, in addition to being treated as a trust, be further accepted as having charitable objectives. In other words, a market committee must be treated to be a "charitable trust". In order to substantiate his latter submission, learned counsel for the respondents, has placed reliance on section 2(15) of the Income-tax Act, which defines the term "charitable purpose". Section 2(15) of the Income-tax Act, is being extracted here-under :

"Section 2.(15) 'charitable purpose' includes relief of the poor, education, medical relief and the advancement of any other object of general public utility."

On the basis of the definition of the term "charitable purpose", expressed by section 2(15) of the Income-tax Act/learned counsel for the petitioner further submits, that the market committee, under reference, should be treated as a "charitable trust" as it discharges functions solely for the advancement of "general public utility". In this behalf, it is the contention of learned counsel for the respondents, that the entire funds of a market committee (described as the market committee fund under section 27 of the Markets Act) are spent only for the purposes, specifically delineated by section 28 of the Markets Act. These functions, according to learned counsel for the respondents, are in the nature of activities des-cribable as "any other object of general public utility". Additionally, it is the contention of learned counsel for the petitioner, that the funds of the market committees, which are contributed to the Marketing Board, which cumulatively constitute the market development fund, are liable to be utilised only for the purpose, expressed in section 26 of the Markets Act. These functions, according to learned counsel for the respondents, are also in the nature of activities describable as "any other object of general public utility". On the basis of the aforesaid, learned counsel for the respondents desires to conclude, that all the funds collected by a market committee, are used by the market committee, as well as, by the Marketing Board, for "the advancement of any other object of general public utility" i.e., for a purpose falling within the definition of the term "charitable purpose" under section 2(15) of the Income-tax Act. On the basis of the instant submission, learned counsel for the respondent desires us to conclude, that the market committee under reference, is indeed a charitable trust.

It was, however, the contention of learned counsel for the petitioner, that a market committee, cannot be considered to be a charitable institution, on account of the fact, that it does not render service to the general public at large, but its activities are limited to facilitating the sale and purchase of agricultural produce for the sole benefit of agriculturists. In order to substantiate his aforesaid contention, learned counsel for the petitioner has also placed reliance on section 2(15) of the Income-tax Act, which defines charitable purpose (already extracted hereinabove). Learned counsel for the petitioner, relying on the definition of the term "charitable purpose" expressed in the Income-tax Act, in the course of his third submission, also contended, that the activities of the market committee are not relatable to any of the categories expressed thereunder, namely, relief for the poor, education or medical relief. On the instant proposition, learned counsel also placed reliance on the decision rendered by a Division Bench of the Karnataka High Court in CIT v. BEL Employees Death Relief Fund and Service Benefit Fund Association [1997] 225 ITR 270. In the case cited, the respondent-association was formed with the object of rendering prompt financial help in case of death. Financial assistance was also provided for, after the employment of a member who was a regular subscriber to the fund (for not less than seven, years) had come to an end, whether on account of termination of services or on account of superannuation or medical disability etc. Under the rules of the respondent-association, membership was limited to subscribing members who were ultimately to be the beneficiaries. The benefit referred to above could be distributed by the managing committee to eligible persons under the rules, as well as, at the discretion of the managing committee. On the issue of entitlement to exemption under section 11 of the Income-tax Act, as a charitable purpose, it was held by the High Court as under (page 281) :

"The rules unambiguously indicate that the benefit of the scheme or the alleged charitable purpose can be utilised only by specified persons who are required to be the subscribers or their dependents. Con-tributories to the fund allegedly collected for their personal benefits could not be held to be forming an association for charitable purpose and thus being entitled to the benefit of exemption under section 11 of the Act."

In order to controvert the aforesaid contention of learned counsel for the petitioner, learned counsel for the market committee submitted, that the words "... any other object of general public utility", used in section 2(15) of the Income-tax Act, should not be taken to relate to an activity which would benefit the whole of mankind, or all persons in a country, or all persons in a State. According to learned counsel, even if the benefit extends to a section of the public as against an individual, or a set of individuals, it will still be covered by the expression "... any other object of general public utility". In so far his aforesaid contention is concerned, learned counsel for the respondent-market committee placed reliance on the decision of the apex court in Ahmedabad Raw Caste Association v. CIT [1971] 82 ITR 704, and referred to the following observations made therein (page 708) :

"It is well-settled by now and the High Court also has rightly taken that view that an object beneficial to a section of the public is an object of general public utility. To serve a charitable purpose it is not necessary that the object should be to benefit the whole of mankind or all persons in a particular country or State. It is sufficient if the intention to benefit a section of the public as distinguished from a specified individual is present. This court in CIT v. Andhra Chamber of Commerce [1965] 55 ITR 722, overruled the view of Beaumont C.J. in CIT v. Grain Merchants Association of Bombay [1938] 6 ITR 427 (Bom) on the point. It was, however, observed that the section of the community sought to be benefited must be sufficiently defined and identifiable by some common quality of a public or impersonal nature. Where there was no common quality uniting the potential beneficiaries into a class the trust might not be regarded as valid."

Having given our thoughtful consideration to the assertions at the hands of the rival parties, to the third contention, we are of the view, that the Explanation under section 13(7) of the Income-tax Act leaves no ambiguity in the matter, that an assessee discharging legal obligations, has to be treated as a "trust" for the purposes of sections 11, 12 and 12A of the Income-tax Act. The only issue, before such a finding can be recorded for the purpose of the present controversy is, whether a market committee, is involved in discharging legal obligations ?

Section 6 of the Markets Act deals with the issue of declaring a notified market area. Section 6 of the Markets Act is being reproduced hereunder :

"Section 6.(1) After the expiry of the period specified in the notification under section 5 and after considering such objections and suggestions as may be received before the expiry of such period, the State Government may by notification and in any other manner that may be prescribed, declare the area notified under section 5 or any portion thereof to be a notified market area for the purposes of this Act in respect of the agricultural produce notified under section 5 or any part thereof.

(2) The State Government if satisfied that in any notified market area a committee is not functioning or two such areas or parts thereof are to be amalgamated or a part of any such area is to be amalgamated with another such area or is to be constituted into a separate notified market area, may by notification denotify any market area notified under sub-section (1) or any part thereof and, when the whole of such area is denotified, cancel a committee and transfer all with the assets of that committee which remain after satisfaction of all its liabilities to the Board. Such assets shall be utilised by the Board for such objects in the area as it may consider to be for the benefit of the producers of that area.

(3) After the date of issue of such notification or from such later date as may be specified therein, no person, unless exempted by rules made under this Act, shall, either for himself or on behalf of another person or of the State Government within the notified market area, set up, establish or continue or allow to be continued any place for the purchase, sale, storage and processing of the agricultural produce so notified, or purchase, sell, store or process such agricultural produce except under a licence granted in accordance with the provisions of this Act, the rules and bye-laws made thereunder and the conditions specified in the licence :

Provided that a licence shall not be required by a producer who sells himself or through a bona fide agent, not being a commission agent his own agricultural produce or the agricultural produce of his tenants on their behalf or by a person who purchases any agricultural produce for his private use.

(4) For the removal of doubts, it is hereby declared that a notification published in the Official Gazette under this section or section 5 shall have full force and effect notwithstanding any omission to publish, or any irregularity or defect in the publication of a notification under this section or under section 5, as the case may be."

A perusal of section 6 of the Markets Act reveals that a market committee is the creation of law. The law which creates a market committee, consequent upon the issuance of a notification in terms of section 6(1) of the Markets Act, enjoins upon it (the market committee) the statutory obligation of regulating the purchase, sale, storage and processing of agricultural produce. Section 6(3) of the Markets Act, in fact, prohibits anyone from carrying on the aforesaid activities (of purchase, sale, storage and processing of agricultural produce) within the market area, unless, he/she is exempted by rules or is licenced to do so by the market committee. In other words, all these activities are regulated by authority vested in the market committee under the Markets Act.

In addition to the statutory obligations vested in a market committee under section 6 of the Markets Act, it needs also to be highlighted, that further statutory obligations have been placed on a market committee under section 13 of the Markets Act which delineates the duties and powers of a market committee (section 13 of the Markets Act has already been reproduced hereinabove). Our conclusions, on the duties and powers of a market committee under section 13 of the Markets Act, have been delineated in paragraph 3 hereinabove. The sources of income of a market committee are statutorily defined under sections 10 and 23 of the Markets Act. The manner of utilisation of the funds of the market committees, namely, the market committee fund, has been statutorily expressed in section 28 of the Markets Act. Our conclusions in respect thereof, have been recorded in paragraph 4 of the instant order. The manner of utilisation of funds of the Marketing Board, namely, the market development fund, and the duties discharged by the Marketing Board while incurring its expenses, have been statutorily expressed in section 26 of the Markets Act. Detailed conclusions in respect thereof, have been recorded in paragraph 5 hereinabove.

It is apparent from the duties and responsibilities of the market committees, delineated in the foregoing two paragraphs, that a market committee, in the background of the provisions of the Markets Act, should be treated as a body, discharging "legal obligation" (s) within the meaning of section 13(7) of the Income-tax Act. The duties and responsibilities discharged by a market committee, envisaged under the provisions of the Markets Act, referred to above, also lead us to conclude, that the activities of a market committee can be included within the definition of the term "charitable purpose", defined by section 2(15) of the Income-tax Act. The instant conclusion is inevitable from a cumulative reading and interpretation of sections 13, 26 and 28 of the Markets Act (analysed in paragraphs 3, 4 and 5 hereinabove). Briefly stated, it may be noticed, that the obligations discharged by a market committee include the regulation of purchase, sale, storage and processing of agricultural produce with the intention of benefiting the producers, as well as, the consumers of agricultural products. A market committee is also obliged to provide for conveniences for the activities of a market area like construction of buildings, sheds, plinths, etc. A market committee is also obliged to provide conveniences for persons visiting a market area, like providing for shelter, shade and parking facilities. A market committee is also obliged to look after the safety, health and convenience of persons visiting the market area. A market committee is also obliged to construct and repair link roads, approach roads, culverts, and bridges, etc. One of the many specified activities of a market committee is to extend loans to financially weak communities as well as in the repayment of such loans and the interest thereon. The market committee under reference, in the discharge of its obligations, besides carrying out all the aforesaid activities, is stated to have spent a huge sum of money for the construction, development and repair of link roads, culverts, bridges, etc. (this fact has been noticed in the order passed by the petitioner, i.e., the Commissioner of Income-tax, Amritsar, dated November 27, 2003), and has not been disputed in the pleadings of this case, or during the course of arguments. Added to the aforesaid is, a very important and uncontroverted factual position, namely, that the activities of a market committee are nonprofit-oriented.

In view of the legal position declared by the apex court in Ahmedabad Rana Caste Association's case [1971] 82 ITR 704, and the conclusions drawn in paragraph 26 above, we have no hesitation in concluding, that the activities of the market committee, under reference, specially in view of the provisions of the Markets Act, statutorily delineating the activities, duties and responsibilities of a market committee, are certainly activities which fall within the framework of the words ". . any other object of general public utility", contained in the definition of the term "public purpose" in section 2(15) of the Income-tax Act. Since there are no limitations on the beneficiaries of the activities of a market committee, we are of the view, that the judgment rendered in BEL Employees Death Relief Fund and Service Benefit Fund Association's case [1997] 225 ITR 270 (Karn), is clearly inapplicable to the facts of this case. In view of the analysis emerging from the rival contentions deliberated upon from paragraph 19 onwards, we hereby hold that a market committee incorporated under the Markets Act is a trust as it discharges legal obligations within the meaning of section 13(7) of the Income-tax Act. Thus, on the basis of our aforesaid conclusion, we are agreeable with the contention of learned counsel for the respondent-market committee, that the market committee under reference is a "charitable trust" under section 11 of the Income-tax Act.

It would be pertinent to mention that in the midstream of hearing of this case, after arguments had been advanced in the first instance on behalf of the petitioner, by Shri N. L. Sharda, advocate, he was superseded by Shri Sanjiv Bansal, advocate. The primary contention raised by Shri Sanjiv Bansal, during the course of arguments, was that a market committee is neither a charitable trust nor a charitable institution within the ambit of section 12A of the Income-tax Act. It was, therefore asserted that registration allowed to the market committee, under reference, by the Income-tax Appellate Tribunal, Delhi Bench, under section 12AA of the Income-tax Act was improper. This proposition, as advanced by Shri Sanjiv Bansal, has been considered by us while dealing with the third contention advanced on behalf of the petitioner. It is, therefore, not necessary for us to deliberate on the instant issue again. The issue projected is accordingly disposed of in terms of the third contention dealt with hereinabove.

Besides reiterating the other submissions advanced by Shri N. L. Sharda, learned counsel for the petitioner, who had assisted this court in the first instance, one additional contention was advanced by Shri Sanjiv Bansal, i.e., that the respondents could not be given the benefit of registration, even if, for the sake of arguments, it is conceded in favour of the market committee, under reference, that it is a charitable trust/institution. In this behalf, it is the vehement contention of learned counsel for the petitioner, relying on section 12 of the Income-tax Act, that for the benefit of registration under section 12AA of the Income-tax Act, it is imperative, that the trust/institution receives voluntary contributions. According to learned counsel for the petitioner, no part of the income of the market committee, is in the nature of a voluntary contribution, and as such, there is no question of the applicability of section 12A or 12AA of the Income-tax Act. Section' 12 of the Income-tax Act is being extracted hereunder :

"Section 12.(1) Any voluntary contributions received by a trust created wholly for charitable or religious purposes or by an institution established wholly for such purposes (not being contributions made with a specific direction that they shall form part of the corpus of the trust or institution) shall for the purposes of section 11 be deemed to be income derived from property held under trust wholly for charitable or religious purposes and the provisions of that section and section 13 shall apply accordingly.

(2) The value of any services, being medical or educational services, made available by any charitable or religious trust running a hospital or medical institution or an educational institution, to any person referred to in clause (a) or clause (b) or clause (c) or clause (cc) or clause (d) of sub-section (3) of section 13, shall be deemed to be income of such trust or institution derived from property held under trust wholly for charitable or religious purposes during the previous year in which such services are so provided and shall be chargeable to income-tax notwithstanding the provisions of sub-section (1) of section 11.

Explanation.For the purposes of this sub-section, the expression 'value' shall be the value of any benefit or facility granted or provided free of cost or at concessional rate to any person referred to in clause (a) or clause (b) or clause (c) or clause (cc) or clause (d) of sub-section (3) of section 13.

(3) Notwithstanding anything contained in section 11, any amount of donation received by the trust or institution in terms of clause (d) of sub-section (2) of section 80G in respect of which accounts of income and expenditure have not been rendered to the authority prescribed under clause (v) of sub-section (5C) of that section, in the manner specified in that clause, or which has been utilised for purposes other than providing relief to the victims of earthquake in Gujarat or which remains unutilised in terms of sub-section (5C) of section 80G and not transferred to the Prime Minister's National Relief Fund on or before the 31st day of March, 2004, shall be deemed to be the income of the previous year and shall accordingly be charged to tax."

Learned counsel for the petitioner also invited the attention of this court to sections 10 and 23 of the Markets Act, which, according to him, sums up the entire earning avenues of a market committee. Sections 10 and 23 of the Markets Act are being extracted hereunder :

"10. Applications for licences, fees to be paid and cancellation or suspension of licences.(1) Any person may apply to the authority specified in section 9 for a licence which may be granted for such period, in such form, on such conditions and on payment of such fees not exceeding three hundred rupees as may be prescribed :

Provided that if any person carrying on any business of the nature specified in sub-section (3) of section 6 in a notified market area on the date of issue of notification under sub-section (1) of that section, fails to apply for a licence on or before the date specified therein for obtaining licence, the prescribed authority may, before a licence is issued, impose on him such penalty not exceeding two hundred rupees as may be prescribed.

(2) The secretary of the Board may, on being satisfied that there has been a breach of any of the conditions specified in a licence, by an order in writing, cancel or suspend such licence and may also direct that such licence shall not be renewed for such period not exceeding five months for the first breach and not exceeding nine months for the second breach and not exceeding one year for every subsequent breach, as may be specified in that order :

Provided that the chairman of a committee of the area concerned may under intimation to the secretary of the Board suspend a licence for a period not exceeding fifteen days :

Provided further that no such order shall be made without giving the licensee an opportunity to show cause why such an order should not be made.

(3) The secretary of the Board after such enquiry as he may consider necessary, refuse a licence to a person who in his opinion :

(a) is a benamidar for or a partner with any person to whom a licence has been refused, or whose licence is cancelled or suspended under sub-section (2) for the period of such cancellation or suspension ; or

(b) is convicted of an offence affecting the said person's integrity as a man of business within two years of such conviction ; or

(c) is undischarged insolvent :

Provided that no such order shall be made without giving such person an opportunity to show cause why such an order should not be made.

(4) Any person aggrieved by an order made under this section may at any time within one month of the making thereof, appeal to the State Government if such order is passed by the secretary of the Board and to the secretary of the Board if such order is passed by the chairman of the committee.

23. Levy of fees.A committee shall subject to such rules as may be made by the State Government in this behalf, levy on ad valorem basis

(i) fees on the agricultural produce bought or sold by a licensee in the notified market area at a rate not exceeding two rupees for every one hundred rupees ; and

(ii) also additional fees on the agricultural produce when sold by a producer to a licensee in the notified market area at a rate not exceeding one rupee for every one hundred rupees.

Provided that

(a) no fee shall be leviable in respect of any transaction in which delivery of the agricultural produce bought or sold is not actually made ; and

(b) a fee shall be leviable only on the parties to a transaction in which delivery is actually made."

Relying on the provisions of sections 10 and 23 of the Markets Act and the fact that no part of the income of a market committee flows to it in the form of voluntary contributions, it is contended, that the market committee under reference, is not entitled to registration under section 12AA of the Income-tax Act.

Learned counsel for the respondent-market committee, in clear and unequivocal terms contended, that the registration sought by the market committee, under reference, under section 12A of the Income-tax Act for tax exemption, has been claimed under section 11 of the Income-tax Act, and not under section 12 thereof. It is, therefore, the contention of learned counsel for the respondents, that it is not necessary for them to respond to the submission advanced by learned counsel for the petitioner, as the submission noticed in the foregoing paragraph, is wholly misconceived, as the same is not relevant to tax exemption sought by the market committee in question, under section 11 of the Income-tax Act.

In view of the clear stance adopted at the hands of the respondents, that the registration sought by the market committee is for tax exemption under section 11 of the Income-tax Act and not under section 12 of the Income-tax Act, we are of the view, that there is no merit in the fourth contention advanced on behalf of the petitioner.

It also needs to be noticed that learned counsel for the petitioner, in the nature of his fifth submission, half-heartedly raised the issue of delay and laches by asserting, that although, tax exemption available to the respondents-market committees, under section 10(20) of the Income-tax Act, ceased to be operational after April 1, 2003, yet the application moved by the Market Committee, Dhariwal, for registration under section 12A of the Income-tax Act, was much later. In response to the instant contention of learned counsel for the petitioner, Shri M. L. Garg, learned counsel appearing for the market committees, submitted that the claim for income-tax exemption can be raised by the respondents-market committees, only when an audit report is filed, depicting which part of the income of the market committee has been utilised for charitable purposes. Such an audit report, according to Shri M. L. Garg, could have been filed only after the claim of registration at the hands of the market committees, was favourably considered under section 12A of the Income-tax Act, and only, after the grant of registration under section 12AA of the Income-tax Act. Delay, according to learned counsel for the respondents, if any, had occurred due to the non-registration of the respondent-market committee by the petitioner, i.e., the Commissioner of Income-tax, Amritsar, and as such, the market committee cannot be blamed for the same.

We are of the view that there is substance in the contention of learned counsel for the respondents. A charitable or religious trust, envisaged under section 11 of the Income-tax Act (or even under section 12), is entitled to exemption from the liability of tax, after it is registered under section 12AA of the Income-tax Act. The claim of the Market Committee, Dhari-wal, made for registration under section 12A of the Income-tax Act was declined by the Commissioner of Income-tax, Amritsar, by an order dated November 27, 2003. The Market Committee, Dhariwal, had to assail the aforesaid order, which it did successfully, by preferring an appeal before the Income-tax Appellate Tribunal, Delhi Bench. The Income-tax Appellate Tribunal, Delhi Bench, accepted the contention of the Market Committee, Dhariwal, by holding that it was entitled to registration under the provisions of section 12AA of the Income-tax Act, by an order dated March 14, 2005. In the aforesaid view of the matter, it is not possible for us to decline the relief sought by the respondents, for reasons of delay and laches. Now, that the Income-tax Appellate Tribunal, Delhi Bench, has recorded a finding in favour of the Market Committee, Dhariwal, for the grant of registration, sought by it through an application preferred under section 12A of the Income-tax Act. and the aforesaid finding has been approved by this order/judgment, we are of the view, that if the respondent-market committee, Dhariwal, shall be granted registration, in terms of section 12AA of the Income-tax Act, without any further delay. The market committee, if it is so advised, shall thereafter, submit audit reports to claim exemption from the liability of tax.

No other contention, besides those dealt with hereinabove, was advanced by learned counsel representing the petitioner.

For the reasons recorded hereinabove, we are of the view, that there is no merit in the claim of the petitioner. In view of the finding recorded by us on the third contention of learned counsel for the petitioner, namely, that the respondent-market committee is a charitable trust within the meaning of section 11 of the Income-tax Act, we are satisfied, that the determination by the Income-tax Appellate Tribunal, Delhi Bench, that the application submitted by the Market Committee, Dhariwal, under section 12A of the Income-tax Act, deserved to be accepted, and that, the Market Committee, Dhariwal, deserved to be registered under section 12AA of the Income-tax Act, is fully justified and is in consonance with the provisions of the Income-tax Act.

Despite our aforesaid conclusions, on the claims agitated by learned counsel for the rival parties, we desire to notice one further contention advanced by Shri B. K. Mukhi, advocate, appearing on behalf of the respondents, namely, that registration under section 12AA of the Income-tax Act, by itself would not exempt the entire income of a market committee, from the liability of income-tax. Referring to section 11 of the Income-tax Act, learned counsel for the respondents, specifically pointed out that only such income of the market committee, as was used by it for charitable purposes alone, would be liable to exemption of income from tax. On the issue canvassed, learned counsel invited our attention to the decision rendered by a Division Bench of this court in Sonepat Hindu Educational and Charitable Society v. CIT [2005] 278 ITR 262, wherein it was observed as under (page 270) :

"As regards the question whether the petitioner's income would be liable to be included in its total income under the provisions of sections 11 and 12 of the Act, a bare perusal of the said provisions would show that there are various factors, like the nature of contributions ; the quantum of income set apart and accumulated for application in future for specified purposes which would require consideration to determine whether the income derived by such trust or society would be liable to be included in the total income. It will thus be not possible, to determine on the date when a donation is made for deduction under section 80G, as to what will be the position as on the end of the relevant previous year of the society or the trust, who had sought approval under section 80G of the Act. We have no hesitation in holding that the scope of enquiry by the Commissioner, while dealing with the application under section 80G(5)(vi) of the Act, extends to eligibility to exemption under various provisions of the Act, referred to in that sub-section, but not to actual computation of income under the Act, particularly when a society or a trust is claiming exemptions under sections 11 and 12 and not under section 10 of the Act ...."

The aforesaid submission had been advanced for a totally different purpose, namely, to highlight the fact that registration under section 12AA of the Income-tax Act did not ipso facto result in the grant of any income-tax exemption to a municipal committee. The effort, on the part of learned counsel, while advancing the instant contention, was to show, that registration under section 12AA of the Income-tax Act did not ipso facto bestow any benefit on the market committee. He clarified that, for the benefit of income-tax exemption, it would again be open to the petitioner to independently determine whether the market committee, had utilised the income for which it seeks exemption, for a charitable purpose, in terms of the mandate of section 11 of the Income-tax Act, and only such income, which is so utilised, to the satisfaction of the income-tax authorities, would not be included, in the total income of the market committee, for the assessment year, under reference for levy of tax. We find merit in the aforesaid contention. We, therefore hereby clarify that it will be open to the petitioner to examine the audit reports submitted by the market committee under reference, so as to determine the justification of the claim of the respondent-market committee, for claiming tax exemption under section 11 of the Income-tax Act.

The instant appeal stands dismissed with the aforesaid conclusions and observations.