Krishi Utpadan Mandi Vs ITO (ITAT Lucknow)
Summary: The assessee, a statutory Krishi Utpadan Mandi Samiti constituted under the Uttar Pradesh Mandi Adhiniyam, 1964, filed its return of income for A.Y. 2019-20 on 31-10-2019. The return was processed under section 143(1), and the exemption claimed in the original return was disallowed, resulting in a tax demand of Rs. 4,89,73,685/-. The assessee subsequently filed an application under section 154 dated 08-12-2022, stating that its income was exempt under section 10(26ABB) of the Income Tax Act, 1961. The relief was not granted, and the CIT(A) dismissed the appeal.
Before the Tribunal, the assessee submitted that it was admittedly a statutory Agriculture Produce Market Committee constituted under the Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964 and was entitled to exemption under section 10(26ABB). It contended that the wrong reference to section 10(23C) in the return was an inadvertent mistake and that exemption could not be denied on this technical ground. The assessee also relied upon relief granted in its own cases for A.Ys. 2015-16, 2016-17 and 2017-18.
The Revenue submitted that the assessee had claimed exemption under the wrong provision and had not filed a revised return mentioning section 10(26AAB). Reliance was placed on Goetze (India) Ltd. V. Commissioner of Income-tax [2006] 157 Taxman 1(SC).
The Tribunal noted that section 10(26AAB), inserted by the Finance Act, 2008 with effect from 01-04-2009, provides exemption for any income of an agriculture-produce market committee or board constituted under any law for the time being in force for regulating the marketing of agricultural produce. It further noted that the assessee was constituted under the Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964 for regulating the marketing of agricultural produce and that exemption had been granted to the assessee for A.Ys. 2015-16, 2016-17 and 2017-18.
The Tribunal held that the assessee’s claim under section 10(23C) instead of section 10(26AAB) did not prevent it from claiming the exemption under section 10(26AAB) to which it was legally entitled. It found the case relied upon by the Ld. DR to be inapplicable in the circumstances of the present case.
Accordingly, the Tribunal allowed the appeal of the assessee for statistical purposes and directed the Assessing Officer to give the benefit of section 10(26AAB) after verification of the conditions laid down under that section.
Cases Discussed
- Pr. Commissioner of Income Tax-20 v, Fish Poultry and egg Marketing Committee ITA 72/2023 — Delhi High Court
- Krishii Utpadan Mandi Samiti Khaga vs. DCIT_CPC Bangalore (Local-ITO-2(4) Fatehpur ITA No. 69 to 86/All/2020 dated 18-11-2020
- Kums Rura v. CPC Bangalore ITO (Exemption) Kanpur ITA No.101/LKW/2024 dated 13-01-2026
- Mumbai APMC v. ACIT(Exemption) Circle-2 Mumbai dated ITA No. 5185/Mum/2024 dated 11-04-2025
- Krishii Utpadan Mandi Samiti Tikonja Lakhimpur Kheri vs. ACIT(CPC) Bangalore ITA No.688/LKW/2018 dated 10-12 -2018
- Goetze (India) Ltd. V. Commissioner of Income-tax [2006]157 Taxman 1(SC)
FULL TEXT OF THE ORDER OF ITAT
This appeal by the assessee is directed against the orders of the Commissioner of Income Tax Appeal Add/JCIT(A)-1 Visakhapatnam [hereinafter referred to as “Ld.CIT(A)”] vide order dated 23-01-2026 arising out the intimation order passed by the CPC under section 154 of the Income Tax Act, 1961 (in short “the Act” Act, dated 28-06-2023.
2. The appeal is time barred by 4 days. In the condonation application has stated that the delay has occurred due to unavoidable circumstances being due to administrative reasons. The assessee has shown the sufficient cause not to file the appeal within time therefore, the delay is condoned and appeal is admitted for adjudication.
3. The assessee has raised the following grounds in appeal as under:
1. Because the Learned Commissioner of Income Tax, Appeals erred in law on facts in dismissing the appeal and in upholding denial of exemption to the appellant, through the appellant is statutory agricultural produce market committee constituted under the Uttar Pradesh Krishi Utpatan Mandi Adhiniyam, 1964 for regulating the marketing of agriculture produce and is entitled to exemption under section 10(26AAB) of the Income Tax Act, 1961.
2. Because the Learned Commissioner of Income Tax, Appeals erred in law on facts in holding that exemption under section 10(26AAB) could not be granted merely because the appellant had claimed exemption under a n incorrect provision in the return of income and had not filed a revised return without appreciating that a lawful exemption cannot be denied on account of a clerical inadvertent or technical error in the manner of claim.
3. Because the Learned Commissioner of Income Tax, Appeals failed to appreciate and properly deal with the appellants own case material for Assessment Year 2017-18 including the assessment order passed under section 143(3), wherein the entitlement of the appellant to exemption under section 10(26AAB) was accepted and income was assed at Nil.
4. Because the Learned Commissioner of Income Tax, Appeals erred in law on facts in failing to appreciate that the issue involved is not of factual ineligibility but only of correct legal characterization of exemption and therefore the claim could not have been rejected on procedural grounds
5. Because the Learned Commissioner of Income Tax, Appeals failed to consider and adjudicate the detailed written submissions documentary evidences and judicial precedents specifically placed on record by the appellant during the course of appellate proceedings.
6. Because the Learned Commissioner of Income Tax, Appeals erred in law on facts in sustaining the consequences of processing under section 143(1) and rejection under section 154 without granting the appellant its lawful statutory exemption.
7. Because the appellant respectfully submits that in its own case for earlier assessment years, including Assessment Years 2015-16 and 2016-17 exemption under section 10(26AAB) has been accepted by the appellate and assessing authorities and the appellant seeks leave to rely upon such earlier orders in support of the present appeal.
8. Because without prejudice to the above the learned Commissioner of Income Tax Appeals ought to have restored the matter for proper verification and adjudication with a direction that exemption under 10(26ABB) be examined on merit instead of rejecting the claim outright.
9. Because the levy of tax interest and consequential demand is unsustainable in law.
10. Because the appellant craves leave to add, amend alter vary or withdraw any ground of appeal at or before the time of hearing.
4. The brief facts of the case are that the assessee is a statutory Krishi Utpadan Mandi Samiti constituted under the Uttar Pradesh Mandi Adhiniyam,1964. The assessee filed the ITR for A.Y. 2019-20 on 31-10-2019. The return of income was processed and the intimation received to the assessee under section 143(1) dated 09-06-202 wherein deduction claimed in original return of income was disallowed and certain demand of tax Rs. 4,89,73,685/-was raised. In the response of the same the assessee filed the rectification under 154 dated 08-12-2022 claiming that the income is exempt under section 10(26ABB) of the Income Tax Act 1961. The relief was not granted to the assessee on the application under section 154 of the Act. Aggrieved the order of the AO the assessee preferred the appeal before the Ld. CIT(A) who vide his order dated 23-0 1-2026 dismissed the appeal of the assessee. The Ld. CIT(A) rejecting the appeal observed as under:-
5.2 The main contention of the appellant is with regard to non- granting of exemption u/s 10(26ABB) to the Samithi. As seen from records, the appellant has filed ROI for the A.Y.2019-20 claiming exemption u/s 10(23C) of the IT Act and the same was disallowed by CPC. Vide submission dated 11-01-2024, the appellant has made certain submission, wherein he stated that return was filed claiming exemption u/s 10(23C) instead of 10(26ABB) of the IT Act. As seen from the record it is evident that the appellant has claimed exemption u/s 10(23C) of the IT Act in the ROI. As the appellant has not fulfilled the provisions of section 10(23C), the CPC has denied the exemption. Thus, there is no error in the action of the CPC, if there is a mistake in the ROI, the appellant has got the opportunity to file the revised return rectifying such mistake. But in this case as per record appellant has not filed revised return rectifying such mistake. Thus, the ground of appeal filed by the appellant on the issue are dismissed.
5.3 The other grounds of appeal are general/ consequential in nature. Hence, no separate adjudication is required.
6. Hence, the grounds of appeal raised by the appellant M/s Krishi Utpadan Mandi Samiti Badaun against the order passed u/s 154 of the A.Y.2019-20 are Dismissed.
5. The Ld. AR submitted that the assessee admittedly a statutory Mandi Samiti under the UP Krishi Utpadan Mandi Adhiniyam, 1964 and has exempt income under section 10(26ABB) of the Act. The revenue has admitted this fact that the assessee is an agriculture Produce Market Committee. He also submitted that in the case of Pr. Commissioner of Income Tax-20 v, Fish Poultry and egg Marketing Committee ITA 72/2023 the Hon’ble Delhi High Court held that statutory phrase is “any income” and not agriculture income”. The appeal of the assessee was dismissed on the technical ground. He further submitted that assessee was not well versed with the provisions of the Income -tax Act and fully depend upon the income tax counsel for legal advice who advertently mentioned the wrong section in claiming the exempt income. He further submitted that since the assessee is constituted under the Utter Pradesh Krishi Utpadan Mandi Adhiniyam 1964 for the purpose of regulating the marketing of Agriculture Produce its entire income is exempt under clause (26ABB) of section 10 of the Act and there is no legal requirement to file return of income. He also submitted that the principal of res judicata is not strictly applicable in the proceedings of the income but consistency should be maintained. The Revenue in the assessee’s own case for the A.Y. 2015-16, 2016-17 &2017-18 the Ld. CIT(A) directed the Assessing Officer to allow the claim under sect ion 10(26AAB) of the Act and assessed the income at Nil. Reliance is placed on the following judgements:
(i) Krishii Utpadan Mandi Samiti Khaga vs. DCIT_CPC Bangalore (Local-ITO-2(4) Fatehpur ITA No. 69 to 86/All/2020 dated 18-11-2020
(ii) Krishii Utpadan Mandi Samiti Tikonja Lakhimpur Kheri vs. ACIT(CPC) Bangalore ITA No.688/LKW/2018 dated 10-12 -2018
(iii) Kums Rura v. CPC Bangalore ITO (Exemption) Kanpur ITA No.101/LKW/2024 dated 13-01-2026
(iv) Mumbai APMC v. ACIT(Exemption) Circle-2 Mumbai dated ITA No. 5185/Mum/2024 dated 11-04-2025
6. Ld. DR submitted that the assessee claimed the exemption in the wrong under section 10(23C) of the Act. The assessee has not filed the revised return of income, mentioning the correct section 10(26AAB) of the Act. The claim can be made by the assessee after filing the revised income. Reliance is placed the judgment in the case of Goetze (India) Ltd. V. Commissioner of Income -tax [2006]157 Taxman 1(SC) the Hon’ble Supreme Court held that there is no provision under the Income tax Act to make amend in the return of Income.
7. We have heard both the parties and perused the material available on record. The assessee claimed the exempt income under section 10(26AAB) of the Act by moving the rectification application, because at the time of filing the return of income the assessee has mentioned the wrong section 10(23C) of the Act, which was rejected by the Assessing officer and appeal also dismissed on the technical ground by the Ld. CIT(A). Section 10(26AAB) inserted by the Finance Act,2008 w.e.f. 01-04-2009 provides that any income of an agriculture-produce market committee or board constituted under any law for the time being in force for the purpose of regulating the marketing of agricultural produce is exempt from income-tax. Admittedly the assessee Samiti is constituted under Uttar Pradesh Kirishi Utpadan Mandi Adhiniyam, 1964 as Agriculture Produce Market Committee for the purpose of regulating the marketing of Agricultural Produce. The relief was granted to the assessee by the Revenue for the A.Y. 2015-16, 2016-17 & 2017 -18 and his income was assessed Nil after granting the exemption under section 10(26AAB) of the Act. The appeal of the assessee was dismissed on the technical point by the Ld. CIT(A). Exemption under section 10(23C) of the Act was claimed by the assessee samiti by mistake in place of exemption under section 10(26AAB) of the Act. Filing of return claiming exemption under section 10(23C) of the Act does not mean that the assessee samiti cannot claim exemption under section 10(26AAB) of the Act to which the assessee samiti is legally entitled. The case cited by the Ld. DR is not applicable to this case because the assessee Samiti is legally entitled for exemption. Therefore, the appeal of the assessee Samiti is liable to be allowed. Accordingly the Assessing Officer is directed to give the benefit of the section 10(26AAB) to the assessee samiti after verification of the condition as laid down under section 10(26AAB) of the Act.
8. In the result, the appeal of the assessee is allowed for statistical purpose. Order pronounced in the open court on 29.07.2026.
