COMMISSIONER OF INCOME TAX, SEC-14, HISAR vs. MARKET COMMITTEE TOHANA

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ITA/186/2011HC Punjab & HaryanaPHHC01095505201112 July 2011Author: MR. JUSTICE AJAY KUMAR MITTAL,MR. JUSTICE ADARSH KUMAR GOEL2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal preferred by the Revenue. The Court noted that the learned counsel for the appellant (Revenue) fairly stated that the matter was covered against the Revenue by a previous judgment of the same Court dated 5.7.2010 in I.T.A. No.535 of 2009 in CIT v. Market Committee, Pipli. Therefore, the High Court did not independently decide the questions of law but relied on its prior ruling. The ratio decidendi of the cited precedent would likely be that allowing depreciation on assets whose acquisition cost was already allowed as application of income under Section 11 does not necessarily amount to a double deduction, or that such a deduction is permissible under the Act. The operative direction was the dismissal of the appeal.

What were the facts?

The Revenue, Commissioner of Income Tax, filed an appeal under Section 260A of the Income Tax Act, 1961, against an order of the Income Tax Appellate Tribunal (ITAT), Delhi Bench. The appeal pertains to the assessment year 2007-08 and challenges the ITAT's decision to allow depreciation on capital assets. The assessee is Market Committee, Tohona. The core of the dispute is whether allowing depreciation on capital assets, when the expenditure for acquiring those assets was already allowed as an application of income under Section 11 of the Act, amounts to a double deduction. The Revenue contends this is impermissible.

What were the issues?

1. Whether on the facts and in the circumstances of the case, the Hon’ble ITAT is justified in allowing depreciation on the capital assets even when capital expenditure on acquisition of the corresponding assets had already been allowed as ‘application of income’ for the purpose of allowing exemption under section 11 of the income-tax Act and as such further allowing of depreciation of these capital assets will amount to double deduction for the same expenditure? 2. Whether allowing of depreciation on the capital assets by Hon’ble ITAT is justified in the light of the Hon’ble Apex Court decision in Escorts India Ltd. (199 ITR 43), wherein it has been held that in the absence of clear statutory indication to the contrary, the statute should not be read as to permit an assessee two deductions on the same expenditure? Assessee's Contentions: Not recorded in the judgment. Revenue's Contentions: The Revenue argued that allowing depreciation on capital assets, when the acquisition cost was already treated as an application of income under Section 11 for exemption, constitutes a double deduction of the same expenditure. They relied on the Supreme Court decision in Escorts India Ltd. (199 ITR 43) to support the principle that double deductions should not be permitted without clear statutory intent.

Which sections of the Income-tax Act were involved?

Section 260A,Section 11

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH.

Date of decision: 12.7.2011 Commissioner of Income Tax -----Appellant Vs. Market Committee, Tohona -----Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL ACTING CHIEF JUSTICE HON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present:- Mr. Yogesh Putney, Sr. Standing counsel for the Revenue. --- ADARSH KUMAR GOEL, ACJ This appeal has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 (for short, “the Act”) against the order of Income Tax Appellate Tribunal, Delhi Bench “E”, New Delhi dated 25.6.2010 in I.T.A. No.1335/DEL/2010 for the assessment year 2007-08 proposing following questions of law:- 1. “Whether on the facts and in the circumstances of the case, the Hon’ble ITAT is justified in allowing depreciation on the capital assets even when capital expenditure on acquisition of the corresponding assets had already been allowed as ‘application of income’ for the purpose of allowing exemption under section 11 of the income-tax Act and as such further allowing of depreciation of these capital assets will amount to double deduction for the same expenditure?

2.

Whether allowing of depreciation on the capital assets by Hon’ble ITAT is justified in the light of the Hon’ble Apex Court decision in Escorts India Ltd. (199 ITR 43), wherein it has been held that in the absence of clear statutory indication to the contrary, the statute should not be read as to permit an assessee two deductions on the same expenditure?”

Learned counsel for the appellant fairly states that the matter is covered against the revenue by judgment of this Court dated 5.7.2010 in I.T.A. No.535 of 2009 in CIT v. Market Committee, Pipli. Accordingly, this appeal is dismissed. (ADARSH KUMAR GOEL) ACTING CHIEF JUSTICE July 12, 2011 ( AJAY KUMAR MITTAL ) ashwani JUDGE 2

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