COMMISSIOENR OF INCOEM -TAX, HISAR vs. MARKET COMMITTEE, ELLENABAD

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ITA/18/2011HC Punjab & HaryanaPHHC01095498201101 April 2011Author: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE AJAY KUMAR MITTAL3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal filed by the revenue. The Court noted that the revenue's counsel fairly conceded that the substantial questions of law raised in the appeal were covered against the revenue by previous judgments of the same High Court. Specifically, question (i) was covered by the Court's decision in Commissioner of Income-Tax, Hisar Vs. Market Committee, Narwana (ITA No.151 of 2010, dated 5.7.2010). Questions (ii) and (iii) were covered by the judgment in Commissioner of Income Tax, Karnal Vs. Market Committee, Pipli (ITA No.535 of 2009, dated 5.7.2010). Question (iv) was covered by the decision in Commissioner of Income Tax, Hisar Vs. Market Committee, Tohana (ITA No.823 of 2010, dated 28.1.2011). Consequently, the Court found that no substantial question of law arose for consideration and dismissed the appeal.

What were the facts?

The appeal was filed by the revenue (Commissioner of Income-Tax, Hisar) against an order dated 25.5.2010 passed by the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench. The ITAT's order pertained to the assessment year 2007-08 and concerned the assessee, Market Committee, Ellenabad. The revenue challenged the ITAT's decision on several substantial questions of law, including the allowability of an expenditure of Rs.65,52,109/- contributed to HSAM Board, the allowability of depreciation on assets for which expenditure was already allowed as application of income, and the benefit of accumulation of income amounting to Rs.1,98,42,581/-.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether the expenditure of Rs.65,52,109/- contributed to HSAM Board under statutory obligation is allowable, considering the lack of evidence of actual incurrence and whether it falls within the ambit of application of income for charitable purposes under Section 2(15) of the Income Tax Act, 1961. 2. Whether allowing depreciation on capital assets, whose acquisition cost was already allowed as 'application of income' for exemption under Section 11, amounts to double deduction for the same expenditure. 3. Whether allowing depreciation on capital assets is justified in light of the Apex Court decision in Escorts India Ltd., which prohibits double deductions on the same expenditure without clear statutory indication. 4. Whether the benefit of accumulation of income amounting to Rs.1,98,42,581/- is allowable, given that no resolution was filed before filing the return and the stated purpose was vague. The revenue argued that the expenditure to HSAM Board was not proven and did not qualify as application of income for charitable purposes. It also contended that allowing depreciation on assets for which the expenditure was already allowed as application of income would lead to double deduction. The revenue relied on the Apex Court decision in Escorts India Ltd. The assessee's arguments are not explicitly recorded in the provided text.

Which sections of the Income-tax Act were involved?

Section 260A,Section 2(15),Section 11

AI-generated summary — verify with the full judgment below

Income-tax Appeal No.18

of 2011

-1- *** IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Income-tax Appeal No.18

of 2011

Date of decision: 1.4.2011 Commissioner of Income-Tax, Hisar ...Appellant Versus Market Committee, Ellenabad ...Respondent CORAM: HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MR.JUSTICE AJAY KUMAR MITTAL Present: Mr. Yogesh Putney, Advocate for the appellant.

**** ADARSH KUMAR GOEL, J (

Oral)

.

1.

This appeal has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 against order dated 25.5.2010 passed by the Income Tax Appellate Tribunal, Chandigarh Bench 'A', Chandigarh in ITA No.429/Chd/2010, for the assessment year 2007-08, raising following substantial questions of law:- “i). Whether on the facts and in the circumstances of the case, the learned ITAT was justified in holding that the expenditure of Rs.65,52,109/- claimed to have been contributed to HSAM Board under statutory obligation by virtue of Section 27 of the Punjab Agricultural Produce Market Act, 1961 is allowable without appreciating that no evidence

Income-tax Appeal No.18

of 2011

-2- *** could be produced by the assessee to prove that such expenditure was actually incurred and whether such contribution can be treated to fall within the ambit of application of income for charitable purposes as defined in Section 2(15) of the Act? ii).

Whether on the facts and in the circumstances of the case, the Hon'ble ITAT is justified in allowing 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 on these capital assets will amount to double deduction for the same expenditure? iii). Whether allowing of depreciation on the capital assets by Hon'ble High Court is justified in the light of the Hon'ble Apex Court decision in the case of 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? iv) Whether on the facts and in the circumstances of the case, the Hon'ble ITAT is justified in allowing

Income-tax Appeal No.18

of 2011

-3- *** the benefit of accumulation of income amounting to Rs.1,98,42,581/- without appreciating the fact that no such resolution was filed before filing the return and the purpose mentioned was vague?”

3.

Learned counsel for the revenue very fairly states that question (i) is covered against the revenue by the judgment of this Court dated 5.7.2010 in ITA No.151 of 2010 Commissioner of Income-Tax, Hisar Vs. Market Committee, Narwana, questions no. (ii) and (iii) are covered against the revenue by the judgment of this Judge

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