CIT, HISAR vs. MARKET COMMITEE BARWALA

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ITA/754/2010HC Punjab & HaryanaPHHC01093722201007 January 2011Author: MR. JUSTICE AJAY KUMAR MITTAL,MR. JUSTICE ADARSH KUMAR GOEL3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal. Regarding the first issue, the Court noted that the question of whether the payment of 30% of market fees to the Haryana Agricultural Marketing Board constituted an application of income for charitable purposes or a sharing of income by overriding title was covered by this Court's prior judgment dated July 5, 2010, in ITA No. 151 of 2010 (Commissioner of Income Tax, Hisar v. Market Committee, Narwana). Similarly, for the second issue concerning the allowability of depreciation on fixed assets for a charitable trust, the Court found it was covered by its judgment dated July 5, 2010, in ITA No. 535 of 2009 (The Commissioner of Income Tax, Karnal v. Market Committee, Pipli). As both substantial questions of law were already decided by the High Court in similar cases, the present appeal was dismissed on the basis of these precedents.

What were the facts?

The Revenue, Commissioner of Income Tax, Hisar, filed an appeal under Section 260A of the Income Tax Act, 1961, against an order dated April 30, 2009, passed by the Income Tax Appellate Tribunal (ITAT), Delhi Bench. The appeal pertains to the assessment year 2004-05 and concerns the assessee, Market Committee, Barwala. The core dispute revolves around whether certain payments made by the Market Committee should be treated as application of income for charitable purposes or as statutory obligations. The ITAT's order is under challenge.

What were the issues?

The Tribunal had to decide two substantial questions of law: 1. Whether the payment of 30% of market fees earned by the Market Committee to the Haryana Agricultural Marketing Board is an application of income for charitable purposes, or if it is a sharing of income by overriding title as per the governing Act. - The Revenue argued that this payment is a statutory obligation and not an application of income for charitable purposes, drawing a distinction between the two. 2. Whether depreciation on fixed assets is allowable in the case of a charitable trust/institution when income is computed under Sections 11 to 13 of the Income-tax Act, 1961, and capital expenditure is considered as application of income. - The Revenue contended that depreciation should not be allowed in such cases, citing the Supreme Court's decision in Escorts Ltd. & another Vs. Union of India and others (199 ITR 43) which held that double deduction is not intended unless statutorily indicated.

Which sections of the Income-tax Act were involved?

Section 260A,Section 11,Section 12,Section 13,Section 32,Section 35(2)(iv)

AI-generated summary — verify with the full judgment below

-1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 754 of 2010 (O&M) Date of Decision: 7.1.2011 Commissioner of Income Tax, Hisar ....Appellant. Versus Market Committee, Barwala ...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.

1.

Delay in refiling condoned.

2.

This appeal has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 against order dated 30.4.2009 passed by the Income Tax Appellate Tribunal, Delhi Bench “E”, New Delhi, in ITA No. 1122/Del/08 for the assessment year 2004- 05, claiming following substantial questions of law:- “(i) Whether on the facts and in the circumstances of the case, the learned CIT(A) was justified in allowing payment of 30% of Market fees earned by it paid to Haryana Agricultural Marketing Board as application of income for charitable purpose, despite the finding that 30% of the market fee has to be paid to the said -2- Board as a statutory obligation under the Agricultural Marketing Board Act, and, therefore, it is not application of income, but it is sharing of Income by an overriding title as per the Act by which the Market Committee is governed? (ii) Whether on the facts and in the circumstances of the case, the learned ITAT was justified in holding that the depreciation on fixed asset is allowable in the case of charitable trust/institution particularly when the income is computed as per provisions of section 11 to 13 of the Income-tax Act, 1961 and question of depreciation does not arise when capital expenditure is also considered as application of income of the assessee and there remains no assets/WDV for claim of depreciation. The strength is drawn from the order of the Hon'ble Supreme Court of India passed in the case of Escorts Ltd. & another Vs. Union of India and others reported in 199 ITR 43 (108) CTR 275 wherein it has been held that when deduction under S. 35(2)(iv) is allowed in respect of capital expenditure on scientific research, no depreciation is allowed under S. 32 on the same asset. There is a fundamental axiom that double deduction is not intended unless there is a clear statutory indication to the contrary?”

3.

Learned counsel for the revenue very fairly states that -3- question (i) is covered by the judgment of this Court dated 5.7.2010 in ITA NO. 151 of 2010 (Commissioner of Income Tax, Hisar v. Market Committee, Narwana) whereas question (ii) is covered by the judgment of this Court dated 5.7.2010 in ITA No. 535 of 2009 (The Commissioner of Income Tax, Karnal v. Market Committee, Pipli).

4.

Accordingly, the appeal is dismissed. (ADARSH KUMAR GOEL) JUDGE January 7, 2011 (AJAY KUMAR MITTAL) gbs JUDGE

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