THE COMMISSIONER OF INCOME TAX ROHTAK vs. HARYANA STATE AGRICULTURAL MARKET COMMITTEE GOHANA

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ITA/180/2014HC Punjab & HaryanaPHHC01109309201427 November 2014Bench: MR. JUSTICE AJAY KUMAR MITTAL,MR. JUSTICE MAHABIR SINGH SINDHU2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the substantial questions of law raised by the revenue had already been answered against the revenue in a previous case, ITA-151-2010, Commissioner of Income Tax Hisar Vs. Market Committee, Narwana, decided on July 5, 2010. The revenue's counsel was unable to distinguish the present case from the cited precedent or refer to any other binding authority. Therefore, the High Court answered all the questions of law against the revenue in terms of the decision in ITA-151-2010. The specific findings of the ITAT on each issue, which were upheld by the High Court, are not detailed in this judgment, but the operative direction was to follow the precedent, implying the ITAT's order was sustained.

What were the facts?

The Commissioner of Income Tax (Revenue) filed an appeal before the High Court of Punjab and Haryana at Chandigarh, challenging an order dated September 13, 2013, passed by the Income Tax Appellate Tribunal, Delhi Bench 'C' (Tribunal). The appeal pertains to the assessment year(s) not specified in the judgment. The dispute involves the deductibility of an advance payment for construction as application of income for charitable purposes, the deletion of an addition on account of interest on FDR investment, and the deletion of depreciation claimed by the assessee. The assessee is the Haryana State Agricultural Market Committee, Gohana.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether the ITAT was justified in holding that an advance payment of Rs. 5,39,36,522/- for construction is considered as application of income for charitable purposes under Section 11 of the Income Tax Act, 1961, when it should only be considered as application in the year of actual utilization. 2. Whether the ITAT erred in deleting the addition of Rs. 4,77,786/- made on account of interest on FDR investment with HVPN, as no such income was declared by the assessee. 3. Whether the ITAT erred in deleting the addition of Rs. 20,35,810/- made on account of depreciation claimed by the assessee, when depreciation on the same asset for which application of funds equivalent to its cost was claimed and allowed as capital expenditure would result in more than 100% deduction. Contentions: Assessee: Not recorded in the judgment. Revenue: Argued that the advance payment for construction should be applied in the year of utilization, not the year of payment. Further argued that interest on FDR and depreciation claims were incorrectly deleted by the ITAT.

Which sections of the Income-tax Act were involved?

Section 11

AI-generated summary — verify with the full judgment below

ITA

-180-2014

[ 1 ] IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

ITA-180-2014 (O&M)

Date of decision: 27.11.2014

The Commissioner of Income Tax, Rohtak ..... Appellant

VERSUS Haryana State Agricultural Market Committee, Gohana ..... Respondent

CORAM: HON'BLE MR. JUSTICE RAJIVE BHALLA HON'BLE MR. JUSTICE B.S. WALIA Present: Mr.Inderpreet Singh, Advocate, for the appellant.

******* RAJIVE BHALLA, J. (ORAL) The revenue is before us, challenging order dated 13.09.2013, passed by the Income Tax Appellate Tribunal, Delhi Bench 'C', New Delhi, (hereinafter referred to as the 'Tribunal'), on the following substantial questions of law: - “a. Whether Hon'ble ITAT New Delhi is justified in law in holding that payment of advance Rs.5,39,36,522/- for construction, made by the Market Committee is considered as application of income for charitable purposes u/s 11 of the IT Act whereas the same can only be considered as application of income in the year in which it is actually utilized. b. Whether Hon'ble ITAT New Delhi has erred in law in deleting the addition of Rs.4,77,786/- made on account of interest on investment made on FDR with HVPN as no such income from this investment made was declared by the assessee. c. Whether Hon'ble ITAT New Delhi has erred in law in deleting the addition of Rs.20,35,810/- made on account of depreciation claimed by the assessee as the

ITA

-180-2014

[ 2 ] claim of depreciation on the same asset on which application of funds equivalent to cost of acquisition has been claimed and allowed as Capital Expenditure would amount to more than 100% deduction on the same outgoing.” We have heard counsel for the appellant. The questions of law have already been answered against the revenue in ITA-151- 2010 “Commissioner of Income Tax Hisar Vs. Market Committee, Narwana” decided on 05.07.2010. Counsel for the revenue despite his attempt to urge to the contrary, is unable to distinguish the aforesaid judgment or refer to any other binding precedent to the contrary. Consequently, we answer the questions of law against the revenue in terms of decision dated 05.07.2010, rendered in ITA-151- 2010 “Commissioner of Income Tax Hisar Vs. Market Committee, Narwana.”

[ RAJIVE BHALLA ]

JUDGE 27.11.2014

[ B.S. WALIA ] Shamsher S.Sabharwal

JUDGE SHAMSHER SINGH 2014.11.29 11:34 I attest to the accuracy and authenticity of this document Chandigarh

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