COMMISSIONER OF INCOEME-TAX, HISAR vs. MARKET COMMITTE, DING

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ITA/32/2011HC Punjab & HaryanaPHHC01095653201108 April 2011Bench: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE AJAY KUMAR MITTAL3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court, while hearing the appeal filed by the Revenue, noted that the substantial question of law concerning the expenditure of Rs.9,56,027/- (Question 1) was covered against the Revenue by this Court's previous judgment dated July 5, 2010, in ITA No.151 of 2010 (CIT v. Market Committee, Narwana). Furthermore, the Court observed that substantial questions of law 2 and 3, relating to the allowability of depreciation and double deduction, were covered by this Court's judgment dated July 5, 2010, in ITA No.535 of 2009 (The Commissioner of Income Tax, Karnal v. Market Committee, Pipli). Based on these prior judgments, the High Court found no merit in the Revenue's appeal. The appeal was accordingly dismissed. No issues were expressly left undecided.

What were the facts?

The Revenue, Commissioner of Income Tax, filed an appeal under Section 260-A of the Income Tax Act, 1961, against the order of the Income Tax Appellate Tribunal (ITAT), Chandigarh, dated May 25, 2010. The appeal pertained to Assessment Year 2007-08 and concerned the Market Committee, Ding, as the respondent assessee. The appeal challenged the ITAT's decision on three substantial questions of law. The ITAT had previously upheld the order of the CIT(A) regarding the allowability of certain expenditures and depreciation claims made by the assessee. The Revenue contended that the ITAT erred in allowing these claims without proper evidence and in contravention of established legal principles.

What were the issues?

The Tribunal had to decide three substantial questions of law: 1. Whether the ITAT was justified in allowing an expenditure of Rs.9,56,027/- contributed to the HSAM Board under statutory obligation, without evidence of actual incurrence and whether such contribution falls within the ambit of application of income for charitable purposes as defined in Section 2(15) of the Income Tax Act, 1961. 2. Whether the ITAT was justified in allowing depreciation on fixed assets for a charitable trust/institution when income is computed under Sections 11 to 13 of the Act, as capital expenditure is considered application of income, leaving no WDV for depreciation. 3. Whether the ITAT was justified in upholding the allowance of double deduction on depreciation when capital expenditure on the asset was already allowed, citing the Apex Court's decision in Escorts Limited Vs UOI. The Revenue argued that for question 1, no evidence was produced to prove the expenditure and its charitable nature. For questions 2 and 3, the Revenue contended that depreciation should not be allowed when capital expenditure is treated as application of income, preventing double deduction. The Assessee's arguments are not recorded in the judgment for any of the issues.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 2(15),Section 11,Section 12,Section 13

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.A. No.32 of 2011 Date of decision: 8.4.2011 Commissioner of Income Tax. -----Appellant. Vs. Market Committee, Ding. -----Respondent. CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present:- Mr. Yogesh Putney, Sr. Standing Counsel for the appellant. --- ADARSH KUMAR GOEL, J.

This appeal has been preferred by the revenue under Section 260-A of the Income Tax Act, 1961 (for short, “the Act”) against the order of the Income Tax Appellate Tribunal, Chandigarh dated 25.5.2010 in ITA No.428/Chd./2010 for the assessment year 2007-08 claiming following substantial question of law:- “1. Whether on the facts and in the circumstances of the case, the Ld. ITAT was justified in holding that the expenditure of Rs.9,56,027/- 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

I.T.A. No.32 of 2011 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 Income-tax Act?” 2. Whether on the facts and in the circumstances of the case, the Hon’ble 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 sections 11 to 13 of the Income Tax Act, 1961 as 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? 3. Whether on the facts and in the circumstances of the case, the Hon’ble ITAT was justified in law in upholding the order of Ld. CIT(A) to allow double deduction on depreciation when capital expenditure on the asset has already been allowed in the light of the Apex Court’s decision in Escorts Limited Vs UOI (199-ITR-43) to the effect 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 same expenditure. Learned counsel for the appellant fairly states that as for as question (1) is concerned, the same is covered against the revenue by judgment of this Court dated 5.7.2010 in I.T.A. No.151 2

I.T.A. No.32 of 2011 of 2010 in CIT v. Market Committee, Narwana and as far as questions (2) and (3) are concerned, the same are covered by judgment of this Court dated 5.7.2010 in I.T.A. No.535 of 2009 The Commissioner of Income Tax, Karnal v. Market Committee, Pipli Accordingly, the appeal is dismissed. (ADARSH KUMAR GOEL) JUDGE April 08, 2011 ( AJAY KUMAR MITTAL ) ashwani JUDGE 3

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