COMMISSIONER OF INCOME TAX, HISAR vs. MARKET COMMITTEE, ADAMPUR

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ITA/526/2010HC Punjab & HaryanaPHHC01093469201018 November 2010Bench: 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 filed by the Revenue. Regarding question (i), the Court noted that the issue was covered against the Revenue by its own previous judgment dated July 5, 2010, in ITA No. 151 of 2010 (CIT, Hisar v. Market Committee, Narwana). Similarly, for questions (ii) and (iii), the Court observed that these issues were covered against the Revenue by its judgment dated July 5, 2010, in ITA No. 535 of 2009 (CIT, Karnal v. Market Committee, Pipli). Consequently, based on these precedents, the appeal was dismissed. No specific reasoning on the merits of each question was provided in this judgment, as it relied on prior decisions.

What were the facts?

The Revenue has appealed to the High Court of Punjab and Haryana against an order of the Income Tax Appellate Tribunal (ITAT) dated June 24, 2009, for the assessment year 2006-07. The appeal concerns the taxability of a Market Committee. The ITAT's order allowed certain deductions claimed by the assessee. The appeal raises three substantial questions of law regarding the allowability of payments to the Haryana Agriculture Marketing Board, depreciation on capital assets, and the principle of double deduction.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether the ITAT was justified in allowing 30% of market fees earned by the Market Committee as an application of income for charitable purposes, despite it being a statutory obligation to pay this amount to the Haryana Agriculture Marketing Board, thus constituting a sharing of income by an overriding title? 2. Whether the ITAT was justified in holding that depreciation was allowable on a capital asset when the capital expenditure incurred for its acquisition had already been allowed as an application of income of the trust? 3. Whether the ITAT's decision to allow double deduction on depreciation, when capital expenditure on the asset was already allowed, is justified in light of the Apex Court's decision in Escorts Ltd. Vs. UOI, which states that without clear statutory indication, the statute should not permit two deductions on the same expenditure? The Revenue argued that the payment to the Board is a statutory sharing of income, not an application of income. For issues 2 and 3, the Revenue contended that allowing depreciation when the capital expenditure was already allowed as application of income leads to double deduction, which is impermissible. The judgment does not record specific arguments from the assessee.

Which sections of the Income-tax Act were involved?

Section 260-A

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.A. No.526 of 2010 Date of decision: 18.11.2010 Commissioner of Income Tax. -----Appellant. Vs. Market Committee, Adampur. -----Respondents 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. 1. 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, New Delhi dated 24.6.2009 in I.T.A. No.1550/Del/09 for the assessment year 2006-07 proposing to raise following substantial questions of law:- “i) Whether on the facts and in the circumstances of the case, the learned ITAT was justified in allowing payment of 30% of Market fees earned by it paid to the Haryana Agriculture 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 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

I.T.A. No.526 of 2010 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 Income-tax Appellate Tribunal was justified in holding that depreciation was allowable on the capital asset, when deduction for capital expenditure incurred for acquisition of these capital assets has already been allowed as application of income of the trust? iii) Whether the ITAT’s decision to allow double deduction on depreciation when capital expenditure on the asset has already been allowed is justified in the light of Apex Court’s decision in Escorts Ltd. 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 the same expenditure? 3. Learned counsel for the revenue fairly states that as far as question No.(i) is concerned, the same is covered against the revenue by judgment of this Court dated 5.7.2010 in I.T.A. No.151 of 2010 Commissioner of Income Tax, Hisar v. Market Committee, Narwana and question Nos.(ii) and (iii) are covered against the revenue by judgment of this Court dated 5.7.2010 in I.T.A. No.535 of 2009 Commissioner of Income Tax, Karnal v. Market Committee, Pipli. 4. Accordingly, the appeal is dismissed. (ADARSH KUMAR GOEL) JUDGE 2

I.T.A. No.526 of 2010 November 18, 2010 (AJAY KUMAR MITTAL) ashwani JUDGE 3

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