COMMISSIONER OF INCOME TAX PANCHKULA V. MARKET COMMITTE YAMUNA NAGAR

ITA/753/2010

AI Insights

The case involves the Commissioner of Income Tax, Panchkula as the appellant and the Market Committee, Yamuna Nagar as the respondent. The appellant challenged the decision of the Income Tax Appellate Tribunal, Chandigarh, which allowed depreciation on capital assets and deleted the addition of Rs.31,50,000 on account of interest income accrued on advance. The appellant also contested the restoration of the issue regarding the set off of brought forward losses. The High Court of Punjab and Haryana dismissed the appeals, referencing previous judgments that addressed similar issues.

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 727559 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 07-01-2011
• Assessment Year: misc
• Other Referred Cases: Escorts Ltd. Vs. UOI (199 ITR 43), The Commissioner of Income Tax, Karnal v. Market Committee, Pipli, The Commissioner of Income Tax, Karnal v. Market Committee, Ladwa
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Assessee Lawyers: YOGESH PUTNEY
• Keywords: Capital assets; Depreciation; Double Deduction; Interest income; Mercantile system of accounting; Set off of Brought Forward Losses
• Section: 11; 260A

Judgement Text

"ITA No. 753 of 2010 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 753 of 2010 Date of Decision: 7.1.2011 Commissioner of Income Tax, Panchkula ....Appellant. Versus Market Committee, Yamuna Nagar ...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. This order will dispose of ITA Nos. 753 and 760 of 2010 as common questions are involved in both the appeals. 2. ITA No. 753 of 2010 has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 against order dated 31.12.2009 passed by the Income Tax Appellate Tribunal, Chandigarh Bench “B”, in ITA No. 1038/Chdl/2009 for the assessment year 2006- 07, claiming following substantial questions of law:- “(a) Whether on the facts and in the circumstances of the case, the Hon'ble ITAT is justified in allowing depreciation on the capital assets, when capital expenditure relating to acquisition of such assets had already been allowed as “application of income” for the purpose of allowing exemption under section 11 of the Income Tax Act, 1961 and as such further ITA No. 753 of 2010 -2- allowing of depreciation on these capital assets will amount to double deduction for the same expenditure? (b) Whether the Ld. ITAT's decision to allow double deduction on depreciation when capital expenditure on the assets has already been allowed, is justified in the light of the Hon'ble 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? (c) Whether on the facts and in the circumstances of the case and in law the order of the Ld. ITAT is perverse in deleting the addition of Rs.31,50,000/- in the case of Market Committee, Yamuna Nagar for A.Y. 2006- 07 on account of interest income accrued on advance ignoring the findings of the CIT(A) on page 6 of his order dated 01.09.2009, that as the assessee is not following purely a cash system of accounting, the interest income of the assessee from such advances accrues regularly as per mercantile system of accounting which has to be accounted for and taxed on accrual basis? (d) Whether on the facts and in the circumstances of the case and in law, the Ld. Income Tax Appellate ITA No. 753 of 2010 -3- Tribunal was justified in restoring the issue regarding set off of brought forward losses for verification and consequential allowance despite the fact that the income of the assessee to be computed u/s 11 to 13 of the Income Tax Act, 1961; whereas, there is no provision to set off the brought forward losses against exempt income and exemption in each year is based upon the application of prescribed percentage of receipts for charitable purposes?” 3. Learned counsel for the revenue very fairly states that questions (a) and (b) are 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) whereas question (c) is covered by the judgment of this Court dated 7.7.2010 in ITA No. 138 of 2010 (The Commissioner of Income Tax, Karnal v. Market Committee, Ladwa). In view of order passed by this Court in ITA No. 535 of 2009, question (d) is decided in the same terms against the revenue. 4. Accordingly, the appeals are dismissed. 5. A photo copy of this order be placed on the file of the connected case. (ADARSH KUMAR GOEL) JUDGE January 7, 2011 (AJAY KUMAR MITTAL) gbs JUDGE "