COMMISSIONER OF INCOME TAX, ROHTAK V. MARKET COMMITTE MEHAM.

ITA/818/2010

AI Insights

The case involves an appeal by the Commissioner of Income-tax, Rohtak against the Market Committee, Meham concerning the assessment year 2006-07. The primary issues were the allowability of an expenditure of \'20,00,000 under the head 'Interest payable to Board against loan' and the non-adjudication on the non-production of bills and vouchers for expenditures claimed towards construction and repair of roads amounting to \'20,01,720. The Income Tax Appellate Tribunal had previously ruled in favor of the Market Committee, which was upheld by the High Court of Punjab and Haryana.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 740136 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 20-04-2012
• Assessment Year: misc
• Other Referred Cases: ITA No.2621/Del/2007, ITA No.1318/Del/2007
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: RAJESH GARG
• Assessee Lawyers: TEJINDER JOSHI
• Keywords: Assessment; Cash system of accounting; Expenditure disallowance; Income Tax; Interest payable; Non-production of bills
• Section: 143(3); 11(1)

Judgement Text

"ITA No.818 of 2010 (O&M) -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No.818 of 2010 (O&M) Date of Decision:20.4.2012 Commissioner of Income-tax, Rohtak ....Appellant Versus The Market Committee, Meham (Rohtak) ....Respondent CORAM: HON'BLE MR. JUSTICE M.M. KUMAR HON'BLE MR. JUSTICE ALOK SINGH Present: - Mr. Tejinder K. Joshi, Advocate, for the appellant. Mr. Rajesh Garg, Advocate, for the respondent. 1.Whether to be referred to the Reporters or not? 2.Whether the judgment should be reported in the Digest? ***** M.M. KUMAR, J. 1. The revenue has filed the instant appeal against the order dated 17.2.2010 passed by the Income Tax Appellate Tribunal Delhi Bench 'E', New Delhi. In ITA No.1539/Del/2009 in respect of assessment year 2006-07 the assessee is the Market Committee Meham. The return of income was filed declaring nil income on 30.10.2006. The assessment proceedings were finalized under Section 143(3) of the Income Tax Act. 2. The revenue has claimed that the following two substantial questions of law would emerge for determination of this Court: - “i) Whether amount of ` 20,00,000/- shown in the liability side under the head “Interest payable to Board against loan” is allowable expenditure within the meaning of Section 11(1) of the Income Tax Act, 1961 as the assessee is following cash system of accounting. ii) Whether on the facts and circumstances of the case, the learned ITAT was right in not adjudicating upon the issue regarding non-production of bills and ITA No.818 of 2010 (O&M) -2- vouchers in support of expenditure of ` 20,01,720/- claimed to have been made by the assessee towards construction and repair of roads, despite the fact that the Department had raised a specific ground of appeal on this regard.” 3. We have heard learned counsel for the parties on the aforesaid issues. Mr. Joshi, learned counsel for the appellant has argued that once cash system of accounting has been followed by the assessee-respondent then the interest payable to the Board against the loan could not be allowed by the CIT(A) or the Tribunal. However, the aforesaid contention is based on the presumption that the interest was payable and not actually paid. Mr. Garg, learned counsel for the assessee-respondent has clarified that interest was actually paid and he has shown us the receipt paying the amount of interest. Therefore, the aforesaid question of law would not emerge for determination of this Court particularly when the Tribunal has placed reliance on the assessee's own case in ITA No.2621/Del/2007 and ITA No.1318/Del/2007. Following the ratio of aforesaid Benches of the Tribunal, the claim of the assessee was allowed and the view taken by the CIT(A) was affirmed. 4. Likewise, non-production of bills and voucher was made the basis by the Assessing Officer for disallowing the expenditure of ` 20,01,720/-, which was claimed as expenditure towards construction and repair of roads. Mr. Joshi has argued that in the absence of voucher and bills, this expenditure could not be allowed as has been rightly held by the A.O. However, the assessee-respondent is a Government department. The account books have been maintained, which are duly audited. Mr. Garg has further submitted that the account books were never rejected by the Assessing Officer and once the account books have ITA No.818 of 2010 (O&M) -3- been accepted then there was no question of deviating from the expenditure shown in those audited account books. Even second question does not emerge for determination. 5. In view of the above, the appeal fails and the same is dismissed. (M.M. Kumar) Judge (Alok Singh) Judge April 20, 2012 R.S. "