Market Committee, V. DCIT, Karnal

ITA 1072/DEL/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 8501 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 02-07-2009
• Assessment Year: 2006-2007
• Appeal Filed On: 23-03-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHEELA CHOPRA
• Assessee Lawyers: NEERAJ GARG
• Keywords: Depreciation; Charitable institution; Assessment record; Unabsorbed depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : C : NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO. 1072/DEL/2009 ASSESSMENT YEAR : 2006-07 MARKET COMMITTEE, NILOKHERI, DISTT., KARNAL, NEW GRAIN MARKET, NILOKHERI, KARNAL. PAN: AAALM 0084C VS. DCIT, INCOME TAX OFFICE, KARNAL. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI GIRISH ANEJA & SHRI NEERAJ GARG, CA REVENUE BY : SMT. SHEELA CHOPRA, SR. DR O R D E R PER I.P. BANSAL, JUDICIAL MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE. IT IS DI RECTED AGAINST THE ORDER OF THE CIT (A) DATED 9 TH JANUARY, 2009 FOR ASSESSMENT YEAR 2006-07. GROUNDS OF APPEAL READ AS UNDER:- 1. THAT THE ORDER PASSED BY THE ASSESSING OFFICER I S ILLEGAL, ARBITRARY HAS BEEN PASSED IN A HASTE AND HAS IGNORE D BASIC ASPECTS AND FACTS OF THE CASE AND LD. CIT (A) ERRED IN CONFIRMING THE SAME, THUS, CAUSING UNDUE HARDSHIP T O THE ASSESSEE. 2. THAT THE SECOND GROUND OF APPEAL IS TO CHALLENG E THE ACTION OF THE ASSESSING OFFICER IN HOLDING THE STAT US OF THE ASSESSEE AS AOP (TRUST) IN STEAD OF CHARITABLE INST ITUTION ON THE GROUND THAT AN SLP IS PENDING BEFORE THE SUPREM E COURT OF INDIA. THE OBSERVATION OF THE A.O. IS NOT CORRE CT AND HOT IN CONSONANCE WITH PROVISIONS OF LAW & LD. CIT (A) ERR ED IN CONFIRMING THE SAME. THE ACTION OF A.O. IN DENYING TO THE ITA NO.1072/DEL/2009 2 ASSESSEE THE STATUS OF CHARITABLE TRUST IS ILLEGAL AND MAY BE ORDERED TO BE QUASHED. IT IS PRAYED THAT THE SUITABLE DIRECTIONS IN THE MA TTER MAY BE GIVEN TO THE ASSESSING OFFICER. 3. THAT THE LD. A.O. HAS ERRED IN DISALLOWING DEPR ECIATION OF RS.3986129.00 WHICH IS ILLEGAL, UNJUSTIFIED AND AGA INST THE NATURAL LAW OF JUSTICE & LD. CIT (A) ERRED IN CONFI RMING THE SAME. IT IS DESERVES TO BE QUASHED. 4. THAT THE LD. ASSESSING OFFICER HAS ERRED IN NOT CONSIDERING THE 30% BOARD SHARE FOR CALCULATING THE 85% OF THE INCOME, WHICH IS ILLEGAL, UNJUSTIFIED AND AGAIN ST THE NATURAL LAW OF JUSTICE & LD.CIT (A) ERRED IN CONFIR MING THE SAME. 5. THAT THE LD. A.O. HAS ERRED IN NOT CONSIDERING THE DECIDED EXCESS EXPENDITURE OF PREVIOUS YEAR & LD. CIT (A) E RRED IN CONFIRMING THE SAME, WHICH IS ILLEGAL, UNJUSTIFIED AND AGAINST THE NATURAL LAW OF JUSTICE. 6. THAT THE APPELLANT CRAVES TO ADD, DELETE, CONCE DE, MODIFY ANY OR ALL THE GROUNDS OF APPEAL AT THE TIME OF HEA RING OF APPEAL. 2. GROUND NOS.1 AND 2 WERE NOT PRESSED. APROPOS GR OUND NO.3, IT WAS SUBMITTED THAT THE FIGURE MENTIONED IN THE GROUNDS OF APPEAL IS INCORRECT AND THE SAME SHOULD BE READ AS RS.4,48,641/-. THE ASSESSIN G OFFICER DID NOT ALLOW DEPRECIATION WHILE COMPUTING THE INCOME OF THE ASSE SSEE AND THE CIT (A) HAS CONFIRMED THE DISALLOWANCE. 3. AT THE TIME OF HEARING, IT WAS BROUGHT TO OUR NO TICE THAT THE ASSESSEE HAS BEEN GRANTED STATUS OF CHARITABLE INSTITUTION BY TH E ORDER OF THE TRIBUNAL DATED 14 TH MARCH, 2005 IN ITA NO. 5117/DEL/2003 AND THE ASSES SING OFFICER HAS ALSO GIVEN EFFECT TO THE SAID ORDER VIDE ORDER PASSED U/ S 254 OF THE IT ACT, 1961 DATED 27 TH SEPTEMBER, 2006. COPY OF THE SAID ORDER IS PLACED AT PAGES 46 AND 47 OF THE PAPER BOOK. THEREFORE, THE REGISTRATION IS APP LICABLE FOR THE YEAR UNDER CONSIDERATION. IT WAS SUBMITTED THAT IN THE CASES OF OTHER MARKET COMMITTEES IT HAS BEEN HELD THAT DEPRECIATION HAS TO BE ALLOWED A S THE INCOME IS TO BE ITA NO.1072/DEL/2009 3 COMPUTED IN NORMAL COMMERCIAL MANNER. REFERENCE IS MADE TO THE ORDER OF THIS TRIBUNAL DATED 8 TH MAY, 2009 IN THE CASE OF MARKET COMMITTEE JUNDLA, DISTT. KARNAL VS. ASSTT. COMMISSIONER OF INCOME-TAX IN ITA NO.654/DEL/2009. REFERENCE WAS MADE TO PARA 3 TO 4. HOWEVER, THE LD. DR RELIED ON THE ORDER OF THE A SSESSING OFFICER AND LD. CIT (A). 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS IN THE LIGHT OF THE MATERIAL PLACED ON RECORD. THE ISSUE IS COVERED BY THE AFOREMENTIONED TRIBUNAL ORDER DATED 8 TH MAY, 2009 IN WHICH ONE OF US (JM) IS A PARTY. THE RELEVANT PORTION FROM THE SAID DECISION IS REPRODUCED BELOW:- 6. THE ISSUE OF GRANT OF DEPRECIATION IN THE ALI KE CASE I.E., IN THE CASE OF VARIOUS MARKET COMMITTEES OF HARYANA WA S CONSIDERED BY THIS TRIBUNAL VIDE ITS ORDER DATED 20 TH JUNE, 2008 IN ITA NOS.3974/DEL/07, 3975/DEL/07 AND 3357/DEL/07 AND OT HER APPEALS I.E., IN THE CASES OF MARKET COMMITTEES ADAMUR, UKL ANA AND HISAR WHEREIN DEPRECIATION BENEFIT WAS NOT ALLOWED TO THE SE MARKET COMMITTEES AND THIS ISSUE WAS CONSIDERED BY THIS TR IBUNAL IN PARA 11 OF THE SAID ORDER. THE COPY OF THE SAID ORDER I S PLACED AT PAGES 2 TO 42 OF THE PAPER BOOK. THE RELEVANT PARA 11 IS REPRODUCED BELOW:- 11..... . IN THE CASE OF CIT VS. RAJPUR PALLOTTINE SOCIETY 18 0 ITR 579 WHEREIN IT WAS HELD THAT FOR THE PURPOSE OF COMPUTI NG ACCUMULATION OF INCOME ALLOWABLE TO THE EXTENT OF 25% OF INCOME, THE INCOME HAS TO BE COMPUTED IN THE NORMAL COMMERCIAL MANNER AND, HENCE, DEPRECIATION HAS TO BE ALLOWED IN COMPUTING THAT IN COME. NO CONTRARY JUDJEMENT HAS BEEN BROUGHT TO OUR NOTICE A ND HENCE, WE ARE OF THE CONSIDERED OPINION THAT NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE LEARNED CIT (A) ON THIS ISSUE ALSO BEC AUSE THIS ISSUE IS DECIDED BY HIM BY FOLLOWING VARIOUS JUDGMENTS OF GU JARAT AND ITA NO.1072/DEL/2009 4 BOMBAY HIGH COURT AND HENCE WE CONFIRM THE SAME. T HIS ISSUE IS ALSO DECIDED IN FAVOUR OF THE ASSESSEE. 7. LD. DR, HOWEVER, RELIED ON THE ORDER OF THE ASSE SSING OFFICER AND CIT (A). 8. IN THIS VIEW OF THE SITUATION, AFTER HEARING BOT H THE PARTIES, RESPECTFULLY FOLLOWING THE AFOREMENTIONED DECISION, WE DIRECT THE ASSESSING OFFICER TO ALLOW DEPRECIATION BENEFIT TO THE ASSESSEE. 6. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO GRANT THE BENEFIT OF DEPRECIATION TO THE ASSESSEE. THIS GROUND IS ALLOW ED. 7. GROUND NO.4 WAS STATED TO BE COVERED IN FAVOUR O F THE ASSESSEE BY THE DECISION OF THE TRIBUNAL DATED 4 TH DAY OF DECEMBER, 2008 IN ITA NO.1522/DEL/07 A COPY OF WHICH IS PLACED AT PAGES 16 TO 30 OF THE PAPER BOOK. RELEVANT PARA IS PARA 24 WHICH IS REPRODUCED BELOW:- 25. WE HAVE CONSIDERED THE SUBMISSIONS. IT IS NOT ICED THAT THE LEARNED CIT (APPEALS) IN PAGE 8 OF HIS ORDER HAS CA TEGORICALLY BROUGHT OUT THE DETAILS OF THE MARKET COMMITTEE FUN D AND THE PURPOSE FOR WHICH THE MARKET COMMITTEE FUND MAY BE EXPENDED. IT IS FURTHER NOTICED THAT THE LEARNED CIT (APPEALS) H AS FOLLOWED THE DECISION OF THE JURISDICTIONAL PUNJAB & HARYANA HIG H COURT IN THE CASE OF HARYANA DALL & GENERAL MILLS VS. STATE REPO RTED IN AIR (1976) (PUNJAB & HARYANA) 1 WHEREIN THE HON'BLE HIG H COURT HAS CATEGORICALLY HELD THAT THE MANDATE OF THE LEGISLA TURE IN SECTION 27 IS THAT THE MARKET COMMITTEE FUND HAS TO BE UTILIZE D OR FOR THE PURPOSE OF THE ACT AND ANY EXCESS REMAINING THEREAF TER IS TO BE INVESTED IN SUCH MANNER AS MAY BE PRESCRIBED. EVER MARKET COMMITTEE HAS TO CONTRIBUTE CERTAIN PERCENTAGE OF I TS INCOME TO THE AGRICULTURAL MARKETING BOARD TO DEFRAY EXPENSES FOR THE OFFICE ESTABLISHMENT OF THE BOARD AND SUCH OTHER EXPENSES INCURRED BY IT IN THE INTEREST OF THE MARKET COMMITTEES GENERALLY AND ALSO HAS TO PAY TO THE STATE GOVT. THE COST OF ANY SPECIAL OR A DDITIONAL STAFF EMPLOYED BY THE STATE GOVT. IN CONSULTATION WITH TH E COMMITTEE FOR GIVING EFFECT TO THE PROVISIONS OF THE ACT IN THE N OTIFIED MARKET. IT IS FURTHER NOTICED THAT THE HONBLE JURISDICTIONAL HIG H COURT HAVING CATEGORICALLY GIVEN A FINDING ON THIS ISSUE AND THE LD. CIT (A) HAVING FOLLOWED THE PRINCIPLES OF JUDICIAL DISCIPLI NE NO FAULT CAN BE FOUND WITH THE FINDINGS OF THE LD. CIT (A) ON THIS ISSUE. RESPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE HIGH COURT OF ITA NO.1072/DEL/2009 5 PUNJAB & HARYANA WHICH HAS BEEN ALSO FOLLOWED BY TH E LD. CIT (A), THE ORDER OF THE CIT (APPEALS) IS CONFIRMED. CONSE QUENTLY, THE APPEAL OF THE REVENUES APPEAL IS DISMISSED. 8. IN THIS VIEW OF THE SITUATION, AFTER HEARING BOT H THE PARTIES, RESPECTFULLY FOLLOWING THE AFOREMENTIONED DECISION, IT IS HELD T HAT THE AMOUNT OF RS.6,89,540/- PAID BY THE ASSESSEE AS BOARD SHARE IS TO BE CONSID ERED TO BE APPLICATION OF INCOME. THIS GROUND IS ALLOWED. 9. APROPOS GROUND NO.5, IT WAS SUBMITTED THAT THIS ISSUE IS ALSO COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBU NAL DATED 6 TH FEBRUARY, 2009 IN THE CASE OF MARKET COMMITTEE, SAMATHA, PANIPAT IN I TA NO.3111/DEL/07 WHEREIN THE ISSUE HAS BEEN DECIDED AS PER PARA 16 W HICH IS REPRODUCED BELOW:- 16. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND THE JUDGMENTS CITED BEFOR E US. WE FIND THAT THIS ISSUE IS DECIDED BY THE LD. CIT (A) ON TH E BASIS THAT SINCE THE ASSESSEE HAS BEEN HELD TO BE ELIGIBLE FOR EXEMP TION U/S 11, THERE IS NO QUESTION OF ALLOWING OF DEPRECIATION OR UNABSORBED DEPRECIATION. HE HAS NOT RECORDED HIS FINDING AS TO WHETHER THERE ARE ANY BROUGHT FORWARD UNABSORBED DEPRECIATION/LOS SES OR NOT FOR A.Y. 2002-03 AND 2001-02 IN ITA NO.4111//2007 AND F OR A.Y. 2002- 003 IN ITA NO.3111/D/2007. NO MATERIAL HAS BEEN PL ACED BEFORE US ON THIS ASPECT. THE ISSUE REGARDING ALLOWABILIT Y OF DEPRECIATION IS TO BE DECIDED IN A.Y. 2001-02 AND 2002-03 AND NO T IN THE PRESENT YEAR. IF THE CLAIM OF THE ASSESSEE REGARDI NG DEPRECIATION IS ALLOWED IN A.Y. 2001-02 AND 2002-03 AND IF THE SAME REMAINED UNABSORBED IN THOSE YEARS AND IN A.Y. 2003-04, THE SAME HAS TO BE ALLOWED AS SET OFF IN THE PRESENT YEAR FROM INCOME OF THE PRESENT YEAR BEFORE ALLOWING EXEMPTION U/S 11. SIMILARLY, IF THERE IS ANY B/F LOSSES OF THESE YEARS AND ITS CARRY FORWARD WAS ALL OWED IN THOSE YEARS, AND IT COULD NOT BE SET OFF IN A.Y. 2003-04, THEN SET OFF OF THE SAME SHOULD BE ALLOWED IN THE PRESENT YEAR BEFORE A LLOWING EXEMPTION U/S 11. THE ISSUE REGARDING ELIGIBILITY OF EXEMPTION IS NOT RELEVANT BECAUSE SET OFF OF B/F UNABSORBED DEPR ECIATION/LOSS IS TO BE ALLOWED AS PER LAW WHETHER THE INCOME IS EXEM PT OR NOT AND EXEMPTION WILL OF THE REMAINING INCOME, IF ANY. WE RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER TO ALLOW SET OFF OF B/F UNABSORBED DEPRECIATION/LOSSES IF ANY OF A.Y. 2001- 02 AND 2002-03 IF CARRY FORWARD OF THE SAME IN THESE YEARS HAS BEE N ALLOWED AND IF ITA NO.1072/DEL/2009 6 IT COULD NOT BE SET OFF IN A.Y. 2003-04. THIS GROU ND OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES IN BOTH THESE C ASES. 10. IN THIS VIEW OF THE SITUATION, AFTER HEARING BO TH THE PARTIES, AS NO CONTRARY DECISION HAS BEEN BROUGHT TO OUR NOTICE, WE DIRECT THE ASSESSING OFFICER TO ALLOW THE BENEFIT OF UNABSORBED DEPRECIATION AND BROUGHT FORWARD LOSSES OF EARLIER YEARS, IF ANY, AS PER ASSESSMENT RECORDS. WE DIREC T ACCORDINGLY. THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 11. GROUND NO.6 IS GENERAL IN NATURE WHICH NEEDS NO SEPARATE ADJUDICATION. 12. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED IN THE MANNER AFORESAID. . 13. THE ORDER PRONOUNCED IN THE OPEN COURT ON 10.07 .2009. [B.C. MEENA] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 10.07.2009. DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES