Market Commitee, V. DCIT, Karnal

ITA 1092/DEL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 9559 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 20-01-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 24-03-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G S SAHOTA
• Keywords: Depreciation; Opportunity of being heard; Cost of acquisition; Revenue expenditure
• Section: 12AA; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `E : NEW DELHI BEFORE SHRI C.L. SETHI, JUDICIAL MEMBER AND SHRI B.P. JAIN, ACCOUNTANT MEMBER I.T.A. NO.1092/DEL/2009 ASSESSMENT YEAR : 2006-07 MARKET COMMITTEE NIGDHU, DY. COMMISSIONER OF INCOM E-TAX, KARNAL. VS. KARNAL. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI GIRISH ANEJA, CA RESPONDENT BY : SHRI G.S. SAHOTA, SR. DR. O R D E R PER B.P. JAIN, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS), KARNAL, DATED 12.01.2009 IN AN APPEAL AGAINST THE ASSESSMENT ORDER UNDER SECTION 1 43(3) OF THE INCOME-TAX ACT, 1961 (THE ACT). 2. GROUND NOS. 1 & 2 ARE NOT PRESSED AND THE SAME A RE DISMISSED AS NOT PRESSED. 3. GROUND NO.3 OF THE ASSESSEE READS AS UNDER:- THAT THE LD AO HAS ERRED IN DISALLOWING DEPRECIATI ON OF RS.1342273.00, WHICH IS ILLEGAL, UNJUSTIFIED AND AG AINST THE NATURAL LAW OF JUSTICE & LD CIT(A) ERRED IN CONFIRM ING THE SAME. IT IS DESERVES TO BE QUASHED. 2 4. THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAS CLAIMED DEPRECIATION OF RS.13,42,273/-. THE ASSESSEE HAS CLAIMED THAT IT W AS APPLICATION OF INCOME AND THEREFORE, CLAIMED IT AS ALLOWABLE. THE ASSESS EE HAS NOT GIVEN THE BIFURCATION BUT IT IS CLAIMED THAT THE DEPRECIATION IS CLAIMED ON ALL THE DEPRECIABLE ASSETS ACQUIRED BY THE ASSESSEE SINCE T HE INCEPTION OF THE MARKET COMMITTEE. THE ASSESSEE HAS NOT FILED ANY DETAIL A S TO WHEN THE ASSET WAS ACQUIRED AND HOW IS THE COST OF ACQUISITION DETERMI NED AND HOW AND ON WHAT BASIS THE DEPRECIATION HAS BEEN CALCULATED IN EARLI ER YEARS AND IN THE YEAR UNDER CONSIDERATION AND HOW IS THE WDV DETERMINED. THE LEARNED CIT(A) CONFIRMED THE ACTION OF THE A.O. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE FACTS OF THE CASE. THE ASSESSEE HAS BEEN ALLOWED REGISTRATION UNDER SE CTION 12AA OF THE ACT BY THE CIT. THE ASSESSEE HAS NOT GIVEN BIFURCATION BU T IT HAS CLAIMED THE DEPRECIATION ON ALL THE DEPRECIABLE ASSETS ACQUIRED BY THE ASSESSEE AND NO DETAIL IN THIS REGARD HAS BEEN PLACED ON RECORD. O N IDENTICAL ISSUE THE CLAIM OF THE ASSESSEE HAS BEEN DECIDED IN FAVOUR OF THE A SSESSEE BY ITAT DELHI BENCH IN ITA NO.2633/DEL/2008 VIDE ORDER DATED 29 TH MAY, 2009 WHERE THE DECISIONS OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SETH MANILAL RANCHHODDAS VISHRAM BHAWAN TRUST, 198 ITR 5 98 AND THAT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. IN STITUTE OF BANKING 3 PERSONNEL SELECTION (IBPS), 264 ITR 110, HAVE BEEN RELIED UPON WHERE IT HAS BEEN HELD THAT INCOME ALLOWABLE HAS TO BE COMPU TED IN THE NORMAL COMMERCIAL MANNER AND THEREFORE, THE DEPRECIATION H AS TO BE ALLOWED IN COMPUTING THE INCOME. IN THE PRESENT CASE THE ASSE SSEE HAS NOT SUBMITTED ANY DETAILS AND THEREFORE, THE MATTER IS RESTORED T O THE FILE OF THE A.O. WHO WILL DECIDE THE ISSUE IN VIEW OF VARIOUS DECISIONS REFERRED HEREIN BEFORE AND DECIDE ACCORDINGLY. THUS GROUND NO.3 IS ALLOWED FO R STATISTICAL PURPOSES. 6. GROUND NO.4 READS AS UNDER:- THAT THE LD. AO HAS ERRED IN NOT CONSIDERING THE 3 0% BOARD SHARE FOR CALCULATING THE 85% OF THE INCOME WHICH I S ILLEGAL, UNJUSTIFIED AND AGAINST THE NATURAL LAW OF JUSTICE & LD CIT(A) ERRED IN CONFIRMING THE SAME. 7. THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAS TO PAY 30% OF THE MARKET FEE TO THE HARYANA AGRICULTURE MARKETING BOA RD, AS ITS SHARE IN THE FEE AS PER THE ACT BY WHICH THE ASSESSEE MARKET COM MITTEE IS GOVERNED. THE ASSESSEE HAS REDUCED THIS 30% OF THE SHARE FROM THE MARKET FEE IN THE INCOME & EXPENDITURE ACCOUNT ON THE INCOME SIDE AND THEREAFTER, THE NET MARKET FEE HAS BEEN SHOWN AS INCOME AND THE SAME HA S BEEN CONSIDERED AS INCOME BY THE A.O ALSO. THEREFORE, THERE IS NO DIS PUTE ON ALLOWING THE SHARE OF MARKET FEE AS APPLICATION OF INCOME OUT OF THE MARKET FEE, WHEREAS, ASSESSEE HAS CLAIMED THAT THE MARKET FEE S HOULD BE TAKEN AT GROSS FIGURE IN THE INCOME AND 30% OF THE SHARE OF BOARD SHOULD BE SEPARATELY 4 INCLUDED IN THE REVENUE EXPENDITURE AND BY THIS CAL CULATION 15% OF THE TOTAL INCOME WHICH ASSESSEE IS ALLOWED TO ACCUMULAT E, WILL BE MORE THAN WHAT IS CALCULATED BY THE A.O. THE LEARNED CIT(A) CONFIRMED THE ACTION OF THE AO IN VIEW OF THE DECISION OF ITAT DELHI BENCH IN ITA NO.2633/DEL/2008 DATED 29 TH MAY, 2009 ON IDENTICAL ISSUE WHERE THE CLAIM OF THE ASSESSEE HAS BEEN ALLOWED. IN THE PRESENT A PPEAL THE ISSUE IS IDENTICAL TO THE FACTS IN THE CASE OF MARKET COMMIT TEE IN ITA NO.2633/DEL/2008 DATED 29 TH MAY, 2009 (SUPRA) WHERE ON IDENTICAL ISSUE, THE CLAIM OF THE ASSESSEE HAS BEEN ALLOWED. WE HAV E PERUSED THE SAID ORDER OF THE ITAT DELHI BENCH AS CITED BY THE LEARN ED COUNSEL FOR THE ASSESSEE AND WE FIND THAT THE ISSUE IS IDENTICAL TO THE FACTS OF THE PRESENT CASE WHERE IT HAS BEEN HELD THAT AS PER SECTION 27( 2) OF THE PUNJAB AGRICULTURAL PRODUCE MARKET ACT, 1961, EVERY COMMIT TEE IS REQUIRED TO PAY TO THE BOARD AS CONTRIBUTION SUCH PERCENTAGE OF ITS INCOME DERIVED FROM LICENCE FEE/MARKET FEE AND FINES LEVIED BY THE COUR TS AS PER THE PERCENTAGE GIVEN BY VARIOUS MARKET COMMITTEES, WHICH IS 30% IN THE PRESENT CASE. THE GROSS INCOME OF THIS MARKET COMMITTEE SHOULD BE WITHOUT DEDUCTING SUCH CONTRIBUTION TO THE BOARD PAYABLE BY MARKET CO MMITTEES AS PER THE PROVISIONS OF PUNJAB AGRICULTURAL PRODUCE MARKET AC T, 1961 AND SUCH CONTRIBUTION TO THE BOARD SHOULD BE ALLOWED AS EXPE NDITURE. APPLICABILITY 5 OF SECTION 11(2) SHOULD BE WORKED OUT ON THE BASIS OF GROSS INCOME OF THE MARKET COMMITTEES WITHOUT DEDUCTING THE CONTRIBUTIO N TO BOARD THEREFROM AND THE AO IS DIRECTED TO REWORK THE APPLICATION OF INCOME AS PER DECISION REFERRED TO HEREIN BEFORE BUT BY PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THUS GROUND NO.4 OF THE ASS ESSEE IS ALLOWED. 8. GROUND NO.5 OF THE ASSESSEE READS AS UNDER:- THAT THE LD AO HAS ERRED IN NOT CONSIDERING THE DE CIDED EXCESS EXPENDITURE OF PREVIOUS YEAR, & LD CIT(A) ERRED IN CONFIRMING THE SAME, WHICH IS ILLEGAL, UNJUSTIFIED AND AGAINST THE NATURAL LAW OF JUSTICE. 9. THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAS CLAIMED THAT THERE WAS AN EXCESS OF EXPENDITURE OVER INCOME IN THE EARLIER YEAR WHICH ASSESSEE HAS CLAIMED AS ADJUSTABLE AS APPLICATION OF INCOME AGAI NST THE INCOME FOR THE YEAR UNDER CONSIDERATION. THE LEARNED CIT(A) VIDE PARA 15 OF HIS ORDER OBSERVED AS UNDER:- 15. I HAVE CONSIDERED THE FACTS OF THE CASE AND TH E SUBMISSIONS OF THE ASSESSEE. THE INCOME OF THE ASS ESSEE IS TO BE COMPUTED AS PER SECTION 11 TO 13 OF THE IT ACT B UT THERE IS NO PROVISION WHICH ALLOWS SET OFF OF EXCESS EXPENSE S CARRIED FORWARD OR LOSS, WHEREAS, THERE IS A PROVISION FOR MEETING OUT SUCH EXPENSES BY WAY OF ACCUMULATING THE INCOME FOR SPECIFIC PURPOSES AND THEREFORE, NO SUCH CLAIM OF CARRY FORW ARD OF EXCESS EXPENSES IS ALLOWED, HENCE THE GROUND OF APP EAL OF THE ASSESSEE IS REJECTED. 6 10. THE LEARNED COUNSEL FOR THE ASSESSEE HAS INVITE D OUR ATTENTION TO THE DECISION OF ITAT DELHI BENCH IN ITA NO.654/DEL/200 9 DATED 8.5.2009 WHERE THE ISSUE HAS BEEN HELD TO BE INFRUCTUOUS CON SIDERING THE APPLICATION MORE THAN THE INCOME. THE ASSESSEE HAS RELIED UPON THE DECISION OF CIT VS. PSG & SONS CHARITIES (1997) 223 ITR 831 (MAD.). IN THE PRESENT CASE NONE OF SUCH FIGURES WITH REGARD TO APPLICATION AND THE INCOME IS AVAILABLE ON RECORD. IN THE CIRCUMSTANCES AND FACTS OF THE CASE THE MATTER IS RESTORED TO THE FILE OF THE AO WHO WILL DECIDE THE ISSUE DE NOV O KEEPING IN VIEW THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE O F PSG & SONS CHARITIES (SUPRA) AND AFTER OBTAINING THE DETAILS FROM THE AS ESSEE AND BY PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. THE GROUND, THEREFORE, IS ALLOWED FOR STATISTICAL PURPOSES. 11. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 22 ND JANUARY, 2010. SD/- SD/- (C.L. SETHI) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 22 ND JANUARY, 2010. COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR. BY ORDER 3. CIT *MG DEPUTY REGISTRAR, ITAT.