ACIT, Kurukshetra V. Market Committee, Kurukshetra

ITA 1249/CHANDI/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51493 (ITAT-CHANDIGARH)
• Duration Of Justice: 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 19-09-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 03-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Assessee Lawyers: NEERAJ GARG
• Keywords: Capital asset; Depreciation; Cost of acquisition; Capital expenditure
• Section: 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES BCHANDIGARH BEFORE MS SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANTMEMBER ITA NO. 1249/CHD/2010 ASSESSMENT YEAR:2005-06 ACIT, CIRCLE V MARKET COMMITTEE, KURUKSHETRA. LADWA (KURUKSHETRA). PAN NO. AAIFM-4798B DEPARTMENT BY: SHRI S.K.MITTAL ASSESSEE BY : SHRI NEERAJ GARG & ITA NO. 1253/CHD/2010 ASSESSMENT YEAR:2005-06 ACIT, CIRCLE V MARKET COMMITTEE, KURUKSHETRA. KAITHAL. PAN NO. AAALM-0097R (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI S.K.MITTAL ASSESSEE BY : NONE DATE OF HEARING : 19.09.2011 DATE OF PRONOUNCEMENT : 29.09.2011 ORDER PER SUSHMA CHOWLA, JM BOTH THE APPEALS RELATING TO DIFFERENT MARKET COMMI TTEES INVOLVING SIMILAR ISSUE, WERE HEARD TOGETHER AND AR E BEING DISPOSED OF BY THIS CONSOLIDATED ORDER. 2 2. THE ISSUE IN GROUND NO.(I) AND (II) RAISED BY TH E REVENUE IN ITA NO. 1249/CHD/2010 IS AGAINST THE DIRECTION OF C IT(A) IN ALLOWING DEPRECIATION ON ASSETS, VALUE OF WHICH HAD ALREADY BEEN ALLOWED AS APPLICATION OF INCOME U/S 11 OF THE INCOME-TAX ACT, 1961. 3. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT T HE TRIBUNAL VIDE ORDER DATED 19.12.2008 VIDE PARA 4 HAD ALLOWED CONT ENTION OF THE ASSESSEE IN RESPECT OF ALLOWANCE OF DEPRECIATION ON ASSETS, PART OF WHICH HAD ALREADY BEEN ALLOWED AS APPLICATION OF IN COME UNDER THE PROVISIONS OF SECTION 11(1) OF THE INCOME-TAX ACT. THE TRIBUNAL HAD DIRECTED THE ASSESSEE TO FILE NECESSARY DETAILS ABO UT THE ASSETS AND COST OF ACQUISITION BEFORE THE AO AND THE AO WAS DI RECTED TO EXAMINE CLAIM OF THE ASSESSEE AND ALLOW DEPRECIATION AS PER THE PROVISIONS OF LAW. THE RELEVANT EXTRACT OF THE ORDER OF THE TRIB UNAL IS REPRODUCED UNDER PARA 4.1 AT PAGE 4 OF THE APPELLATE ORDER AND THE SAME IS NOT BEING REPRODUCED FOR THE SAKE OF BREVITY. 4. THE ASSESSEE IN THE PROCEEDINGS BEFORE THE AO FA ILED TO FURNISH THE REQUISITE DETAILS AND THE CIT(A) VIDE PARA 4.6 OBS ERVED THAT THE TRIBUNAL IN PRINCIPLE HAD ALLOWED DEPRECIATION ON THE ASSETS BUT SUBJECT TO FILING OF THE NECESSARY DETAILS. THE CIT(A), ACCORDINGLY DIR ECTED THE AO TO VERIFY THE DEPRECIATION CLAIM OF THE ASSESSEE AS PER THE D IRECTIONS OF THE TRIBUNAL ISSUED VIDE ORDER DATED 19.12.2008. THE A O WAS FURTHER DIRECTED TO ALLOW THE DEPRECIATION AS PER LAW. THE REVENUE IS IN APPEAL AGAINST THE AFORESAID DIRECTIONS OF THE CIT(A) VIDE PARA 4.6 OF THE APPELLATE ORDER. WE FIND NO MERIT IN THE GROUND OF APPEAL RAISED BY THE ASSESSEE AS THE CLAIM OF THE DEPRECIATION ON THE AS SETS HAD BEEN DECIDED IN PRINCIPLE BY THE TRIBUNAL VIDE ITS ORDER DATED 1 9.12.2008. THE CIT(A) HAS ONLY DIRECTED THE AO TO VERIFY THE CLAIM OF THE ASSESSEE AND ALLOW THE SAME AS PER LAW. 3 5. LD. DR FOR THE REVENUE HAD PLACED RELIANCE ON TH E RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN ESCORTS INDIA LTD., 199 ITR 43 (S.C). THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT V MA RKET COMMITTEE, PIPLI IN ITA NO. 535 OF 2009, DATE OF DECISION 5.7. 2010 ON SIMILAR ISSUE OF ALLOWANCE OF DEPRECIATION ON CAPITAL ASSETS, WHE RE DEDUCTION FOR CAPITAL EXPENDITURE INCURRED FOR ACQUISITION OF THE ASSET HAD ALREADY BEEN ALLOWED AS APPLICATION OF INCOME OF THE TRUST , HAD ALLOWED THE CLAIM OF THE ASSESSEE IN VIEW OF THE RATIO LAID DOWN BY THE HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT V. RAO BAHADUR CALAVALA CU NNAN CHETTY CHARITIES (1982) 135 ITR 485 (MAD) AND CIT V. INSTI TUTE OF BANKING PERSONAL SELECTION (IBPS) (2003) 131 TAXMAN 386 (BO M.). THE HON'BLE COURT ALSO REFERRED TO THE JUDGEMENT OF THE HON'BLE APEX COURT IN ESCORTS LTD. (SUPRA), RELIED UPON BY THE REVENUE BEFORE THE COURT AND HELD THAT THE ASSESSEE WAS NOT CLAIMING DOUBLE DEDU CTION AS CANVASSED BY THE REVENUE AND THE JUDGEMENT OF HON'BLE SUPREME CO URT IN ESCORTS LTD. (SUPRA) WAS DISTINGUISHABLE FOR THE ABOVE REASONS. FOLLOWING THE SAME, WE UPHOLD THE ORDER OF CIT(A) AND DISMISS GROUND NO . (I) AND (II) RAISED BY THE REVENUE IN ITA NO. 1249/CHD/2010.. 6. THE ISSUE RAISED BY THE REVENUE IN GROUND NOS. ( III) AND (IV) IN ITA NO.1249/CHD/2010 AND GROUND NO. (I) AND (II) IN ITA NO.1253/CHD/2010 ARE IDENTICAL. THE REVENUE IS AGG RIEVED BY THE ORDER OF CIT(A) IN DELETING THE ADDITION MADE ON ACCOUNT OF INTEREST ACCRUED ON ADVANCES MADE TO HARYANA STATE ELECTRICITY BOARD (I N SHORT HSEB) AND TO OTHER MARKET COMMITTEES. 7. THE FACTS OF BOTH THE CASES BEFORE US ARE IDENTI CAL, BUT REFERENCE IS BEING MADE TO THE FACTS IN ITA NO.1249/CHD/2010 FOR ADJUDICATING THE ISSUE. THE ASSESSEE HAD SHOWN DEPOSITS WITH HSEB O F RS.2.26 CR AND TO MARKET COMMITTEE, PUNDRI AND MARKET COMMITTEE, SIRS A OF RS.50 LACS. 4 THE ASSESSEE HAD NOT DECLARED ANY INTEREST INCOME O N THE ABOVESAID DEPOSITS. IT WAS EXPLAINED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS THAT THE ADVANCES MADE TO THE OTHER MAR KET COMMITTEES AND HSEB WERE AS PER THE INSTRUCTIONS OF THE BOARD AND FURTHER INSTRUCTIONS WERE THAT FIRST THE PRINCIPAL ARE TO BE RECOVERED, THEN INTEREST ON THE SAME AND THE CLAIM OF THE ASSESSEE WAS THAT IT WAS FOLLO WING CASH SYSTEM OF ACCOUNTING. THE AO DID NOT ACCEPT THE CONTENTION O F THE ASSESSEE OBSERVING THE ASSESSEE TO HAVE FOLLOWED MIXED SYSTE M OF ACCOUNTING. ACCORDINGLY, INTEREST @ 10% WAS CHARGED RESULTING I N AN ADDITION OF RS.27,60,000/-. BEFORE THE CIT(A), THE ASSESSEE PL ACED RELIANCE ON THE ORDER OF THE TRIBUNAL IN ASSESSEE'S OWN CASE RELATI NG TO ASSESSMENT YEAR 2006-07 IN WHICH IT HAD BEEN HELD THAT AS THE ASSES SEE WAS FOLLOWING CASH SYSTEM OF ACCOUNTING, NO INCOME ON THIS ACCOUNT OF HAVING ADVANCED DEPOSITS TO HSEB AND OTHER MARKET COMMITTEES WAS RE CEIVED DURING THE YEAR AND HENCE, IT WAS NOT LIABLE TO BE SO ASSESSED . THE TRIBUNAL FURTHER HELD THAT EVEN ON ACCRUAL BASIS, NO INTEREST HAD AC TUALLY ACCRUED TO THE ASSESSEE AND THEREFORE, NO ADDITION WAS WARRANTED. THE RELEVANT EXTRACT OF THE ORDER OF THE TRIBUNAL IS REPRODUCED UNDER PA RA 5.2 AT PAGE 6 OF THE APPELLATE ORDER, WHICH IS NOT BEING REPRODUCED FOR THE SAKE OF BREVITY, THOUGH THE SAME IS BEING REFERRED. THE CIT(A) ALLO WED THE CLAIM OF THE ASSESSEE IN VIEW THEREOF. 8. WE FIND THAT SIMILAR ISSUE HAD ARISEN IN DIFFERE NT CASES OF MARKET COMMITTEE. A REFERENCE IS BEING MADE TO DCIT, KARN AL V MARKET COMMITTEE, TARAORI IN ITA NOS. 3538 & 3539/DEL/2010 RELATING TO ASSESSMENT YEAR 2003-04 AND 2007-08 WHEREIN VIDE PA RA 4, FOLLOWING ITS EARLIER ORDER IN DCIT ROHTAK V MARKET COMMITTEE DAT ED 4.12.2008,THE CLAIM OF THE ASSESSEE WAS ALLOWED. SIMILAR ISSUE A ROSE IN ASSESSEE'S OWN CASE RELATING TO ASSESSMENT YEAR 2006-07 AS REFERRE D TO BY CIT(A) IN PARA 5 5.2 AT PAGE 6 UNDER WHICH RELEVANT PORTION OF THE O RDER OF THE TRIBUNAL IS REPRODUCED. FOLLOWING THE SAME, WE UPHOLD THE ORDE R OF THE CIT(A) AND DISMISS GROUND NOS. (III) AND (IV) RAISED IN ITA 12 49/CHD/2010 AND (I) & (II) IN ITA NO. 1253/CHD/2010. 9. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE A RE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 29 TH DAY OF SEPTEMBER, 2011. SD/- SD/- (MEHAR SINGH) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 29 TH SEPT.,2011 POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR BY ORDER ASSISTANT REGISTRAR, ITAT, CHANDIGARH