Market Committee Panipat, Haryana V. ACIT, Panipat

ITA 1570/DEL/2011

• Counselvise Citation: 157020114 RSA 2011
• Duration Of Justice: 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 09-02-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 31-03-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R S NEGI
• Assessee Lawyers: SIDHARTH JAIN
• Keywords: Charitable institution

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI. BEFORE SHRI RAJPAL YADAV AND SHRI K.G. BANSAL I.T.A. NO. 1570(DEL)/2011 ASSESSMENT YEAR: 2006-07 MARKET COMMITTEE, ASSIS TANT COMMISSIONER OF INCOME PANIPAT, HARYANA. VS. TAX, PANIPAT CIRCLE, PANIPAT. PAN: AAALM2630H I.T.A. NO. 1926(DEL)/2011 ASSESSMENT YEAR: 2006-07 ASSISTANT COMMISSIONER OF MARKET COMMITTEE, INCOME-AX, PANIPAT CIRCLE, VS. PANIPAT, HARYANA. PANIPAT. (APPLICANT) (RESPONDENT) ASSESSEE BY : SHRI SIDHARTH JAIN, FCA RESPONDENT BY : S HRI R.S. NEGI, SR. D.R. DATE OF HEARIN G: 09.02.2012 DATE OF PRONOUN CEMENT: 09.02.2012. ORDER PER K.G. BANSAL : A.M THESE CROSS APPEALS OF THE ASSESSEE AND THE REV ENUE FOR ASSESSMENT YEAR 2006-07 WERE ARGUED IN A CONSOLIDATED MANNE R BY THE LD. COUNSEL FOR THE ASSESSEE AND THE LEARNED SENIOR DR. THEREFORE , WE FIND IT FIT TO PASS A CONSOLIDATED ORDER. ITA NOS. 1570&1926(DEL)/2011 2 2. THE ONLY GROUND TAKEN BY THE ASSESSEE IS THAT THE LD. CIT(APPEALS) HAS NOT CONSIDERED THE REPAYMENT OF THE LOAN AS APPLICATION OF INCOME, WHICH IS ILLEGAL, UNJUSTIFIED AND AGAINST NATUR AL LAW OF JUSTICE. THE REVENUE HAS ALSO TAKEN ONLY ONE GROUND THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(APPEALS) ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE BY TREATING THE INCOME-TAX PAID BY WAY OF ADVANCE- TAX AMOUNTING TO RS. 15.00 LAKH AS APPLICATION OF INCOME SINCE THE SAME IS NOT ALLOWABLE EXPENDITURE AS PER INCOME-TAX ACT , 1961. 3. IN THE COURSE OF HEARING, BOTH THE PARTIES S UBMITTED THAT THE ISSUES STAND COVERED BY THE DECISION OF F BENCH OF T HE DELHI TRIBUNAL IN THE CASE OF MARKET COMMITTEE, ASSANDH & OTHERS IN ITA NO. 2633(DEL)/2008, A COPY OF WHICH HAS BEEN PLACED BEFORE US. THE QUESTION REGARDING REPAYMENT OF LOAN IS COVERED IN PARAGRAPH NO. 35 O F THIS ORDER. IT HAS BEEN HELD THAT SINCE THE EXPENDITURE INCURRED FROM T HE LOAN HAS BEEN ALLOWED AS APPLICATION OF INCOME, THE REPAYMENT OF LOAN CANNOT BE ALLOWED AGAIN AS APPLICATION OF INCOME. DOING SO WILL AMOUNT TO GIVING DEDUCTION FOR THE SAME AMOUNT TWICE OVER. FURTHER, THE QUESTI ON REGARDING ADVANCE-TAX PAYMENT BEING APPLICATION OF INCOME IS COVERED IN PARAGRAPH NO. 32 OF THIS ITA NOS. 1570&1926(DEL)/2011 3 ORDER. IT HAS BEEN HELD THAT THE AMOUNT HAS TO BE TREATED AS APPLICATION OF INCOME. THESE PARAGRAPHS ARE REPRODUCED BELOW:- 35. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, P ERUSED THE MATERIALS ON RECORD AND HAVE GONE THROUGH THE ORD ERS OF AUTHORITIES BELOW AND THE TRIBUNAL DECISION CITED BY LD. AR FOR THE ASSESSEE. WE FIND THAT THIS ISSUE HAS B EEN DECIDED BY LD. CIT(A) AGAINST THE ASSESSEE ON THE BASIS THA T IN THE YEAR OF INCURRING OF THE EXPENDITURE OUT OF BORROWING OF A LOAN/INCURRING OF A DEBT, DEDUCTION WAS ALLOWED TO THE ASSESSEE FOR SUCH EXPENDITURE AND HENCE FOR RE PAYMENT OF LOAN, IF THE SAME IS CONSIDERED AS APPLICATION O F INCOME, IT WILL AMOUNT TO DOUBLE DEDUCTION. LD. AR FOR THE ASSESSEE COULD NOT CONTROVERT THIS SPECIFIC FINDING OF THE CIT(A) BY BRINGING RELEVANT MATERIAL ON RECORD TO SHOW THA T NO DEDUCTION WAS CLAIMED OR ALLOWED IN THE YEAR IN WH ICH LOAN WAS BORROWED OR DEBT WAS INCURRED. UNDER THIS FACTUAL POSITION, NOW WE EXAMINE THE APPLICABILITY OF THE JUDGMENT OF HONBLE RAJASTHAN HIGH COURT CITED BEFORE US. WE FIND THAT IN THIS CASE THE ISSUE BEFORE RAJASTHAN HIGH COURT WAS NOT REGARDING REPAYMENT OF LOAN BUT THE ISSUE UNDER CONSIDERATION OF HONBLE RAJASTHAN HIGH COURT WAS AS TO WHERE THERE IS EXCESS OF EXPENDITURE OVER INCOM E IN ANY YEAR, SUCH EXCESS OF EXPENDITURE OVER INCOME CAN BE CONSIDERED AS APPLICATION OF INCOME IN THE SUBSEQ UENT YEAR. WHILE DECIDING THIS ISSUE, IT WAS OBSERVED BY HON BLE RAJASTHAN HIGH COURT THAT IF THE TRUST TAKES THE LOAN FOR THE PURPOSE OF INCURRING EXPENSES FOR CHARITABLE OR RE LIGIOUS PURPOSES IN ANY PARTICULAR YEAR AND THE SAID L OAN IS REPAID, SUCH REPAYMENT WOULD BE ENTITLED FOR EXEMPTION FROM TAX U/S 11(1)(A) OF THE I.T. ACT BUT IF THE TRUST INSTEAD OF TAKING THE LOAN INCURS EXPENDITURE OUT OF CORPUS, SU CH AMOUNT FOR IT WOULD NOT BE ENTITLED TO EXEMPTION. IT WAS H ELD THAT IN THE OPINION OF THEIR LORDSHIPS, CONSTRUCTION WHICH L EADS TO ANOMALY MUST BE AVOIDED. FROM THIS EXAMPLE TAKE N INTO CONSIDERATION BY HONBLE RAJASTHAN HIGH COURT, IT IS SEEN THAT IN THE YEAR OF INCURRING EXPENDITURE OUT OF LOAN , NO DEDUCTION ITA NOS. 1570&1926(DEL)/2011 4 WAS BEING CLAIMED ON ACCOUNT OF EXPENDITURE INCUR RED OUT OF SUCH LOAN WHEREAS IN THE PRESENT CASE, A SPECIF IC FINDING IS GIVEN BY THE CIT(A) THAT EXPENDITURE INCURRED O UT OF BORROWING WAS CONSIDERED AS APPLICATION OF INCO ME IN THE YEAR OF BORROWING OF LOAN AND THIS SPECIFIC FIND ING OF CIT(A) WAS NOT CONTROVERTED BY LD. A.R. FOR THE ASSES SEE IN THE COURSE OF ARGUMENTS BEFORE US. HENCE THE FACTS ARE DIFFERENT IN THE PRESENT CASE AS COMPARED TO THE FACTS I N THE CASE OF MAHARANA OF MEWAR (SUPRA)., IN VIEW OF THIS DIFFE RENCE IN FACTS, THE JUDGMENT OF HONBLE RAJASTHAN HIGH COUR T IS NOT APPLICABLE IN THE PRESENT CASES BECAUSE DEDUCTIO N CANNOT BE ALLOWED IN BOTH THE YEARS, I.E., IN THE YEAR WHE N LOAN IS BORROWED OR DEBT IS INCURRED AND IN THE YEAR OF R EPAYMENT OF SUCH LOAN/DEBT. WE, THEREFORE, CONFIRM THE ORDER OF CIT(APPEALS) ON THIS ISSUE. THIS ISSUE STANDS DE CIDED AGAINST THE ASSESSEE. 32. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, P ERUSED THE MATERIALS ON RECORD AND HAVE GONE THROUGH THE ORD ERS OF AUTHORITIES BELOW AND THE TRIBUNAL DECISION CITED BY LD. AR FOR THE ASSESSEE. WE FIND THAT IT HAS BEEN HELD BY HONBLE MADRAS HIGH COURT IN THE CASE CITED (SUPRA) THAT THE PAYMENT OF TAX SHOULD BE TREATED AS HAVING BEEN APPLIED FOR CHARITABLE PURPOSES AND THE ASSESSEE IS ENTITLED TO EXEMPTION. RESPECTFULLY FOLLOWING THIS JUDGMENT OF HONBLE M ADRAS HIGH COURT, WE DECIDE THIS ISSUE IN FAVOUR OF ASSESSE E IN ALL THESE CASES. THIS ISSUE STANDS DECIDED IN FAVOUR OF A SSESSEE. 4. RESPECTFULLY, FOLLOWING THIS DECISION, BOTH T HE APPEALS ARE DISMISSED. SD/- SD/- (RAJPAL YADAV) (K.G. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER SP SATIA ITA NOS. 1570&1926(DEL)/2011 5 COPY OF THE ORDER FORWARDED TO:- 1. MARKET COMMITTEE, PANIPAT, HARYANA. 2. ASSISTANT CIT, PANIPAT CIRCLE, PANIPAT. 3. CIT(A) 4. CIT, 5. THE DR, ITAT, NEW DELHI. ASSISTANT REGISTRAR.