Market Committee, Taraori V. DCIT, Karnal

ITA 1675/DEL/2009

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0188 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 09-03-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 23-04-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PIYUSH SONKAR SENIOR
• Assessee Lawyers: NEERAJ GARG CAS
• Keywords: Depreciation; Charitable institution
• Section: 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E : NEW DELHI) BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.1675/DEL./2009 (ASSESSMENT YEAR : 2006-07) MARKET COMMITTEE, VS. DCIT, TARAORI, DISTT. KARNAL, KARNAL. NEW GRAIN MARKET TARAORI, KARNAL. (PAN : AAALM0089R) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI GIRISH ANEJA & SHRI NEERAJ GARG, CAS REVENUE BY : SHRI PIYUSH SONKAR, SENIOR DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE ARISES OUT OF THE ORDER OF THE CIT (APPEALS), KARNAL DATED 16.2.2009. 2. THE ASSESSEE HAS FILED A RETURN OF INCOME IN THE STATUS OF LOCAL AUTHORITY. EXCESS OF INCOME OVER EXPENDITURE WAS CLAIMED EXEMP TED U/S 11 OF THE INCOME-TAX ACT. THE ASSESSEE IS A MARKET COMMITTEE WHICH IS A STATUTORY BODY FUNCTIONS UNDER THE SUPERVISION AND CONTROL OF THE HARYANA STATE AG RICULTURAL MARKETING BOARD AND THE HARYANA STATE GOVERNMENT. THE MAIN OBJECTS OF THE COMMITTEE ARE TO HELP THE FARMERS AND TO SELL THEIR GOODS AT THE MAXIMUM PRIC E. 3. THE GROUNDS OF APPEAL READ AS UNDER :- ITA NO.6068/DEL./2010 2 1) THAT THE ORDER PASSED BY LD AO IS ILLEGAL, ARBI TRARY HAS BEEN PASSED IN A HASTE AND HAS IGNORED BASIC ASPECTS AND FACTS OF THE CASE & LD. CIT(A) ERRED IN CONFIRMING THE SAME, THUS CAU SING UNDUE HARDSHIP TO THE ASSESSEE. 2) THAT THE SECOND GROUND OF APPEAL IS TO CHALLENGE THE ACTION OF THE ASSESSING OFFICER IN HOLDING THE STATUS OF THE ASSESSEE AS AOP (TRUST) IN STEAD OF CHARITABLE INSTITUTION ON THE G ROUND THAT AN SLP IS PENDING BEFORE THE SUPREME COURT OF INDIA. THE OBSE RVATION OF THE AO IS NOT CORRECT AND HOT IN CONSONANCE WITH PROVIS IONS OF LAW & LD. CIT(A) ERRED IN CONFIRMING THE SAME. THE ACTION OF AO IN DENYING TO THE ASSESSEE THE STATUS OF CHARITABLE TRUST IS I LLEGAL 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. AO HAS ERRED IN ADDITION OF RS.9177 000.00 ON ACCOUNT OF ACCRUED INTEREST ON ADVANCE TO HVPNL. YE T ASSESSING OFFICER IN HIS OWN DECISION CONFIRM THAT ASSESSEE F OLLOWS THE CASH SYSTEM OF ACCOUNTING BUT ADD INTEREST ON ACCRUED BA SIS, WHICH IS ILLEGAL, UNJUSTIFIED AND AGAINST THE NATURAL LAW OF JUSTICE & LD. CIT(A) ERRED IN CONFIRMING THE SAME. IT IS DESERVES TO BE QUASHED. ITA NO.6068/DEL./2010 3 4) THAT THE LD. AO HAS ERRED IN DISALLOWING DEPRECI ATION OF RS.3588517.00, WHICH IS ILLEGAL, UNJUSTIFIED AND AG AINST THE NATURAL LAW OF JUSTICE & LD. CIT(A) ERRED IN CONFIRMING THE SAME. IT IS DESERVES TO BE QUASHED. 5) THAT THE LD. AO HAS ERRED IN NOT CONSIDERING THE 30% BOARD SHARE FOR CALCULATING THE 85% OF THE INCOME, WHICH IS ILLEGAL, UNJUSTIFIED AND AGAINST THE NATURAL LAW OF JUSTICE & LD. CIT(A) ERRED IN CONFIRMING THE SAME. 6) THAT THE LD. AO 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. 7) THAT THE LD. AO HAS ERRED IN NOT CONSIDERING THE FUND RS.4115876 DEPOSITING ACCORDING TO SEC. 11 OF THE I NCOME TAX ACT, 1961. & LD. CIT(A) ERRED IN ADDITIONAL AMOUNT OF RS .3468408.00 ON THE GROUND THAT IN FORM NO.10 IT IS MENTIONED AS 'A CCUMULATED OR SET APART TILL THE PREVIOUS YEAR ENDING 31-3-2006 WHICH IS ILLEGAL UNJUSTIFIED AND AGAINST THE NATURAL LAW OF JUSTICE ADDITION THE DEMAND CONFIRMING THE SAME. ITA NO.6068/DEL./2010 4 8) THAT THE APPELLANT CRAVES TO ADD, DELETE, CONCED E, MODIFY ANY OR ALL THE GROUNDS OF APPEAL AT THE TIME OF HEARING OF APPEAL. 4. GROUND NOS.1, 2 & 8 ARE GENERAL IN NATURE AND TH E LEARNED AR FAIRLY CONCEDED THAT THESE GROUNDS DO NOT REQUIRE ANY ADJU DICATION. THEREFORE, WE DISMISS THE SAME FOR NON-PROSECUTION. 5. FURTHER THE LEARNED AR PLEADED THAT GROUND NOS.3 TO 6 ARE COVERED BY VARIOUS PRONOUNCEMENTS OF ITAT DELHI BENCHES AND ORDERS OF HON'BLE PUNJAB & HARYANA HIGH COURT WHICH A JURISDICTIONAL HIGH COURT IN ASS ESSEES CASE AND IN RESPECT OF GROUND NO.7, HE PLEADED THAT THE SAME MAY BE REMAND ED BACK TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATION AND TO DECIDE AF RESH AS PER LAW. 6. ON THE OTHER HAND, LEARNED DR ALSO FAIRLY CONCED ED THAT GROUND NOS.3 TO 6 ARE COVERED IN FAVOUR OF THE ASSESSEE BY VARIOUS JU DICIAL PRONOUNCEMENTS OF ITAT DELHI BENCHES AND PUNJAB & HARYANA HIGH COURT. HE WAS ALSO HAVING NO OBJECTION FOR REMANDING BACK THE GROUND NO.7 TO THE FILE OF ASSESSING OFFICER FOR VERIFICATION AND DECIDE AFRESH. 7. BOTH THE SIDES WERE HEARD AND AFTER HEARING, WE DECIDE THE GROUND AS: 8. IN THE GROUND NO.3, THE ISSUE INVOLVED IS CONFIR MATION OF ADDITION OF RS.91,77,000/- ON ACCOUNT OF ACCRUAL OF INTEREST ON THE ADVANCES TO HVPNL. THE ASSESSING OFFICER HAS STATED IN HIS ORDER THAT ASSE SSEE WAS FOLLOWING CASH SYSTEM OF ACCOUNTING. HOWEVER, THE INTEREST WAS ADDED ON ACC RUAL BASIS. HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT, KARNAL VS. M ARKET COMMITTEE, LADWA IN ITA NO.6068/DEL./2010 5 ITA NO.138/2010 DATED 7.7.2010 HAS DECIDED THE ISSU E IN FAVOUR OF THE ASSESSEE WHERE THE SIMILAR FACTS AND CIRCUMSTANCES WERE INVO LVED. IN THE VARIOUS PRONOUNCEMENTS, THE CO-ORDINATE BENCH OF ITAT HAS A LSO TAKEN A SIMILAR VIEW WHERE THE ADDITION ON ACCOUNT OF ACCRUAL OF INTERES T IN RESPECT OF THE DEPOSIT/ADVANCES WITH HVPNL HAS BEEN DELETED. SINC E THE FACTS AND CIRCUMSTANCES REMAIN THE SAME WE ALLOW GROUND NO.3 IN FAVOUR OF T HE ASSESSEE AND DIRECT TO DELETE THE ADDITION. 9. THE FOURTH GROUND IN ASSESSEES APPEAL IS AGAINS T THE DISALLOWANCE OF DEPRECIATION OF RS.35,88,517/-. AS STATED ABOVE, T HIS ISSUE IS ALSO COVERED IN FAVOUR OF THE ASSESSEE BY VARIOUS DECISIONS OF CO-ORDINATE BENCH OF THE ITAT, NEW DELHI AND ALSO BY THE DECISION OF HON'BLE PUNJAB & HARYAN A HIGH COURT IN THE CASE OF CIT, KARNAL VS. MARKET COMMITTEE, PIPLI IN ITA NO.5 35/2009 DATED 5.7.2010. RESPECTFULLY FOLLOWING THE SAME, WE ALLOW THIS GROU ND OF APPEAL IN FAVOUR OF THE ASSESSEE AND DIRECT TO ALLOW THE DEPRECIATION. 10. IN GROUND NO.5, THE ISSUE INVOLVED IS REGARDING NOT CONSIDERING THE 30% PAYMENTS MADE TO THE BOARD FOR WORKING OUT THE 85% OF THE INCOME. THIS WAS A CONTRIBUTION MADE BY THE ASSESSEE TO HSAMB WHICH IS A STATUTORY REQUIREMENT. THIS IS A STATUTORY CONTRIBUTION MADE BY THE MARKET COMMITTEES TO THE STATE AGRICULTURE MARKETING BOARD. THIS ISSUE HAS ALSO B EEN DECIDED ALSO STANDS SETTLED IN FAVOUR OF THE ASSESSEE BY THE VARIOUS DECISIONS OF CO-ORDINATE BENCH OF ITAT AND ALSO BY THE DECISION OF HON'BLE PUNJAB & HARYANA HI GH COURT IN THE CASE OF CIT, HISSAR VS. MARKET COMMITTEE, NARWANA IN ITA NO.151/ 2010 DATED 5.7.2010. RESPECTFULLY FOLLOWING THE SAME, WE ALLOW THE APPEA L OF THE ASSESSEE ON THIS ITA NO.6068/DEL./2010 6 GROUND AND DIRECT TO CONSIDER THE CONTRIBUTION OF T HE HSAMB FOR CALCULATING THE 85% OF THE INCOME FOR DEDUCTION. 11. IN THE GROUND NO.6, THE ISSUE INVOLVED IS NOT C ONSIDERING THE EXCESS EXPENDITURE OF THE PREVIOUS YEAR AGAINST THE INCOME FOR THE CURRENT YEAR. THIS ISSUE ALSO STANDS COVERED IN FAVOUR OF THE ASSESSEE BY VA RIOUS DECISIONS OF ITAT, NEW DELHI BENCHES AND ALSO BY THE DECISION OF HON'BLE P UNJAB & HARYANA HIGH COURT IN THE CASE OF CIT, KARNAL VS. MARKET COMMITTEE, KARNA L IN ITA NO.238/2010 DATED 28.7.2010. RESPECTFULLY FOLLOWING THE SAME, WE ALL OW THIS GROUND OF APPEAL OF THE ASSESSEE AND DIRECT TO CONSIDER THE EXCESS OF EXPEN DITURE OF EARLIER YEARS AS APPLICATION OF INCOME AGAINST THE INCOME FOR THE CU RRENT YEAR. 12. IN THE GROUND NO.7, THE ISSUE INVOLVED IS MAKIN G THE ADDITION OF RS.34,68,408/- ON THE GROUND THAT IN FORM NO.10 FIL ED BY THE ASSESSEE IT WAS MENTIONED AS ACCUMULATED OR SET APART TILL THE PRE VIOUS YEAR ENDING 31.3.2006. THE FACTS REGARDING THE ISSUE ARE THAT DURING THE Y EAR, THE AMOUNT UTILIZED WAS OF RS.2,40,42,719/-. WHILE THE AMOUNT TO BE UTILIZED SHOULD HAVE BEEN RS.3,16,27,004/-. THUS, THE BALANCE OF UNUTILIZED AMOUNT WAS RS.75,84,284/- WHICH WAS ACCUMULATED FOR APPLICATION IN VIEW OF THE REQU IREMENTS OF SECTION 11(2) OF THE INCOME-TAX ACT READ WITH RULE 17. A NOTICE IN FORM NO.10 WAS GIVEN TO THE ASSESSING OFFICER IN THIS REGARD ALONG WITH RETURN OF INCOME. THIS ACCUMULATED AMOUNT WAS REQUIRED TO BE INVESTED/DEPOSITED AS PRE SCRIBED U/S 11 (5) OF THE INCOME-TAX ACT. CLAUSE (III) OF SECTION 11(5) SPEC IFIES THAT IT IS TO BE DEPOSITED IN A SCHEDULED BANK. THIS AMOUNT WAS DEPOSITED AND THE ASSESSING OFFICER REJECTED THE CLAIM OF THE ASSESSEE FOR ASSUMPTION ON THE GROUND THAT THE PURPOSE AND PERIOD FOR ITA NO.6068/DEL./2010 7 ACCUMULATION WAS NOT SPECIFIED. THEREFORE, THE REQ UIREMENTS OF SECTION 11(5) WERE NOT FULFILLED. AS STATED ABOVE, THE LEARNED AR AND DR HAS FAIRLY CONCEDED THAT THE ISSUE REQUIRES VERIFICATION OF FACTS AT THE LEVEL O F ASSESSING OFFICER. THEREFORE, WE SET ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OF FICER TO DECIDE AS PER LAW. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THIS 11 TH DAY OF MARCH, 2011. SD/- SD/- (RAJPAL YADAV) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 11 TH DAY OF MARCH, 2011 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT (A), KARNAL 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.