Market Committee, Karnal V. ACIT, Karnal

ITA 2745/DEL/2009

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 5713 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 08-03-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 04-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAYANT MISHRA
• Assessee Lawyers: R K AGARWAL; B S SAINI
• Keywords: Depreciation; Opportunity of being heard; Principle of natural justice
• Section: 11; 12A

Judgement Text

I.T.A. NO.2745 /DEL/09 1/4 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E NEW DELHI) BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER I.T.A. NO.2745 /DEL/2009 ASSESSMENT YEAR : 2006-07 MARKET COMMITTEE, ACIT, NEW GRAINS MARKET, KARNLA. KARNAL. V. (APPELLANT) (RESPONDENT) PAN /GIR/NO.AAALM-0414-E APPELLANT BY : SHRI RK AGARWAL & SHRI BS SAINI. RESPONDENT BY : SHRI JAYANT MISHRA, CIT-DR. ORDER PER A.K. GARODIA, AM: THIS IS AN ASSESSEE'S APPEAL DIRECTED AGAINST THE O RDER OF LD CIT(A), KARNAL DATED 23.3.2009 FOR ASSESSMENT YEAR 2006-07. 2. THE GROUNDS RAISED BY THE ASSESSEE READ AS UNDER :- 1. THAT THE ORDERS PASSED BY THE LD CIT(A) ARE ILLE GAL, ARBITRARY HAVE BEEN MADE IN A HASTE HAVING IGNORED BASIC ASPECTS AND CO NCEPTS CAUSING UNDUE HARDSHIP TO THE ASSESSEE. 2. THE LD CIT(A) HAS ERRED IN CONFIRMING THE ADDITI ON OF RS.24,21,300/- ON ACCOUNT OF ACCRUED INTEREST ON ADVANCE TO HVPNL, MA RKET COMMITTEE, NISSING. . I.T.A. NO.2745/DEL/09 2/4 3. THE LD CIT(A) HAS ERRED IN CONFIRMING THE DISALL OWANCE OF THE AMOUNT OF EXPENDITURE GIVEN TO THE BOARD AS PER RULES/BUDGET. 4. THE LD CIT(A) HAS ERRED IN CONFIRMING THE DISALL OWANCE OF THE DEPRECIATION OF RS.96,55,190/- AND VIOLATED THE LAW OF LAND. 5. THE CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWA NCE OF 30% BOARD SHARE FOR CALCULATING THE 85% OF INCOME WHICH IS ILLEGAL UNJUSTIFIED AND AGAINST THE NATURAL LAW OF JUSTICE. 6. THE CIT(A) HAS ERRED IN NOT ALLOWING THE BENEFIT S OF SET OFF FROM THE EXCESS EXPENDITURE OF THE PREVIOUS YEAR WHICH IS AGAIN ILL EGAL AND UNJUSTIFIED. 7. THE CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWA NCE OF FORM NO.10 FOR FULL AMOUNT WHICH IS ALLOWABLE AS PER LAW BY HOLDING THA T THE ASSESSEE HAS NOT HELD THE SURPLUS IN SPECIFY DEPOSITS PRESCRIBED U/S 11 THEREBY AND DENYING THE BENEFITS ACCUMULATION TO THE ASSESSEE. 8. THE ORDER PASSED BY CIT(A) BY ENHANCING THE INCO ME OF THE APPELLANT A SUM OF RS.2,34,95,544/- BY SAYING THAT THE NOTICE G IVEN U/S 11 (2) WAS NOT IN CONFORMITY WITH THE PROVISIONS OF LAW IS VOID AR BITRARY AND AGAINST THE LAW AND PRINCIPLES OF NATURAL JUSTICE. 3. BRIEF FACTS OF THE CASE ARE THAT THE RETURN OF I NCOME WAS FILED BY THE ASSESSEE SHOWING EXCESS OF INCOME OVER EXPENDITURE AT RS.298.80 LAKHS. THE NET INCOME WAS DECLARED AT RS. NIL AFTER CLAIMING E XEMPTION U/S 11 OF THE INCOME TAX ACT, 1961. ON PAGE NO.2 OF THE ASSESSMENT ORDER , IT IS STATED BY THE ASSESSING OFFICER THAT THE ASSESSEES APPLICATION F OR REGISTRATION U/S 12A OF THE INCOME TAX ACT, 1961 WAS REJECTED BY THE CIT KARNAL BUT THE TRIBUNAL HAS ALLOWED THE APPEAL OF THE ASSESSEE. THE ASSESSING O FFICER FURTHER SAYS THAT THE DEPARTMENT WENT IN APPEAL BEFORE HON'BLE PUNJAB & H ARYANA HIGH COURT AND VIDE ITS ORDER DATED 14.3.2007, HON'BLE HIGH COURT HAS REJECTED THE APPEAL OF THE DEPARTMENT AND THEREAFTER THE DEPARTMENT HAS FILED SLP BEFORE THE HON'BLE APEX COURT WHICH IS PENDING AND HENCE THE STATUS OF THE ASSESSEE IS TAKEN THAT OF AOP (TRUST). THE ASSESSING OFFICER MADE ADDITIO N OF RS.24,21,300/- ON ACCOUNT OF ACCRUED INTEREST @ 10.5% ON THE DEPOSIT OF RS.230.60 LAKHS WITH . I.T.A. NO.2745/DEL/09 3/4 HVPNL. THE BASIS OF ADDITION IS THAT INTEREST INCOM E HAS TO BE ACCOUNTED FOR ON ACCRUAL BASIS SINCE THE ASSESSEE IS FOLLOWING MIXED SYSTEM OF ACCOUNTING AND NOT PURELY CASH SYSTEM OF ACCOUNTING AS CLAIMED BY THE ASSESSEE. THE ASSESSING OFFICER ALSO MADE ADDITION OF RS.96,55,19 0/- BY DISALLOWING THE CLAIM OF THE ASSESSEE REGARDING DEPRECIATION. IN THE ASS ESSMENT ORDER WHILE WORKING OUT THE EXEMPTION U/S 11 OF THE ACT , THE ASSESSING OFFICER HAS CONSIDERED GROSS INCOME OF RS.975.86 LAKHS WHEREAS THE CLAIM OF THE ASSESSEE IS THAT 30% OF MARKET FEES PAYABLE TO HARYANA AGRICULTURAL MARKETI NG BOARD SHOULD BE REDUCED FROM SUCH GROSS INCOME FOR THE PURPOSE OF WORKING O UT EXEMPTION U/S 11 OF THE INCOME TAX ACT, 1961. THE ASSESSEE CARRIED THE MAT TER IN APPEAL BEFORE LD CIT(A) ON THESE ISSUES AS WELL AS SOME OTHER ISSUES . ON THE ABOVE ISSUES, NO RELIEF IS ALLOWED BY THE LD CIT(A) AND HENCE THE AS SESSEE IS IN FURTHER APPEAL BEFORE US. 4. IT WAS SUBMITTED BY THE LD AR OF THE ASSESSEE T HAT ALL THE ISSUES INVOLVED IN THE PRESENT APPEAL ARE COVERED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL DECISION IN ASSESSEES OWN CASE IN PRECEDING YEARS BUT HE COULD NOT FILE THE COPY OF THE TRIBUNAL DECISION IN ASSESSEES OWN CASE. I T WAS POINTED OUT BY HIM THAT IN THE EARLIER YEARS, SIMILAR ISSUES WERE RESTORED BACK BY THE TRIBUNAL TO THE FILE OF THE ASSESSING OFFICER FOR A FRESH DECISION. HENC E, IN THE PRESENT YEAR ALSO, THE MATTER MAY BE RESTORED BACK TO THE FILE OF THE ASSE SSING OFFICER FOR A FRESH DECISION IN THE LIGHT OF DIRECTIONS GIVEN BY THE TR IBUNAL IN THAT YEAR. IT WAS SUBMITTED BY HIM THAT IN THE PRESENT YEAR ALSO ALL THE ISSUES MAY BE RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER FOR A FRE SH DECISION IN THE LIGHT OF THE TRIBUNAL DECISION IN ASSESSEES OWN CASE FOR ASSESS MENT YEAR 2005-06 AND 2004-05. 5. LD DR OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE GON E THROUGH THE MATERIAL AVAILABLE ON RECORD. IT WAS SUBMITTED BEFORE US THA T IN THE PRECEDING YEAR, THE . I.T.A. NO.2745/DEL/09 4/4 TRIBUNAL HAS RESTORED BACK THE MATTER TO THE FILE O F THE ASSESSING OFFICER FOR A FRESH DECISION. SINCE, THAT TRIBUNAL ORDERS IS NOT FURNISHED BEFORE US, THE FACT IF THE MATTER IS RESTORED BACK TO THE FILE OF THE ASSE SSING OFFICER FOR A FRESH DECISION IN THE LIGHT OF THE TRIBUNAL ORDER IN ASSESSEES OW N CASE IN ASSESSMENT YEAR 2005-06 AND 2004-05, NO PREJUDICE WILL BE CAUSED TO ANY SIDE. HENCE, IN THE PRESENT YEAR ALSO, WE SET ASIDE THE ORDER OF THE LD CIT(A) ON ALL THE ISSUES WHICH ARE RAISED BEFORE US AND RESTORE THESE MATTERS BACK TO THE FILE OF THE ASSESSING OFFICER FOR A FRESH DECISION IN THE LIGHT OF THE TR IBUNAL DECISION RENDERED IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2004-05 AN D 2005-06. THE ASSESSING OFFICER SHOULD PASS NECESSARY ORDER AS PER LAW IN T HE LIGHT OF THE TRIBUNAL DECISION IN THE CASE OF THE ASSESSEE ITSELF IN THES E TWO EARLIER YEARS AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO TH E ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. 8. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH MARCH, 2010. SD/- SD/- (R.P.L TOLANI) (A.K. GARODI A) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 12.3.2010. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DELHI. TRUE COPY. BY ORDER (ITAT, NEW DELHI).