DCIT, Panipat V. Market Committee, Panipat

ITA 413/DEL/2011

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0036 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 28-03-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 24-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PEEYUSH SONKAR SENIOR
• Keywords: Capital asset; Depreciation; Charitable institution; Capital expenditure
• 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.413/DEL./2011 (ASSESSMENT YEAR : 2007-08) DCIT, PANIPAT CIRCLE, VS. MARKET COMMITTEE, PANIPAT. MADLAUDA DISTT., PANIPAT. (PAN : AAALM0258Q) (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI PEEYUSH SONKAR, SENIOR DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE REVENUE ARISES OUT OF THE ORDER OF CIT (APPEALS), KARNAL DATED 29.11.2010. THE GROUNDS OF APPEAL TAK EN BY THE REVENUE ARE AS UNDER :- 1. THE LD. CIT (A) HAS ERRED IN LAW AND ON THE FAC TS AND CIRCUMSTANCES OF THE CASE IN DIRECTING THAT DEPRECI ATION IS ALLOWABLE IN PRINCIPLES SUBJECT TO FURNISHING OF REQUISITE PA RTICULARS IGNORING THE FACT THAT CAPITAL EXPENDITURE RELATING TO ACQUI SITION OF SUCH ASSETS HAD ALREADY BEEN ALLOWED AS APPLICATION OF INCOME F OR THE PURPOSE OF ALLOWING EXEMPTION U/S 11 OF THE I.T. ACT AND FURTH ER ALLOWING OF DEPRECIATION ON THESE CAPITAL ASSETS WILL AMOUNT TO DOUBLE DEDUCTION FOR THE SAME EXPENDITURE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN ALLOWING 30% OF MARKET FEES EAR NED BY IT AND PAID TO THE HSAMB AS APPLICATION OF INCOME FOR CHAR ITABLE PURPOSE ITA NO.413/DEL./2011 2 DESPITE THE FACT THAT 30% OF THE MARKET FEE HAS TO BE PAID TO THE SAID BOARD AS A STATUTORY OBLIGATION UNDER THE AGRICULTU RAL MARKETING BOARD ACT AND, THEREFORE, IT IS NOT APPLICATION OF INCOME BUT IT IS SHARING OF INCOME BY AN OVER-RIDING TITLE AS PER AC T BY WHICH THE MARKET COMMITTEE IS GOVERNED. 3. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE G ROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD OR DISPOSED OFF. 2. IN THE GROUND NO.1, THE ISSUE INVOLVED IS REGARD ING THE ALLOWABILITY OF DEPRECIATION. THE REVENUE CLAIMED THAT THE CAPITAL EXPENDITURE RELATED TO THE ACQUISITION OF SUCH ASSETS HAD ALREADY BEEN ALLOWED AS APPLICATION OF INCOME FOR THE PURPOSE OF ALLOWING EXEMPTION U/S 11OF THE INCOME-T AX ACT, THEREFORE, FURTHER ALLOWING OF DEPRECIATION ON THESE CAPITAL ASSETS SH ALL AMOUNT TO DOUBLE DEDUCTION. 3. WE HAVE HEARD LEARNED DR AND NONE ATTENDED ON BE HALF OF THE ASSESSEE. WE FIND THAT THIS ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE HON'BLE JURISDICTIONAL PUNJAB & HARYANA HIGH COURT IN THE C ASE OF CIT, KARNAL VS. MARKET COMMITTEE, PIPLI IN ITA NO.535/2009 DATED 5.7.2010. WE ALSO FIND THAT THE CIT (A) HAS GRANTED THE RELIEF BY FOLLOWING THE DECISIO N OF ITAT CHANDIGARH A BENCH AND THERE ARE NUMBER OF DECISIONS OF ITAT DELHI BEN CHES WHERE THE DEPRECIATION HAS BEEN HELD TO BE ALLOWABLE. IN VIEW OF THIS FAC T, WE SUSTAIN THE ORDER OF CIT (A) ON THIS ISSUE AND DISMISS THE GROUND NO.1. 4. IN THE SECOND GROUND, THE ISSUE INVOLVED IS ALLO WABILITY OF MARKET FEES PAID TO HSAMB. THE REVENUE CLAIMED THAT IT IS NOT AN AP PLICATION OF INCOME FOR CHARITABLE PURPOSES AS THAT THE MARKET FEE PAID TO THE BOARD IS A STATUTORY OBLIGATION UNDER THE AGRICULTURAL MARKETING BOARD ACT. THE RE VENUE CLAIMED THAT IT IS SHARING ITA NO.413/DEL./2011 3 OF INCOME BY AN OVERRIDING TITLE AS PER ACT BY WHIC H THE MARKET COMMITTEE IS GOVERNED. 5. LEARNED DR RELIED ON THE ORDER OF THE ASSESSING OFFICER. 6. WE FIND THAT THE CIT (A) GRANTED THE RELIEF BY F OLLOWING THE DECISION OF ITAT IN THE CASE OF MARKET COMMITTEE, ASAND VS. ACI T, KARNAL. ON THIS ISSUE ALSO, THERE ARE UMPTEEN NUMBER OF DECISIONS OF ITAT , DELHI BENCHES WHERE THE PAYMENT TO THE BOARD HAS BEEN HELD ALLOWABLE. IN V IEW OF THESE FACTS, WE SUSTAIN THE ORDER OF CIT (A) ON THIS ISSUE AND DISMISS THE GROUND NO.2. 7. GROUND NO.3 IS GENERAL IN NATURE AND DOES NOT RE QUIRE ANY ADJUDICATION. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 28 TH DAY OF MARCH, 2011. SD/- SD/- (RAJPAL YADAV) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 28 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.