ACIT, Panipat V. Market Committee, Panipat

ITA 4341/DEL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 9746 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2004-2005
• Appeal Filed On: 13-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G S SAHOTA
• Assessee Lawyers: ADHIR KUMAR
• Keywords: Charitable institution; Revenue expenditure
• Section: 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : E : NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO. 4341/DEL/2009 ASSESSMENT YEAR : 2004-05 ASSTT. COMMISSIONER OF INCOME TAX, PANIPAT CIRCLE, PANIPAT. VS. MARKET COMMITTEE, MADLAUDA, PANIPAT. PAN : AAALM0258Q (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ADHIR KUMAR, CA REVENUE BY : SHRI G.S. SAHOTA, SR. DR ORDER PER I.P. BANSAL, JUDICIAL MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DIR ECTED AGAINST THE ORDER OF THE CIT (A) DATED 4 TH SEPTEMBER, 2009 FOR ASSESSMENT YEAR 2004-05. GROU NDS OF APPEAL READ AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN L AW IN HOLDING THAT EXPENDITURE INCURRED ON REPAIR AND MAI NTENANCE OF ROADS IS APPLICATION OF INCOME. 2. THAT THE APPELLANT CRAVES FOR PERMISSION TO AD D, DELETE OR AMEND THE GROUNDS OF APPEAL BEFORE OR AT THE TIME O F HEARING OF APPEAL. 2. THE ISSUE WHETHER EXPENDITURE INCURRED BY THE AS SESSEE ON REPAIR AND MAINTENANCE OF ROADS IS AN EXPENDITURE IN THE HANDS OF ASSESSEE WAS RESTORED BACK BY THE TRIBUNAL TO THE FILE OF CIT (A) VIDE IT S ORDER DATED 27 TH JANUARY, 2009. ITA NO.4341/DEL/2009 2 IN THE RESTORED PROCEEDINGS, IT WAS SUBMITTED BY TH E ASSESSEE THAT THESE EXPENDITURES ARE REVENUE EXPENDITURES AND RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS:- (A) LAKSHMIJI SUGAR MILLS CO. PVT. VS. CIT 82 ITR 376 (B) PANIPAT COOPERATIVE SUGAR MILLS LTD. VS. CIT 10 8 ITR 111 (P&H) 3. IT MAY BE POINTED OUT HERE THAT IT IS MENTIONED IN THE ORDER OF THE CIT (A) THAT HONBLE SUPREME COURT HAS DISMISSED SLP OF THE DEPARTMENT VIDE ORDER DATED 17 TH NOVEMBER, 2008 IN SLP NO.1532/2008 AND THE ISSUE W AS FINALLY DECIDED AND THE ASSESSEE WAS HELD AS A CHARITABLE I NSTITUTION AND ASSESSABLE U/S 11 TO 13 OF IT ACT, 1961 AND, THUS, IT WAS OBSERVED THAT IT WILL MAKE NO DIFFERENCE WHETHER THE EXPENDITURE INCURRED BY THE ASSESSEE IS CAPITAL OR REVENUE. EVEN IF IT IS HELD THAT IT IS APPLICATION OF INCOME, THEN A LSO IT WILL BE AN ALLOWABLE EXPENDITURE AS APPLICATION OF INCOME. AS THE ISSUE WAS RESTORED BACK TO THE FILE OF CIT (A), HE IS DECIDING THIS ISSUE. 4. THE CIT (A) CALLED FOR THE REPORT OF THE AO AND THE REPORT OF THE AO WAS AS UNDER:- IN THE ORDER DATED 27.01.2009, THE HONBLE ITAT H AD SET ASIDE THE ISSUE OF CONSTRUCTION AND REPAIRING OF RO ADS TO YOUR HONOURS OFFICE. I HAVE SEEN THE OBJECTS OF THE MA RKET COMMITTEE AND AS PER THESE OBJECTS GIVEN IN THE PUNJAB AGRICU LTURAL PRODUCT MARKETS ACT, 1961, (CLAUSE 28 (VIII) ), COPY OF WHI CH IS ENCLOSED, THE PURPOSES FOR WHICH THE MARKET COMMITTEE FUNDS MAY B E EXPENDED, IT HAS BEEN MENTIONED AS UNDER:- PROVIDING COMFORTS AND FACILITIES, SUCH AS SHELTER , SHEDS, PARKING ACCOMMODATION AND WATER FOR THE PERSONS, DRAUGHT CATTLE, VEHICLES AND PACK ANIMALS COMING OR BEING BROUGHT TO THE MARKET OR ON CONSTRUCTION AND REPAIR OF APPROACH ROADS (LINK ROADS), CULVERTS, BRIDES AND OTHER SUCH PURPOSES. IN VIEW OF THE ABOVE CLAUSE, IT IS CLEAR THAT CONST RUCTION AND REPAIR OF ROADS IS ONE OF THE MAIN PURPOSES OF THE MARKET COMMITTEES AND THE EXPENDITURE CLAIMED IS TREATED A S APPLICATION OF FUNDS AS A REVENUE EXPENDITURE. ITA NO.4341/DEL/2009 3 5. ON THESE FACTS, IT HAS BEEN HELD BY LD. CIT (A) THAT THE ABOVE MENTIONED EXPENDITURE BEING INCURRED ON THE OBJECTS OF THE AS SESSEE AS PROVIDED UNDER THE ACT, HAVE TO BE HELD TO BE ALLOWABLE AS REVENUE EXP ENDITURE. AGAINST THESE FINDINGS OF CIT (A) THE DEPARTMENT IS AGGRIEVED, HE NCE, IN APPEAL. 6. LD. DR RELIED ON THE ORDER OF AO AND IT WAS PLEA DED THAT EXPENDITURE ON REPAIR AND MAINTENANCE OF ROAD COULD NOT BE ALLOWED AS EXPENDITURE AS CLAIMED BY THE ASSESSEE AND CIT (A) IS WRONG IN ALLOWING TH E SAME. 7. ON THE OTHER HAND, IT WAS SUBMITTED BY LD. AR OF THE ASSESSEE THAT THE ABOVE MENTIONED EXPENDITURE WAS INCURRED BY THE ASS ESSEE IN ACCORDANCE WITH THE OBJECTS STATED IN THE ACT. THUS, IT WAS PLEADE D THAT THE CIT (A) WAS RIGHT IN HOLDING THAT THESE WERE EXPENDITURE WHICH WERE TO B E ALLOWED. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS IN THE LIGHT OF THE MATERIAL PLACED BEFORE US. THE FACT THAT THE ASSES SEE HAS BEEN HELD TO BE A CHARITABLE INSTITUTION ON WHICH SECTION 11 TO 13 AR E APPLICABLE HAS NOT BEEN CONTROVERTED BY THE REVENUE. THE EXPENDITURE IS CO VERED BY THE OBJECTS MENTIONED IN THE ACT UNDER WHICH THE ASSESSEE HAS B EEN INCORPORATED AND OPERATING, THEREFORE, WE FIND NO INFIRMITY IN THE O RDER OF THE CIT (A) VIDE WHICH THESE EXPENDITURES HAVE BEEN HELD EITHER AS ALLOWAB LE REVENUE EXPENDITURE OR AS APPLICATION OF INCOME. WE, THEREFORE, DECLINE T O INTERFERE IN THE FINDINGS OF CIT (A). 9. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMEN T IS DISMISSED. 10. THE ORDER PRONOUNCED IN THE OPEN COURT ON 15.01 .2010. SD/- SD- [A.K. GARODIA] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 15.01.2010. DK ITA NO.4341/DEL/2009 4 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES