COMMISSIONER OF INCOME TAX V. MARKET COMMITTEE

ITA/439/2010

AI Insights

The case involves an appeal by the Commissioner of Income Tax against the Market Committee concerning the assessment year 2004-05. The primary issues revolved around the deletion of an addition of Rs.68,80,000 made on account of interest income accrued on advances to the Haryana State Electricity Board (HSEB). The Tribunal's decision to delete this addition was contested on grounds that the interest income had indeed accrued to the assessee during the year, contrary to the Tribunal's acceptance of the assessee's cash system of accounting. Additionally, the appeal questioned the Tribunal's allowance of depreciation on capital assets which had already been considered for exemption under section 11 of the Income Tax Act, 1961, suggesting a potential double deduction. The court's decision referenced the principles established in the case of Escorts India Ltd. (199 ITR 43) regarding the prohibition of double deductions unless explicitly allowed by statute.

• Counselvise Citation: [2010] 140 COUNSELVISE.COM (IT) 736008 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 20-09-2010
• Assessment Year: misc
• Other Referred Cases: CIT v. Market Committee, Ladwa
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Assessee Lawyers: YOGESH PUTNEY
• Keywords: Capital assets; Depreciation; Double Deduction; Income Tax; Interest income
• Section: 11; 260-A

Judgement Text

"IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.A. No.439 of 2010 Date of decision: 20.9.2010 The Commissioner of Income Tax. -----Appellant. Vs. Market Committee. -----Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present:- Mr. Yogesh Putney, Sr. Standing Counsel for the appellant. --- ADARSH KUMAR GOEL, J. This appeal has been preferred by the revenue under Section 260-A of the Income Tax Act, 1961 (for short, “the Act”) against the order dated 15.10.2009 of the Income Tax Appellate Tribunal, Chandigarh in I.T.A. No.828/Chandi/2009 for the assessment year 2004-05 proposing to raise following substantial questions of law:- “i) Whether the orderof the Income Tax Appellate Tribunal is perverse in deleting the addition of Rs.68,80,000/- made on account of interest income accrued on advance made to Haryana State Electricity Board, relying on the communication dated 20.01.2003 of the Haryana Government that principal amount of FDRs of market Committees with HSEB be returned to the concerned Market Committees, but ignoring the remaining part of the communication which says that the matter regarding interest on these I.T.A. No.439 of 2010 deposits will be considered after repayment of principal, which means that right of interest on the advance/deposit made by the assessee with HSEB did not stand waived and as such the same had accrued to the assessee during the year? ii) Whether on the facts and in the circumstances of the case, the order of the Income Tax Appellate Tribunal is perverse in as much as it has deleted the addition, made on account of interest on advance made by the assessee to the Haryana State Electricity Board by accepting the contention of the assessee that it was maintaining cash system of accounting and no interest income was received during the year, ignoring the fact that, as it is clear from the audit report and final account, the assessee had followed mixed system of accounting and not cash system? iii) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is justified in allowing depreciation on capital assets, when capital expenditure relating to acquisition of such assets had already been allowed as “application of income” for the purpose of allowing exemption under section 11 of the Income Tax Act, 1961 and as such further allowing of depreciation on these capital assets will amount to double deduction for the same expenditure? iv) Whether allowing of depreciation on the capital assets by the Income Tax Appellate Tribunal is justified in the light of the Hon’ble Apex Court decision in the case of Escorts India Ltd. (199 ITR 43), wherein it has been held that in the absence of clear statutory indication to the contrary, the Statute 2 I.T.A. No.439 of 2010 should not be read as to permit as assessee two deductions on the same expenditure? v) Whether on the facts and in the circumstances of the case, the order of the Income Tax Appellate Tribunal is perverse in as much as it has deleted the addition made on account of interest accrued on advance made by the assessee to the Haryana State Electricity Board by accepting the contention of the assessee that it was maintaining cash system of accounting and no interest income was received during the year, ignoring the fact that, as it is clear from the audit report and final account, the assessee had followed mixed system of accounting and not cash system? vi) Whether on the facts and in the circumstances of the case, the Ld. ITAT is right in law in restoring the issue to the file of assessing officer for a fresh decision in terms of decision of Bombay High Court reported in 264 ITR 110 without examining the issue on merits and the law laid down by the Hon’ble Apex Court in 1999 ITR 143?” It is not disputed that identical appeal of the revenue being I.T.A. No.138 of 2010 CIT v. Market Committee, Ladwa has been dismissed by this Court vide order dated 7.7.2010. Accordingly, this appeal is dismissed. (ADARSH KUMAR GOEL) JUDGE September 20, 2010 ( AJAY KUMAR MITTAL ) ashwani JUDGE 3 "