COMMISSIONER OF INCOME TAX , KARNAL V. MARKET COMMITTEE, BAPOLI

ITA/285/2010

AI Insights

The case involves the Commissioner of Income Tax appealing against the Market Committee, Bapoli, concerning the allowance of depreciation on capital assets and the application of income for charitable purposes under the Income Tax Act, 1961. The core issues revolved around whether the Income Tax Appellate Tribunal was justified in allowing depreciation on assets for which capital expenditure had already been deducted as application of income. The Tribunal's decisions included allowing double deductions and the carry forward of unabsorbed depreciation, which the Revenue contested. The High Court of Punjab and Haryana dismissed the appeals, referencing a prior decision that had addressed similar questions.

• Counselvise Citation: [2010] 140 COUNSELVISE.COM (IT) 727628 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 02-08-2010
• Assessment Year: misc
• Other Referred Cases: Escorts Ltd. Vs. UOI (199 ITR 43), The Commissioner of Income Tax v. Market Committee, Karnal, Maharana of Mewar Charitable Foundation (164 ITR 439)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Assessee Lawyers: YOGESH PUTNEY
• Keywords: Application of income; Capital asset; Depreciation; Double Deduction; Losses; Market fees; Unabsorbed depreciation
• Section: 11; 13; 80; 70; 260-A

Judgement Text

"IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.A. No.285 of 2010 & other connected cases being ITA Nos.286 to 288 of 2010 Date of decision: 2.8.2010 The Commissioner of Income Tax. -----Appellant. Vs. Market Committee, Bapoli. -----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 Revenue. --- ADARSH KUMAR GOEL, J. 1. This order will dispose of I.T.A. Nos.285 to 288 of 2010, as it is stated that identical questions are involved in all the appeals. 2. I.T.A. No.285 of 2010 has been preferred by the Revenue under Section 260-A of the Income Tax Act, 1961 against the order dated 29.5.2009 in I.T.A. No.3655/Del/2008 passed by the Income Tax Appellate Tribunal, Delhi Bench ‘F’, New Delhi for the assessment year 2006-07, proposing to raise following substantial questions of law:- “i) Whether on the facts, and in the circumstances of the case, the Income-Tax Appellate Tribunal was justified in holding that depreciation was allowable I.T.A. No.285 of 2010 on the capital asset, when deduction for capital expenditure incurred for acquisition of these capital assets has already been allowed as application of income of the trust? ii) Whether on the facts, and in the circumstances of the case, the Income Tax Appellate Tribunal was justified in allowing double deduction on depreciation when capital expenditure on the asset has already been allowed is justified in the light of the apex Court's decision in Escorts Ltd. Vs. UOI (199 ITR 43) to the effect that in the absence of clear statutory indication to the contrary, the statute should not be read as to permit an assessee two deductions on the same expenditure? iii) Whether on the facts and in the circumstances of the case, the Ld. ITAT was justified in restoring the issue to the file of the Assessing Officer to allow set off of brought forward unabsorbed depreciation and losses of earlier years, despite the fact that depreciation per se is not allowable on capital assets when deduction for capital expenditure has already been allowed as application of income in earlier years and when the provisions of sections 70 to 80 of the Income-tax Act have not specifically provided for carry forward and set off of losses or unabsorbed depreciation in the case of income assessed u/s 11 to 13 of the Act? iv) Whether on the facts and in the circumstances of the case, the Ld. ITAT was justified in directing the AO to consider the excess amount of application of income of previous years to be adjusted in the current year, despite there being no provision in Section 11 to 13 of the Act in this regard and despite the fact that the ratio of the decision of the Hon'ble 2 I.T.A. No.285 of 2010 Rajasthan High Court in Maharana of Mewar Charitable Foundation (164 ITR 439) is not applicable to this jurisdiction? v) Whether on the facts and in the circumstances of the case, the Ld. ITAT was justified in allowing payment of 30% of market fees earned by it paid to the Haryana Agriculture Marketing Board as application of income for charitable purpose, despite the finding that 30% of the market fee has to be paid to the said Board as a statutory obligation under the Agricultural Marketing Board Act, and therefore, it is not application of income, but it is sharing of income by an overriding title as per the Act by which the Market Committee is governed?” 3. Learned counsel for the revenue fairly states that the matter is covered against the revenue by order of this Court dated 28.7.2010 in I.T.A. No.238 of 2010 (The Commissioner of Income Tax v. Market Committee, Karnal). 4. In view of above, these appeals are dismissed. 5. A photocopy of this order be placed on the files of each connected case (ADARSH KUMAR GOEL) JUDGE August 02, 2010 ( AJAY KUMAR MITTAL ) ashwani JUDGE 3 "