ITO,, Sirsa v. Market Committee,, Ding

ITA 428/CHANDI/2010 | 2007-2008
Pronouncement Date: 25-05-2010 | Result: Partly Allowed

Appeal Details

RSA Number 42821514 RSA 2010
Assessee PAN AAHFR5988F
Bench Chandigarh
Appeal Number ITA 428/CHANDI/2010
Duration Of Justice 29 day(s)
Appellant ITO,, Sirsa
Respondent Market Committee,, Ding
Appeal Type Income Tax Appeal
Pronouncement Date 25-05-2010
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 25-05-2010
Assessment Year 2007-2008
Appeal Filed On 26-04-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI G.S.PANNU ACCOUNTANT MEMBER AND MS SUSHMA CHOWLA JUDICIAL MEMBER ITA NO. 427/CHD/2010 ASSESSMENT YEAR: 2007-08 THE ITO WARD-1 VS. MARKET COMMITTEE SIRSA RANIA PAN NO. AAHFR5988F (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N.K.SAINI RESPONDENT BY: SHRI R.R.THAKUR ITA NO. 428/CHD/2010 ASSESSMENT YEAR: 2007-08 THE ITO WARD-1 VS. MARKET COMMITTEE DING SIRSA DING PAN NO. AAALM0426A (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.P. KHUTAN RESPONDENT BY: SHRI R.R.THAKUR & ITA NO. 429/CHD/2010 ASSESSMENT YEAR: 2007-08 THE ITO WARD-1 VS. MARKET COMMITTEE SIRSA ELLENABAD PAN NO. AAALM0430E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N.K.SAINI RESPONDENT BY: SHRI R.R.THAKUR 2 ORDER PER SUSHMA CHOWLA JM THE APPEALS BY THE REVENUE ARE AGAINST THE SEPARA TE ORDERS OF CIT(A) ROHTAK DATED 24.2.2010 RELATING TO ASSESSMEN T YEAR 2007-08 AGAINST THE ORDER PASSED UNDER SECTION 143(3) OF TH E I.T. ACT. 2. COMMON GROUNDS NOS. (I) AND (II) HAVE BEEN RAISE D BY THE REVENUE IN THE CASE OF DIFFERENT MARKET COMMITTEES RELATING TO ASSESSMENT YEAR 2007-08. THE APPEALS OF DIFFERENT MARKET COMMITTEE S ON THE SAME ISSUES ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER F OR THE SAKE OF CONVENIENCE. 3. THE COMMON GROUNDS OF APPEAL READS AS UNDER:- (I) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) WAS JUSTIFIED IN ALLOWING PAYMEN T OF 30% OF MARKET FEES AMOUNTING TO RS. 59 21 662/- (MARKET COMMITTEE RANIA) RS. 9 56 027/-(MARKET COMMITTEE DING) AND RS. 65 52 109/- (MARKET COMMITTEE ELLENABAD) EARNED BY IT PAID TO HARYANA AGRICULTURAL MARKETING BOARD AS APPLICATION OF INCO ME FOR CHARITABLE PURPOSES. (II) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) WAS JUSTIFIED IN ALLOWING DEPRECIATION OF RS. 21 06 555/- (MARKET COMMITTEE RANIA) RS. 11 70 725/- (MARKET COMMITTEE DING) AND RS. 8 86 822/- (MARKET COMMITTEE ELLENABAD) ON FIX ED ASSETS. 4. THE LEARNED AR FOR THE ASSESSEE POINTED OUT THAT THE GROUND NO.(I) RAISED IN THE PRESENT APPEAL IS COVERED BY THE ORDE R OF TRIBUNAL IN VARIOUS CASES OF MARKET COMMITTEES WHEREIN VIDE CONSOLIDATE D ORDER DATED 29.5.2009 THE APPEALS OF THE REVENUE WERE DISMISSE D 5. THE BRIEF FACTS OF THE CASE THAT THE ASSESSEE DU RING THE YEAR UNDER CONSIDERATION HAD DEBITED AFTER EXPENSES RS.. 59 21 662/- (MARKET 3 COMMITTEE RANIA) RS.. 9 56 027/- (MARKET COMMITT EE DING) AND 65 52 109/- (MARKET COMMITTEE ELLENABAD) AS CONTR IBUTION TO HARYANA STATE AGRICULTURAL MARKETING BOARD (HSAMB) AS APPLI CATION OF INCOME UNDER SECTION 11(1) OF THE ACT. THE CLAIM OF THE ASSESSEE WAS THAT UNDER SECTION 11 OF THE PUNJAB AGRICULTURE PRODUCE MARKET ACT 1961 THE STATE GOVERNMENT BY NOTIFICATION SHALL ESTABLISH A MARKET COMMITTEE FOR EVERY NOTIFIED MARKET AREA. THE HEADQUARTERS OF THE MARK ET COMMITTEE SHALL BE SPECIFIED. IN OTHER WORDS THE MARKET COMMITTEES ARE GOVERNED BY THE STATE GOVERNMENT THROUGH HSAMB WHO EXERCISE COMPLE TE CONTROL OVER ITS FUNCTION. AS PER SECTION 12 OF PUNJAB AGRICULTU RAL PRODUCE MARKETS ACT 1961 CERTAIN MEMBERS ARE NOMINATED BY THE STATE GOVERNM ENT. UNDER SECTION 27 OF THE SAID ACT EVERY COMMITTEE S HALL OUT OF ITS FUNDS / COLLECTION PAY TO THE BOARD CONTRIBUTION AT CERTAI N PERCENTAGE OF ITS INCOME DERIVED FROM LICENSE FEE MARKET AND FINES E TC TO DEFRAY EXPENSES OF THE ESTABLISHMENT OF THE BOARD AND SUCH OTHER EX PENSE INCURRED IN THE INTEREST OF THE COMMITTEE. SECTION 28 OF THE SAID ACT LAYS DOWN THE MANNER OF EXPENDING OF FUNDS OF MARKET COMMITTEE. T HE CONTRIBUTION TO THE BOARD BY THE MARKET COMMITTEE U/S 27 OF THE PUN JAB AGRICULTURAL PRODUCE MARKETS ACT 1961 WAS A STATUTORY REQUIREMENT AND EVERY MARKET COMMITTEE HAS TO CONTRIBUTE CERTAIN PERCENTAGE OF I TS INCOME TO THE AGRICULTURAL MARKETING BOARD. THE ISSUE RAISED BEFO RE US IS IN RESPECT OF THE ALLOWABILITY OF THE 30% CONTRIBUTION MADE BY TH E MARKET COMMITTEES TO THE BOARD BEING APPLICATION OF INCOME WHILE COMP UTING THE INCOME U/S 11(1) OF THE INCOME TAX ACT. 5. WE FIND THAT SIMILAR ISSUE AROSE BEFORE THE TRIB UNAL IN THE CASE OF VARIOUS MARKET COMMITTEES AND THE TRIBUNAL VIDE CON SOLIDATED ORDER DATED 29.5.2009 IN ITA NOS. 386 TO 390/CHD/2009 RELATING TO ASSESSMENT YEAR 4 2006-07 ALLOWED THE CLAIM OF THE ASSESSEE. THE TRI BUNAL IN THE CASE OF MARKET COMMITTEE JULANA (JIND) ETC IN IT NOS. 357 TO 362/CHD/2009 IN TURN FOLLOWING THE RATIO LAID DOWN DELHI BENCH OF T HE TRIBUNAL IN THE CASE OF MARKET COMMITTEE (ITA NO. 3974/D/2007) AND 21 OT HER APPEALS VIDE ORDER DATED 20.6.2008 WHEREIN IT WAS HELD AS UNDER :- 8. GROUND NO. 2 IS WITH REGARD TO THE ADDITION OF RS. 30 85 291/- OUT OF 30% OF CONTRIBUTION PAID BY THE ASSESSEES CONTRIBUTION TO THE BOARD. THE ISSUE IS ALSO COVERED BY THE AFORESAID DECISION OF THE TRIBUNAL DELHI BENCH D NEW DELHI IN THE CASE OF MARKET COMMITTEE VIDE ITA NO. 3957/D/97 AND 21 OTHER APPEALS DECIDED ON 2 0TH JUNE 2008 WHERE THE TRIBUNAL HAD CONFIRMED THE ORD ER OF LEARNED CIT(A) IN DELETING THE ADDITION HAVING REGA RD TO THE PROVISIONS CONTAINED IN SECTIONS 27 & 28 OF THE PUNJAB AGRICULTURE PRODUCE MARKETING ACT 1961 AND BY FOLL OWING THE DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF HARYANA DAL & GENERAL MILLS VS. STATE REPORTED AT AIR (1976) 1 (PUNJAB & HARYANA) IN CIVI L WRIT PETITION NO. 3274 2583 3268 ETC OF 1974 DATED 8.1 1.1974. IN THE PRESENT CASE ALSO THE CIT HAS DELETED THE A DDITION BY MAKING A REFERENCE TO THE SECTIONS 27 AND 28 OF THE PUNJAB AGRICULTURAL PRODUCE MARKET ACT 1961 AND FOLLOWING THE AFORESAID DECISION OF PUNJAB & HARYA NA HIGH COURT IN THE CASE OF HARYANA DAL & GENERAL MIL LS VS. STATE (SUPRA) WE THEREFORE DO NOT FIND ANY INFIRM ITY IN THE ORDER OF LEARNED CIT(A) IN DELETING THE ADDITION OF RS. 30 85 291/- OUT OF CONTRIBUTION MADE BY THE ASSESSE E COMMITTEE TO THE MARKETING BOARD. THUS THIS GROUND IS ALSO REJECTED. 6. IT WAS FURTHER HELD AS UNDER:- 7. THE ASSESSEE MARKET COMMITTEES AS WELL AS HSAMB ARE DULY REGISTERED U/S 12AA OF THE ACT. THE CLAIM OF T HE ASSESSEE ARE ALLOWABLE ON THE GROUND THAT THEY ARE REQUIRED TO PAY 30% OF THE INCOME TO THE BOARD WHICH IS SPE NT FOR SPECIFIED DEVELOPMENT PROJECTS AND OTHER PURPOSES A ND NOT FOR THE BENEFIT OF THE ASSESSEE MARKET COMMITTEE T HEREFORE RESPECTFULLY FOLLOWING THE AFORESAID ORDER OF THE TRIBUNAL AND SPECIALLY WHEN NO CONTRARY DECISION WAS BROUGHT TO OUR NOTICE CONSEQUENTLY ON THE IMPUGNED ISSUE THE AP PEAL OF THE REVENUE FAILS. THE STAND OF THE CIT(A) IS UPHEL D. 7. RESPECTFULLY FOLLOWING THE SAME WE ALLOW THE CL AIM OF THE ASSESSEE IN RESPECT OF DEDUCTION CLAIMED ON ACCOUNT OF 30% O F MARKET FEES EARNED 5 BY IT PAID TO M/S HAMB AS APPLICATION OF INCOME FOR CHARITABLE PURPOSES. THE GROUND OF APPEAL RAISED BY THE REVENUE IS DISMI SSED. 8. THE NEXT ISSUE RAISED VIDE GROUND NO. (II) IN TH E PRESENT APPEALS ARE AGAINST THE ALLOWABILITY OF DEPRECIATION ON ASSETS ON FIXED ASSETS. 9. WE FIND THAT THE ISSUE RAISED BEFORE US IS COVER ED BY THE ORDER OF THE TRIBUNAL IN CASE OF VARIOUS MARKET COMMITTEES B Y DIFFERENT ORDERS OF THE TRIBUNAL. A REFERENCE IS BEING MADE TO THE ORD ER PASSED BY THE TRIBUNAL IN ITA NOS. 1037/CHD/2009 & 1067/CHD/2009 IN THE CASE OF MARKET COMMITTEE MUSTAFABAD & SAUDHARA VS DCIT YA MUNANAGAR VIDE ORDER DATED 18.3.2010 WHEREIN WHILE ADJUDICATING TH E CLAIM OF DEDUCTION ON ACCOUNT OF DEPRECIATION ON ASSETS COST OF WHICH WAS ALLOWED AS APPLICATION OF INCOME IT WAS HELD AS UNDER:- 8. THE ISSUE IN GROUND NO.3 IS AGAINST THE DISALLO WANCE OF DEPRECIATION ON ASSETS COST OF WHICH WAS CLAIME D AND ALLOWED AS APPLICATION OF INCOME TOWARDS CHARITABLE PURPOSES IN THE YEAR OF ACQUISITION OF THE SAID AS SET. THE TRIBUNAL VIDE ORDER DATED 31.12.2009 ON SIMILAR IS SUE VIDE PARAS 11 & 12 HAS HELD AS UNDER:- 11. WE FIND THAT SIMILAR ISSUE AROSE BEFORE THE TRIBUNAL IN ITA NO. 1055/CHD/2009 RELATING TO ASSESSMENT YEAR 2006-07 WHEREBY VIDE ORDER DATED 30.11.2009 IT WAS HELD AS UNDER:- 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS. THE ASSESSEE BEFORE US IS A LOCAL AUTHORITY WHICH IS CLAIMING ITS INCOME TO BE EXEMPT U/S 11 OF THE I.T. ACT. WHILE COMPUTING THE INCOME FOR THE YEAR AS PER INCOME AND EXPENDITURE ACCOUNT THE ASSESSEE HAD DEBITED DEPRECIATION OF RS. 8 92 957/- ON THE FIXED ASSETS. ADMITTEDLY THE ENTIRE COST OF THE ASSETS WAS CLAIMED AND ALLOWED AS APPLICATION OF INCOME TOWARDS CHARITABLE PURPOSE IN THE YEAR OF ACQUISITION OF THE SAID ASSETS. THE ASSETS WERE EITHER ACQUIRED IN THE EARLIER YEARS OR DURING THE YEAR UNDER CONSIDERATION. THE 6 QUESTION BEFORE US IS LIMITED TO THE CLAIM OF DEDUCTION ON ACCOUNT OF DEPRECIATION WHILE COMPUTING THE INCOME FOR THE PURPOSE OF SECTION 11 OF THE ACT. SIMILAR ISSUE AROSE IN CIT VS RAIPUR PALLOTTINE SOCIETY [180 ITR 579 (M.P.)] WHEREIN WHILE COMPUTING THE INCOME OF A RELIGIOUS AND CHARITABLE INSTITUTION BEING ASSESSED IN THE STATUS OF AOP IT WAS HELD THAT DEPRECIATION IS TO BE ALLOWED WHILE COMPUTING THE BUSINESS INCOME U/S 28 OF THE I.T. ACT. 6. THE HON'BLE BOMBAY HIGH COURT IN CIT VS INSTITUTE OF BANKING [264 ITR 111 (BOM.)] HAD HELD THAT DEPRECIATION IS TO BE ALLOWED ON THE ASSETS THE COST OF WHICH HAD BEEN FULLY ALLOWED AS APPLICATION OF INCOME UNDER SECTION 11 IN THE PAST YEARS. IT HAD FURTHER HELD THAT DEPRECIATION ON ASSETS RECEIVED ON TRANSFER WHERE THE ASSESSEE HAD NOT INCURRED THE COST OF ACQUIRING THE ASSET IS ALSO TO BE ALLOWED. 7. SIMILAR ISSUE AROSE BEFORE THE TRIBUNAL IN VARIOUS CASES OF MARKET COMMITTEES OF HARYANA AND THE CLAIM OF DEPRECIATION HAS BEEN ALLOWED BY THE TRIBUNAL IN VARIOUS APPEALS FILED BY THE ASSESSEE COPIES OF WHICH HAVE BEEN FILED ON RECORD. 12. RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE M.P. HIGH COURT (SUPRA) AND BOMBAY HIGH COURT (SUPRA) IN THE ABOVE MENTIONED CASES AND FOLLOWING THE DECISION OF THE COORDINATE BENCHES OF TRIBUNAL IN THE CASE OF MARKET COMMITTEE OF HARYANA WE HOLD THAT T HE CLAIM OF DEDUCTION ON ACCOUNT OF DEPRECIATION IS TO BE ALLOWED WHILE COMPUTING THE INCOME U/S 11 OF THE A CT. HOWEVER WE FIND THAT FACTUAL ASPECTS OF THE ISSUE OF ADDITION TO THE FIXED ASSETS AND THE DEPRECIATION ALLOWABLE ON THE SAME IS NOT CLEAR FROM THE PERUSAL OF RECORDS. WE THEREFORE RESTORE THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER FOR THE LIMITED PURPO SE OF VERIFYING THE ADDITIONS MADE TO THE FIXED ASSETS FR OM YEAR TO YEAR AND THE RATE OF DEPRECIATION TO BE ALL OWED ON THE SAME AND CONSEQUENTLY WORK OUT THE DEPRECIATION ALLOWABLE TO THE ASSESSEE DURING THE Y EAR UNDER APPEAL. THE ASSESSING OFFICER SHALL AFFORD A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. THUS GROUND NO.3 RAISED BY THE ASSESSEE IN BOTH TH E APPEALS IS ALLOWED FOR STATISTICAL PURPOSES. 9. RESPECTFULLY FOLLOWING THE RATIO LAID DOWN IN TH E CASE OF MARKET COMMITTEES (SUPRA) VIDE ORDER DATED 31.12.20 09 WE ALLOW THE CLAIM OF THE ASSESSEE. HOWEVER THE ISS UE IS RESTORE BACK TO THE FILE OF ASSESSING OFFICER FOR L IMITED PURPOSES OF VERIFYING THE ADDITIONS MADE TO THE FIX ED ASSETS FROM YEAR TO YEAR AND THE RATE OF DEPRECIATION TO B E ALLOWED 7 ON THE SAME AND CONSEQUENTLY WORK OUT THE DEPRECIAT ION ALLOWABLE TO THE ASSESSEE DURING THE YEAR UNDER APP EAL. THE ASSESSING OFFICER SHALL AFFORD A REASONABLE OPPORTU NITY OF HEARING TO THE ASSESSEE. THUS GROUND NO.3 RAISED BY THE ASSESSEE IN BOTH THE APPEALS IS ALLOWED FOR STATIST ICAL PURPOSES. 10. THE ISSUE RAISED IN THE PRESENT APPEALS BEING I DENTICAL TO THE ISSUE RAISED BEFORE THE TRIBUNAL AND FOLLOWING THE RATIO LAID DOWN VIDE ORDER DATED 18.3.2010 WE REMIT THIS ISSUE BACK TO THE FILE OF ASSESSING O FFICER TO ALLOW THE CLAIM OF THE ASSESSEE IN LINE WITH THE DIRECTIONS OF THE TRIBUNAL IN PARA 9 OF THE AFORESAID ORDER. HOWEVER A REASONABLE OPPORTUNITY OF HEARING SHALL BE AFFORDED TO THE ASS ESSEE. THE GROUND OF APPEAL RAISED BY THE REVENUE IS ALLOWED FOR STATIST ICAL PURPOSES. 11. THE REVENUE HAS RAISED GROUND NO. (III) IN ITA NO.429/CHD/2010) WHICH READS AS UNDER:- (III) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) WAS JUSTIFIED IN ALLOWING EXEMPTION U/S 11(2) OF THE I.T. ACT 1961 AMOUNTING TO RS. 1 98 41 581/-. 12. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSEE HAD FAILED TO FILE THE COPY OF RESOLUTION PASSED BY THE TRUSTE ES ALONGWITH FORM NO.10. THE ASSESSING OFFICER REQUISITIONED THE ASS ESSEE TO EXPLAIN WHY INCOME ACCUMULATED AT RS. 1.98 CRORES BE NOT DISALL OWED U/S 11(2) OF THE ACT AS THE PURPOSES MENTIONED IN FORM NO. 10 WERE N OT SPECIFIC AND NOT SUPPORTED BY THE RESOLUTION DEED PASSED BY THE TRUS T. THE ASSESSEE FAILED TO FILE COPY OF THE SAID RESOLUTION BEFORE THE ASSE SSING OFFICER AND CLAIM OF THE ASSESSEE WAS THUS REJECTED AND BENEFIT OF AC CUMULATION OF RS. 1.98 CRORES WAS NOT ALLOWED TO THE ASSESSEE. BEFORE THE CIT(A) THE LEARNED AR FOR THE ASSESSEE PRODUCED THE COPY OF RESOLUTION PASSED BY THE TRUST OF THE ASSESSEE AND CLAIM WAS ALLOWED U/S 11(2) OF THE ACT. 8 13. WE FIND THAT THE BASIS FOR DISALLOWING THE CLAI M U/S 11(2) OF THE ACT WAS NON FURNISHING THE COPY OF THE RESOLUTION PASS ED BY THE TRUST ALONGWITH THE FORM NO.10 IN WHICH THE INTENTION OF THE MONEY ACCUMULATED AND SET APART IS CLARIFIED. THE ASSESSE E FILED THE COPY OF THE SAID RESOLUTION BEFORE THE CIT(A) AND HE IN TURN AL LOWED THE CLAIM OF THE ASSESSEE. IN THE FACTS AND CIRCUMSTANCES OF THE CAS E WE ARE IN CONFORMITY WITH THE ORDER OF THE CIT(A) IN ALLOWING THE CLAIM OF THE ASSESSEE ONCE THE COPY OF RESOLUTION PASSED BY THE TRUSTEE HAD BE EN FURNISHED BEFORE THE CIT(A). THE LEARNED DR FOR THE REVENUE FAILED TO BR ING ON RECORD ANY EVIDENCE TO THE CONTRARY. ACCORDINGLY UPHOLDING TH E ORDER OF THE CIT(A) WE DISMISS THE GROUND NO.(III) RAISED BY THE REVENU E. 14. IN THE RESULT ALL THE APPEALS OF THE REVENUE A RE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 25 TH DAY OF MAY 2010. SD/- SD/- (G.S.PANNU) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 25 TH MAY 2010 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR