The Commissioner Of Income Tax v. Market Committee

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH. I.T.A. No.439 of 2010 Date of decision: 20.9.2010 The Commissioner of Income Tax. Vs. Market Committee. -----Appellant. -----Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOELHON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present:-Mr. Yogesh Putney, Sr. Standing Counselfor the appellant. --- ADARSH KUMAR GOEL, J. This appeal has been preferred by the revenue underSection 260-A of the Income Tax Act, 1961 (for short, “the Act”)against the order dated 15.10.2009 of the Income Tax AppellateTribunal, Chandigarh in I.T.A. No.828/Chandi/2009 for theassessment year 2004-05 proposing to raise following substantialquestions of law:- “i)Whether the orderof the Income Tax AppellateTribunal is perverse in deleting the addition ofRs.68,80,000/- made on account of interest incomeaccrued on advance made to Haryana StateElectricity Board, relying on the communication dated20.01.2003 of the Haryana Government that principalamount of FDRs of market Committees with HSEB bereturned to the concerned Market Committees, butignoring the remaining part of the communicationwhich says that the matter regarding interest on theseTribunal is perverse in deleting the addition ofRs.68,80,000/- made on account of interest incomeaccrued on advance made to Haryana StateElectricity Board, relying on the communication dated20.01.2003 of the Haryana Government that principalamount of FDRs of market Committees with HSEB bereturned to the concerned Market Committees, butignoring the remaining part of the communicationwhich says that the matter regarding interest on these deposits will be considered after repayment ofprincipal, which means that right of interest on theadvance/deposit made by the assessee with HSEBdid not stand waived and as such the same hadaccrued to the assessee during the year? ii)Whether on the facts and in the circumstances of thecase, the order of the Income Tax Appellate Tribunalis perverse in as much as it has deleted the addition,made on account of interest on advance made by theassessee to the Haryana State Electricity Board byaccepting the contention of the assessee that it wasmaintaining cash system of accounting and nointerest income was received during the year,ignoring the fact that, as it is clear from the auditreport and final account, the assessee had followedmixed system of accounting and not cash system? iii)Whether on the facts and in the circumstances of thecase, the Income Tax Appellate Tribunal is justified inallowing depreciation on capital assets, when capitalexpenditure relating to acquisition of such assets hadalready been allowed as “application of income” forthe purpose of allowing exemption under section 11of the Income Tax Act, 1961 and as such furtherallowing of depreciation on these capital assets willamount to double deduction for the sameexpenditure? iv)Whether allowing of depreciation on the capitalassets by the Income Tax Appellate Tribunal isjustified in the light of the Hon’ble Apex Courtdecision in the case of Escorts India Ltd. (199 ITR43), wherein it has been held that in the absence ofclear statutory indication to the contrary, the Statute should not be read as to permit as assessee twodeductions on the same expenditure? v)Whether on the facts and in the circumstances of thecase, the order of the Income Tax Appellate Tribunalis perverse in as much as it has deleted the additionmade on account of interest accrued on advancemade by the assessee to the Haryana StateElectricity Board by accepting the contention of theassessee that it was maintaining cash system ofaccounting and no interest income was receivedduring the year, ignoring the fact that, as it is clearfrom the audit report and final account, the assesseehad followed mixed system of accounting and notcash system? should not be read as to permit as assessee twodeductions on the same expenditure? v)Whether on the facts and in the circumstances of thecase, the order of the Income Tax Appellate Tribunalis perverse in as much as it has deleted the additionmade on account of interest accrued on advancemade by the assessee to the Haryana StateElectricity Board by accepting the contention of theassessee that it was maintaining cash system ofaccounting and no interest income was receivedduring the year, ignoring the fact that, as it is clearfrom the audit report and final account, the assesseehad followed mixed system of accounting and notcash system? vi)Whether on the facts and in the circumstances of thecase, the Ld. ITAT is right in law in restoring the issueto the file of assessing officer for a fresh decision interms of decision of Bombay High Court reported in264 ITR 110 without examining the issue on meritsand the law laid down by the Hon’ble Apex Courtin1999 ITR 143?” It is not disputed that identical appeal of the revenuebeing I.T.A. No.138 of 2010 CITv. Market Committee, Ladwahas been dismissed by this Court vide order dated 7.7.2010. Accordingly, this appeal is dismissed. (ADARSH KUMAR GOEL) JUDGE September 20, 2010ashwani ( AJAY KUMAR MITTAL ) JUDGE