Commissioner of Income Tax vs Market Committee

Adarsh Kumar Goel, J.—This order will dispose of ITA Nos. 753 and 760 of 2010 as common questions are involved in both the appeals.

ITA No. 753 of 2010 has been preferred by the revenue u/s 260A of the Income Tax Act, 1961 against order dated 31.12.2009 passed by the Income Tax Appellate Tribunal, Chandigarh Bench "B", in ITA No. 1038/Chdl/2009 for the assessment year 2006-07, claiming following substantial questions of law:

(a) Whether on the facts and in the circumstances of the case, the Hon''ble ITAT is justified in allowing depreciation on the 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 u/s 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?

(b) Whether the Ld. ITAT''s decision to allow double deduction on depreciation when capital expenditure on the assets has already been allowed, is justified in the light of the Hon''ble Apex Court''s decision in Escorts Limited and Others Vs. Union of India and others, 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?

(c) Whether on the facts and in the circumstances of the case and in law the order of the Ld. ITAT is perverse in deleting the addition of Rs. 31,50,000/-in the case of Market Committee, Yamuna Nagar for A.Y. 2006-07 on account of interest income accrued on advance ignoring the findings of the CIT(A) on page 6 of his order dated 01.09.2009, that as the Assessee is not following purely a cash system of accounting, the interest income of the Assessed from such advances accrues regularly as per mercantile system of accounting which has to be accounted for and taxed on accrual basis?

(d) Whether on the facts and in the circumstances of the case and in law, the Ld. Income Tax Appellate Tribunal was justified in restoring the issue regarding set off of brought forward losses for verification and consequential allowance despite the fact that the income of the Assessee to be computed u/s 11 to 13 of the Income Tax Act, 1961; whereas, there is no provision to set off the brought forward losses against exempt income and exemption in each year is based upon the application of prescribed percentage of receipts for charitable purposes?

Learned Counsel for the revenue very fairly states that questions (a) and (b) are covered by the judgment of this Court dated 5.7.2010 in ITA No. 535 of 2009 The Commissioner of Income Tax, Karnal v. Market Committee Pipli whereas question (c) is covered by the judgment of this Court dated 7.7.2010 in ITA No. 138 of 2010 The Commissioner of Income Tax Karnal v. Market Committee, Ladwa. In view of order passed by this Court in ITA No. 535 of 2009, question (d) is decided in the same terms against the revenue.

Accordingly, the appeals are dismissed.

A photo copy of this order be placed on the file of the connected case.