Market Committee, Panipat v. ACIT, Panipat

ITA 4400/DEL/2009 | 2004-2005
Pronouncement Date: 22-01-2010 | Result: Allowed

Appeal Details

RSA Number 440020114 RSA 2009
Assessee PAN AAALM0258Q
Bench Delhi
Appeal Number ITA 4400/DEL/2009
Duration Of Justice 2 month(s) 3 day(s)
Appellant Market Committee, Panipat
Respondent ACIT, Panipat
Appeal Type Income Tax Appeal
Pronouncement Date 22-01-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted E
Tribunal Order Date 22-01-2010
Assessment Year 2004-2005
Appeal Filed On 18-11-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `E : NEW DELHI BEFORE SHRI C.L. SETHI JUDICIAL MEMBER AND SHRI B.P. JAIN ACCOUNTANT MEMBER I.T.A. NO.4400/DEL/2009 ASSESSMENT YEAR : 2004-05 MARKET COMMITTEE MADLAUDA ASSTT. COMMISSIONER OF INCOME-TAX PANIPAT. VS. PANIPAT CIRCLE PANIPAT. PAN: AAALM0258Q I.T.A. NOS.305 & 3935/DEL/2009 ASSESSMENT YEARS : 2006-07 & 2007-08 MARKET COMMITTEE ASSANDH ASSTT. COMMISSIONER OF I NCOME-TAX KARNAL. VS. KARNAL. PAN: AAALM0090J (APPELLANT) (RESPONDENT) APPELLANTS BY : SHRI ADHIR KUMAR CA RESPONDENTS BY : SMT. PRATIMA KAUSHIK S R. DR. O R D E R PER B.P. JAIN ACCOUNTANT MEMBER THESE 3 APPEALS BY TWO ASSESSEES ARE DIRECTED AGAIN ST THE ORDERS OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) KARNA L DATED 04.09.2009 03.12.2008 & 06.07.2009 FOR ASSESSMENT YEARS 2004-0 5 2006-07 AND 2007- 08 RESPECTIVELY IN APPEALS AGAINST THE ASSESSMENT O RDERS UNDER SECTION 143(3) OF THE INCOME-TAX ACT 1961 (THE ACT). SINC E COMMON ISSUES ARE 2 INVOLVED ALL THE APPEALS ARE HEARD TOGETHER AND AR E BEING DISPOSED OF BY THIS CONSOLIDATED ORDER. ITA NO.305/DEL/2009 (A.Y.2006-07) 2. GROUND NO.1 IS GENERAL IN NATURE. THEREFORE I T DOES NOT REQUIRE ANY ADJUDICATION. 3. GROUND NOS.2 8 & 9 ARE BEING TAKEN UP TOGETHER AS IDENTICAL ISSUE IS RAISED. GROUNDS READ AS UNDER:- 2. THAT THE LEARNED CIT(A) WRONGLY CONSIDERED THE ACCRUED INTEREST WHICH WAS NOT RECEIVED FROM HVPN AND THERE IS ALSO REMOTE POSSIBILITIES OF RECOVERY OF PRINCIPAL EVEN IS UNJUSTIFIED AND ILLEGAL AND DESERVES TO BE QUASHED IN THE INTER EST OF NATURAL JUSTICE. 8. THAT THE LEARNED CIT(A) WRONGLY CONSIDERED THE ACCRUED INTEREST WHICH WAS NOT RECEIVED FROM MARKET COMMITT EE PUNDRI AND MARKET COMMITTEE NISSING WHICH IS UNJUS TIFIED AND ILLEGAL AND DESERVES TO BE QUASHED IN THE INTEREST OF NATURAL JUSTICE. 9. THAT THE LEARNED CIT(A) WRONGLY CONSIDERED THE ACCRUED INTEREST FOR FULL YEAR BUT THE AMOUNT WAS PAID BY THE ASSESSEE IN THE MONTH OF AUGUST TO THE MARKET COMMITTEE NISS ING WHICH IS UNJUSTIFIED AND ILLEGAL AND DESERVES TO BE QUASHED IN THE INTEREST OF NATURAL JUSTICE. 4. WE HAVE HEARD THE PARTIES. THE ASSESSEE HAS MAD E AN INVESTMENT IN THE SHAPE OF FDR WITH HVPN. DURING THE YEAR THE AS SESSEE HAS NOT RECEIVED ANY INTEREST FROM HVPN AS THE ASSESSEE HAS CLAIMED THE CASH SYSTEM OF ACCOUNTING AND THEREFORE THE INTEREST NOT RECEIVED FROM HVPN HAS NOT BEEN 3 DECLARED AS INTEREST INCOME DURING THE YEAR. IN TH E AUDIT REPORT FILED DURING ASSESSMENT PROCEEDINGS THE CASH SYSTEM OF ACCOUNTIN G HAS BEEN REPORTED WHEREAS REPAIR CONSTRUCTION OF ROAD AND BUILDING A RE ON MERCANTILE SYSTEM OF ACCOUNTING. THE ASSESSEE HAS CLAIMED EXEMPTION OF INCOME BEING THE RETURN FILED IN THE STATUS OF A CHARITABLE TRUST. THE ASSESSING OFFICER DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND TREATED T HE INTEREST ON ACCRUAL BASIS AND ADDED TO THE INCOME OF THE ASSESSEE. 5. THE LEARNED CIT(A) OBSERVED THAT THE ASSESSEE IS FOLLOWING MIXED SYSTEM OF ACCOUNTING AND NOT PURELY CASH SYSTEM OF ACCOUNTING AND THEREFORE THE INTEREST HAS RIGHTLY BEEN TAXED ON A CCRUAL BASIS SINCE THE INTEREST IS ACCRUING REGULARLY. THE ASSESSEE HAS B EEN ALLOWED THE STATUS OF CHARITABLE TRUST UNDER SECTION 12AA OF THE ACT. TH EREFORE THE INCOME TAXABLE AS PER SECTION 11 TO 13 ONLY AND INTEREST I NCOME HAS RIGHTLY BEEN ADDED TO THE INCOME ON ACCRUAL BASIS. 6. WE HAVE PERUSED THE FACTS OF THE CASE. THE LEAR NED COUNSEL FOR THE ASSESSEE SHRI ADHIR KUMAR HAS POINTED OUT THE DECIS ION OF ITAT CHANDIGARH BENCH IN THE CASE OF MARKET COMMITTEE SH AHBAD (M) VS. ACIT KURUSHETRA IN ITA NO.471/CHD/2009 DATED 28.05.2009 WHERE IT WAS HELD VIDE PARA 5 OF THE ORDER THAT NO SUCH INCOME HAD BE EN RECEIVED BY THE ASSESSEE AND NO AMOUNT HAS BEEN OFFERED FOR TAXATIO N ON THIS COUNT. IT WAS 4 HELD THAT THERE IS NO CASE MADE OUT HOW THE MIXED S YSTEM OF ACCOUNTING AFFECTS THE POSITION STATED BY THE ASSESSEE. EVEN IF IT IS ACCEPTED THAT THE ASSESSEE IS FOLLOWING THE MIXED SYSTEM OF ACCOUNTIN G THERE NO REASON AS TO WHY THE INCOME FROM THE DEPOSITS IN QUESTION IS LIA BLE TO BE ASSESSED ON ACCRUAL BASIS. AS PER COMMUNICATION OF THE GOVERNM ENT OF HARYANA PAYMENT OF INTEREST IS NOT DECIDED BY THE GOVERNMEN T. THEREFORE THE INCOME BY WAY OF INTEREST HAS ACCRUED TO THE ASSESS EE IS ACTUALLY WRONG AND THEREFORE THE SAID INCOME IS NOT LIABLE TO BE ASSE SSED EVEN ON ACCRUAL BASIS. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE ASSE SSEE HAS ALSO PLACED ON RECORD THE DECISION OF DELHI BENCH OF ITAT IN ASSES SEES OWN CASE IN ITA NO.2633/DEL/2008 DATED 29 TH MAY 2009 WHERE ON IDENTICAL ISSUE THE MATTER HAS BEEN RESTORED TO THE FILE OF THE LEARNED CIT(A) FOR FRESH DECISION FOLLOWING THE EARLIER DECISION OF THE TRIBUNAL IN T HE CASE OF MARKET COMMITTEES IN ITA NO.3830/DEL/2007 DATED 25.4.2008 AND ITA NO.3111/DEL/2007 DATED 6.2.2009. AFTER CONSIDERING BOTH THE ORDERS OF THE TRIBUNAL AS CITED BY THE LEARNED COUNSEL FOR THE AS SESSEE WE ARE OF THE VIEW THAT THE ASSESSEE IS FOLLOWING THE CASH SYSTEM OF A CCOUNTING AS PER PAGE 1 OF THE AOS ORDER. WHEREAS THE LEARNED CIT(A) REFERS TO THE MIXED SYSTEM OF ACCOUNTING NO INSTANCE OF MIXED SYSTEM OF ACCOUNTI NG HAS BEEN BROUGHT ON RECORD BY HIM. MOREOVER THERE IS NO MIXED SYSTEM OF ACCOUNTING AS PER 5 SECTION 145 OF THE ACT AS AMENDED BY THE FINANCE AC T 1995 WITH EFFECT FROM 1.4.1997 AND THERE ARE EITHER CASH OR MERCANTILE SY STEM OF ACCOUNTING ACCORDING TO WHICH THE INCOME HAS TO BE COMPUTED. THE AUDIT REPORT AND THE FINAL ACCOUNTS OF THE ASSESSEE ARE NOT ON RECORD. IN THE CIRCUMSTANCES AND FACTS OF THE CASE SINCE THE ISSUE IS DIRECTLY COVER ED BY THE DECISION OF ITAT DELHI BENCHES (SUPRA) IN ASSESSEES OWN CASE FOLLO WING THE SAME WE RESTORE THE MATTER BACK TO THE FILE OF THE LEARNED CIT(A) WHO WILL DECIDE THE ISSUE ON MERIT AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE PARTIES AND INDICATE IN HIS ORDER THE BASIS OF THE DECISION ON THIS ISSUE. THE ISSUES IN ALL THE GROUNDS NO.2 8 & 9 ARE ALLOWED F OR STATISTICAL PURPOSES. 7. GROUND NO.3 IN ASSESSEES APPEAL READS AS UNDER: - THAT THE LEARNED CIT(A) WRONGLY CONFIRMED THE DISA LLOWANCE OF UNABSORBED DEPRECIATION CARRIED FORWARD LOSSES W HICH IS ILLEGAL AND UNJUSTIFIED. 8. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED THE INCOME-TAX RETURN WITHIN THE TIME PRESCRIBED UNDER THE ACT CLA IMING THE UNABSORBED DEPRECIATION/CARRIED FORWARD LOSSES OF RS.59 39 994 /- FOR THE ASSESSMENT YEAR 2002-03 AGAINST THE INCOME OF THE SUBSEQUENT YEAR. THE A.O. DID NOT ACCEPT THE CLAIM OF THE ASSESSEE. THE LEARNED CIT(A) OBSE RVED THAT THE ASSESSEE HAS BEEN ALLOWED THE STATUS OF A CHARITABLE TRUST AND T HEREFORE THE INCOME OF THE ASSESSEE IS COMPUTED AS PER SECTIONS 11 TO 13 OF TH E ACT AND THEREFORE THE 6 QUESTION OF DEPRECIATION OR UNABSORBED DEPRECIATION DOES NOT ARISE BECAUSE CAPITAL EXPENDITURE IS ALSO CONSIDERED AS APPLICATI ON OF THE INCOME OF THE ASSESSEE. THE LOSSES AND CARRY FORWARD LOSSES WILL NOT ARISE BECAUSE THE EXPENDITURE IS ALREADY ALLOWED AS PER SECTION 11(1) OF THE ACT. MOREOVER THERE ARE NO SPECIFIC PROVISIONS FOR CHARITABLE TRU ST UNDER SECTIONS 70 TO 80 OF THE ACT WHICH GOVERN THE MATTER RELATING TO CARRY FORWARD OR SET OFF OF LOSSES. THEREFORE THE LEARNED CIT(A) REJECTED THE GROUND RAISED BY THE ASSESSEE. 9. THE LEARNED COUNSEL FOR THE ASSESSEE POINTED OUT AT PAGES 23 TO 27 OF THE PAPER BOOK THE DECISION OF ITAT DELHI BENCH IN ASSESSEES OWN CASE IN ITA NO.2633/DEL/2008 DATED 29 TH MAY 2009 WHERE THE CLAIM HAS BEEN ALLOWED TO THE ASSESSEE ON IDENTICAL ISSUE. AFTER GOING THROUGH THE ORDER OF ITAT DELHI BENCH IN ASSESSEES OWN CASE IN ITA NO.2 633/DEL/2008 IN PARA 19 OF THAT ORDER DATED 29 TH MAY 2009 THE ISSUE IS IDENTICAL IN THE PRESENT CASE AND FOLLOWING THE SAME THE MATTER IS RESTORED TO THE FILE OF THE ASSESSING OFFICER. SINCE NO FINDING IS GIVEN BY TH E LEARNED CIT(A) AS TO WHETHER CARRY FORWARD WAS ALLOWED IN THE YEAR IN WH ICH THE ASSESSEE HAS CLAIMED CARRY FORWARD OR WHETHER SUCH CARRY FORWARD EVEN IF ALLOWED REMAINED UNADJUSTED DURING THE PRESENT ASSESSMENT Y EAR. THE ASSESSING OFFICER IS DIRECTED TO PASS NECESSARY ORDERS AS DIR ECTED BUT BY PROVIDING 7 REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. THUS GROUND NO.3 OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 10. GROUND NO.4 READS AS UNDER:- THAT THE LEARNED CIT(A) WRONGLY CONFIRMED THE ADDI TION OF DEPRECIATION WHICH IS ILLEGAL UNJUSTIFIED AND AGAI NST THE NATURAL LAW OF JUSTICE. 11. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE H AS CLAIMED DEPRECIATION OF RS.44 46 976/-. THE ASSESSEE HAS CLAIMED THAT IT W AS APPLICATION OF INCOME AND THEREFORE CLAIMED IT AS ALLOWABLE. THE ASSESS EE HAS NOT GIVEN THE BIFURCATION BUT IT IS CLAIMED THAT THE DEPRECIATION IS CLAIMED ON ALL THE DEPRECIABLE ASSETS ACQUIRED BY THE ASSESSEE SINCE T HE INCEPTION OF THE MARKET COMMITTEE. THE ASSESSEE HAS NOT FILED ANY DETAIL A S TO WHEN THE ASSET WAS ACQUIRED AND HOW IS THE COST OF ACQUISITION DETERMI NED AND HOW AND ON WHAT BASIS THE DEPRECIATION HAS BEEN CALCULATED IN EARLI ER YEARS AND IN THE YEAR UNDER CONSIDERATION AND HOW IS THE WDV DETERMINED. THE LEARNED CIT(A) OBSERVED THAT THE INCOME OF THE ASSESSEE IS EXEMPT AND THE EXPENDITURE WAS FOR THE OBJECTS OF THE ASSESSEE THEN IT HAS TO BE ALLOWED AS APPLICATION OF INCOME AND THERE IS NO QUESTION OF MAKING ANY DISTI NCTION BETWEEN CAPITAL EXPENDITURE AND REVENUE EXPENDITURE. THEREFORE AN Y FURTHER DEPRECIATION CLAIMED WILL AMOUNT TO DOUBLE DEDUCTION WHICH IS NO T ALLOWABLE. ACCORDINGLY THE LEARNED CIT(A) REJECTED THE CLAIM OF THE ASSESSEE. 8 12. WE HAVE PERUSED THE FACTS OF THE CASE. THE LEA RNED COUNSEL FOR THE ASSESSEE POINTED OUT AT PAGES 20 TO 23 OF THE PAPER BOOK THE DECISION IN ASSESSEES OWN CASE IN ITA NO.2633/DEL/2008 DATED 2 9 TH MAY 2009 WHERE ON IDENTICAL ISSUE THE CLAIM OF THE ASSESSEE IS DEC IDED IN FAVOUR OF THE ASSESSEE. AFTER GOING THROUGH THE SAID ORDER IN IT A NO.2633/DEL/2008 DATED 29 TH MAY 2009 IN ASSESSEES OWN CASE WHERE THE DECISIO NS OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SETH MANI LAL RANCHHODDAS VISHRAM BHAWAN TRUST 198 ITR 598 AND THAT OF HONB LE BOMBAY HIGH COURT IN THE CASE OF CIT VS. INSTITUTE OF BANKING P ERSONNEL SELECTION (IBPS) 264 ITR 110 HAVE BEEN RELIED UPON WHERE IT HAS BEE N HELD THAT INCOME ALLOWABLE HAS TO BE COMPUTED IN THE NORMAL COMMERCI AL MANNER AND THEREFORE THE DEPRECIATION HAS TO BE ALLOWED IN CO MPUTING THE INCOME. IN THE PRESENT CASE THE ASSESSEE HAS NOT SUBMITTED TH E DETAILS OF ASSETS. THE ISSUE THEREFORE IS RESTORED TO THE FILE OF THE A. O WHO AFTER EXAMINING THE DETAILS OF THE ASSETS DECIDE THE ISSUE AS DIRECTED ABOVE BUT BY PROVIDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THUS G ROUND NO.4 OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 13. GROUND NO.5 OF THE ASSESSEE HAS NOT BEEN PRESSE D AND HENCE THE SAME IS DISMISSED AS NOT PRESSED. 14. GROUND NO.6 OF THE ASSESSEE READS AS UNDER:- 9 THAT LEARNED CIT(A) HAS NOT CONSIDERED THE EXPENSE S INCURRED ON THE SALARY AND OTHER ESTABLISHMENT OF THE STAFF OF IIIRD CLASS AND UPPER STAFF (I.E. 30% OF MARKET FEES) AS PART O F INCOME AS WELL AS EXPENDITURE AS APPLICATION OF INCOME WHICH IS ILLEGAL UNJUSTIFIED AND AGAINST THE NATURAL LAW. 15. THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAS TO PAY 30% OF THE MARKET FEE TO THE HARYANA AGRICULTURE MARKETING BOA RD AS ITS SHARE IN THE FEE AS PER THE ACT BY WHICH THE ASSESSEE MARKET COM MITTEE IS GOVERNED. THE ASSESSEE HAS REDUCED THIS 30% OF THE SHARE OF THE B OARD FROM THE MARKET FEE IN THE INCOME & EXPENDITURE A/C ON THE INCOME SIDE AND THEREAFTER THE NET MARKET FEE HAS BEEN SHOWN AS INCOME AND THE SAME HA S BEEN CONSIDERED AS INCOME BY THE A.O. ALSO THEREFORE THERE IS NO DIS PUTE ON ALLOWING THE SHARE OF MARKET FEE AS APPLICATION OF INCOME OUT OF THE M ARKET FEE WHEREAS ASSESSEE HAS CLAIMED THAT THE MARKET FEE SHOULD BE TAKEN AT GROSS FIGURE IN THE INCOME AND 30% OF THE SHARE OF BOARD SHOULD BE SEPARATELY INCLUDED IN THE REVENUE EXPENDITURE AND BY THIS CALCULATION 15% OF THE TOTAL INCOME WHICH ASSESSEE IS ALLOWED AS EXEMPT WILL BE MORE TH AN WHAT IS CALCULATED BY THE AO. 16. THE LEARNED CIT(A) HELD THAT 30% OF THE MARKET FEE HAS TO BE PAID TO THE BOARD AS PER THE ACT AND THEREFORE IT IS NOT A PPLICATION OF INCOME BUT IT IS SHARE OF INCOME BY AN OVERRIDING TITLE AS PER THE A CT BY WHICH THE MARKET COMMITTEE IS GOVERNED AND THEREFORE IT HAS RIGHTLY BEEN SHOWN BY THE 10 ASSESSEE IN THE INCOME BY WAY OF REDUCING 30% OF TH E SHARE OF THE BOARD FROM MARKET FEE ON THE INCOME SIDE OF THE INCOME & EXPENDITURE ACCOUNT AND THE TREATMENT GIVEN BY THE ASSESSING OFFICER IS CORRECT AND ACCORDINGLY REJECTED THE GROUND OF THE ASSESSEE. 17. WE HAVE PERUSED THE FACTS OF THE CASE. THE LE ARNED COUNSEL FOR THE ASSESSEE HAS POINTED OUT AT PAPER BOOK PAGES 32 TO 38 IN PARA 26 TO 39 OF ORDER OF ITAT IN ITA NO.2633/DEL/2008 DATED 29 TH MAY 2009 WHERE ON IDENTICAL ISSUE THE CLAIM OF THE ASSESSEE HAS BEEN ALLOWED. WE HAVE PERUSED THE SAID ORDER OF THE ITAT DELHI BENCH AS CITED BY THE LEARNED COUNSEL FOR THE ASSESSEE AND WE FIND THAT THE ISSUE IS IDENTICA L TO THE FACTS OF THE PRESENT CASE WHERE IT HAS BEEN HELD THAT AS PER SECTION 27( 2) OF THE PUNJAB AGRICULTURAL PRODUCE MARKET ACT 1961 EVERY COMMIT TEE IS REQUIRED TO PAY TO THE BOARD AS CONTRIBUTION SUCH PERCENTAGE OF ITS INCOME DERIVED FROM LICENCE FEE/MARKET FEE AND FINES LEVIED BY THE COUR TS AS PER THE PERCENTAGE GIVEN BY VARIOUS MARKET COMMITTEES WHICH IS 30% IN THE PRESENT CASE. THE GROSS INCOME OF THIS MARKET COMMITTEE SHOULD BE WIT HOUT DEDUCTING SUCH CONTRIBUTION TO THE BOARD PAYABLE BY MARKET COMMITT EES AS PER THE PROVISIONS OF PUNJAB AGRICULTURAL PRODUCE MARKET AC T 1961 AND SUCH CONTRIBUTION TO THE BOARD SHOULD BE ALLOWED AS EXPE NDITURE. APPLICABILITY OF SECTION 11(2) SHOULD BE WORKED OUT ON THE BASIS OF GROSS INCOME OF THE 11 MARKET COMMITTEES WITHOUT DEDUCTING THE CONTRIBUTIO N TO BOARD THEREFROM AND THE AO IS DIRECTED TO REWORK THE APPLICATION OF INCOME AS PER DECISION REFERRED TO HEREIN BEFORE BUT BY PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THUS GROUND NO.6 IS ALLOWED . 18. GROUND NO.7 READS AS UNDER:- THAT LEARNED CIT(A) WRONGLY NOT CONSIDERED THE PRO OFS OF EXPENSES AND DISALLOWED THE EXPENSES INCURRED ON AC COUNT OF CONSTRUCTION OF COVER SHED/BUILDING OF THE MARKET C OMMITTEE WHICH IS ILLEGAL UNJUSTIFIED AND AGAINST THE NATUR AL LAW. 19. THE FACTS OF THE CASE ARE THAT THE ASSESSEE CLA IMED TO HAVE SPENT RS.1 29 92 000/- ON CONSTRUCTION OF COVER SHED/BUIL DING AND CLAIMED THEM TO BE AS PER THE OBJECTS OF THE MARKET COMMITTEE WHER EAS ON ASKING FOR THE DETAILS BY THE A.O. IT FILED A STATEMENT SHOWING E XPENDITURE INCURRED BY THE EXECUTIVE ENGINEER OF RS.1 17 68 000/- ONLY AND THE REFORE THE A.O. DISALLOWED THE BALANCE AMOUNT OF RS.12 24 000/- WHI CH HAS BEEN OBJECTED BY THE ASSESSEE BUT NO FURTHER DETAIL HAS BEEN FILE D. 20. THE LEARNED CIT(A) OBSERVED THAT DURING THE APP ELLATE PROCEEDINGS THE ASSESSEE HAS NOT FILED ANY FURTHER DETAIL OR EV IDENCE AND HAS MERELY RAISED THIS GROUND WITHOUT ANY FURTHER SUBMISSIONS. THE ASSESSEE HAS FILED EVIDENCE OF EXPENDITURE UPTO RS.1 17 68 000/- AND T HEREFORE THE A.O. HAS RIGHTLY DISALLOWED THE BALANCE. 12 21. WE HAVE PERUSED THE FACTS OF THE CASE. THE LEA RNED COUNSEL FOR THE ASSESSEE POINTED OUT PAPER BOOK PAGE 46 WHICH CONTA INS DETAILS OF EXPENDITURE AMOUNTING TO RS.1 29 92 000/- ON CONSTR UCTION OF COVER SHED/BUILDING. IT APPEARS THAT THE DETAILS OF EXPE NDITURE AMOUNTING TO RS.12 24 000/- HAS REMAINED TO BE EXAMINED BY THE A .O. IT WAS ARGUED BY THE LEARNED COUNSEL THAT ALL THE EVIDENCES ARE AVAI LABLE WITH THE ASSESSEE. IT WILL BE IN THE INTEREST OF JUSTICE WHEN THE DETAILS ARE AVAILABLE AND THERE IS NOTHING ON RECORD TO PROVE THAT THE EXPENDITURE HAS NOT BEEN INCURRED AND FOR WANT OF VERIFICATION OF EXPENSES THE EXPENDITURE C ANNOT BE DISALLOWED. THEREFORE THE MATTER IS RESTORED TO THE FILE OF TH E A.O. WHO WILL EXAMINE THE EVIDENCE AND DECIDE THE ISSUE ACCORDINGLY BUT BY PR OVIDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THUS GROUND NO.7 IS A LLOWED FOR STATISTICAL PURPOSES. 22. GROUND NO.10 READS AS UNDER:- THAT LEARNED CIT(A) HAS NOT CONSIDERED THE PAYMENT OF INCOME/ADVANCE TAX AS APPLICATION OF INCOME WHICH I S ILLEGAL UNJUSTIFIED AND AGAINST THE NATURAL LAW OF JUSTICE. 23. THIS GROUND DOES NOT ARISE FROM THE ORDER OF TH E LEARNED CIT(A) AND NO ADDITIONAL GROUND HAS BEEN RAISED BY THE ASSESSE E BEFORE THE BENCH AND THEREFORE THE SAID GROUND IS NOT MAINTAINABLE. 13 24. GROUND NO.11 IS GENERAL IN NATURE AND THEREFORE IT DOES NOT REQUIRE ANY ADJUDICATION. 25. IN THE RESULT THE APPEAL IS PARTLY ALLOWED. ITA NO.3935/DEL/`2009 26. GROUND NOS.1 2 3 & 4 READ AS UNDER:- 1. THAT THE LEARNED CIT(A) WRONGLY CONSIDERED THE ACCRUED INTEREST OF RS.895650/- WHICH WAS NOT RECEIVED FROM HVPN AND THERE IS ALSO REMOTE POSSIBILITIES OF RECOVERY OF PRINCIPAL EVEN IS UNJUSTIFIED AND ILLEGAL AND DESERVES TO BE QUASHED IN THE INTEREST OF NATURAL JUSTICE. 2. THAT THE LEARNED CIT(A) WRONGLY CONSIDERED THE ACCRUED INTEREST OF RS.315000/- WHICH WAS NOT RECEIVED FROM MARKET COMMITTEE PUNDRI WHICH IS UNJUSTIFIED AND ILLEGAL AND DESERVES TO BE QUASHED IN THE INTEREST OF NATURAL J USTICE. 3. THAT THE LEARNED CIT(A) WRONGLY CONSIDERED THE ACCRUED INTEREST OF RS.945000/- WHICH WAS NOT RECEIVED FROM MARKET COMMITTEE NISSING WHICH IS UNJUSTIFIED AND ILLEGAL AND DESERVES TO BE QUASHED IN THE INTEREST OF NATURAL JUSTICE. 4. THAT THE LEARNED CIT(A) WRONGLY CONSIDERED THE ACCRUED INTEREST OF RS.52500/- WHICH WAS NOT RECEIVED FROM MARKET COMMITTEE YAMUNANAGAR WHICH IS UNJUSTIFIED AND ILL EGAL AND DESERVES TO BE QUASHED IN THE INTEREST OF NATURAL JUSTICE. 27. THE FACTS IN GROUND NOS.1 TO 4 HEREIN BEFORE AR E IDENTICAL TO THE FACTS IN THE CASE OF MARKET COMMITTEE ASSANDH KARNAL VS. ACIT WHEREIN THE ISSUE HAS COME UP BEFORE US IN ITA NO.305/DEL/2009 AND VIDE OUR ORDER IN PARA 6 HEREINABOVE THE MATTER HAS BEEN RESTORED TO THE FILE OF THE CIT(A). 14 OUR DECISION IN THE CASE OF MARKET COMMITTEE ASSAND H IN ITA NO.305/DEL/2009 (SUPRA) SHALL APPLY IN THE PRESENT CASE AND ACCORDINGLY THE MATTER IS RESTORED TO THE FILE OF THE LEARNED CIT(A ) WHO WILL DECIDE THE ISSUE AFRESH ON MERIT BY INDICATING THE BASIS OF HIS DECI SION BUT BY PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. THUS GROUND NOS.1 TO 4 OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PU RPOSES. 28. GROUND NO.5 READS AS UNDER:- THAT THE LD. CIT(A) HAS ERRED IN LAW WHILE CONFIRM ING THE NON CONSIDERATION OF DEPRECIATION OF RS.4200141/- AS AP PLICATION OF INCOME UNDER SECTION 11 TO 13 OF THE INCOME TAX ACT AND THEREFORE THE SAME MAY PLEASE BE CONFIRMED AS APPLI CATION OF INCOME FOR THE PURPOSE OF COMPUTATION OF INCOME OF THE ASSESSEE. 29. FACTS IN GROUND NO.5 HEREIN BEFORE ARE IDENTICA L TO THE FACTS IN THE CASE OF THE ASSESSEE FOR ASSESSMENT YEAR 2006-07 IN ITA NO.305/DEL/2009 WHERE ON IDENTICAL FACTS THE ISSUE HAS BEEN ALLOWED IN FA VOUR OF THE ASSESSEE FOR STATISTICAL PURPOSES VIDE PARA 12 OF THIS ORDER HER EIN BEFORE. FOLLOWING THE SAME THE SAID ISSUE IS DECIDED IN FAVOUR OF THE ASS ESSEE ON SIMILAR LINES FOR STATISTICAL PURPOSE AS IN PARA 12 HEREINABOVE. THU S GROUND NO.5 IS ALLOWED. 30. GROUND NO.6 READS AS UNDER:- THAT LD. CIT(A) WRONGLY CONFIRMED THE DISALLOWANCE OF UNABSORBED DEPRECIATION CARRIED FORWARD LOSSES WHIC H IS ILLEGAL AND UNJUSTIFIED. 15 31. FACTS IN GROUND NO.5 HEREIN BEFORE ARE IDENTICA L TO THE FACTS IN THE CASE OF THE ASSESSEE FOR ASSESSMENT YEAR 2006-07 IN ITA NO.305/DEL/2009 WHERE THE ISSUE HAS BEEN RESTORED TO THE FILE OF THE A.O. VIDE PARA 9 OF OUR ORDER HEREIN BEFORE. ON THE SAME LINES WE ARE RESTORING THIS ISSUE TO THE FILE OF THE A.O. THUS GROUND NO.6 IS ALLOWED FOR STATISTICAL P URPOSES. 32. GROUND NO.7 READS AS UNDER:- THAT THE LD. CIT(A) HAS ERRED IN LAW WHILE CONFIRM ING THE ACTION OF LD. AO ABOUT NON CONSIDERATION OF EXCESS AMOUNT OF APPLICATION OF INCOME FOR PREVIOUS YEARS WHICH IS ALSO TO BE ADJUSTED IN THE CURRENT YEAR AS APPLICATION OF INCO ME UNDER SECTION 11 TO 13 OF THE IT ACT WHICH IS ILLEGAL U NJUSTIFIED AND AGAINST THE NATURAL LAW AND THEREFORE THE SAME MAY PLEASE BE CONSIDERED AS APPLICATION OF INCOME FOR PERIOD UNDE R CONSIDERATION. 33. THIS GROUND IS NOT PRESSED AND HENCE THE SAME I S DISMISSED AS NOT PRESSED. 34. GROUND NO.8 READS AS UNDER:- THAT THE LD. CIT(A) HAS ERRED IN LAW WHILE CONFIRM ING THE NON CONSIDERATION OF ADVANCE INCOME TAX PAID AS APPLICA TION OF INCOME UNDER SECTION 11 TO 13 OF THE INCOME TAX ACT AND THEREFORE THE SAME MAY PLEASE BE CONFIRMED AS APPLI CATION OF INCOME FOR THE PURPOSE OF COMPUTATION OF INCOME OF THE ASSESSEE. 35. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE H AS CLAIMED PAYMENT OF INCOME-TAX/ADVANCE TAX AS APPLICATION OF INCOME. T HE A.O. DID NOT ALLOW THE CLAIM OF THE ASSESSEE. THE LEARNED CIT(A) VIDE PARA 22 OF HIS ORDER 16 OBSERVED THAT THERE IS NO PROVISION IN SECTIONS 11 TO 13 WHICH ALLOW INCOME- TAX AS APPLICATION OF INCOME BECAUSE IT IS NOT FOR THE OBJECTS OF THE TRUST AND IT WILL BE DUE TO VIOLATION OF PROVISIONS OF SECTIO NS 11 TO 13 OF THE ACT. ACCORDINGLY HE REJECTED THE GROUND OF THE ASSESSEE . 36. THE LEARNED COUNSEL FOR THE ASSESSEE POINTED OU T AT PAGES 38 TO 39 OF THE PAPER BOOK THE DECISION OF ITAT DELHI BENCH IN ASSESSEES OWN CASE IN ITA NO.2633/DEL/2008 DATED 29 TH MAY 2009 WHERE THE CLAIM OF THE ASSESSEE VIDE PARA 32 OF THE ORDER HAS BEEN ALLOWED . ON PERUSAL OF ORDER OF ITAT DELHI BENCH `F IN ITA NO.2633/DEL/2008 DATED 29 TH MAY 2009 IN ASSESSEES OWN CASE THE PAYMENT OF INCOME-TAX/ADVAN CE TAX SHOULD BE TREATED AS HAVING BEEN APPLIED FOR CHARITABLE PURPO SES AND THE ASSESSEE IS ENTITLED TO EXEMPTION. THE JUDGMENTS IN THE CASES OF CIT VS. NIZAMS SUPPL. RELIGIOUS ENDOWMENT TRUST (TRUSTEE OF HEH) 127 ITR 378 (AP) AND CIT VS. JANAKI AMMAL AYYA NADAR TRUST 153 ITR 159 (MAD.) HAVE BEEN FOLLOWED. THE ISSUE IS FULLY COVERED IN FAVOU R OF THE ASSESSEE BY THE DECISION OF ITAT DELHI BENCH IN ASSESSEES OWN CASE IN ITA NO.2633/DEL/2008 DATED 29 TH MAY 2009 (SUPRA) AND THEREFORE FOLLOWING THE SAME THIS ISSUE IS DECIDED IN FAVOUR OF THE AS SESSEE. THUS GROUND NO.8 IS ALLOWED. 37. IN THE RESULT THE APPEAL IS PARTLY ALLOWED. ITA NO.4400/DEL/2009 38. GROUND NO.1 TO 3 READ AS UNDER:- 1. THAT THE LD. CIT(A) HAS ERRED IN LAW WHILE CO NFIRMING THE ADDITION OF THE INTEREST OF RS.1732500-00 ON ACCOU NT OF FDR 17 AND LOAN TO HPVN UNDER THE OBSERVATION THAT ASSESSE E IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING IGNORING THE FACT THAT ASSESSEE IS FOLLOWING MIXED SYSTEM OF ACCOUNTI NG AND BOOKING THE RESPECTIVE INTEREST ON CASH BASIS AND THEREFORE THE ADDITION OF RS.1732500-OO ON ACCOUNT OF INTEREST AC CRUE DON FDR AND LOAN TO HPVN MAY PLEASE BE DELETED AS THE S AME WOULD BE OFFERED FOR TAX PURPOSES IN THE YEAR OF RE CEIPT. 2. THAT THE LD. CIT(A) HAS ERRED IN LAW WHILE IGNOR ING THE EXPLANATION (2) TO SECTION 11 THAT PROVIDES ASSESSE E AN OPTION OF RECOGNIZING THE INCOME IN THE YEAR OF RECEIPT O R DURING THE PREVIOUS YEAR IMMEDIATELY FOLLOWING IF THE SAME HA S NOT BEEN RECEIVED DURING THE PERIOD UNDER CONSIDERATION AND THEREFORE THE ADDITION OF INCOME ON ACCOUNT OF INTEREST ON FD R AND LOAN TO HPVN MAY PLEASE BE DELETED AS THE SAME WOULD BE OFFERED FOR TAX PURPOSES IN THE YEAR OF RECEIPT AND WOULD BE AVAILABLE FOR APPLICATION ONLY IN THE YEAR OF RECEIPT. 3. THAT THE LD. CIT(A) HAS ERRED IN LAW WHILE NOT I NTERPRETING THE SECTION 145 IN ITS TRUE SPIRIT THAT THE SECTION PROVIDES FOR RECOGNIZING THE INCOME UNDER THE HEAD PROFIT AND GA INS OF BUSINESS OR PROFESSION OR INCOME FROM OTHER SOURCE S EITHER UNDER THE CASH OR MERCANTILE SYSTEM OF ACCOUNTING SINCE THE INCOME OF INTEREST ON FDR OR LOAN TO HVPN WOULD BE COVERED UNDER INCOME FROM OTHER SOURCES AND ASSESSEE MAY FO LLOW DIFFERENT ACCOUNTING SYSTEM TO BOOK INCOME UNDER TH E DIFFERENT HEADS AND THEREFORE THE PLEA OF THE ASSESSEE OF BO OKING THE INCOME OF INTEREST ON FDR OR LOAN TO HPVN AT CASH B ASIS MAY PLEASE BE ACCEPTED AND ADDITION MADE OF RS.1732500- 00 BY TREATING THE SAME ON ACCRUAL BASIS MAY PLEASE BE DE LETED. 39. THE FACTS IN GROUND NOS.1 TO 3 HEREIN BEFORE AR E IDENTICAL TO THE FACTS IN THE CASE OF MARKET COMMITTEE ASSANDH KARNAL VS. ACIT WHEREIN THE ISSUE HAS COME UP BEFORE US IN ITA NO.305/DEL/2009 AND VIDE OUR ORDER IN PARA 6 HEREINABOVE THE MATTER HAS BEEN RESTORED TO THE FILE OF THE CIT(A). OUR DECISION IN THE CASE OF MARKET COMMITTEE ASSAND H IN ITA 18 NO.305/DEL/2009 (SUPRA) SHALL APPLY IN THE PRESENT CASE AND ACCORDINGLY THE MATTER IS RESTORED TO THE FILE OF THE LEARNED CIT(A ) WHO WILL DECIDE THE ISSUE AFRESH ON MERIT BY INDICATING THE BASIS OF HIS DECI SION BUT BY PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. THUS GROUND NOS.1 TO 3 OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PU RPOSES. 40. THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 41. IN THE RESULT ITA NOS.305 & 3935/DEL/2009 ARE PARTLY ALLOWED AND ITA NO.4400/DEL/2009 IS ALLOWED FOR STATISTICAL PUR POSES. PRONOUNCED IN THE OPEN COURT ON 22 ND JANUARY 2010. SD/- SD/- (C.L. SETHI) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 22 ND JANUARY 2010. COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR ITAT.