TMI Blog2024 (2) TMI 279X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowance on the ground that it is a repayment of loan to Haryana Mandi Board whereas from the record it is lucid that the payment was made for achievement of objects prescribed under the Act? HELD THAT:- It is the case of the assessee that it had a opening balance of Rs. 5,78,74,454/- which had been carried forward and a payment of Rs. 4,50,00,000/- had been made to the Apex Body on account of development works. The necessary receipts showing the payments wherein, the sum of the above said amount was disbursed in four installments on account of development works and the receipts have been issued by the Haryana State Agricultural Marketing Board. The said receipts would go on to show that the said amounts were deposited for development works. It was accordingly pointed out that as per the table, the Board had incurred expenditure on development works on account of the assessee. For the assessment year in question, an excess payment had been made and, thus, it was the case of the assessee that the excess payment had been made of the said amount leaving a balance towards development works which was carried forward to the next financial year 2008-09. The balance sheet was als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade for the assessment year 2007-08 and restored the order of the Assessing Officer dated 30.11.2009 (Annexure A-I) for the assessment year 2007-08. 3. The reasoning which prevailed with the Tribunal was that it was a payment of loan taken from the Haryana State Agricultural Marketing Board (in short 'the Board') and had been used for spending on repair work of Mandi construction and repairs of various rural roads and development of Mandis and, therefore, the expenses incurred were not out of the own funds but out of borrowed funds. Resultantly, the Tribunal was of the opinion that making repayment of such borrowed funds and claiming deduction as application of income was claiming double deduction for the same expenditure and, therefore, the appellant (Committee herein) was not eligible for double deduction on account of the same expenditure incurred based on the construction of rural roads and development of Mandis. 4.. The appeal was admitted on 07.05.2012 on the following substantial question of law:- (i) Whether the learned Income Tax Tribunal has gravely erred in law in maintaining the disallowance of Rs. 2,81,33,700/- on the ground that it is a repayment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t effect and resultantly, the appeal of the assessee had been allowed and the penalty of Rs. 1,19,26,437/- was deleted which had been imposed vide order dated 28.03.2011 (Annexure A-II) and upheld by the Commissioner on 31.10.2011 (Annexure A-III). The Revenue is, thus, in appeal against the said reasoning of the Tribunal which had been ordered to be heard with the appeal filed by the Market Committee. Our Findings 7. The Commissioner had come to the conclusion vide order dated 05.02.2010 (Annexure A/2 in ITA No. 244 of 2011) that the sources of income of the Market Committee were specified and the items on which the income is to be applied are also mentioned in the Act. The amount had been paid to the Board for the expenditure which the Board had incurred on behalf of the Market Committee and the same was allowable as application of income and, therefore, the addition made by the Assessing Officer had been deleted. The same was done by accepting the argument that the source of income of the Committee is from license fee, market fees and sale of plots and the expenditure is made on the items mentioned under Section 28 of the Punjab Agricultural Produce Markets Act, 196 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vements and thrift ; (xi) production and betterment of agricultural produce ; (xii) meeting any legal expenses incurred by the Committee ; (xiii) imparting education in marketing or agricultural ; (xiv) payments of travelling and other allowances to the members and employees of the committee, as prescribed; (xv) loans and advances to the employees ; (xvi) expenses of and incidental to elections ; and (xvii) with the previous sanction of the Board, any other purpose which is calculated to promote the general interest of the committee or the notified market area or with the previous sanction of the State Government, any purpose calculated to promote the national or public interest. 9. A perusal of the above said provision would go on to show that the purposes for which the funds are available are for the maintenance and improvement of the Market Committees which are necessary for the purposes of the existing market and for the health, convenience and safety of the persons using it. The Market Committee is vested with the responsibility of effecting improvements besides ensuring that there is repair and maintenance of the existing infras ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... link roads, approach roads, culverts, bridges and other such purposes, (xv) loans and advances to the employees; (xvi) expenses incurred in auditing the accounts of the Board; (xvii) with the previous sanction of the State Government, any other purposes which is calculated to promote the general interests of the Board and the committee or the national or public interest: Provided that if the Board decides to give aid of more than five thousands rupees to a financially weak committees under Clause (vii), the prior approval of the State Government to such payment shall be obtained. 27. Market Committee Fund (1) All moneys received by a Committee shall be paid into a fund to be called the Market Committee Fund and all expenditure incurred by the Committee under or for the purposes of this Act shall be defrayed out of such fund, and any surplus remaining after such expenditure has been met shall be invested in such manner as may be prescribed. (2)(a) Every Committee shall, out of its funds pay to the Board as contribution such percentage of its income derived from licence fee, market fee and fines levied by the Courts as is specified below to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Less Expenditure 2,49,03,967 Excess payments 1,50,96,033 Excess payments 5,78,74,454 2007-08 Opening Balance 5,78,74,454 Payments 4,50,00,000 Add payments 4,50,00,000 10,28,74,454 Less Expenditure 1,68,66,300 Less Expenditure 1,68,66,300 Excess payments 2,81,33,700 Excess payments 8,60,08,154 2008-09 Opening balance 8,60,08,154 Payments 6,59,00,000 Add payments 6,59,00,000 15,19,08,154 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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