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2024 (2) TMI 279 - PUNJAB AND HARYANA HIGH COURTAllowable expenditure versus Application of Income (Repayment of loan) - Payment made to the Marketing Board - statutory functions of application of money for the objects provided in the Statute OR repayment of any loan - progressive payments given to the Haryana State Agricultural Marketing Board from the year 2006 onwards till the year 2009 - payment of liability of old loan - Purpose for which the market development fund may be expended - 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 - penalty proceedings un/s 271(1)(c) Whether Tribunal erred in law in maintaining the 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 also appended in support of the said case which had been appended with the return of income duly attested by the Chartered Accountant wherein, the sum of Rs. 8,60,08,154/- was shown as capital works. Thus, it is apparent that the findings recorded by the Commissioner of Income Tax (Appeals) were correct to the extent that the payment was made by the assessee to the Marketing Board towards the statutory functions of application of money for the objects provided in the Statute and it was not for repayment of any loan and, therefore, both the Assessing Authority and the Tribunal wrongly came to the said conclusion regarding this aspect. Tribunal has wrongly reversed the well reasoned order passed by the Commissioner of Income Tax and the record as such would go on to show that the payment which was made was for the achievement of the objects prescribed under the Act and, therefore, the disallowance could not have been done on the ground that it was a loan to the Marketing Board. Rather, it was the expense as such for the purpose given in the objects of the Act as such and, therefore, the Assessing Officer was wrong in holding that it was a payment of liability of old loan. Resultantly, disallowance made was on a wrong reasoning. Penalty proceedings were initiated is liable to be dismissed - Decided against revenue.
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