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Issues involved: Appeal against Commissioner of Income-tax (A) order u/s 11 of the Income-tax Act, 1961 for assessment year 2006-07.
Issue 1: Application of income u/s 11(1)(a) for construction of building The Revenue challenged the allowance of income application u/s 11(1)(a) for building construction expenditure. The assessee, a registered society, declared a deficit but had ongoing construction projects. The Assessing Officer disallowed certain expenses, but the Commissioner of Income-tax (A) held that income was applied towards land purchase and building construction. Citing judicial precedents, the Commissioner deemed capital expenditure as income application under section 11(1)(a). The Revenue's appeal was based on the Assessing Officer's order, which was not upheld. Issue 2: Interpretation of judicial pronouncements The Commissioner relied on judicial decisions to support the inclusion of capital expenditure as income application under section 11(1)(a). Notably, the Tribunal's past decision in the assessee's case for a previous assessment year was considered valid. The Revenue did not present any contradictory decisions, leading to the affirmation of the Commissioner's order based on established precedents. Issue 3: Distinction in judgment applicability The Revenue cited a judgment from the Hon'ble Uttrakhand High Court regarding a different case under section 10(23)(iiiad), contending its relevance to the present case under section 11(1)(a). However, the Commissioner correctly noted the distinction, emphasizing that the case at hand pertained to income application under section 11/12, not section 10(23)(iiiad). The absence of any flaws in the Commissioner's reasoning, coupled with the lack of contradictory decisions, led to the dismissal of the Revenue's appeal.
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