MEGA FINE PHARMA P.LTD, MUMBAI V. ACIT CIR WD 4(2), MUMBAI

CO 163/MUM/2014

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9873 (ITAT-MUMBAI)
• Duration Of Justice: 1 month(s) 2 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 10-09-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2006-2007
• Appeal Filed On: 07-08-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PREMANAND
• Keywords: Business income
• Section: 80IB

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B , BENCH MUMBAI , BEFORE : SHRI R.C.SHARMA , A M & SHRI AMIT SHUKLA , J M ITA NO. 4298 / MUM/20 1 3 ( ASSESSMENT YEAR : 200 6 - 0 7 ) ACIT - 4(2), MUMBAI VS. M/S MEGA FINE PHARMA PVT. LTD., SETHNA, 4 TH FLOOR, 55, M.K.ROAD, MARINE LINE, MUMBAI - 400 002 PAN/GIR NO. : A A A C M 7472 M ( APPELLANT ) .. ( RESPONDENT ) AND NO. 163 / MUM/20 1 4 ( ITA NO. 4298/ MUM/20 13) ( ASSESSMENT YEAR : 2006 - 07 ) M/S MEGA FINE PHARMA PVT. LTD., SETHNA, 4 TH FLOOR, 55, M.K.ROAD, MARINE LINE, MUMBAI - 400 002 VS. ACIT - 4(2), MUMBAI PAN/GIR NO. : A AACM 7472 M ( APPELLANT ) .. ( RESPONDENT ) /REVENUE BY : SHRI PREMANAND /ASSESSEE BY : SHRI C.V.JAIN DATE OF HEARING : 10 TH SEPT. 201 4 DATE OF PRONOUNCEMENT : 10 TH SEPT , 201 4 O R D E R PER R.C.SHARMA ( A .M.) : TH E REVENUE HAS FILED APPEAL WHEREAS THE ASSESSEE HAS FILED CROSS OBJECTION AGAINST THE ORDER CIT(A ) , DATED 1 - 3 - 2013 FOR ASSESSMENT YEAR 200 6 - 0 7 , IN THE MATTER OF IMPOSITION OF PENALTY U/S. 271(1)(C) OF THE ACT AMOUNTING TO RS. 10,78,886/ - . ITA NO. 4 298 /1 3 & CO NO. 163/14 2 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. THE FACTS OF THE CASE ARE THAT THE ASSESSEE WAS ENGAGED IN THE BUSIN ESS OF MANUFACTURING OF DRUG AND DRUG INTERMEDIATES AND EXPORT SALES AS WELL AS DOMESTIC SALES. THE ASSESSEE FILED ITS RETURN OF INCOME. IN THE RETURN OF INCOME, THE ASSESSEE CLAIMED DEDUCTION U/ S. 80 - I B OF THE ACT AT RS.1 ,26,41,339/ - BEING 30% OF PROFIT O F RS. 4 ,21,37,795/ - OF INDUSTRIAL UNDERTAKING. THIS PROFIT INCLUDED EXCISE DULY REFUND OF RS.1, 02,80,575/ - , PROFIT ON SALE OF DEPB LICENSE AMOUNTING TO RS.17,09,724/ - . EXPORT INCENTIVE WERE RECEIVED BY THE ASSESSEE ON ACCOUNT OF EXPORT ACTIVITY. THE RETUR N OF INCOME WAS SELECTED FOR SCRUTINY. THE AO ASKED THE ASSESSEE THAT THOUGH SUCH EXPORT INCENTIVE WAS ATTRIBUTES OF BUSINESS INCOME BUT THE Y CANNOT BE SAID TO BE INCOME DERIVED FROM INDUSTRIAL UNDERTAKING. THE AO ASKED THE ASSESSEE AS TO WHY THESE EXPORT INCENTIVE AND INTEREST INCOME SHOULD NOT BE EXCLUDED FROM PROFITS WHILE COMPUTING DEDUCTION U/S 80 IB OF THE AC T. ASSESSEE FILED REPLY ALONG WITH SUPPORTING CASE LAWS REGARDING ASSESSEES ELIGIBILITY U/S. 80IB IN RESPECT OF SUCH INCOME. HOWEVER, THE AO DID NOT AGREE WITH THE SAME, ACCORDINGLY EXCLUDED SUCH INCOME OF COMPUTATION OF DEDUCTION U/S. 80IB . THE AO ALSO LEVIED U/S. 271(1)(C). BY THE IMPUGNED ORDER, THE CIT(A) DELETED THE PENALTY AFTER HAVING THE FOLLOWING OBSERVATIONS : - 2.3 I HAVE CONSIDERED THE FA CTS OF THE CASE. THE APPELLANT CLAIMED DEDUCTION U/S.80IB OF THE ACT AT RS.1,26,41,339/ - ON PROFITS WHICH WAS INCLUSIVE OF EXPORT INCENTIVE. THE AO REDUCED THE APPELLANT'S CLAIM OF DEDUCTION U/S. 80IB TO RS.90,45,051/ - HOLDING THAT THE EXPORT INCENTIVE WER E NOT ENTITLED FOR DEDUCTION U/S. 80IB OF THE ACT. THE AO HAS ALSO LEVIED PENALTY ON EXCESS CLAIM OF DEDUCTION U/S. 80 - IB. I HAVE CONSIDERED THE FACTS O F THE CASE. PENALTY U/ S. 271(1 )(C) OF THE ACT CAN BE LEVIED IF THE ASSESSEE HAS CONC EALED THE PARTICULA RS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. PENALTY CANNOT BE LEVIED IF THE APPELLANT OFFERS A ITA NO. 4 298 /1 3 & CO NO. 163/14 3 SATISFACTORY AND BONA - FIDE EXPLANATION FOR SUCH CLAIM. IN THE CASE UNDER APPEAL, THE APPELLANT CLAIMED DEDUCTION U/ S. 80IB ON INCENTIVE ALSO. APP ELLANT'S SUCH CLAIM WAS BASED ON AND SUPPORTED BY VARIOUS DECISION OF HON'BLE COURTS AND TRIBUNAL AVAILABLE AS ON DATE OF FILING OF RETURN OF INCOME. THUS, BY MAKING EXCESS CLAIM, THE APPELLANT DID NOT CONCEAL THE PARTICULARS OF ITS INCOME NOR FILED ANY I NACCURATE PARTICULARS OF INCOME. THE APPELLANT FURNISHED BONA-FIDE, AND SATISFACTORY EXPLANATION BEFORE AO' THAT SUCH CLAIM WAS. BASED ON THE JUDGEMENTS AND LAW PREVAILING AT THAT TIME. DIFFERENT COURTS AND TRIBUNALS HAVE GIVEN CONTRADICTORY DECISIONS A S TO WHETHER THE DEDUCTION U/ S. 80 IB AS ALLOWABLE ON EXPORT INCENTIVE . IN ITS SUBMISSION BEFORE AO DURING ASSESSMENT PROCEEDINGS, THE APPELLANT HAS RELIED ON THE DECISION OF HON'BLE IT AT, MUMBAI IN THE CASE OF JCIT VS. SUDITI IND.LTD. AND DELHI HIGH COURT IN THE CASE OF ELTE K S GS PV T. LTD. SUPPORTING THE APPELLANT'S CLAIM. IN THE FACTS AND CIRCUMSTANCES THERE WAS NO DOUBT THAT THE ISSUE WAS DEBATABLE ISSUE . THERE ARE A NUMBER OF DECISIONS OF COURTS AND TRIBUNALS HOLDING THAT THE PENALTY U/ S. 271(1)(C) CAN NOT BE LEVIED ON D E BATABLE ISSUE. IN THE CASE UNDER CONSIDERATION, THE ISSUE WAS DEBATABLE AS WELL AS THERE WAS NO CASE OF CONCEALING PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. IN THE FACTS AND CIRCUMSTANCES, PENALTY WAS NOT LEVI ABLE U/S. 271(1)(C) OF THE ACT. THE PENALTY LEVIED BY THE AO IS , THEREFORE, DELETED. REVENUE IS IN FURTHER APPEAL BEFORE US AGAINST THE SAID DELETION. 3 . WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT PENALTY WAS IMPOSED FOR DISALLOWANCE OF CLAIM OF DEDUCTION IN RESPECT OF EXPORT INCENTIVE. THE CIT(A) AFTER RECODING DETAILED FINING OBSERVED THAT ASSESSEES CLAIM WAS BASED ON AND SUPPORTED BY THE VARIOUS DECISION OF THE HONBLE HIGH COURTS AND TRIBUNALS AVAILABLE AS ON DATE OF FILING OF RETURN OF INCO ME. THUS, ASSESSEE DID NOT CONCEAL THE PARTICULARS OF INCOME NOR FILE ANY INACCURATE PARTICULARS OF INCOME. THE CIT(A) FURTHER OBSERVED THAT ASSESSEE HAS FURNISHED BONAFIDE AND SATISFACTORY EXPLANATION BEFORE THE AO THAT SUCH CLAIM IS BASED ON JUDGMENTS AN D LAW PREVAILING AT THAT POINT OF TIME. ACCORDINGLY, THE CIT(A) HELD THAT ISSUE IS DEBATABLE WHICH DOES NOT REQUIRE ANY IMPOSING OF PENALTY. THE ISSUE UNDER CONSIDERATION IS ALSO COVERED BY THE DECISION OF HONBLE SUPREME ITA NO. 4 298 /1 3 & CO NO. 163/14 4 COURT IN THE CASE OF RELIANCE PET ROPRODUCTS (P) LTD., (2010) 322 ITR 158 (SC) , WHEREIN IT WAS HELD THAT MERE DECLINE OF THE DEDUCTION CLAIMED IN THE RETURN OF INCOME WILL NOT ENTAIL PENALTY U/S. 271(1)(C) OF THE ACT . ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) FOR DELE TING THE PENALTY. 4 . THE CROSS OBJECTION SO FILED BY THE ASSESSEE WAS NOT PRESSED BY LEARNED AR DURING THE COURSE OF HEARING, THEREFORE, THE SAME IS DISMISSED AS NOT PRESSED. 5 . IN THE RESULT, APPEAL OF THE REVENUE AS WELL AS CROSS OBJECTION OF THE ASSES SEE ARE HEREBY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 10 /09/ 201 4 . /09/ 2014 SD/ - SD/ - ( ) ( AMIT SHUKLA ) ( ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 10 /09 /2014 /PKM , PS COPY OF THE ORDER FORWARDED TO : / B Y ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMBAI 1. / THE APPELLANT 2. / TH E RESPONDENT. 3. / THE CIT(A), MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//