M/s Invensys India Pvt. Ltd., New Delhi V. DCIT, New Delhi

CO 360/DEL/2011

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8684 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s) 10 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 11-07-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 11-07-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 01-11-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R S GILL
• Keywords: Transfer pricing; Opportunity of being heard; International transaction; Deemed to accrue or arise in india; Wrong claim; Bad and doubtful debts
• Section: 115JB; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C NEW DELHI) BEFORE SHRI R. P. TOLANI : JUDICIAL MEMBER AND SHRI J.S. REDDY : ACCOUNTANT MEMBER ITA NOS. 1858, 1859 & 2214/DEL/ 2011 ASSTT. YRS. 2004-05, 2005-06 & 2005-06 RESPECTIVELY DCIT, CIRCLE 11(1) VS. M/S INVENSYS INDIA PVT. L TD., NEW DELHI. NO. 01, DOCTORS LANE, GOLE MARKET, NEW DELHI-110001. PAN: AABCS 8027 M AND C.O. NOS: 360 & 361/DEL/2011 ( IN ITA NOS. 1858, 1859 /DEL/ 2011) ASSTT. YRS. 2004-05 & 2005-06 M/S INVENSYS INDIA PVT. LTD., VS. DCIT, CIRCLE 11( 1) NO. 01, DOCTORS LANE, GOLE MARKET, NEW DELHI. NEW DELHI-110001. (APPELLANT ) (RESPONDENT) REVENUE BY : SHRI R.S. GILL CIT (DR) ASSESSEE BY : SHRI SALIL KAPOOR ADV. & SHRI VIKAS JAIN ADV. ORDER PER R. P. TOLANI, J.M: THIS IS A SET OF TWO REVENUES APPEALS FOR A.Y. 2004-05 AND 2005-06 ON THE QUANTUM ASSESSMENT AND THE CORRESPONDING CRO SS-OBJECTIONS BY THE ASSESSEE. REVENUE HAS ALSO FILED APPEAL AGAINST DEL ETION OF PENALTY U/S 271(1)(C) FOR A.Y. 2005-06. 2 2. COMMON GROUNDS RAISED IN THE REVENUES APPEALS A RE AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS . 52,69,973/- (A.Y. 2004-05) & 19,14,031/- (A.Y. 2005-06) ON ACCO UNT OF DISALLOWING WARRANT COST. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS . 1,32,59,824/- (A.Y. 2004-05) & RS. 2,33,57,928/- (A .Y. 2005- 06) ON ACCOUNT OF VARIATION OF ARMS LENGTH PRICE DE TERMINED U/S 92CA(3) OF IT ACT. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS . 52,69,973/- (A.Y. 2004-05) & RS. 19,14,031/- (A.Y. 2005-06) ON ACCOUNT OF ADDITION OF WARRANTY COST FOR COMPUTING THE BOOK PR OFIT U/S 115JBV OF IT ACT. 2.1. EXCEPT GROUND NO. 6 IN A.Y. 2005-06 ALL OTHER GROUNDS OF BOTH THE CROSS OBJECTIONS FILED BY THE ASSESSEE FOR A.Y. 200 4-05 & 2005-06, ARE NOT PRESSED, HENCE DISMISSED. 3. LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT THE I SSUE OF DISALLOWANCE OF WARRANTY COST AND ITS ADDITION WHILE COMPUTING BOOK PROFIT U/S 115JB OF THE I.T. ACT IS COVERED IN FAVOUR OF THE ASSESSEE BY TH E ITAT DELHI BENCH C ORDER DATED 28-8-2009 RENDERED IN ITA NO. 2196 (A.Y . 2003-04) IN THE CASE OF DCIT VS. M/S INVENSYS INDIA PVT. LTD., INTER ALI A, BY FOLLOWING OBSERVATIONS: 3. BEFORE US, THE LEARNED DR FOR THE REVENUE EXCEP T PLACING RELIANCE ON THE REASONING GIVEN IN THE ORDER OF ASS ESSING OFFICER WAS NEITHER ABLE TO CONTROVERT THE FACTUAL OBSERVAT IONS MADE IN THE ORDER OF CIT(APPEALS) NOR WAS ABLE TO CITE ANY OTHER CASE LAW IN WHICH A VIEW CONTRARY TO THE VIEW TAKEN IN T HE DECISIONS SUPRA HAS BEEN TAKEN. WHEREAS, ON THE OTHER HAND, L EARNED AR 3 FOR THE ASSESSEE PLACING RELIANCE ON THE REASONING GIVEN IN THE ORDER OF CIT(APPEALS) FURTHER SUBMITTED THAT THIS O RDER PASSED BY THE CIT(APPEALS) DOES NOT SUFFER FROM ANY ILLEGA LITY OR INFIRMITY RATHER IT FURTHER FINDS SUPPORT FROM THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF ROTORK CONTROL S INDIA P. LTD. & ORS. VS. CIT 314 ITR 62 (SC) WHEREIN THEIR L ORDSHIPS HELD: HELD, REVERSING THE DECISION OF THE HIGH COURT THAT THE VALVE ACTUATORS, MANUFACTURED BY THE ASSESSEE, WERE SOPHISTICATED GOODS AND STATISTICAL DATA INDICATED THAT EVERY YEAR SOME OF THESE WERE FOUND DEFECTIVE; THAT VALVE ACTUATOR BEING A SOPHISTICATED ITEM NO CUSTOMER WAS PREPARED TO BUY A VALVE ACTUATOR WITHOUT A WARRANTY. THEREFORE, THE WARRANTY BECAME AN INTEGRAL PART OF THE SALE PRICE; IN OTHER WORDS, THE WARRANTY STOOD ATTACHED TO THE SALE PRICE OF THE PRODUCT. IN THIS CASE THE WARRANTY PROVISIONS HAD TO BE RECOGNIZED BECAUSE THE ASSESSEE HAD A PRESENT OBLIGATION AS A RESULT OF PAST EVENTS RESULTING IN AN OUTFLOW OF RECOURCES AND RELIABLE ESTIMATE COULD BE MADE OF THE AMOUNT OF THE OBLIGATION. THEREFORE, THE ASSESSEE HAD INCURRED A LIABILITY DURING THE ASSESSMENT YEAR WHICH WAS ENTITLED TO DEDUCTION UNDER SECTION 37 OF THE INCOME-TAX ACT, 1961. AND ANOTHER DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT OF DELHI I THE CASE OF CIT VS. HEWLETT PACKARD INDI A (P) LTD. (2008) 5 DTR (DEL) 220; (2008) 171 TAXMAN 13/ (2008 ) 173 TAXMAN 162, WHEREIN THE HONBLE HIGH COURT DECIDED THIS ISSUE IN FAVOUR OF ASSESSEE BY HOLDING THAT PROVISI ON FOR WARRANTY MADE BY ASSESSEE FOLLOWING MERCANTILE SYST EM OF ACCOUNTING AND CALCULATED ON SCIENTIFIC BASIS WAS A CONTINGENT LIABILITY AND WAS AN ALLOWABLE DEDUCTION. 4. ON CONSIDERING THE SUBMISSIONS OF BOTH THE PARTI ES AND THE CASE LAW SUPRA REFERRED TO IN THE ORDER OF CIT( APPEALS) AS WELL AS THE RECENT DECISION OF HONBLE JURISDICTION AL HIGH COURT IN THECA SEE OF CIT VS. HEWLETT PACKARD INDIA (P) L TD. (SUPRA) RELIED UPON BY THE LEARNED AR FOR THE ASSESSEE, WE FIND THAT THE ISSUE UNDER QUESTION BEFORE WHETHER PROVISION FOR W ARRANTY 4 EVEN IF THE ASSESSEE FOLLOWING THE MERCANTILE SYSTE M OF ACCOUNTING WAS AN ALLOWABLE DEDUCTION STANDS COVERE D IN FAVOUR OF THE ASSESSEE. SINCE THE ORDER PASSED BY T HE CIT(APPEALS) IS BASED ON THESE DECISIONS SUPRA, TH ERE IS NO ILLEGALITY OR INFIRMITY IN THE ORDER OF CIT(APPEALS ) IN RESPECT OF THE ISSUE OF WARRANTY PROVISION AND THEREFORE, THE SAME IS UPHELD AND GROUND NO. 1 OF APPEAL OF THE REVENUE IS REJECTED. 5. 6. . . 7. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PA RTIES, WE ARE OF THE OPINION THAT THE FINDINGS OF CIT(APPEALS ) IN DELETING THE IMPUGNED ADDITION MADE BY THE ASSESSING OFFICER UNDER SECTION 115JB OF THE ACT SINCE BEING IN CONFORMITY WITH THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN TH E CASE OF HEWLETT PACKARD INDIA (P) LTD. (SUPRA), THE IMPUGNE D ORDER OF CIT(APPEALS) IN THIS REGARD IS UPHELD AND GROUND N O. 2 OF APPEAL TAKEN BY THE REVENUE IS REJECTED. 3.1. THE ISSUE OF ALLOWABILITY OF WARRANTY WAS CHAL LENGED BY THE REVENUE BEFORE THE HONBLE DELHI HIGH COURT WHICH BY JUDGME NT DATED 17-8-2010 IN ITA NO. 1156/2010 (CIT VS. INVENSYS INDIA PVT. LTD. ), DECIDED IN FAVOUR OF THE ASSESSEE BY HOLDING AS UNDER: THE PRESENT APPEAL IS DIRECTED AGAINST THE ORDER D ATED 28 TH AUGUST, 2009 PASSED BY THE INCOME TAX APPELLATE TRI BUNAL DELHI BENCH C (IN SHORT TRIBUNAL) IN ITA NO. 21 96/DEL/2008 PERTAINING TO THE ASSESSMENT YEAR 2003-04 WHEREBY T HE TRIBUNAL AFTER PLACING RELIANCE ON THE DECISION IN ROTORK CO NTROLS INDIA P. LTD. & ORS VS. CIT, 314 ITR 62 (SC) HAS ALLOWED THE APPEAL OF THE RESPONDENT ASSESSEE. WE MUST FAIRLY SAY THAT MR. SANJEV SABHARWAL, LEARN ED COUNSEL FOR THE REVENUE, STATED THAT THE CONTROVERS Y IS SQUARELY COVERED BY THE AFORESAID DECISION. IN VIEW OF THE AFORESAID, WE DO NOT PERCEIVE ANY ME RIT IN THE APPEAL AND ACCORDINGLY THE SAME IS DISMISSED IN LIMINE. 5 3.2. APROPOS OTHER GROUND OF THE REVENUE I.E. THE A DJUSTMENT IN THE ARMS LENGTH PRICE, BRIEF FACTS ARE: THE ASSESSEE CLAIMED THAT IT MAINTAINS PROPER SEGMENTATION SEGREGATING SALES OF RELATED AND UNREL ATED ENTERPRISES AND A BIFURCATION OF DOMESTIC AND INTERNATIONAL TRANSACTI ONS. TPO WHILE DETERMINING THE ALP U/S 92CA(3) MADE THE ADJUSTMENT S DISREGARDING THE SEGMENTATION MAINTAINED BY THE ASSESSEE. FURTHER, T HE ADJUSTMENT ON THE ENTIRE SALES TURNOVER OF THE APPLIANCE CONTROLS DIV ISION (ACD) WAS MADE DISREGARDING THE OBJECTIONS OF THE ASSESSEE. 3.3. ASSESSEE PREFERRED FIRST APPEAL RAISING FOLLO WING CONTENTIONS (I) ON MERITS OF THE ADJUSTMENTS; (II) ALTERNATIVELY RESTRICTING THE ADJUSTMENT ONLY TO TH E INTERNATIONAL TRANSACTIONS RELYING ON ITAT DELHI BENCH ORDER IN T HE CASE OF IL JIN ELECTRONICS (I) LTD. VS. ACIT (ITA NO. 483/DEL/ 2008); AND THAT OF ITAT MUMBAI BENCH IN THE CASE OF TWO INTERNATION AL PVT. LTD. TATA JEWELS EXPORTS PVT. LTD. AND TARA ULTIMO PVT. LTD. VS. ACIT (2010-TIOL-166-ITAT-MUM), HOLDING THAT TP ADJUSTMEN TS SHOULD BE APPLIED ONLY ON THE VALUE OF THE INTERNATIONAL T RANSACTIONS. 3.4. CIT(A) UPHELD THE ALTERNATE PLEA OF THE ASSESS EE BY FOLLOWING OBSERVATIONS: FURTHER, IT HAS ALSO BEEN POINTED OUT THAT IN APPE LLANTS OWN CASE THE DISPUTE RESOLUTION PANEL (DRP) FOR AY 20 06-07 HAS CONFIRMED BY HOLDING THAT THE ADJUSTMENT SHOULD BE RESTRICTED ONLY TO THE VALUE OF INTERNATIONAL TRANSACTIONS OF THE ACD. THEREFORE, IN LIGHT OF THE ABOVE, I AM OF THE OPINI ON THAT THE ALTERNATE ARGUMENT PRESSED BY THE APPELLANT IS TO B E CONSIDERED AND THE ADDITION SHOULD BE RESTRICTED TO THE VALUE OF INT4ERNATIONAL TRANSACTIONS AND NOT ON THE ENTIRE V ALUE OF SALES TURNOVER. ACCORDINGLY THE GROUND RAISED BY THE APPE LLANT COMPANY IS BEING PARTLY ALLOWED. AO SHOULD MODIFY ACCORDINGLY. 6 3.5. LD. COUNSEL CONTENDS THAT SETTLED LEGAL POSITI ON REMAINS THE SAME. BESIDES, THE DRP ALSO HAS DECIDED THE ISSUE OF ADJU STMENT OF TP ONLY ON INTERNATIONAL TRANSACTIONS IN ITS FAVOUR. THEREFORE , THERE IS NO INFIRMITY IN THE ORDER OF THE CIT(A). 4. LD. CIT(DR) RELIED ON THE ORDERS OF ASSESSING OF FICER. 5. WE HAVE HERD RIVAL CONTENTIONS AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. APROPOS GROUND NOS. 1 & 3 OF THE REVENUES APPEALS I.E. THE CLAIM OF ALLOWING WARRANTY COST AND NON-INCLUSION OF ADDITIO N OF WARRANTY COST WHILE COMPUTING THE BOOK PROFIT U/S 115JB STANDS DECIDED IN FAVOUR OF THE ASSESSEE BY ITAT AND THE ISSUE OF ALLOWABILITY OF WARRANTY C OST IS UPHELD BY HONBLE DELHI HIGH COURT ALSO. IN VIEW THEREFORE RESPECTFUL LY FOLLOWING THESE AUTHORITIES THESE GROUNDS OF REVENUE ARE DISMISSED. 5.1. APROPOS THE SECOND GROUND I.E. ADJUSTMENT IN R ESPECT OF TRANSFER PRICING, THE ASSESSEE HAS NOT PRESSED THIS GROUND I N THE CROSS-OBJECTIONS. THE RESTRICTION OF TP ADJUSTMENT TO INTERNATIONAL TRAN SACTIONS HAS BEEN UPHELD BY THE CIT(A) FOLLOWING THE ABOVE ITAT AND DRP ORDERS IN ITS OWN CASE FOR A.Y. 2006-07. IN VIEW OF THESE FACTS AND CIRCUMSTAN CES, WE FIND NO INFIRMITY IN THE ORDER OF CIT(A) WHICH IS UPHELD. 6. IN THE RESULT, BOTH THE REVENUES APPEALS ARE DI SMISSED. 7. THAT LEAVES GROUND NO. 6 IN ASSESSEES CROSS OBJ ECTIONS FOR A.Y. 2005- 06 WHICH IS AS UNDER: THAT THE LEARNED CIT(A) HAS ERRED IN NOT REDUCING THE REVERSAL OF PROVISION FOR BAD DEBTS AMOUNTING TO IN R 9,010,145/- WHILE CALCULATING PROFIT UNDER SECTION 115JB OF THE ACT GIVEN THAT THE BOOK PROFITS COMPUTED UNDER SECT ION 115JB OF EARLIER ASSESSMENT YEARS WAS INCREASED BY SUCH P ROVISION FOR BAD DEBTS CREATED IN THOSE YEARS. 7 8. LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT HONB LE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. HUTCHISON MAX TEL ECOM (P) LTD. (2011) 338 ITR 614 HAS RESTORED THE MATTER BACK TO THE FIL E OF ASSESSING OFFICER BY FOLLOWING OBSERVATIONS: 8. LEARNED COUNSEL FOR THE REVENUE ARGUED THAT CL. (I) OF EXPLN. 1 HAD BEEN INSERTED IN S. 115JB(2) OF THE AC T BY FINANCE (NO.2) ACT, 2009 WHICH IS EFFECTIVE RETROSP ECTIVELY FROM 1ST APRIL, 200L. ACCORDING TO CI. (I), ANY AMO UNT OR AMOUNTS SET ASIDE AS PROVISION FOR DIMINUTION IN TH E VALUE OF ANY ASSET SHALL NOT REDUCE THE BOOK PROFITS OF A N ASSESSEE. IT WAS SUBMITTED THAT PROVISION FOR BAD A ND DOUBTFUL DEBTS WOULD BE COVERED THEREUNDER. SUPPORT WAS GATHERED FROM THE DECISION OF THIS COURT IN CIT VS. STERIPLATE LTD. N APPEAL NO, 931 OF 2008, DECIDED ON 30TH MAY, 2011. LEARNED COUNSEL FOR THE REVENUE ALSO PLA CED RELIANCE ON A JUDGMENT OF THE MADRAS HIGH COURT IN DY. CIT VS. BEARDSELL LTD. (2000) 162 CTR (MAD) 467 : (2000) 244 ITR 256 (MAD). LEARNED COUNSEL FOR THE ASSESSEE, HOWEVER, CITED THE JUDGMENT OF THE SUPREM E COURT IN CIT VS. HCL COMNET SYSTEMS & SERVICES LTD. (2008) 219 CTR (SC) 222 : (2008) 13 DTR (SC) 105 : (2008) 305ITR 409 (SC) BUT HE COULD NOT CONTROVERT THE SUBMISSION OF THE LEARNED COUNSEL FOR THE REVENUE T HAT INSERTION OF CL. (I) IN EXPLANATION TO S. 115 JB(2) RETROSPECTIVELY W.E.F. 1ST APRIL, 2001 WAS APPLICAB LE BUT IT WAS SUBMITTED THAT THE MATTER REQUIRES TO BE CONSID ERED BY THE AO REGARDING THE APPLICABILITY OF OTHER CLAUSES MENTIONED IN THE EXPLANATION. 9. AFTER HEARING COUNSEL FOR THE PARTIES, WE ARE OF TH E OPINION THAT IDENTICAL ISSUE CAME UP FOR CONSIDERAT ION BEFORE THIS COURT IN STERIPLATE (P) LTD.'S CASE (SU PRA) WHERE THIS COURT HAD OBSERVED THAT INTRODUCTION OF CI. (I) OF EXPLN. 1 TO S. 115JB(2) OF THE ACT WAS MADE EFFE CTIVE FROM 1ST APRIL, 2001 AND WOULD, THEREFORE, APPLY TO ASST. YR. 2001-02 AND SUBSEQUENT ASSESSMENT YEARS. 8 10. IN VIEW OF THE ABOVE, THE ISSUE NEEDS TO BE DECIDED AFRESH BY THE AO. THE JUDGMENT OF THE APEX COURT RE FERRED TO BY THE LEARNED COUNSEL FOR THE ASSESSEE IN THE W AKE OF THE AFORESAID AMENDMENT MADE RETROSPECTIVELY DOES N OT ADVANCE THE CASE OF THE ASSESSEE IN ANY MANNER. 8.1. IN VIEW OF THIS JUDGMENT, LD. COUNSEL CONTENDS THAT THE ISSUE MAY BE SET ASIDE BACK TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE SAME IN ACCORDANCE WITH LAW. 9. LD. DR IS HEARD. 10. WE HAVE HERD RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. FOLLOWING HONBLE PUNJAB & HARYANA HIGH COU RT JUDGMENT IN THE CASE OF HUTCHISON MAX TELECOM (P) LTD. (SUPRA), WE SET ASIDE THE MATTER BACK TO THE FILE OF ASSESSING OFFICER TO DECIDE THE SAME AFRESH IN ACCORDANCE WITH LAW, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD. 11. IN THE RESULT ASSESSEE CROSS-OBJECTION FOR A.Y. 2004-05 IS DISMISSED AND THAT FOR A.Y. 2005-06 IS PARTLY ALLOWED FOR STA TISTICAL PURPOSES ONLY. 12. COMING TO THE REVENUES APPEAL RELATING TO DELE TION OF PENALTY LEVIED U/S 271(1)(C) FOR A.Y 2005-06, THE IMPUGNED PENALTY WAS LEVIED BY THE ASSESSING OFFICER ON ACCOUNT OF ADJUSTMENT TO THE A LP U/S 92CA(3). IT SHALL BE PERTINENT TO MENTION THAT IN QUANTUM PROCEEDINGS THE ALP WERE REDUCED TO INTERNATIONAL TRANSACTIONS ONLY. ASSESSING OFFIC ER HOWEVER IMPOSED PENALTY U/S 271(1)(C) ON THE ENTIRE ADJUSTMENTS. 12.1. ON FIRST APPEAL, CIT(A) DELETED THE PENALTY B Y FOLLOWING OBSERVATIONS: 9 I HAVE CONSIDERED THE ABOVE ARGUMENTS AND SUBMISSI ONS MADE BY THE APPELLANT AND THE GROUNDS ON JURISDICTION HA VE NOT BEEN DELIBERATED UPON BY THE APPELLANT AND HENCE I HAVE PROCEEDED INTO THE MERITS OF THE CASE. VIDE MY ORDER DATED 28 -02-2011, I HAVE HELD THAT THE TRANSFER PRICING ADJUSTMENT PROP OSED BY THE AO HAS TO BE REDUCED FROM RS. 2,23,57,928/- TO RS. 18,57,065/- SINCE THE ADJUSTMENT CANNOT EXCEED THE VALUE OF INT ERNATIONAL TRANSACTIONS. GIVEN THE SAME, THERE IS NO CONCEALME NT OF INCOME OR FURNISHING ANY INACCURATE PARTICULARS OF INCOME BY THE APPELLANT SO AS TO WARRANT LEVY OF PENALTY UNDE R SECTION 271(1)(C) OF THE ACT. 13. LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT ALL THE RELEVANT DETAILS WERE FILED ALONG WITH THE TRANSFER PRICING REPORT SUBMIT TED BY THE ASSESSEE, BESIDES THE EXPLANATIONS AND OBJECTIONS RAISED BEFORE TPO. BESIDES, TPOS ORDER WAS ERRONEOUS INASMUCH AS NEITHER THE SEGMENTATION NOR THE INTERNATIONAL TRANSACTIONS WERE TAKEN INTO CONSIDERATION. ALL THE RELEVANT FACTS HAVING BEEN FURNISHED ALONG WITH THE RETURN THERE IS NO INFIRMI TY IN THE ORDER OF CIT(A). BESIDES. NO PENALTY U/S 271(1)(C) CAN BE IMPOSED QU A 115JB, AS HAS BEEN HELD BY HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. NALWA SONS INVESTMENTS LTD. (2010) 327 ITR 543 BY FOLLOWING OB SERVATIONS: AS PER S. 271(1)(C), THE PENALTY CAN BE IMPOSED WH EN ANY PERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INCORRECT PARTICULARS OF THE INCOME. ONCE THIS CONDITION IS SATISFIED, QUANTUM OF PENALTY IS TO BE LEVIED AS PER CL. (III) OF S. 271(1)(C) WHICH STIPULATES THAT THE PENALTY SHALL NOT EXCEED THREE TIMES' THE AMOUNT OF TAX SOU GHT TO BE EVADED'. THE QUESTION WOULD BE, AS TO WHETHER FURNI SHING OF SUCH WRONG PARTICULARS HAD ANY EFFECT ON THE AMO UNT OF TAX SOUGHT TO BE EVADED. UNDER THE SCHEME OF THE AC T, THE TOTAL INCOME OF THE ASSESSEE IS FIRST COMPUTED UNDE R THE NORMAL PROVISIONS OF THE ACT AND TAX PAYABLE ON SUC H TOTAL INCOME IS COMPARED WITH THE PRESCRIBED PERCENTAGE O F THE 'BOOK PROFITS' COMPUTED UNDER S. 115JB. THE HIGHER OF THE 10 TWO AMOUNTS IS REGARDED AS TOTAL INCOME AND TAX IS PAYABLE WITH REFERENCE TO SUCH TOTAL INCOME. IF THE TAX PAY ABLE UNDER THE NORMAL PROVISIONS IS HIGHER, SUCH AMOUNT IS THE TOTAL INCOME OF THE ASSESSEE, OTHERWISE, 'BOOK PROF ITS' ARE DEEMED AS THE TOTAL INCOME OF THE APPELLANT IN TERM S OF S. 115JB. IN THE PRESENT CASE, THE INCOME COMPUTED AS PER THE NORMAL PROCEDURE WAS LESS THAN THE INCOME DETERMINE D BY LEGAL FICTION NAMELY 'BOOK PROFITS' UNDER S. 115JB. ON THE BASIS OF NORMAL PROVISION, THE INCOME WAS ASSESSED IN THE NEGATIVE I.E. AT A LOSS OF RS. 36,95,21,018. ON THE OTHER HAND, ASSESSMENT UNDER S. 115JB RESULTED IN CALCULA TION OF PROFITS AT RS. 4,01,63,180. THE INCOME OF THE ASSES SEE WAS THUS ASSESSED UNDER S. 115JB AND NOT UNDER THE NORM AL PROVISIONS. NO DOUBT, THERE WAS CONCEALMENT BUT THA T HAD ITS REPERCUSSIONS ONLY WHEN THE ASSESSMENT WAS DONE UNDER THE NORMAL PROCEDURE. THE ASSESSMENT AS PER T HE NORMAL PROCEDURE WAS, HOWEVER, NOT ACTED UPON. ON T HE CONTRARY, IT IS THE DEEMED INCOME ASSESSED UNDER S. 115JB WHICH HAS BECOME THE BASIS OF ASSESSMENT AS IT WAS HIGHER OF THE TWO. TAX IS THUS PAID ON THE INCOME A SSESSED UNDER S. 115JB. HENCE, WHEN THE COMPUTATION WAS MAD E UNDER S. 115JB, THE CONCEALMENT HAD NO ROLE TO PLAY AND WAS TOTALLY IRRELEVANT. THEREFORE, THE CONCEALMENT DID NOT LEAD TO TAX EVASION AT ALL. THE UPSHOT OF THE AFORE SAID DISCUSSION WOULD BE TO SUSTAIN THE ORDER OF THE TRI BUNAL, THOUGH ON DIFFERENT GROUNDS. THEREFORE, WHILE THE REASONING AND APPROACH OF THE TRIBUNAL IS NOT TENAB LE, FOR THE REASONS DISCLOSED ABOVE, PENALTY COULD NOT HAVE BEEN IMPOSED EVEN IN RESPECT OF THE FALSE CLAIM OF DEPRE CIATION MADE BY THE ASSESSEE.-CIT VS. GOLD COIN HEALTH FOOD (P) LTD. (2008) 218 CTR (SC) 359 : (2008) 11 DTR (SC) 1 85 : (2008) 304 ITR 308 (SC) DISTINGUISHED . 14. LD. DR IS HEARD. 15. WE FIND NO INFIRMITY IN THE ORDER OF CIT(A) IN DELETING THE PENALTY. ACCORDINGLY, ORDER OF CIT(A) IS UPHELD. BESIDES, HO NBLE DELHI HIGH COURT HAS HELD THAT NO CONCEALMENT PENALTY U/S 271(1)(C) CAN BE IMPOSED FOR 11 ADJUSTMENT WHILE WORKING OUT BOOK PROFIT U/S 115JB. IN VIEW THEREOF, THIS REVENUES APPEAL IS DISMISSED. 16. IN THE RESULT, ALL THE THREE REVENUES APPEALS STAND DISMISSED. ASSESSEES CROSS OBJECTION FOR A.Y. 2004-05 IS DISM ISSED AND ASSESSEES CROSS OBJECTION FOR A.Y. 2005-06 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AS INDICATED ABOVE. ORDER PRONOUNCED IN OPEN COURT ON 11/07/ 2013. SD/- SD/- (J.S. REDDY ) (R.P. TOLNI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 11-07- 2013 *MP* COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. CIT (ITAT), NEW DELHI.