ACIT, New Delhi V. M/s. Century Communication Ltd., New Delhi

ITA 1026/DEL/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65481 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 17-09-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 01-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRITHI LAL
• Section: 115JB

Judgement Text

ITA NO. 1026/DEL/2012 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B, NEW DELHI BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 1026/DEL/2012 A.Y. : 2008-09 ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-13, ROOM NO. 332, ARA CENTRE, JHANDEWALAN EXTN., NEW DELHI VS. M/S CENTURY COMMUNICATION LTD., M-14-A, LAJPAT NAGAR-II, NEW DELHI 110 024 (PAN/GIR NO. : AABCC5986H) (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSESSEE BY : SH. C.S. ANAND, ADV. DEPARTMENT BY : SH. PRITHI LAL, SR. D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-VI, NEW DEL HI DATED 14.11.2011 PERTAINING TO ASSESSMENT YEAR 2008-09. 2. THE GROUNDS RAISED READ AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED IN DELETING THE PENALTY OF ` 3,91,910/- IMPOS ED BY THE ASSESSING OFFICER U/S. 271(1)(C) OF THE I.T . ACT, 1961 IN RESPECT OF DISALLOWANCE OF ` 11,23,600/- ON ACCOUNT OF PROVISION FOR AUDITORS REMUNERATION ITA NO. 1026/DEL/2012 2 PAYABLE FOR NON-DEDUCTION OF TDS AS MANDATED BY SECTION 40(A)(IA) INCOME TAX ACT, 1961. 2. THE ORDER OF LD. COMMISSIONER OF INCOME TAX (A) IS PERVERSE IN LAW AND ON FACTS. 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND ANY/ ALL THE GROUNDS OF APPEAL BEFORE OR DURING THE COUR SE OF THE HEARING OF THE APPEAL. 3. IN THIS CASE BRIEFLY STATED FACTS OF THE CASE A RE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF VIDEO TAPE RECORDING I.E. POST FILM PROCESSING AND PRODUCING AND MARKETING OF TELEV ISION SOFTWARE CONTAINED FOR SAVING FREE COMMERCIAL TESTING. THE A SSESSEE COMPANY FILED ITS RETURN OF INCOME ON 20.2.2009 DECLARING AN INCOME OF ` 5,60,53,704/- AND BOOK PROFIT AT ` 32,98,29,062/- U /S. 115JB OF THE I.T. ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER MADE DISALLOWANCE OF ` 11,23,600/- ON ACCOU NT OF PROVISION FOR AUDITORS REMUNERATION PAYABLE U/S. 40(A)(IA) O F THE ACT BY OBSERVING THAT THE ASSESSEE COMPANY HAD DEDUCTED TA X AT SOURCE BUT THERE WAS DELAY IN PAYMENT OF TDS IN THE GOVT. TREASU RY. THE ASSESSEE COMPANY ADMITTED DELAY AND REQUESTED THE ASS ESSING OFFICER TO DISALLOW THE AMOUNT U/S. 40(A)(IA) OF THE ACT. A CCORDINGLY, THE ASSESSING OFFICER MADE THE DISALLOWANCE AND ALSO LE VIED A PENALTY U/S. 271(1)(C) BY OBSERVING THAT THOUGH THE ASSESSEE HA D MADE A MENTION ABOUT THE DELAY IN TDS PAYMENTS IN THE AUDIT REPORT, WHILE AT THE SAME TIME, IT DID NOT DISALLOW THE AMOUNT IN THE COMPU TATION OF INCOME FILED BY IT. THUS, THE ASSESSING OFFICER CONCLUDED THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF IN COME AND LEVIED ITA NO. 1026/DEL/2012 3 PENALTY U/S. 271(1)(C). AGGRIEVED BY THE AFORESAI D ORDER, THE APPEAL HAS BEEN FILED BEFORE THE LD. COMMISSIONER OF INCOME TAX (A). 4. CONSIDERING THE ABOVE, LD. COMMISSIONER OF INCOME TAX (A) HELD THAT ASSESSEE COMPANY HAD MADE THE PROVISION FOR AUD ITORS REMUNERATION PAYABLE OF AN AMOUNT OF ` 11,23,600/- ON WHICH NO TDS WAS DEDUCTED. THEREFORE, IN VIEW OF SECTION 40(A) (IA) OF THE ACT, THE ASSESSING OFFICER HAS RIGHTLY DISALLOWED THE AFORES AID EXPENDITURE. ASSESSEE HAS ALSO SUBMITTED THAT THE SAME IS DISALL OWABLE U/S. 40(A)(IA) OF THE ACT. THE ADDITIONS WERE NOT CHAL LENGED BY THE ASSESSEE COMPANY. HOWEVER, LD. COMMISSIONER OF IN COME TAX (A) NOTED THAT ASSESSING OFFICER HAS DETERMINED THE TAX PAYABLE BY THE ASSESSEE COMPANY ON THE BOOK PROFIT OF ` 32,98,29,0 62/- U/S. 115JB OF THE I.T. ACT. WHEREAS AFTER MAKING THE NORMAL PR OVISIONS OF THE I.T. ACT AT ` 5,93,14,600/-. THEREFORE, LD. COMMISSIONE R OF INCOME TAX (A) FOUND THAT PENALTY CANNOT BE IMPOSED IN THIS CASE AS THERE IS NO TAX WHICH WAS SOUGHT TO BE EVADED. IN THIS REGARD, L D. COMMISSIONER OF INCOME TAX (A) RELIED UPON THE DECISION OF THE HON BLE DELHI COURT IN THE CASE OF NALWA SONS INVESTMENT LIMITED 327 ITR 54 3 THAT PENALTY U/S. 271(1)(C) CANNOT BE LEVIED WHEN INCOME IS ASSE SSED UNDER MAT. HENCE, LD. COMMISSIONER OF INCOME TAX (A) DIRECTED THAT PENALTY BE DELETED IN THIS CASE. 5. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. WE FIND THAT IN THIS CASE ADDITION WAS MADE ON ACCOUNT OF DISALLOWANCE OF ` 1 1,23,600/- U/S. 40(A)(IA). HOWEVER, IT IS NOTED THAT ASSESSEE PAID THE TAX, AS PER THE ITA NO. 1026/DEL/2012 4 PROVISIONS OF SECTION 115JB. IN THESE CIRCUMSTANCE S, WE FIND THAT DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF NALWA SONS INVESTMENT LIMITED 327 ITR 543 (SUPRA) IS SQUA RELY APPLICABLE. IN THIS CASE, IT WAS HELD THAT UNDER THE SCHEME OF THE INCOME TAX ACT, 1961, THE TOTAL INCOME OF THE ASSESSEE IS FIRST COMP UTED UNDER THE NORMAL PROVISIONS OF THE ACT AND THE TAX PAYABLE ON SUCH PROFITS IS COMPARED UNDER SECTION 115JB OF THE ACT. THE HIGHER OF THE TWO AMOUNTS IS REGARDED AS TOTAL INCOME AND TAX IS PAYABL E WITH REFERENCE TO SUCH TOTAL INCOME. IF THE TAX PAYABLE UNDER THE NORMAL PROVISIONS IS HIGHER, SUCH AMOUNT IS THE TOTAL INCOME OF THE ASS ESSEE, OTHERWISE, THE BOOK PROFITS ARE DEEMED AS THE TOTAL INCOME OF THE ASSESSEE IN TERMS OF SECTION 115JB OF THE ACT. WHERE THE TOTAL INCOME COMPUTED IN ACCORDANCE WITH THE NORMAL PROCEDURE IS LESS THAN TH E INCOME DETERMINED BY HE LEGAL FICTION, NAMELY, THE BOOK PRO FITS UNDER SECTION 115JB OF THE ACT AND NOT UNDER THE NORMAL PROVISION S, THE TAX IS PAID ON THE INCOME ASSESSED UNDER SECTION 115JB OF THE A CT. CONCEALMENT OF INCOME WOULD HAVE NO ROLE TO PLAY AND WOULD NOT L EAD TO TAX EVASION. THEREFORE, PENALTY CANNOT BE IMPOSED ON T HE BASIS OF DISALLOWANCE OR ADDITIONS MADE UNDER THE REGULAR PRO VISIONS. ITA NO. 1026/DEL/2012 5 7. IN VIEW OF THE AFORESAID DISCUSSION AND PRECEDEN T, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (A). ACCORDINGLY, WE UPHOLD THE SAME. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE S TANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21/9/2012. SD/- SD/- [ [[ [JOGINDER SINGH JOGINDER SINGH JOGINDER SINGH JOGINDER SINGH] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 21/9/2012 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES