, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, C MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.104/MUM/2016 ASSESSMENT YEAR: 2007-08 ASST. COMMISSIONER OF INCOME TAX-9(2)(1), ROOM NO.665A, 6 TH FLOOR, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI 400 020 / VS. M/S.CASTROL INDIA LTD., TECHNOPOLIS KNOWLEDGE PARTK, MAHAKALI CAVES ROAD, CHAKALA, ANDHERI(EAST), MUMBAI 400 093 ( / REVENUE) ( !'#$ % /ASSESSEE) PAN. NO. AAACC4481E !& ' % ( / DATE OF HEARING : 25/10/2017 ' % ( / DATE OF ORDER: 27/10/2017 !'#$ % ! / ASSESSEE BY SHRI DHANESH BAFNA/APURVA SHAH, MS.FORUM MEHTA ! / REVENUE BY SHRI RAJAT MIT TAL (DR) ITA NO.104/MUM/2016 M/S.CASTROL INDIA LTD. 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 30.10.2015 OF THE LD. FIRST APPELLATE AUTHORI TY, MUMBAI IN DELETING THE PENALTY LEVIED IN THE RELATI ON TO TRANSFER PRICING ADJUSTMENT MADE OF RS.70,03,106/- U/S.92CA(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTE R THE ACT), BY HOLDING THAT THE CONDUCT OF THE ASSESSEE S ATISFIES BOTH THE CONDITIONS GIVEN IN EXPLANATION 7 TO SECTI ON 271(1)(C) OF THE ACT, I.E. GOOD FAITH AND DUE DILIG ENCE, WITHOUT APPRECIATING THE FACT THAT THE TPO HAD MADE THE ADJUSTMENT AFTER DETAILED DISCUSSION AND FURTHER ER RED IN DELETING THE PENALTY LEVIED IN THE RELATION TO SHOR T TERM CAPITAL GAINS ON SALE OF BUILDING U/S.50 OF RS.5,60 ,71,987/- BY HOLDING THAT THE ASSESSING OFFICER HAD NOT BROUG HT ANY MATERIAL WHICH COULD PROVE THAT EXTRA MONEY WAS REC EIVED BY THE ASSESSEE COMPANY ON SALE OF ASSET. 2. DURING HEARING, THE LD.DR, SHRI RAJAT MITTAL DEF ENDED THE PENALTY IMPOSED BY THE LD.ASSESSING OFFICER. O N THE OTHER HAND, SHRI DHANES BAFNA ALONG WITH APURVA SHA H ITA NO.104/MUM/2016 M/S.CASTROL INDIA LTD. 3 AND MS.FORUM MEHTA, LD.COUNSEL FOR THE ASSESSEE EXPLAINED THAT QUANTUM WAS SET ASIDE BY THE TRIBUNA L TO FILE OF THE TPO AND THE LD.CIT(A) PLACED RELIANCE U PON THE ORDER OF A.Y.2003-04 WHICH WAS SENT TO TPO. OUR AT TENTION WAS INVITED TO PAGE 7(PARA 3.4) OF THE ORDER. IT W AS SUBMITTED THAT THE TRIBUNAL FOR A.Y.2003-04, IDENTI CALLY DELETED THE PENALTY. THIS FACTUAL MATRIX WAS NOT CONTROVERTED BY THE LD.DR. 2.1 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. BEFORE A DVERTING FURTHER, WE ARE EXPECTED TO ANALYSE THE ORDER OF TH E TRIBUNAL DATED 27.07.2016 (ITA NO.7922&7033/MUM/2010), (ITA NO.5261 & 2414/MUM/2014) IN THE CASE ASSESSEE ITSELF FOR A.Y. 2003- 04, 2004-05 AND ALSO 2007-08 (ITA NO.195/MUM/2012), ITA NO.13/MUM/2012), (ITA NO.5671 & 5846/MUM/2013 FOR A.Y. 2008-09). IT IS NOTED THAT THE TRIBUNAL F OR A.Y.2003-04 DELETED THE PENALTY IMPOSED U/S.271(1)( C) OF THE ACT (PARA 21) LEVIED ON ACCOUNT OF TRANSFER PRI CING ADJUSTMENT. AS FAR AS TWO ADDITIONS RELATING TO CO E3 ITA NO.104/MUM/2016 M/S.CASTROL INDIA LTD. 4 RELATED EXPENSES AND DAVID BECKHAM ADVERTISING CAMP AIGN EXPENSES ARE CONCERN THE TRIBUNAL IN QUANTUM PROCEE DINGS RESTORED THE MATTER BACK TO THE FILE OF THE TPO (PA RA 22) BY HOLDING THAT THE IMPOSITION OF PENALTY U/S.271(1)(C ) WAS NOT PROPER. THE ORDER OF THE LD.CIT(A) IN DELETING THE PENALTY WAS UPHELD BY THE TRIBUNAL. 2.2 IF THE OBSERVATION MADE IN THE ASSESSMENT ORDER , LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCL USION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSEL AND T HE CONCLUSION DRAWN IN THE ORDER OF THE TRIBUNAL DATED 27.07.2016 (SUPRA), IF KEPT IN JUXTAPOSITION AND AN ALYZED, WE FIND THAT THE LD.CIT(A) HAS BROADLY RELIED UPON THE DECISION FOR A.Y.2003-04. THE TRIBUNAL WHILE ADJUD ICATING THE ORDER FOR A.Y.2003-04 DELETED THE PENALTY (PARA 20 & 21) (PAGE 19 & 20 OF THE ORDER). THUS, FOLLOWING T HE REASONING CONTENT IN THE AFORESAID ORDER OF THE TRI BUNAL, IN THE CASE OF ASSESSEE ITSELF, WE DELETE THE PENALTY. ITA NO.104/MUM/2016 M/S.CASTROL INDIA LTD. 5 3. THE NEXT GROUND PERTAINS TO DELETING THE PENALTY LEVIED IN RELATION TO SHORT TERM CAPITAL GAINS ON SALE OF BUILDING U/S.50 OF THE ACT OF RS.5,60,71,987/- IS CONCERNED. THE ASSESSEE SOLD CERTAIN BUILDINGS, BEING DEPRECIABLE ASSET, FOR A SUM OF RS.20,64,09,897/- AND THE NET SALE PROCEED S WERE REDUCED FROM THE RESPECTIVE BLOCK OF ASSETS. THE S TAMP DUTY VALUATION AUTHORITY VALUED THE PROPERTY AT RS.25,04,97,069/-. THE LD.AO CONSIDERED THIS VALUE AS SALE PROCEEDS U/S.50C AND COMPUTED THE SHORT TERM C APITAL GAIN AT RS.5,60,71,987/-. THE LD.COUNSEL FOR THE AS SESSEE RELIED UPON THE DECISION IN THE CASE OF RENU HINGOR ANI VS. ACIT (ITA NO.2210/M/2010) ORDER DATED 22.12.2010. THIS FACTUAL MATRIX WAS NOT CONTROVERTED BY THE REVENUE. 3.1 WE HAVE CONSIDERED THE SUBMISSIONS OF LD.DR AN D PERUSED THE MATERIAL AVAILABLE ON RECORD. UNDER TH E FACTS DISCUSSED HEREINABOVE, IT ALSO NOTED THAT HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. M/S.FORTUNE HOTELS AND ESTATES PVT.LTD.,(ITA NO.116 4 OF 2012) VIDE ORDER DATED 26.09.2014 HELD AS UNDER. ITA NO.104/MUM/2016 M/S.CASTROL INDIA LTD. 6 1. HEARD MR.VIMAL GUPTA, LEARNED SENIOR COUNSEL APPEARING IN SUPPORT OF THIS APPEAL, WHICH IMPUGNS THE ORDER OF THE INCOME TAX APPELLATE TRIBUNAL DATED 30.09.20 11 ALLOWING THE ASSESSEES APPEAL AND DELETING THE PEN ALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) ACT, 1961. MR.VIMAL GUPTA SU BMITS THAT THE SUBSTANTIAL QUESTION OF LAW WHICH ARISES FOR DE TERMINATION AND CONSIDERATION IS WHETHER, THE TRIBUNAL WAS RIGH T IN HOLDING THAT THE PENALTY CANNOT BE IMPOSED WITH REF ERENCE TO ADDITION OF DEEMED INCOME UNDER SECTION 50C OF THE INCOME TAX ACT, 1961. MR.VIMAL GUPTA RELIES UPON THE JUDG MENT OF THE HONOURABLE SUPREME COURT IN THE CASE OF CHUHARMAL V/S COMMISSIONER OF INCOME TAX REPORTED IN 172 ITR 250(SC). 2. UPON PERUSAL OF THE ORDER PASSED BY THE TRIBUNAL IN ITS ENTIRETY AND NOTING THE PECULIAR FACTS PERTAINING T O THE ASSESSEE WE ARE OF THE VIEW THAT THE QUESTION AS PO SED BEFORE US AND THE CONTENTIONS ADVANCED NEED NOT BE GONE INTO IN ANY FURTHER DETAILS. THE ADMITTED FACTUAL POSITION AND WHICH THE TRIBUNAL NOTED IS PREVAILING THROUGHOUT. THE ASSESSEE WAS THE OWNER OF THE OFFICER PREMISES AT N ARIMAN POINT, MUMBAI AND HE SOLD THE SAME DURING THE YEAR PREVIOUS TO THE ASSESSMENT YEAR 2004-2005 AND SALE CONSIDERA TION WAS RS.2 CRORES. THE ASSESSING OFFICER NOTED THAT THE MARKET VALUE ADOPTED BY THE REGISTRAR OF ASSURANCES FOR LEVY OF STAMP DUTY WAS RS.3,72,42,000/-. IN VIEW THEREO F BY TAKING RECOURSE TO SECTION 52C(2) THE ASSESSING OFF ICER CALLED UPON THE ASSESSEE TO SHOW CAUSE AS TO WHY THE FULL VALUE OF CONSIDERATION RECEIVED ON TRANSFER SHOULD NOT BE AD OPTED AS PER THE STAMP VALUATION. THE ASSESSEE INSISTED THA T THE QUESTION OF VALUATION OF THE PROPERTY SHOULD BE REF ERRED TO THE DEPARTMENTAL VALUATION OFFICER. THAT WAS SO RE FERRED AND THE REPORT WAS SUBMITTED BY THE VALUATION OFFICER D ATED 27.12.2006 DETERMINING THE MARKET VALUE OF THE PROP ERTY AT RS.2,70,03,920/-. THE ASSESSEE MAINTAINED THAT THE VALUE OFRS.2 CRORES IS ACTUAL SALE CONSIDERATION RECEIVED BY IT. HOWEVER, THIS WAS NOT ACCEPTED AND THE DIFFERENCE B ETWEEN THE CONSIDERATION RECEIVED AND DETERMINATION OF THE VALUATION OFFICER WAS DECLARED AS TAX LIABILITY. 3. TO THIS EXTENT THERE IS NO DISPUTE AND WHAT LATE R ON FOLLOWED WAS THE IMPOSITION OF PENALTY. THE TRIBUN AL HELD THAT THIS CANNOT BE TAKEN AS A CASE OF FURNISHING I NACCURATE PARTICULARS OF INCOME INASMUCH AS THERE WAS A REGIS TERED SALE DEED AND THERE WAS CONSIDERATION MENTIONED THEREIN. THAT GROUND WAS RAISED AND THEREFORE, THE DOCUMENT WAS ITA NO.104/MUM/2016 M/S.CASTROL INDIA LTD. 7 FORWARDED TO THE VALUER AND FOR DETERMINATION OF TH E VALUE, BY ITSELF WOULD NOT MEAN THAT THE ASSESSEE HAD FURN ISHED INACCURATE PARTICULARS OF INCOME OR HAS CONCEALED T HE INCOME. IN THESE PECULIAR CIRCUMSTANCES THE IMPOSITION OF P ENALTY WAS NOT JUSTIFIED, IS THE CONCLUSION DRAWN. THE LARGER QUESTION POSED FOR OUR CONSIDERATION BY MR.VIMAL GUPTA REALL Y DOES NOT ARISE IN THE PECULIAR FACTS OF THE CASE. WE LE AVE THAT QUESTION AND CONTENTIONS BASED THEREON OPEN FOR BEI NG CANVASSED IN AN APPROPRIATE CASE. THE TRIBUNALS O RDER EVEN IF CONTAINING ANY REFERENCE TO SOME DEEMING PROVISI ON WILL NOT PRECLUDE OR PREVENT THE REVENUE FROM RAISING SU CH CONTENTIONS. WITH THIS CLARIFICATION AND FINDING T HAT THE TRIBUNALS ORDER DOES NOT RAISE ANY SUBSTANTIAL QUE STION OF LAW THAT WE PROCEED TO DISMISS THE APPEAL. IT IS, ACCORDINGLY, DISMISSED. NO COSTS. 3.2 CONSIDERING THE AFORESAID DECISION OF THE TRIBU NAL AND ALSO OF THE HON'BLE JURISDICTIONAL HIGH COURT (ORDE R DATED 26.09.2014), WE ARE OF THE VIEW THAT THERE IS AN EV IDENCE THAT THE ASSESSEE SOLD THE DEPRECIABLE ASSET FOR RS.20,64,09,897/- AND THE STAMP DUTY VALUATION AUTH ORITY ADOPTED THE VALUE OF RS.25,04,97,069/-. THE LD.AO LEVIED PENALTY U/S.50C ON THE DIFFERENCE BETWEEN THESE TWO FIGURES. IN VIEW OF THE AFORESAID DECISIONS, WE AR E OF THE VIEW THAT PENALTY CANNOT BE IMPOSED BY APPLYING THE DEEMING PROVISIONS OF SECTION 50C OF THE ACT AS THE RE WAS NO EVIDENCE THAT THE ASSESSEE ACTUALLY RECEIVED THE AMOUNT ADOPTED BY THE STAMP DUTY VALUATION AUTHORITY. IT IS NOT THE CASE THAT THE ASSESSEE CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. T HE RATIO ITA NO.104/MUM/2016 M/S.CASTROL INDIA LTD. 8 LAID DOWN FROM HON'BLE APEX COURT IN RELIANCE PETRO PRODUCTS PVT. LTD., 322 ITR 158 (SC) SUPPORTS OUR V IEW. THUS, WE DO NOT ANY INFIRMITY IN THE CONCLUSION DRA WN BY THE LD.CIT(A). FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. DR AT THE CONCLUSION OF THE HEARING ON 25/10/2017. SD/- SD/- (RAJESH KUMAR) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# /JUDICIAL MEMBER & MUMBAI; * ! DATED : 27/10/2017 S.GANGADHARA RAO, SR.PS %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. +,-. / THE APPELLANT (RESPECTIVE ASSESSEE) 2. /0 -. / THE ASSESSEE. 3. 1 1 2%(+,3 / THE CIT, MUMBAI. 4. 1 1 2% / CIT(A)- , MUMBAI, 5. 45 /%!', 1 +,( +' 6, & / DR, ITAT, MUMBAI 6. 7# 8& / GUARD FILE. / BY ORDER, 04,% /% //TRUE COPY// / (DY./ASSTT. REGISTRAR) & / ITAT, MUMBAI