Appeal details
Counselvise Citation
[2015] 140 COUNSELVISE.COM (IT) 93178 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
7 year(s) 4 month(s) 24 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
08-07-2015
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
F
Next Hearing Date
29-07-2015
Assessment Year
2001-2002
Appeal Filed On
14-02-2008
Judgement Text
F IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI A.D. JAIN, JM AND SHRI N.K. BILLAIYA, A M .. , . . , ./ I.T.A. NO. 4221 /MUM/2005 ( / ASSESSMENT YEAR : 2001-2002 TATA COMMUNICATIONS LTD., (FORMERLY VIDESH SANCHAR NIGAM LTD.), VIDESH SANCHAR BHAVAN, MAHATMA GANDHI ROAD, FORT, MUMBAI 400 001. / VS. ADDL. COMMISSIONER OF INCOME TAX RANGE 1(3), AAYAKAR BHAVAN, 5 TH FLOOR, MAHARSHI KARVE ROAD, MUMBAI 400 020. ./ PAN : NOT AVAILABLE ( ! / APPELLANT ) .. ( '# ! / RESPONDENT ) ./ I.T.A. NO. 4219 /MUM/2005 ( / ASSESSMENT YEAR : 2001-2002 DY. COMMISSIONER OF INCOME TAX RANGE 1(3), ROOM NO. 540, AAYAKAR BHAVAN, 5 TH FLOOR, MAHARSHI KARVE ROAD, MUMBAI 400 020. / VS. VIDESH SANCHAR NIGAM LTD.), VIDESH SANCHAR BHAVAN, MAHATMA GANDHI ROAD, FORT, MUMBAI 400 001. ./ PAN : NOT AVAILABLE ( ! / APPELLANT ) .. ( '# ! / RESPONDENT ) ITA 4221/ M/05, ITA 4219/M/05, ITA 1107/M/0 8 & 1835/M/08 2 ./ I.T.A. NO. 1107 /MUM/2008 ( / ASSESSMENT YEAR : 2001-2002 TATA COMM UNICATIONS LTD., (FORMERLY VIDESH SANCHAR NIGAM LTD.), VIDESH SANCHAR BHAVAN, MAHATMA GANDHI ROAD, FORT, MUMBAI 400 001. / VS. ASST. COMMISSIONER OF INCOME TAX RANGE 1(3), AAYAKAR BHAVAN, 5 TH FLOOR, MAHARSHI KARVE ROAD, MUMBAI 400 020. ./ PAN : AAACV2808C ( ! / APPELLANT ) .. ( '# ! / RESPONDENT ) ./ I.T.A. NO. 1835 /MUM/2008 ( / ASSESSMENT YEAR : 2001-2002 ASST. COMMISSIONER OF INCOME TAX RANGE 1(3), ROOM NO. 540/564, AAYAKAR BHAVAN, 5 TH FLOOR, MAHARSHI KARVE ROAD, MUMBAI 400 020. / VS. VIDESH SANCHAR NIGAM LTD.), LOKMANYA VIDESH SANCHAR BHAVAN, KASHINATH DHRU MARG, OPP. KIRTI COLLEGE, PRABHADEVI, MUMBAI 400 028. ./ PAN : AAACV2808C ( ! / APPELLANT ) .. ( '# ! / RESPONDENT ) A SSESSEE BY SHRI DINESH VYAS R E VENUE BY : SHRI G.M. DOSS $ % & ' ( ) / DATE OF HEARING : 01-07-2015 *+,- ' ( ) / DATE OF PRONOUNCEMENT : 08-07-2015 [ ITA 4221/ M/05, ITA 4219/M/05, ITA 1107/M/0 8 & 1835/M/08 3 . / O R D E R PER A.D. JAIN, J.M . : .. , THESE APPEALS HAVE BEEN FILED BY ASSESSEE AND REVEN UE. ITA NO. 4221/MUM/2005, ASSESSEES APPEAL FOR A.Y. 2001-02, ITA NO. 4219/MUM/2005, DEPARTMENTS APPEAL FOR A.Y. 2001-02 , ITA NO. 1107/MUM/2008, ASSESSEES PENALTY APPEAL FOR A.Y. 2 001-02, AND ITA NO. 1835/MUM/2008, DEPARTMENTS PENALTY APPEAL FOR A.Y. 2001-02. FIRST, WE SHALL TAKE UP ASSESSEES APPEAL IN ITA NO . 4221/MUM /2005 FOR A.Y. 2001-02. 2. AS PER GROUND NO. 1.1, THE LD. CIT(A) HAS ERRED IN HOLDING THAT IN THE COMPUTATION OF ITS BUSINESS INCOME, THE ASSESSEE WA S NOT ENTITLED TO DEDUCTION OF RS. 5.17 CRORES IN RESPECT OF LOSS IN THE VALUE OF SHARES OF ICO GLOBAL HOLDINGS LTD. 3. THIS ISSUE, IT IS SEEN, STANDS DECIDED AGAINST T HE ASSESSEE BY THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR A.Y. 2000-0 1, IN ITA NO. 4220/MUM/2005, VIDE ORDER DATED 7-3-2014, HOLDING A S FOLLOWS; ..IN THE CASE IN HAND THE PURPOSE OF INVESTMEN T AT THE MOST CAN BE SAID FOR ACQUIRING OR HAVING ACCESS TO THE N EW ADVANCED TECHNOLOGY IN THE MOBILE TELECOMMUNICATION SYSTEM, WHICH COULD BE TREATED AS ACQUISITION OF A NEW AND MODERN PROFIT M AKING APPARATUS. THE LOSS SUFFERED DUE TO THE DEVALUATION OF THE INV ESTMENT IS ON CAPITAL ACCOUNT. IN VIEW OF THE ABOVE DISCUSSION, WE DO NO T FIND ANY ERROR OR ILLEGALITY IN THE ORDER OF LD. CIT(A) QUA THIS ISSU E. (PAGE 27 OF THE ORDER) 4. THE FACTS REMAINING THE SAME, NO DEVIANCE IS REQ UIRED TO BE MADE FROM THE AFORESAID TRIBUNAL ORDER FOR A.Y. 2000-01. THER EFORE, FOLLOWING THE ORDER OF THE CO-ORDINATE BENCH, GROUND NO. 1.1 IS REJECTED. ITA 4221/ M/05, ITA 4219/M/05, ITA 1107/M/0 8 & 1835/M/08 4 5. THE ASSESSEE HAS RAISED AN ALTERNATIVE GROUND TH AT THE LOSS ON THE SHARES OF ICO GLOBAL HOLDING LTD. IS ADMISSIBLE AS A CAPITAL LOSS. TO THIS, THE LD. D.R. HAS OBJECTED THAT SUCH ALTERNATIVE GROUND WAS NEVER TAKEN UP EARLIER AT ANY STAGE, AND THAT THEREFORE, IT IS NOT PERMISS IBLE TO BE TAKEN NOW. IT HAS BEEN REQUESTED THAT, ACCORDINGLY, THIS ALTERNATIVE CLAIM BE NOT ENTERTAINED. 6. IN THIS REGARD, IT IS NOT CORRECT TO SAY THAT TH IS CLAIM WAS NEVER MADE BY THE ASSESSEE EARLIER. IN FACT, AS POINTED OUT ON BE HALF OF THE ASSESSEE, IT WAS MADE AT THE VERY FIRST INSTANCE, I.E., IN THE RETUR N OF INCOME, BY WAY OF NOTES TO THE RETURN. FURTHER, IT WAS ALSO MADE BEFORE THE A.O. THE A.O. DEALT WITH IT IN THE ASSESSMENT ORDER FOR A.Y. 2000-01, VIDE PARA NOS. 4.5, 4.6 AND 4.15 TO 4.20, HOLDING THE LOSS TO BE A CAPITAL LOSS COVERED UNDER SECTIONS 45, 60, 49 OF THE ACT. FURTHER, IT WAS ALSO MADE BEFORE THE LD. CIT(A) BY WAY OF WRITTEN SUBMISSION DTD. 12-11-2003, REQUESTING THE LD. CIT( A) TO ALLOW THE CAPITAL LOSS. THIS CLAIM HAS ALSO BEEN CONSIDERED BY THE LD . CIT(A), THOUGH IT WAS REJECTED. THEREFORE, IT IS NOT AN ALTOGETHER NEW CL AIM AND IT EMANATES FROM THE ORDERS UNDER APPEAL. AS SUCH, THE ADDITIONAL GROUN D OF APPEAL RAISED IN THIS REGARD, IS ADMITTED. 7. APROPOS THE MERITS OF THIS ADDITIONAL GROUND, TH E ASSESSEE MAINTAINED THIS TRANSACTION IS COVERED UNDER THE PROVISIONS OF SECTION 46 OF THE ACT. THE LD. CIT(A) HAS HELD IT TO BE A CASE OF LIQUIDATION, TO WHICH, THE PROVISIONS OF SECTION 46(2), PERTAINING TO CAPITAL GAINS ON DISTR IBUTION OF ASSETS BY COMPANIES IN LIQUIDATION, APPLY. IT HAS BEEN SO HE LD IN VIJAY KUMAR BUDHIA VS. CIT, 204 ITR 355 (SC). 8. FURTHER, TRANSFER WITHIN THE MEANING OF SECTION 2(47) OF THE ACT IS AN INCLUSIVE TERM, INCLUDING EXTINGUISHMENT OF ANY RIG HT IN AN ASSET, AS HELD, INTER ALIA, IN CIT VS. COLLIS, 248 ITR 323 (SC), KARTHIKEYA V. SARABHAI VS. CIT, 228 ITR 163 (SC), SATH GWALDAS MATHURADAS MO HATA TRUST VS. CIT, 165 ITR 620 (BOM)(HC) AND DCIT VS. BPL SANYO, 312 ITR 63 (KAR)(HC). ITA 4221/ M/05, ITA 4219/M/05, ITA 1107/M/0 8 & 1835/M/08 5 FURTHER, RELINQUISHMENT IS ALSO A TRANSFER U/S 2(47 )(1)(I),AS IS EXCHANGED. THE LD. CIT(A) HAS HIMSELF HELD IT TO BE A CASE RELATIN G TO LIQUIDATION (PAGE 9, LAST LINE OF THE IMPUGNED ORDER). HOWEVER, THE LD. CIT( A) HAS NOT CONSIDERED THAT THE SHARES OF I.C.O. GLOBAL HOLDINGS LTD. WERE ACTU ALLY TRANSFERRED. THE LOSS WAS ON INVESTMENT IN THE SHARES. THE SHARES WERE RE CEIVED FROM THE COMPANY/LIQUIDATOR, AS NOTED BY THE LD. CIT(A). THE REFORE, WE HOLD THAT THE LOSS IS A CAPITAL LOSS. PERTINENTLY, THE ISSUE RAIS ED BY THE ASSESSEE THAT IT WAS A BUSINESS LOSS STANDS DECIDED AGAINST THE ASSESSEE BY THE TRIBUNAL ON THE CASE FOR A.Y. 2000-01. 9. AS PER GROUND NO.2, THE LD. CIT(A) ERRED IN DENY ING THE CLAIM MADE U/S 80IA OF THE ACT, IN RESPECT OF EARTH STATION. THE A.O. MADE THE DISALLOWANCE ON THE BASIS OF A SIMILAR DISALLOWANCE MADE FOR A.Y . 1996-97. THE LD. CIT(A) CONFIRMED THE SAME. 10. THIS ISSUE STANDS CONSISTENTLY DECIDED AGAINST THE ASSESEE BY THE TRIBUNAL FOR THE ASSESSMENT YEARS 1996-97 TO 2000-0 1. THEREFORE, THE FACTS REMAINING THE SAME FOR THE YEAR UNDER CONSIDERATION ALSO, THIS ISSUE IS DECIDED AGAINST THE ASSESSEE. 11. THE ASSESSEE HAD ALSO CLAIMED DEDUCTION U/S 80I A OF THE ACT IN RESPECT OF INTERNET. IT IS SEEN THAT FOR ASSESSMENT YEARS 1999-2000 AND 2000-01, THE TRIBUNAL HAS SET ASIDE THIS ISSUE TO THE FILE OF LD . CIT(A). HERE ALSO, THE FACTS REMAINING THE SAME, AND IN KEEPING IN VIEW THE SAID APPEAL TRIBUNAL ORDER, THIS ISSUE IS REMITTED TO THE FILE OF LD. CIT(A), T O BE DECIDED AFRESH ON AFFORDING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 12. GROUND NO. 3 STATES THAT THE LD. CIT(A) ERRED I N CHARGING INTEREST U/S 234D OF THE ACT. THIS ISSUE STANDS DECIDED AGAINST THE ASSESSEE BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF C IT VS. INDIAN OIL CORPORATION LTD., 210 TAXMANN 466 (BOM.) THEREFORE , RESPECTFULLY FOLLOWING ITA 4221/ M/05, ITA 4219/M/05, ITA 1107/M/0 8 & 1835/M/08 6 THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COU RT IN THE CASE OF INDIAN OIL CORPORATION LTD. (SUPRA), GROUND NO. 3 IS REJECTED . 13. THE ASSESSEE HAS MADE AN ALTERNATIVE CLAIM THAT THE COMPUTATION OF INTEREST U/S 234D IS INCORRECT AND THAT INTEREST U/ S 244A SHOULD BE EXCLUDED. RELIANCE IN THIS REGARD HAS BEEN PLACED ON THE DECI SION OF THE MUMBAI BENCH OF THE ITAT IN ITA NO. 4962/MUM/2013, FOR A.Y. 1990 -91, DATED 22-10-2014, IN THE CASE OF TATA COMMUNICATIONS LTD., THE MUMBAI ITAT DECISION DATED 6- 3-2013 IN ITA NO. 6863/MUM/2011, FOR A.Y. 1997-98, IN THE CASE OF M/S TATA POWER COMPANY LTD., AND THE MUMBAI ITAT DECISI ON DATED 3-7-2013 IN ITA NO. 3977 & 3978/MUM/2012 FOR ASSESSMENT YEARS 2 002-03 AND 2005- 06, RESPECTIVELY, IN THE CASE OF TATA POWER COMPANY LTD. 14. IN THE CASE OF TATA POWER COMPANY LTD. (SUPRA), THE A.O. WAS DIRECTED BY THE ITAT TO EXCLUDE THE INTEREST ELEMENT OF REFU ND EARLIER GRANTED. IN THE CASE OF TATA COMMUNICATIONS LTD. (SUPRA), THE MATTE R WAS REMITTED TO THE FILE OF A.O. TO CALCULATE THE INTEREST IN KEEPING WITH T HE DECISION OF TATA POWER COMPANY LTD. (SUPRA). THE ASSESSEE HAS ALSO CONTEND ED THAT INTEREST SHOULD BE COMPUTED FOR THE PERIOD BEGINNING ON 1-6-2003 AN D NOT FROM THE DATE OF GRANTING OF THE REFUND, I.E., 31-3-2003. RELIANCE I N THIS RESPECT HAS BEEN PLACED ON THE DECISION IN THE CASE OF CIT VS. KERA LA CHEMICALS AND PROTEINS LTD., RENDERED BY THE HONBLE KERALA HIGH COURT ON 15-1-2010. RELIANCE HAS ALSO BEEN PLACED ON THE HONBLE PUNJAB & HARYANA HI GH COURT DECISION IN THE CASE OF CIT VS. AVERY CYCLE INDUSTRIES LTD., 56 T AXMANN.COM 459 (PUNJAB & HARYANA). 15. IN KEEPING WITH THE ABOVE CASE LAWS, THE INTERE ST U/S 244A NEEDS TO BE EXCLUDED WHILE COMPUTING THE INTEREST U/S 234B OF T HE ACT AND THIS COMPUTATION NEEDS TO BE DONE FOR THE PERIOD BEGINNI NG ON 1-6-2003. WE ORDER ACCORDINGLY AND REMIT THE ISSUE TO THE A.O. F OR THE PURPOSE, TO BE ITA 4221/ M/05, ITA 4219/M/05, ITA 1107/M/0 8 & 1835/M/08 7 DECIDED AFRESH IN ACCORDANCE WITH LAW, KEEPING IN C ONSIDERATION THE ABOVE DECISIONS. 16. AS PER GROUND NOS. 4 & 5, THE LD. CIT(A) ERRED IN CONFIRMING THE REDUCTION IN THE COST OF DEPRECIABLE FIXED ASSET BY RS. 4.28 CRORES AND IN TAXING THE NON-ADJUSTMENT OF COST OF FIXED ASSET, T HE DEPRECIATION OF RS. 1.07 CRORES ON THE AMOUNT OF RS. 4.28 CRORES. ACCORDING TO THE ASSESSEE, THESE ADJUSTMENTS HAD BEEN CARRIED OUT IN THE SUBSEQUENT YEAR. 17. HERE, IT IS NOT DISPUTED THAT THE ASSESSEE HAD, IN THE SUCCEEDING YEAR, SUO MOTU MADE THE NECESSARY ADJUSTMENTS AND REDUCTI ON IN THE COST OF DEPRECIABLE FIXED ASSET. IT IS ONLY A QUESTION OF T IME TAKEN. IN FACT, THERE IS NO REVENUE LOSS. THEREFORE, GROUND NO. 4 & 5 ARE ACCEP TED, DIRECTING THE A.O. TO MAKE NECESSARY VERIFICATION AND GRANT RELIEF ACCORD INGLY. 18. GROUND NO. 6 STATES THAT THE LD. CIT(A) HAS ERR ED IN PARTIALLY DISALLOWING CERTAIN LATE REMITTANCES OF PROVIDENT FUND (PF) CON CERNING THE CONTRIBUTION BY THE MANAGEMENT TOWARDS PF AND PENSION FUND. IT IS N OT THE CASE OF THE DEPARTMENT THAT THE PAYMENTS WERE MADE BEYOND THE D UE DATE OF FILING THE RETURN OF INCOME. SUCH CONTRIBUTIONS ARE COVERED UN DER THE PROVISIONS OF SECTION 43-B OF THE ACT, AS HELD IN THE FOLLOWING D ECISIONS:- A) CIT VS. ALOM EXTRUSION LTD. [2009], 319 ITR 306(SC) B) CIT VS. HINDUSTAN ORGANICS CHEMICALS LTD. (ITA NO. 399 OF 2012(BOM HC) C) CIT VS. GHATGE PATIL TRANSPORTS LTD. (ITA NO. 1002 & 1034 OF 2012 (BOM HC) D) EURO PRATIK ISPAT P. LTD. VS. ACIT [2013] , 27 ITR (T) 432 (MUM) (TRIB. AT PAGE 433 PARA 4. E) ONWARD TECHNOLOGIES LTD. VS. DY. CIT [2013], 26 ITR (T) 734 (MUM)(TRIB) AT PAGE 742 PARA 2. F) GAMMON INDIA LTD. VS. ACIT (ITA NO. 20/MUM/2009. G) CIT VS. SPECTRUM CONSULTANTS [2013], 215 TAXMAN 597 (KAR.)(HC) H) CIT VS. AIMIL LTD. [2009], 321 ITR 508 (DEL)(HC) I) CIT VS. MARK AUTO INDUSTRIES LTD. [2013], 358 IT R 43 (P&H)(HC) ITA 4221/ M/05, ITA 4219/M/05, ITA 1107/M/0 8 & 1835/M/08 8 J) CIT VS. KICHHA SUGAR COMPANY LTD. (2013) 35 TAXM ANN.COM 54 (UTTARAKHAND) K) CIT VS. NIPSO POLYFABRIKS LTD. (2013), 350 ITR 3 27 (HP) 19. ACCORDINGLY, GROUND NO. 6 IS ACCEPTED. 20. ACCORDING TO GROUND NO. 7, THE LD. CIT(A) ERRED IN DISALLOWING THE CLAIM OF RS. 55,64,52,500/- BEING THE AMOUNT PAID TO USE THE LAND AT BANDRA KURLA COMPLEX FOR 80 YEARS, AS A BUSINESS EXPENDITURE. AL TERNATIVELY SAYS THE ASSESSEE, THE LD. CIT(A) OUGHT TO HAVE ALLOWED AMOR TIZATION OF THE TOTAL AMOUNT PAID OVER 80 YEARS. ACCORDING TO THE ASSESSE ES SECOND ALTERNATIVE CONTENTION, THE DEPRECIATION ON THE AMOUNT PAID TO ACQUIRE THE RIGHT TO USE THE LAND FOR 80 YEARS OUGHT TO HAVE BEEN ALLOWED. T HE LD. CIT(A) CONFIRMED THE DISALLOWANCE MADE, OBSERVING, INTER ALIA, THAT ON T HE EXPIRY OF THE LEASE, THE ASSESSEE HAD THE RIGHT TO REMOVE AND APPROPRIATE TO ITSELF ALL BUILDINGS, ERECTIONS AND STRUCTURES AND MATERIALS FROM THE LAN D AND THAT ENDURING BENEFIT ACCRUED TO THE ASSESSEE; THAT THE RIGHTS WE RE IN RESPECT OF INTEREST IN LAND AND THEY COULD NOT BE EQUATED WITH KNOW-HOW, P ATENTS, COPYRIGHTS, ETC.; THAT INTEREST IN LAND WAS NOT INCLUDED IN INTANGIBL E ASSET AND BENEFIT OF DEPRECIATION COULD NOT BE GIVEN THEREON. 21. HERE, IT IS SEEN THAT THIS MATTER STANDS DECIDE D BY THE G BENCH OF THE MUMBAI TRIBUNAL AGAINST THE ASSESSEE, UNDER SIMILAR FACTS AND CIRCUMSTANCES, VIDE ORDER DATED 3-7-2013, IN THE CA SE OF M/S WADHWA & ASSOCIATES FOR A.Y. 2008-09 IN ITA NO. 695/MUM/201 2, HOLDING AS FOLLOWS: PAGE 6A TO 7A. THE ENTIRE GRIEVANCE REVOLVES AROUND THE PREMIUM P AID BY THE ASSESSEE TO M/S. MMRDA LTD. FOR THE LEASEHOLD RIGHT S ACQUIRED BY THE ASSESSEE THROUGH THE LEASE DEED DT. 22ND NOVEMBER, 2004. IT IS THE SAY OF THE REVENUE THAT THIS LEASE PREMIUM WAS LIABLE F OR DEDUCTION OF TAX AT SOURCE FAILING WHICH THE ASSESSEE IS TO BE TREAT ED AS ASSESSEE IN DEFAULT. IT IS THE SAY OF THE ASSESSEE THAT SUCH LE ASE PREMIUM IS IN THE NATURE OF CAPITAL EXPENDITURE AND THEREFORE THERE I S NO QUESTION OF DEDUCTION OF TAX AT SOURCE. FURTHER, THE SAID LEASE PREMIUM DOES NOT COME WITHIN THE PURVIEW OF THE DEFINITION OF RENT A S PROVIDED U/S. 194-1 ITA 4221/ M/05, ITA 4219/M/05, ITA 1107/M/0 8 & 1835/M/08 9 OF THE ACT. 10. WE HAVE CAREFULLY PERUSED THE LEASE DEED AS EXHIBITED FROM PAGE-1 TO 42 OF THE PAPER BOOK. A CAREFUL READ ING OF THE SAID LEASE DEED TRANSPIRES THAT THE PREMIUM IS NOT PAID UNDER A LEASE BUT IS PAID AS A PRICE FOR OBTAINING THE LEASE, HENCE IT PRECED ES THE GRANT OF LEASE. THEREFORE, BY ANY STRETCH OF IMAGINATION, IT CANNOT BE EQUATED WITH THE RENT WHICH IS PAID PERIODICALLY. A PERUSAL OF THE R ECORDS FURTHER SHOW THAT THE PAYMENT TO MMRD IS ALSO FOR ADDITIONAL BUI LT UP ARE AND ALSO FOR GRANTING FREE OF FSI AREA, SUCH PAYMENT CANNOT BE EQUATED TO RENT. IT IS ALSO SEEN THAT THE MMRD IN EXERCISE OF POWER U/S. 43 R.W. SEC. 37(1) OF THE MAHARASHTRA TOWN PLANNING ACT 1966, MR TP ACT AND OTHER POWERS ENABLING THE SAME HAS APPROVED THE PROPOSAL TO MODIFY REGULATION 4A(II) AND THEREBY INCREASED THE FSI OF THE ENTIRE G BLOCK OF BKC. THE DEVELOPMENT CONTROL REGULATIONS FOR BKC SP ECIFY THE PERMISSIBLE FSI. PURSUANT TO SUCH PROVISIONS, THE A SSESSEE BECAME ENTITLED FOR ADDITIONAL FSI AND HAS FURTHER ACQUIRE D/PURCHASED THE ADDITIONAL BUILT UP AREA FOR CONSTRUCTION OF ADDITI ONAL AREA ON THE AFORESAID PLOT. THUS THE ASSESSEE HAS MADE PAYMENT TO MMRD UNDER DEVELOPMENT CONTROL FOR ACQUIRING LEASEHOLD LAND AN D ADDITIONAL BUILT UP AREA. THE DECISIONS OF THE TRIBUNAL IN THE CASE OF M/S. NATIONAL STOCK EXCHANGE (SUPRA) AND MUKUND LTD (SUPRA) HAVE BEEN WELL DISCUSSED BY THE LD. CIT(A) IS HIS ORDER. THE DECIS ION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF KHIMLINE P UMPS LTD. (SUPRA) SQUARELY AND DIRECTLY APPLY ON THE FACTS OF THE CAS E WHEREIN THE HONBLE JURISDICTIONAL HIGH COURT HAS HELD THAT PAYMENT FOR ACQUIRING LEASEHOLD LAND IS A CAPITAL EXPENDITURE. CONSIDERIN G THE ENTIRE FACTS IN TOTALITY IN THE LIGHT OF THE JUDICIAL DECISIONS VIS --VIS PROVISIONS OF SEC. 194-1, DEFINITION OF RENT AS PROVIDED UNDER THE SAI D PROVISION, WE DO NOT FIND ANY REASON TO TAMPER OR INTERFERE WITH THE FIN DINGS OF THE LD. CIT(A) WHICH WE CONFIRM. THE FACTS REMAINING THE SIMILAR, RESPECTFULLY FOLLO WING M/S WADHWA & ASSOCIATES (SUPRA), THIS GRIEVANCE OF THE ASSESSEE IS REJECTED. 22. THE FIRST ALTERNATIVE CLAIM OF AMORTIZATION IN THIS REGARD HAS ALSO BEEN DECIDED AGAINST THE ASSESSEE IN CIT VS. KHIMLINE P UMPS LTD. 258 ITR 459 (BOM), BY THE HONBLE JURISDICTIONAL HIGH COURT, HO LDING SUCH EXPENDITURE TO THE CAPITAL IN NATURE. ACCORDINGLY, THIS ALTERNATI VE CLAIM IS ALSO REJECTED. 23. THE ASSESSEE HAS FURTHER RAISED A SECOND ALTERN ATIVE CLAIM, I.E., OF DEPRECIATION IN THIS REGARD. SINCE THE NATURE OF T HE EXPENSE HAS ALREADY BEEN HELD TO BE CAPITAL, AS ABOVE, THE A.O. IS DIRECTED TO ALLOW THE DEPRECIATION THEREON IN ACCORDANCE WITH LAW. ITA 4221/ M/05, ITA 4219/M/05, ITA 1107/M/0 8 & 1835/M/08 10 24. THE ISSUE OF ALLOWABILITY OF REPAIRS AND MAINTE NANCE EXPENSES (PRIOR DEDUCTIONS BEING EXPENSES PERTAINING TO THE YEAR UN DER CONSIDERATION), AMOUNTING TO RS. 3,41,222/- AS RAISED ON THE ADDITI ONAL GROUND STANDS DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL I N ITS CASE FOR ASSESSMENT YEARS 1997-98, 1999-2000 AND 2000-01. THE FACTS RE MAINING THE SAME, THE ISSUE OF ALLOWABILITY OF REPAIRS AND MAINTENANCE EX PENSES, I.E., PRIOR PERIOD EXPENSES BEING EXPENSES PERTAINING TO THE YEAR UNDE R CONSIDERATION, IS DECIDED IN FAVOUR OF THE ASSESSEE. 25. APROPOS, THE ISSUE OF PRIOR PERIOD EXPENSES PAI D DURING THE YEAR UNDER CONSIDERATION, THE TRIBUNAL HAS ALLOWED RELIEF TO T HE ASSESSEE VIDE ITS ORDER OF A.Y. 2000-01 (SUPRA), THEREFORE, THIS GROUND IS INF RUCTUOUS. 26. THE ASSESSEE HAS ALSO CLAIMED WRITE-BACK OF REP AIRS AND MAINTENANCE EXPENSES DISALLOWED IN A.Y. 1999-2000, SINCE THE EX PENSES RELATED TO PRIOR PERIOD. THESE EXPENSES ARE OF RS. 49,99,521/- FOR A .Y. 2000-01. UNDER SIMILAR CIRCUMSTANCES, THE A.O. SHOULD VERIFY WHETHER THIS WRITE-BACK OF REPAIR AND MAINTENANCE EXPENSES WAS ALSO SUBJECTED TO TAX FOR A.Y. 1999-2000, BEING DISALLOWED IN THE ASSESSMENT ORDER AND TO TAKE STEP S TO AVOID DOUBLE TAXATION OF THE SAME AMOUNT AS PER THE TRIBUNAL ORDER FOR A. Y. 2000-01, FOR THE YEAR UNDER CONSIDERATION ALSO, WE REMIT THE MATTER TO TH E FILE OF THE A.O. FOR MAKING A SIMILAR VERIFICATION AND TO ALLOW RELIEF A CCORDINGLY. ITA 4219/MUM/2005 FOR A.Y. 2001-02 (REVENUES APPEA L) 27. THE FIRST GROUND IN THIS APPEAL BY THE DEPARTME NT FIR A.Y. 2001-02 IS THAT THE LD. CIT(A) ERRED IN DIRECTING THE A.O. TO ALLOW DEPRECIATION OF RS. 21,02,61,421/- ON UNDERSEA FLAG CABLE SYSTEM. ITA 4221/ M/05, ITA 4219/M/05, ITA 1107/M/0 8 & 1835/M/08 11 28. THIS ISSUE HAS BEEN DECIDED IN FAVOUR OF THE AS SESSEE BY THE TRIBUNAL FOR ASSESSMENT YEARS 1997-98 TO 2000-01. IN ACCORD ANCE WITH THEREOF, GROUND NO. 1 IS REJECTED. 29. AS PER GROUND NO. 2, THE LD. CIT(A) ERRED IN DI RECTING THE A.O. TO RESTRICT THE DISALLOWANCE U/S 36(1)(VA) AND SECTION 43B OF T HE ACT TO THE CONTRIBUTION CREDITED IN THE FUNDS AFTER THE GRACE PERIOD, SPECI FIED IN THE RELEVANT STATUTES. 30. THIS GROUND IS A COUNTER GROUND TO GROUND NO. 6 TAKEN BY THE ASSESSEE ITS APPEAL AND OUR OBSERVATION THEREIN IN DECIDING THAT GROUND ARE SQUARELY APPLICABLE HERE ALSO. IN ACCORDANCE WITH THEREOF, THIS GROUND IS REJECTED. 31. FOR THE ABOVE DISCUSSION, THE ASSESSEES APPEAL IN ITA NO. 4221/MUM/2005 FOR A.Y. 2001-02 IS PARTLY ALLOWED AN D DEPARTMENTS APPEAL IN ITA NO. 4219/MUM/2005 FOR A.Y. 2001-02 IS DISMIS SED. ITA NO. 1107/MUM/2008 FOR A.Y. 2001-02 (ASSESSEES APPEAL) 32. THIS IS ASSESSEES APPEAL FOR A.Y. 2001-02 AGAI NST CONFIRMATION OF LEVY OF PENALTY U/S 271()(C) OF THE I.T. ACT. 33. THE PENALTY WAS LEVIED ON THE DISALLOWANCE OF C LAIM OF BUSINESS LOSS ON ACCOUNT OF ICO GLOBAL HOLDINGS LTD. THE LD. CIT(A) CONFIRMED THE PENALTY. A SIMILAR PENALTY FOR A.Y. 2000-01 STANDS DELETED BY THE TRIBUNAL HOLDING AS FOLLOWS:- 18.1 WE FIRST TAKE UP GROUND NO. 2 REGARDING LEVY OF PENALTY OF DISALLOWANCE OF CLAIM OF BUSINESS LOSS ON ACCOUNT OF DEVALUATION OF THE VALUE OF INVESTMENT IN ICO GLOBAL. WE HAVE HEARD THE LD. SENIOR COUNSEL AS WELL AS LD. DR AND CAREFULLY PERUSED THE RELEVANT MATERIAL ON RECORD. THOUGH, THE DISALLOWANCE OF CLAIM BEING BUSINESS LOSS HAS BEEN CONFIRMED BY US, HOWEVER, WE FIND THAT THE ISSUE INVOLVES IN THE CLAIM OF BUSINESS LOSS IS A H IGHLY DEBATABLE ONE, AND THERE IS NOTHING ON RECORD TO INDICATE THAT THIS CLAIM OF THE ASSESSEE IS ABSOLUTELY ILLEGAL, BOGUS OR FALSE. THE ASSESSEE HAS SUPPORTED ITS CLAIM WITH THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF PATNAIK CO. LT D.(SUPRA), THEREFORE, WE ARE OF THE VIEW THAT THE CLAIM OF THE ASSESSEE THOUGH N OT ALLOWABLE AS PER THE ITA 4221/ M/05, ITA 4219/M/05, ITA 1107/M/0 8 & 1835/M/08 12 PROVISIONS OF INCOME TAX ACT, HOWEVER THE SAME CANN OT BE TERMED AS BOGUS OR INHERENTLY INCORRECT CLAIM LEADING TO THE CONCLUSIO N THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME OR CONCE ALED THE PARTICULARS OF INCOME. DISALLOWANCE OF A CLAIM WHICH IS NOT FOUND BOGUS OR INHERENTLY INCORRECT OR PATENTLY UNTENABLE WOULD NOT IFSO FACT O LEAD TO THE CONCLUSION THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS O F INCOME OR CONCEALED PARTICULARS OF INCOME ATTRACTING LEVY OF PENALTY U /S 271 (1)(C). THE ASSESSEE HAS DISCLOSED ALL THE RELEVANT FACTS AND DETAILS I N RESPECT OF THE CLAIM DURING THE ASSESSMENT PROCEEDINGS AND THE CLAIM HAS BEEN S PECIFICALLY EXPLAINED THROUGH THE NOTES OF THE RETURN OF INCOME. THEREFOR E, WE FIND THAT THE PENALTY ON THE DISALLOWANCE OF CLAIM OF BUSINESS LOSS ON ACCOU NT OF WRITTEN DOWN VALUE OF SHARES OF ICO GLOBAL IN THE FACTS AND CIRCUMSTANCES OF THE CASE DOES NOT WARRANT LEVY OF PENALTY. ACCORDINGLY, WE DELETE THE PENALTY ON THIS ACCOUNT. 34. FOR PARITY OF FACTS FOR THE YEAR UNDER CONSIDER ATION ALSO, THE LEVY OF PENALTY ON THIS COUNT IS DELETED. 35. PENALTY WAS ALSO LEVIED ON DISALLOWANCE OF DEDU CTION U/S 80IA OF THE ACT ON INCOME FROM EARTH STATION UNDERTAKING. THIS PENALTY AMOUNTING TO RS. 75.56 CRORES, THE LD. CIT(A) CONFIRMED THE SAME. HE RE ALSO FOR A.Y. 2000-01, THE TRIBUNAL HAS DELETED THE PENALTY HOLDING AS FOL LOWS:- 18.2 GROUND NO. 3 IS REGARDING LEVY OF PENALTY ON DISALLOWANCE OF DEDUCTION U/S 80IA. WE HAVE HEARD LD. SENIOR COUNSEL AS WELL AS LD. DR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. SINCE THE ISSUE OF DEDUCTION U/S 80IA ON THE INTERNET INCOME HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE AND THE CLAIM OF DEDUCTION U/S 80IA HAS BEEN ALLOWED IN THE QUANTUM APPEAL. THEREFORE, THE PENALTY TO THE EXTENT OF DISALLOWANCE OF DEDUCTION U/S 80IA ON INTERNET INCOME IS NOT SUSTAINABLE AND ACCORDINGLY DELETED. AS REGA RDS THE PENALTY AGAINST THE DISALLOWANCE OF DEDUCTION U/S 80IA ON EARTHSTATION IT IS TO BE NOTED THAT THE QUESTION OF LAW INVOLVED IN THE CLAIM OF THE ASSESS EE IS A HIGHLY COMPLEXED AND DEBATABLE ONE AS IT WAS FINALLY DECIDED BY A LA RGER BENCH OF THIS TRIBUNAL. SINCE THE ISSUE WAS REFERRED TO THE LARGER BENCH (S B) OF THIS TRIBUNAL FOR ADJUDICATION WHICH ITSELF MANIFESTS THAT THERE WAS POSSIBILITY OF MORE THAN ONE VIEW ON THIS ISSUE. ACCORDINGLY, THE DISALLOWAN CE OF CLAIM WHICH INVOLVES A HIGHLY DEBATABLE ISSUE AND BASED ON THE DIFFERENCE OF OPINION WOULD NOT AMOUNT TO FURNISHING INCORRECT PARTICULARS OF INCOM E OR CONCEALMENT OF PARTICULARS OF INCOME ON THE PART OF THE ASSESSEE. HENCE LEVY OF PENALTY ON SUCH A DEBATABLE LEGAL ISSUE IS NOT WARRANTED AND A CCORDINGLY DELETED. 36. ON SIMILAR REASONING AS THAT GIVEN BY THE TRIBU NAL FOR A.Y. 2000-01, THIS PENALTY IS ALSO DELETED. ITA 4221/ M/05, ITA 4219/M/05, ITA 1107/M/0 8 & 1835/M/08 13 ITA 1835/MUM/2008 FOR A.Y. 2001-02 (REVENUES APPEA L) 37. THIS IS DEPARTMENTS APPEAL AGAINST THE ACTION OF LD. CIT(A) IN DELETING THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. 38. AS PER GROUND NO. 1, THE LD. CIT(A) ERRED IN DI RECTING THE A.O. TO DELETE THE PENALTY LEVIED FOR WRONG FULL CLAIM U/S 80IA OF THE ACT. HERE, FOR A.Y. 2000-01, THE TRIBUNAL DECIDED THE MATTER IN FAVOUR OF THE ASSESSEE, HOLDING AS FOLLOWS:- 19.1 WE HAVE HEARD THE LD. DR AS WELL AS LD. SENIO R COUNSEL AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE AO LEVIED THE PENALTY INTER ALIA AGAINST THE DISALLOWANCE OF HIGHER DEPRECIATION ON GATEWAY DIGITAL SWITCHES(GDS). WE HAVE SET ASIDE THE ISSUE OF HIGHE R DEPRECIATION ON GDS TO THE RECORD OF CIT(A) AND, THEREFORE, THE PENALTY ON THIS ACCOUNT DOES NOT SURVIVE. EVEN OTHERWISE THIS ISSUE OF HIGHER DEPREC IATION ON GDS IS A DEBTATABLE ISSUE AS THE QUESTION INVOLVES WHETHER G DS IS PART OF THE COMPUTER FOR THE PURPOSE FOR DEPRECIATION U/S 32 OF THE INCO ME TAX ACT. THE ASSESSEE HAS CLAIMED HIGHER DEPRECIATION IN VIEW OF THE INFO RMATION TECHNOLOGY ACT, AND SUPPORTED ITS CLAIM BY THE VARIOUS DECISIONS O F THIS TRIBUNAL, WHEREIN THE SWITCHES AND ROUTERS ARE HELD TO BE THE PART OF TH E COMPUTER FOR THE PURPOSE OF DEPRECIATION U/S 32 OF THE ACT. EVEN OTHERWISE T HERE IS NO DISPUTE ABOUT THE ASSET IN QUESTION AND THE HIGHER RATE OF DEPREC IATION IS ONLY A QUESTION OF INTERPRETATION OF DEFINITION OF THE COMPUTER. THERE FORE, WHEN THE ASSESSEE HAS DISCLOSED AND EXPLAINED ALL THE RELEVANT FACTS AND DETAILS RELEVANT TO THE CLAIM OF HIGHER DEPRECIATION ON GDS, THEN WE DO NOT FIND THAT MERELY CLAIMING A HIGHER DEPRECIATION WHICH IS OTHERWISE SUPPORTED BY THE VARIOUS DECISIONS WOULD LEAD TO THE CONCLUSION THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OR CONCEALED PARTICULARS OF INCOME. IN VIEW OF OUR FINDING IN THE QUANTUM APPEAL ON THIS ISSUE, WE ARE OF THE CONSIDE RED OPINION, THAT DISALLOWANCE OF HIGHER DEPRECIATION ON GDS SWITCHE S DOES NOT WARRANT LEVY OF PENALTY U/S 271(1)(C). ACCORDINGLY, IN THE FACTS AN D CIRCUMSTANCES OF THE CASE, WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE ORDER OF CIT(A) IN DELETING THE PENALTY ON THIS ACCOUNT AND HENCE WE DISMISS THE AP PEAL OF THE REVENUE. 39. FINDING NO DIFFERENCE IN THE FACTS FOR THE YEAR UNDER CONSIDERATION, FOLLOWING THE TRIBUNAL ORDER FOR A.Y. 2000-01, GROU ND NO. 1 RAISED BY THE DEPARTMENT IS REJECTED. 40. PENALTY WAS ALSO LEVIED FOR WRONG FULL CLAIM OF DEPRECIATION ON GDS THE EQUIPMENT. THE LD. CIT(A) DELETED THE PENALTY. THE TRIBUNAL, FOR A.Y. 2000-01 ITA 4221/ M/05, ITA 4219/M/05, ITA 1107/M/0 8 & 1835/M/08 14 HAS AGAIN DECIDED THE MATTER IN FAVOUR OF THE ASSES SEE. RESPECTFULLY FOLLOWING THAT ORDER, GROUND NO. 2 IS REJECTED. 41. PENALTY WAS ALSO LEVIED FOR WRONG FULL CLAIM OF ADVANCE RENT AS REVENUE EXPENDITURE. THE LD. CIT(A) DELETED THE PENALTY. 42. HERE, IT IS SEEN THAT THE LD. CIT(A) OBSERVED T HAT THE ISSUE OF EXPENSE BEING REVENUE OR CAPITAL WAS A DEBATABLE ISSUE. IT WAS FOUND THAT NO INACCURATE PARTICULARS HAVE BEEN FURNISHED BY THE A SSESSEE. THE CONDUCT OF THE ASSESSEE WAS FOUND TO BE BONA FIDE. THE DEPART MENT HAS NOT BEEN ABLE TO REFUTE THESE FINDINGS OF THE LD. CIT(A). FURTHER, AS DISCUSSED, WHILE DEALING WITH THE ISSUE ON MERIT IN THE QUANTUM APPEAL, THE ASSESSEE WAS FOUND TO HAVE MADE DUE DISCLOSURE IN THIS REGARD IN THE NOTE S FORMING PART OF COMPUTATION OF INCOME, WHERE THE SAID DISCLOSURE HA S BEEN MADE, NO PENALTY HAS BEEN HELD TO BE LIABLE, AS PER, INTER ALIA, THE FOLLOWING DECISION; A. CIT VS. RELIANCE PETROPRODUCTS (P) LTD. (322 ITR 15 8(SC) B. CIT VS. NALIN P. SHAH (HUF (BOM HC) (40 TAXMANN.COM 86) C. METAL ROLLING WORKS LTD. VS. CIT (339 ITR 373) (BOM ) D. NARANG INTERNATIONAL HOTELS (P) LTD. VS. DCIT (137 ITD 53) (MUM) (TM) E. KANBAY SOFTWARE INDIA (P) LTD. VS. DCIT (31 SOT 153 ) (PUNE ITAT) 43. THE A.O. ALSO LEVIED PENALTY FOR WRONG FULL CLA IM OF DEPRECIATION ON INTERCONNECT SYSTEM TAS. THE LD. CIT(A) DELETED T HE PENALTY, HOLDING THAT WHEREAS THE ASSESSEE HAD PROJECTED THE FEATURES OF THE ASSET TO CLAIM IT TO BE COMPUTER, THIS CLAIM WAS DISBELIEVED BY THE A.O., W ITHOUT SUPPLYING ANY REASONING. THE LD. CIT(A) ALSO HELD THE CONTROVERS Y TO BE EQUITABLE WITH THAT OF GDS (GROUND NO. 2 OF THIS APPEAL PERTAINS TO LEV Y OF PENALTY FOR WRONG FULL CLAIM OF DEPRECIATION ON GDS EQUIPMENT). HERE, THE CLAIM WAS NEVER SHOWN TO BE MALAFIDE. THE A.O. DID NOT ELABORATE ANY REAS ONS BY RECORDING THE FINDING IN THE ASSESSMENT ORDER AS TO WHY THE ASSES SEE WAS BEING DISBELIEVED. THE CLAIM INVITED A DIFFERENCE OF OPINION. ALL THI S DID NOT ATTRACT LEVY OF ITA 4221/ M/05, ITA 4219/M/05, ITA 1107/M/0 8 & 1835/M/08 15 CONCEALMENT OF PENALTY AND THE LD. CIT(A) HAS CORRE CTLY DELETED THE SAME. THEREFORE, GROUND NO. IS ALSO REJECTED. 44. FOR THE ABOVE DISCUSSION, THE ASSESSEES APPEAL IN ITA NO. 1107/MUM/2008 FOR A.Y. 2001-02 IS ALLOWED, WHEREAS, THE DEPARTMENTS APPEAL IN ITA NO. 1835/MUM/2008 IS DISMISSED. 45. IN THE RESULT, ITA 4221/MUM/2005, I.E., THE ASS ESASEES APPEAL IN THE QUANTUM PROCEEDING FOR A.Y. 2001-02 IS PARTLY ALLOW ED, ITA NO. 4219/MUM/2005 BEING DEPARTMENTS APPEAL IN THE QUAN TUM PROCEEDING FOR A.Y. 2001-02 IS DISMISSED, ITA NO. 1107/MUM/2008 BE ING THE ASSESEES PENALTY APPEAL FOR A.Y. 2001-02 IS ALLOWED AND ITA NO. 1835/MUM/2008 BEING DEPARTMENTS APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH JULY, 2015. . ' *+,- $ /0 1 2 08-07-2015 + ' 3& SD/- SD/- (N.K. BILLAIYA) (A.D. JAIN ) ACCOUNTANT MEMBER /J UDICIAL MEMBER / $ & MUMBAI ; 1 DATED 08-07-2015 [ %.../ R.K. R.K. R.K. R.K. , SR. PS ! ' #$%& ' &$ / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '# ! / THE RESPONDENT. 3. $ ?( () / THE CIT(A)- CONCERNED,, MUMBAI 4. $ ?( / CIT- CONCERNED, MUMBAI 5. B%C 3 '(DE , ) DE- , / $ & / DR, ITAT, MUMBAI F BENCH 6. 3 F G & / GUARD FILE. ! ( / BY ORDER, # B( '( //TRUE COPY// )/(* + ( DY./ASSTT. REGISTRAR) , / $ & / ITAT, MUMBAI
