TVS Motor Company Ltd., CHENNAI V. ACIT, CHENNAI

ITA 1119/CHNY/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96653 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 05-11-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 12-05-2015
• Court: TRIBUNAL
• Department Lawyers: K RADHAKRISHNAN
• Assessee Lawyers: SAROJ PARIDA
• Keywords: Depreciation; Additional depreciation; Bonafide belief; Revised return
• Section: 143(3); 115JB; 32

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . , . , BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI DUVVURU R L REDDY , JUDICIAL MEMBER I.T.A.NO S . 1118 AND 1119 /MDS/2015 ASSESSMENT YEAR S : 20 0 7 - 08 AND 2004 - 05 M/S. TVS MOTOR COMPANY LTD., NO. 29, HADDOWS ROAD, CHENNAI 600 0 06 . [PAN: A A A C S 7032B ] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX , CO MPANY (CORPORATE) RANGE 3(1), CHENNAI 600 034 . ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI SAROJ PARIDA, ADVOCATE / RESPONDENT BY : SHRI K. RADHAKRISHNAN , J CIT / DATE OF HEARING : 0 5 . 11 .201 5 / DATE OF P RONOUNCEMENT : 31 . 1 2 .201 5 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : BOTH THE APPEAL S FILED BY THE SAME ASSESSEE ARE DIRECTED AGAINST DIFFERENT ORDER S OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 11 , CHENNAI , BOTH DATED 2 4 . 0 2 . 20 1 5 RELEVANT TO THE ASSESSMENT YEAR 200 7 - 08 AND 2004 - 05. THE ONLY COMMON GROUND RAISED IN BOTH THE APPEALS RELATES TO CONFIRMATION OF LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT] . I.T.A. NO S . 1 118 & 1119 /M/ 15 2 2. BRIEF FACTS OF THE CAS E ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND SALE OF TWO WHEELERS AND FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007 - 08 ON 31.10.2007 DECLARING A TOTAL INCOME OF .68,03,86,578/ - UNDER SECTION 115JB OF THE ACT. LATER A REVISED RETURN OF INCOME WAS FILED ON 31.03.2009 ADMITTING A TOTAL INCOME OF .73,47,51,524/ - . THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMPLETED ON 24.12.2009 BY MAKING CERTAIN ADDITIONS/D ISALLOWANCES. SUBSEQUENTLY, THE ASSESSING OFFICER HAS INITIATED PENALTY PROCEEDINGS AND A NOTICE UNDER SECTION 274 R.W.S. 271(1)(C) OF THE ACT WAS ISSUED ON 29.12.2009. AGAINST THE ORDER UNDER SECTION 143(3) OF THE ACT, THE ASSESSEE PREFERRED AN APPEAL BEF ORE THE LD. CIT(A) AND THE APPEAL WAS DISPOSED OFF BY THE LD. CIT(A) VIDE HIS ORDER DATED 21.02.2011 DECIDING CERTAIN ISSUES IN FAVOUR OF THE REVENUE AND SOME ISSUES IN FAVOUR OF THE ASSESSEE. 3. DURING THE COURSE OF PENALTY PROCEEDINGS, THE ASSESSING O FFICER HAS OBSERVED THAT THE ASSESSEE HAS CLAIMED ADDITIONAL DEPRECIATION AMOUNTING TO .1,85,93,843/ - IN RELATION TO ASSETS INSTALLED IN THE PREVIOUS YEAR PERTAINING TO THE ASSESSMENT YEAR 2006 - 07 AND CLAIMED ADDITIONAL DEPRECIATION SINCE THE NEW ASSETS W ERE PUT TO USE FOR MORE THAN 180 DAYS. AGAIN, THE ASSESSEE HAS CLAIMED THE BALANCE ADDITIONAL DEPRECIATION @ 50% IN THE NEXT FINANCIAL YEAR 2006 - 07 RELEVANT TO THE ASSESSMENT YEAR 2007 - 08 I.E., THE YEAR UNDER APPEAL. HENCE, THE ASSESSING OFFICER HAS TAKEN THE VIEW I.T.A. NO S . 1 118 & 1119 /M/ 15 3 THAT THE ASSETS WERE NO LONGER NEW TO THE ELIGIBLE FOR ADDITIONAL DEPRECIATION AND FORM PART OF THE OPENING WRITTEN DOWN VALUE OF THE RESPECTIVE BLOCK OF ASSETS AND HELD THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS AND INCOME CHARGEABLE TO TAX HAS BEEN CONCEALED. ACCORDINGLY, HE LEVIED A PENALTY OF .62,58,687/ - BEING 100% OF TAX SOUGHT TO BE EVADED UNDER SECTION 271(1)(C) OF THE ACT ON 29.03.2012. 4. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) AND BY RELYING VARIOU S CASE LAW, FILED A WRITTEN SUBMISSIONS AND ARGUED THAT IF THE ISSUE IS DEBATABLE LEGAL ISSUE AND TWO VIEWS ARE POSSIBLE, THERE CANNOT BE ANY LEVY OF PENALTY. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, BY FOLLOWING THE DECISION OF THE TRIBUNAL IN T HE CASE OF BRAKES INDIA LTD. IN 249 & 1166/MDS/2010 DATED 06.01.2012, THE LD. CIT(A) HAS CONFIRMED THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. 5. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AND THE LD. COUNSEL FOR THE AS SESSEE HAS SUBMITTED THAT THE ASSESSEE, IN THE TAX AUDIT REPORT SUBMITTED ALONG WITH THE RETURN OF INCOME, HAS CLEARLY DISCLOSED THE CLAIM OF BALANCE ADDITIONAL DEPRECIATION AND HENCE, THE ASSESSEE HAS NOT CONCEALED ANY FACTS AND OUGHT NOT TO HAVE LEVIED T HE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. BY RELYING VARIOUS DECISIONS, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THE ISSUE IS SQUARELY COVERED BY THE DECISION OF I.T.A. NO S . 1 118 & 1119 /M/ 15 4 THE TRIBUNAL IN THE CASE OF ACIT V. M.M. FORGINGS IN I.T.A. NO. 1554/MDS/2010 DATED 04.02.2011. 6. ON THE OTHER HAND, THE LD. DR HAS STRONGLY SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 7. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ISSUE RAISED BEFORE US RELATES TO LEVY OF PENALTY ON A CLAIM OF ADDITIONAL DEPRECIATION UNDER S ECTION 32(1)(IIA) OF THE ACT, WHICH WAS DISALLOWED BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A) . ON SIMILAR SET OF FACTS, THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ACIT V. M.M. FORGINGS (SUPRA), THE TRIBUNAL HAS OBSERVED AS UNDER: 8. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. WHAT WE NOTE AT THE FIRST INSTANCE IS THAT ASSESSEE HAD FILED FORM NO.3AA WHICH IS A CERTIFICATE THAT HAS TO BE GIVEN BY A CHARTERE D ACCOUNTANT FOR ANY CLAIM OF ADDITIONAL DEPRECIATION. RULE 5A OF INCOME - TAX RULES, 1962 HAS PRESCRIBED THIS FORM NO.3AA. 9. THIRD PROVISO TO CLAUSE (IIA) OF SECTION 32(1) IS REPRODUCED HEREUNDER: - PROVIDED ALSO THAT NO DEDUCTION SHALL BE ALLOWED UNDER CLAUSE (A) OR, AS THE CASE MAY BE, CLAUSE (B), OF THE FIRST PROVISO UNLESS THE ASSESSEE FURNISHES THE DETAILS OF MACHINERY OR PLANT AND INCREASE IN THE INSTALLED CAPACITY OF PRODUCTION IN SUCH FORM, AS MAY BE PRESCRIBED ALONG WITH THE RETURN OF INCOME, AND THE REPORT OF AN ACCOUNTANT, AS DEFINED IN EXPLANATION BELOW SUB - SECTION (2) OF SECTION 288 CERTIFYING THAT THE DEDUCTION HAS BEEN CORRECTLY CLAIMED IN ACCORDANCE WITH THE PROVISIONS OF THIS CLAUSE. I.T.A. NO S . 1 118 & 1119 /M/ 15 5 RULE 5A OF INCOME - TAX RULES, 1962 HAS PRESCRIBED FORM NO.3AA AS THE FORM IN WHICH THE REPORT HAS TO BE FURNISHED BY AN ASSESSEE. IF WE HAVE A LOOK AT FORM NO.3AA, IT RAN AS FOLLOWS: - FORM NO. 3AA [SEE RULE 5A] REPORT UNDER SECTION 32(1)(IIA) OF THE INCOME - TAX ACT, 1961 1. I/WE HAVE EXAMINED THE ACCOUNTS AND RECORDS OF [NAME AND ADDRESS OF THE ASSESSEE WITH PERMANENT ACCOUNT NUMBER] RELATING TO THE BUSINESS OF MANUFACTURE OR PRODUCTION OF DURING THE YEAR ENDED ON 31ST DAY OF MARCH, .. 2. I/WE HAVE OBTAINED ALL TH E INFORMATION AND EXPLANATIONS WHICH, TO THE BEST OF MY/OUR KNOWLEDGE AND BELIEF, WERE NECESSARY FOR THE PURPOSE OF ASCERTAINING THE AMOUNT OF EXPENDITURE INCURRED BY THE ASSESSEE FOR ACQUIRING AND INSTALLING NEW PLANT AND MACHINERY IN THE NEW INDUSTRIAL U NDERTAKING/EXISTING INDUSTRIAL UNDERTAKING. 3. (A) I/WE CERTIFY THAT THE DEDUCTION TO BE CLAIMED BY ASSESSEE UNDER THE PROVISIONS OF CLAUSE (A) OF THE FIRST PROVISO TO CLAUSE (IIA) OF SUB - SECTION (1)OF SECTION 32 OF THE INCOME - TAX ACT, 1961, IN RESPECT OF THE ASSESSMENT YEAR .IS RS ..WHICH HAS BEEN DETERMINED ON THE BASIS OF NEW PLANT AND MACHINERY ACQUIRED AND INSTALLED AFTER THE 31ST DAY OF MARCH, 2002 BY THE ASSESSEE IN THE NEW INDUSTRIAL UNDERTAKING. THE SAID AMOUNT HAS BEEN WORKED OUT ON THE BASIS OF THE DETAILS GIVEN IN ANNEXURE A TO THIS FORM. (B) I/WE CERTIFY THAT THE DEDUCTION TO BE CLAIMED BY THE ASSESSEE UNDER THE PROVISIONS OF CLAUSE (B) OF THE FIRST PROVISO TO CLAUSE (IIA) OF SUB - SECTION (1)OF SECTION 32 OF THE INCOME - TAX ACT, 1 961, IN RESPECT OF THE ASSESSMENT YEAR .IS RS WHICH HAS BEEN DETERMINED ON THE BASIS OF NEW MACHINERY AND PLANT ACQUIRED AND INSTALLED BY THE ASSESSEE DURING THE COURSE OF SUBSTANTIAL EXPANSION BY WAY OF INCREASE IN INSTALLED CAPACITY O F THE INDUSTRIAL UNDERTAKING EXISTING BEFORE THE 1ST DAY OF APRIL,2002. THE SAID AMOUNT HAS BEEN WORKED OUT ON THE BASIS OF THE DETAILS IN THE ANNEXURE B TO THIS FORM. 4. I/WE, THEREFORE, CERTIFY THAT THE TOTAL DEDUCTION TO BE CLAIMED BY THE ASSESSEE UNDER CLAUSE (IIA) OF SUB - SECTION (1) OF SECTION 32 IN RESPECT OF THE ASSESSMENT YEAR IS RS IN MY/OUR OPINION AND TO THE BEST OF MY/OUR INFORMATION AND ACCORDING TO THE INFORMATION GIVEN TO ME/US, THE PARTICULARS GIVEN ABOVE ARE TRUE AND CORRECT . . SIGNED ACCOUNTANT I.T.A. NO S . 1 118 & 1119 /M/ 15 6 IF WE LOOK AT THIRD PROVISO TO CLAUSE (IIA) AS IT STOOD AT THE RELEVANT POINT OF TIME, IT CLEARLY STIPULATED THAT FURTHER DEPRECIATION OF 15% WAS TO BE ALLOWED TO AN ASSESSEE ONLY IF THERE WAS REPORT OF A CHARTERED ACCO UNTANT IN THE PRESCRIBED FORM FURNISHED BY IT ALONG WITH RETURN OF INCOME. THE PRESCRIBED FORM AS MENTIONED BY US ABOVE WAS FORMNO.3AA AND THE RELEVANT PORTION REPRODUCED ABOVE. ASSESSEE HERE HAD FILED SUCH FORM NO.3AA AND THE CLAIM OF ADDITIONAL DEPRECIAT ION UNDER SECTION 32(1)(IIA) OF THE ACT WAS BASED ON CERTIFICATE IN FORMNO.3AA GIVEN BY A CHARTERED ACCOUNTANT AND THIS HAS NOT BEEN REBUTTED BY THE REVENUE. NO DOUBT, ASSESSEE MIGHT HAVE MADE A WRONG INTERPRETATION OF SECOND PROVISO TO SECTION 32(1)(II) O F THE ACT AND CLAIMED ADDITIONAL DEPRECIATION TO FULL 15% UNDER CLAUSE (IIA) OF THE ACT. BUT, NEVERTHELESS, IT REMAINS A FACT THAT CLAIM OF ADDITIONAL DEPRECIATION WAS MADE BY IT BASED ON A CERTIFICATE ISSUED BY A CHARTERED ACCOUNTANT IN PRESCRIBED FORMAT. THAT BEING SO, WE CANNOT SAY THAT THE CLAIM MADE BY THE ASSESSEE WAS NOT BONAFIDE. NO DOUBT, APPELLATE AUTHORITY WOULD HAVE FOUND THAT THE CLAIM MADE BY THE ASSESSEE FOR FULL ADDITIONAL DEPRECIATION FOR ASSETS USED FOR LESS THAN 180 DAYS, COULD NOT BE ALL OWED AND HAD UPHELD ALLOWANCE AT7.5%. BUT, THE FACTS AND CIRCUMSTANCES OF THE CASE, AS MENTIONED ABOVE BY US, CLEARLY SHOW THAT THE CLAIM WAS WORKED OUT BY THE ASSESSEE BASED ON CERTIFICATE GIVEN BY A CHARTERED ACCOUNTANT UNDER FORM NO.3AA OF THE ACT. WE A RE OF THE OPINION THAT IN THESE CIRCUMSTANCES, CONCEALMENT COULD NOT HAVE BEEN FASTENED TO ASSESSEE. MAKING A CLAIM FOR ALLOWANCE UNDER BONAFIDE BELIEF, WHICH WAS LATER FOUND NOT SUSTAINABLE IN LAW, WOULD NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REG ARDING THE INCOME OF THE ASSESSEE. NO INFORMATION PROVIDED BY THE ASSESSEE IN RETURN WAS FOUND TO BE INACCURATE. IN TAKING THIS VIEW, WE ARE FORTIFIED BY THE DECISION OF HON'BLE APEX COURT IN THE CASE OF RELIANCE PETRO PRODUCTS P. LTD.(SUPRA). ASSESSEE COU LD NOT HAVE BEEN HELD GUILTY FOR FURNISHING INACCURATE PARTICULARS OR FOR CONCEALMENT OF INCOME. LD.CIT(APPEALS) HAS RIGHTLY DELETED THE LEVY OF PENALTY. 10. BEFORE PARTING IT WILL BE INAPPROPRIATE IF WE DO NOT MENTION THE CASE OF ZOOM COMMUNICATION (P.) LTD. (SUPRA) RELIED ON BY THE LEARNED D.R. THERE THE CLAIM OF THE ASSESSEE ITSELF HAD NO FOUNDATION. HERE, ON THE OTHER HAND, THE CLAIM OF THE ASSESSEE COULD NOT BE CONSIDERED AS ONE MADE WITHOUT ANY FOUNDATION SINCE ASSESSE E HAD ATTACHED FORM NO.3AA AS PRESCRIBED UNDER RULE 5A OF INCOME - TAX RULES, 1962 AND BASED ON SUCH CERTIFICATE CLAIMED THE ALLOWANCE. THUS, WE FIND NO REASON TO INTERFERE IN THE ORDER OF THE CIT(APPEALS). 8. IN THE CASE IN HAND, THE ASSESSEE HAS FILED TAX AUDIT REPORT ALONG WITH THE RETURN OF INCOME CLEARLY DISCLOSING THE CLAIM OF BALANCE ADDITIONAL I.T.A. NO S . 1 118 & 1119 /M/ 15 7 DEPRECIATION. THEREFORE, IT CANNOT BE HELD THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS WARRANTING LEVY OF PENALTY. RESPECTFULLY FOLLOWING THE AB OVE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL, WE ARE OF THE OPINION THAT IT IS NOT A FIT CASE TO LEVY PENALTY AND ACCORDINGLY, THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT STANDS DELETED. 9. IN SO FAR AS APPEAL FOR THE ASSESSMENT YEAR 2 004 - 05 IN I.T.A. NO. 1119 /MDS/2015 IS CONCERNED, EXCEPT OF CHANGE OF FIGURES, THE ISSUE RAISED IN THIS APPEAL IS SIMILAR ON IDENTICAL FACTS. BY FOLLOWING THE ABOVE DECISION IN I.T.A. NO. 1118/MDS/2015 FOR THE ASSESSMENT YEAR 2007 - 08, THE PENALTY LEVIED UN DER SECTION 271(1)(C) OF THE ACT IS DELETED. 10 . IN THE RESULT, BOTH THE APPEAL S FILED BY THE ASSESSEE ARE ALLOWED . ORDER PRONOUNCED ON THE 31 ST DECEMBER , 2015 AT CHENNAI. SD/ - SD/ - (A. MOHAN ALANKAMONY ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 31. 1 2 .201 5 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.