M/s. Sidharth Soya Products Pvt. Ltd., Haryana V. The DCIT 1(1), Bhopal

ITA 114/IND/2014

• Counselvise Citation: 11422714 RSA 2014
• Duration Of Justice: 1 year(s) 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 08-10-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 10-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJAY K CHHAJED
• Assessee Lawyers: R A VERMA
• Keywords: Business income; Depreciation
• Section: 80HHC; 115JB; 147; 148; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI B.C.MEENA, ACCOUNTANT MEMBER I.T.A.NO. 114 /IND/2014 A.Y : 2002 - 03 M/ S. SIDHARTH SOYA PRODUCTS PVT.LTD.,(NOW M/S.ADM AGRO INDUSTRIES KOTA & AKHOLA PVT.LTD.), DY. CIT, 1(1) BHOPAL GURGAON VS APPELLANT RESPONDENT PAN NO. AABCS9646L DEPARTMENT BY : SHRI AJAY K. CHHAJED, ADV. ASSESSEE BY : SHRI R. A. VERMA, DR O R D E R PER D. T. GARASIA, J.M. TH IS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF DATE OF HEARING : 08 . 10.2015. DATE OF PRONOUNCEMENT : 01 .1 2 .2015 M/S.SIDHARTH SOYA PRODUCTS P.LTD VS. DCIT, 1(1), BH OPAL. I.T.A.NO. 114/IND/2014 A.Y. 2002-03. 2 2 LD. CIT(A) - I, BHOPAL, DATED 6.11.2013, CONFIRMING THE PENALTY OF RS. 3,40,000/- U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF AGRO BAS ED INDUSTRY HAVING SOLVENT EXTRACTION PLANT AND REFINE RY. THE ASSESSEE FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2002-03 ON 28.10.2002 DECLARING INCOME OF RS. 42,30,741/- A FTER SETTING OFF BROUGHT FORWARD BUSINESS LOSS AND DEPRECIATION. THE ASSESSEE COMPANY HAS SHOWN INCOME U/S 115JB OF RS. 1,07,47,664/-. THE RETURN WAS PROCESSED U/S 143(1) ON 21.03.2003. THE CASE WAS RE-OPENED U/S 147 BY ISSUI NG NOTICE U/S 148 AND RE-ASSESSMENT U/S 147/143(3) WAS COMPLE TED VIDE ORDER DATED 20.03.2006 DETERMINED TAXABLE INCOME OF RS. 50,86,889/-, AFTER DISALLOWING THE CLAIM OF DEDUCTI ON U/S 80HHC TO THE EXTENT OF RS. 8,56,148/- AND DEEMED IN COME U/S 115JB WAS TAKEN AT RS. 1,16,03,812/-. THE AO NOTICE D THAT THE ASSESSEE HAD CLAIMED DEDUCTION U/S 80HHC OF RS. 30, 27,846/-. HOWEVER, IT WAS NOTICED THAT ASSESSEE WAS HAVING OT HER INCOME TO THE TUNE OF RS. 47,57,465/- WHICH INCLUDED RENT, DIVIDEND, M/S.SIDHARTH SOYA PRODUCTS P.LTD VS. DCIT, 1(1), BH OPAL. I.T.A.NO. 114/IND/2014 A.Y. 2002-03. 3 3 MIS C . I NCOME, INTEREST ETC. AND THE ASSESSEE HAD NOT REDUC ED 90% OF THESE RECEIPTS FOR COMPUTING PROFITS OF THE BUSINESS FOR CALCULATING DEDUCTION U/S 80HHC. THE AO, ACCORDINGL Y, REVISED THE ALLOWABLE DEDUCTION U/S 80HHC(3) AT RS. 21,71,6 98/- AND, THUS, DISALLOWED THE DEDUCTION U/S 80HHC TO THE TUN E OF RS. 8,56,148/- ( RS. 30,27,846/- (-) RS. 21,71,698/- ). THE AO ALSO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT ON DISALLOWANCE OF DEDUCTION U/S 80HHC TO THE EXTENT O F RS. 8,51,146/- FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. 3. THE LD. AUTHORIZED REPRESENTATIVE FILED A WRITTE N SUBMISSION, WHICH READS AS UNDER :- IT IS A SETTLED PROPOSITION OF LAW THAT PENALTY PROCEEDINGS AND ASSESSMENT PROCEEDINGS ARE SEPARATE AND MERELY BECAUSE A DISALLOWANCE HAS BEEN MADE IN THE QUANTUM PROCEEDINGS DOES NOT IPSO FACTO LEAD TO AN INFERENCE OR CONCLUSION THAT THE ASSESSEE IS LIABLE TO BE PENALIZED ON SUCH M/S.SIDHARTH SOYA PRODUCTS P.LTD VS. DCIT, 1(1), BH OPAL. I.T.A.NO. 114/IND/2014 A.Y. 2002-03. 4 4 ADDITIONS MADE IN THE QUANTUM PROCEEDINGS. PENALTY IS TO BE LEVIED ONLY IF AN INCOME HAS EITHER BEEN CONCEALED OR INACCURATE PARTICULARS HAVE BEEN FURNISHED IN RESPECT OF ANY INCOME. ON THE GIVEN FACTS, IT WOULD BE NOTED THAT THE ASSESSEE MADE A CLAIM U/S BOHHC AMOUNTING TO RS.30.27.846/-. HOWEVER, THE ASSESSING OFFICER IN HIS WISDOM REDUCED SUCH CLAIM TO RS.21,71,698/-. THE DIFFERENCE AROSE ON ACCOUNT OF VARIOUS ITEMS OF INCOMES AS IDENTIFIED IN THE ASSESSMENT ORDER, 90% OF WHICH ACCORDING TO THE ASSESSING OFFICER WERE TO BE REDUCED FROM THE ELIGIBLE PROFITS FOR TH E PURPOSE OF SECTION 80HHC. SUCH VIEW OF THE ASSESSING OFFICER HAS BEEN UPHELD BY THE HIGHER AUTHORITIES. THE FACT THAT THESE ITEMS OF RECEIPTS WERE EARNED BY THE ASSESSEE AND WERE INCLUDED AS BUSINESS INCOME AND MOST OF WHICH WERE ALSO M/S.SIDHARTH SOYA PRODUCTS P.LTD VS. DCIT, 1(1), BH OPAL. I.T.A.NO. 114/IND/2014 A.Y. 2002-03. 5 5 TAXED AS BUSINESS INCOME IS NOT IN DISPUTE. THE ONLY DISPUTE IS WHETHER SUCH ITEMS WERE TO BE INCLUDED/ELIGIBLE FOR THE BENEFIT OF SECTION 80HHC OR NOT. ACCORDING TO THE ASSESSEE, ALL SUCH ITEMS AROSE PURELY OUT OF BUSINESS TRANSACTIONS OF THE ASSESSEE. THE EXPORT INCENTIVES RECEIVED CLEARLY FA LL UNDER SECTION 28 OF THE INCOME TAX ACT AND ARE TREATED AS BUSINESS INCOME. HOWEVER, A DIFFERENTIAL TREATMENT TO SUCH EXPORT EXPENDITURE HAS BEEN PRESCRIBED BY THE FINANCE ACT RETROSPECTIVELY FROM 2005 ONWARD. INSURANCE CLAIM RECEIVED IS ALSO ANOTHER ITEM WHICH ARISE OUT OF BUSINESS TRANSACTIONS AND HAS BEEN TAXED AS BUSINESS INCOME EVENTUALLY. SIMILAR IS THE CASE OF LIQUIDATED DAMAGES AND SALES TAX REFUND RECEIVED. ALL SUCH RECEIPTS HAVE ARISEN OUT OF THE BUSINESS TRANSACTIONS UNDERTAKEN BY THE ASSESSEE AND HAVE M/S.SIDHARTH SOYA PRODUCTS P.LTD VS. DCIT, 1(1), BH OPAL. I.T.A.NO. 114/IND/2014 A.Y. 2002-03. 6 6 GONE TO MAKEUP THE TOTAL BUSINESS INCOME. THERE IS NO DISPUTE ON THAT. THE NATURE O F THESE RECEIPTS CLAIMED BY THE ASSESSEE IS NOT IN DISPUTE. THAT THE ASSESSEE IS ENTITLED TO CLAIM U/S 80HHC IS ALSO NOT IN DISPUTE AND A MODIFIED/REDUCED CLAIM HAS BEEN ALLOWED TO THE ASSESSEE U/S 80HHC. THE ONLY DISPUTE, AS ALREADY STATED, IS WITH REGARD TO THE ITEMS OF INCOME, 90% OF WHICH WERE REQUIRED TO BE REDUCED AS PER THE OPINION OF ASSESSING OFFICER. HOWEVER, ACCORDING TO THE ASSESSEE, ALL SUCH RECEIPTS WERE ELIGIBLE FOR THE BENEFIT U/S 80HHC. THE COMPUTATION OF CLAIM U/S 80HHC HAD BEEN CERTIFIED BY A CHARTERED ACCOUNTANT WHO HAD ALSO IN HIS WISDOM AND OPINION CERTIFIED THESE RECEIPTS TO BE ELIGIBLE FOR THE BENEFIT/REDUCTION U/S 80HHC. THE ASSESSEE HAS A LEGAL RIGHT TO MAKE A CLAIM, WHICH ACCORDING TO THE ASSESSEE, IT IS ELIGIBLE TO. M/S.SIDHARTH SOYA PRODUCTS P.LTD VS. DCIT, 1(1), BH OPAL. I.T.A.NO. 114/IND/2014 A.Y. 2002-03. 7 7 MERELY BECAUSE SUCH CLAIM HAS BEEN NEGATED BY THE DEPARTMENT DOES NOT PUT IT IN THE CATEGORY CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS IN RESPECT OF ANY INCOME. 4. THE LD. AUTHORIZED REPRESENTATIVE FURTHER RELIED UP ON THE DECISIONS, OF HON'BLE MADRAS HIGH COURT IN THE CAS E OF CIT VS. CAPLIN POINT LABORATORIES LIMITED, 2007) 293 ITR 52 4 (MAD) AND MUMBAI BENCH IN THE CASE OF STRIDES ARCOLAB LIMITED VS. ACIT,(2011) 40 SOT 398 (MUMBAI E BENCH), ACIT VS. P ERFECT FORGINGS, (2011) 143 TTJ 117, I.T.A.T., CHANDIGARH B BENCH, AND CIT VS. ZOOM COMMUNICATION (P) LIMITED, (2010) 327 ITR 0510 (DEL). THE LD. AUTHORIZED REPRESENTATIVE FINAL LY CONCLUDED THAT IN VIEW OF LEGAL POSITION AVAILABLE ON THIS IS SUE, NO PENALTY CAN BE LEVIED ON THE ASSESSEE AND PENALTY HAVING BE EN LEVIED IN A MECHANICAL AND ROUTINE MANNER IS REQUESTED TO BE CANCELLED. 5. THE LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIE S BELOW. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PAR TIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT M/S.SIDHARTH SOYA PRODUCTS P.LTD VS. DCIT, 1(1), BH OPAL. I.T.A.NO. 114/IND/2014 A.Y. 2002-03. 8 8 THE ISSUE IN CONTROVERSY IS COVERED BY THE DECISION OF HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. CAPLIN POI NT LABORATORIES LIMITED (SUPRA), WHEREIN THE HON'BLE M ADRAS HIGH COURT HAS HELD THAT MERE REJECTION OF CLAIM OF ASSE SSEE U/S 80HHC BY RELYING ON DIFFERENT INTERPRETATION DID NO T AMOUNT TO CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME AND THE PENALTY U/S 271(1)(C) CANNOT BE LEVIED. WE, RESPECTFULLY FOLLOWING THE DECISION OF HON'BLE MADRAS HIGH COURT (SUPRA), DELETE THE PENALTY. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLO WED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 1 ST DECEMBER, 2015. SD/- (B. C. MEENA) ACCOUNTANT MEMBER SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 1 ST DECEMBER, 2015. M/S.SIDHARTH SOYA PRODUCTS P.LTD VS. DCIT, 1(1), BH OPAL. I.T.A.NO. 114/IND/2014 A.Y. 2002-03. 9 9 CPU* 09.19