Deputy Commissioner of Income Tax Circle-7(1)(1), Bangalore V. M/s Technotree Convergence Ltd , Gurgaon

ITA 1145/BANG/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7340 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-11-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 22-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJASHEKAR REDDY L
• Assessee Lawyers: P DINESH
• Section: 143(3); 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES B, BANGALORE BEFORE SHRI A.K.GARODIA, AM & SHRI GEORGE GEORGE K, JM ITA NO.1145/BANG/2017 : ASST.YEAR 2008-2009 DY.COMMISSIONER OF INCOME- TAX, CIRCLE 7(1)(1) BANGALORE. M/S.TECNOTREE CONVERGENCE LIMITED 394-PHASE-IV, UDHYOG VIHAR GURGAON 122 001.. PAN : AAACL7345L. (APPELLANT) VS. (RESPONDENT) APPELLANT BY : SHRI RAJASHEKAR REDDY L, CIT (DR) RESPONDENT BY : SHRI P.DINESH, ADVOCATE DATE OF HEARING : 31.10.2017 DATE OF PRONOUNCEMENT : 03.11.2017 O R D E R PER GEORGE GEORGE K, JM THIS APPEAL AT THE INSTANCE OF THE REVENUE IS DIRE CTED AGAINST THE CIT(A)S ORDER DATED 23.02.2017. THE OR DER OF THE CIT(A) ARISES OUT OF THE ORDER IMPOSING PENALTY U/S 271(1)(C) OF THE ACT. THE RELEVANT ASSESSMENT YEAR IS 2008-20 09. 2. THE SOLITARY EFFECTIVE GROUND READS AS FOLLOW:- WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE CIT(A) WAS JUSTIFIED IN LAW IN DELETING THE PENALTY LEVIED AFTER GIVING APPEAL EFFECT TO THE ORDER OF THE CIT( A), ON THE ISSUES ALLOWED IN FAVOUR OF REVENUE? 3. THE BRIEFLY STATED THE FACTS OF THE CASE ARE AS FOLLOWS:- 3.1 THE ASSESSEE IS A COMPANY. FOR THE ASSESSMENT Y EAR 2008-2009 THE RETURN OF INCOME WAS FILED ON 31.03.2 009 ITA NO.1145/BANG/2017. M/S.TECNOTREE CONVERGENCE LTD. 2 DECLARING TOTAL INCOME OF RS.45,19,912 UNDER THE NO RMAL PROVISIONS OF THE ACT AND BOOK PROFIT UNDER THE PRO VISIONS OF SECTION 115JB OF THE ACT, WERE DECLARED AT RS.20,18 ,82,080. SINCE THE AMOUNT DECLARED UNDER THE MAT PROVISION W AS HIGHER THAN THE INCOME DECLARED UNDER THE NORMAL PR OVISIONS, THE ASSESSEE PAID THE TAX UNDER THE MAT PROVISIONS. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT, BY ORDER DATED 31.12.2010, WHEREIN CERTAIN DISALLOWANCES WER E MADE. AGAINST THE ASSESSMENT ORDER, THE ASSESSEE PREFERRE D APPEAL TO THE FIRST APPELLATE AUTHORITY. THE CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 3.2 WITH REGARD TO THE ADDITIONS SUSTAINED BY THE F IRST APPELLATE AUTHORITY, THE ASSESSING OFFICER IMPOSED PENALTY AMOUNTING TO RS.31,60,854. 3.3 AGGRIEVED BY THE IMPOSITION OF PENALTY U/S 271( 1)(C) OF THE INCOME-TAX ACT, THE ASSESSEE PREFERRED APPEAL T O THE FIRST APPELLATE AUTHORITY. BEFORE THE FIRST APPELLATE AUT HORITY IT WAS SUBMITTED THAT WHILE GIVING EFFECT TO THE ORDER OF THE CIT(A), THE TAX PAYABLE UNDER THE NORMAL PROVISION WAS BELO W THE MAT PROVISIONS, AND THEREFORE, NO PENALTY CAN BE LE VIED GOING BY THE DICTUM LAID DOWN BY THE JUDGMENT OF THE HON BLE DELHI HIGH COURT IN THE CASE OF CIT V. NALWA SONS INVESTMENT LTD. REPORTED IN 327 ITR 543. THE CIT(A) FOLLOWING THE J UDGMENT OF THE HONBLE DELHI HIGH COURT AND TAKING NOTICE OF T HE BOARD CIRCULAR NO.25/2015 DATED 31.12.2015, DELETED THE P ENALTY IMPOSED U/S 271(1)(C) OF THE ACT. ITA NO.1145/BANG/2017. M/S.TECNOTREE CONVERGENCE LTD. 3 3.4 THE REVENUE BEING AGGRIEVED HAS FILED THE PRESE NT APPEAL BEFORE THE TRIBUNAL. 3.5 THE LEARNED DEPARTMENTAL REPRESENTATIVE, APART FROM RELYING ON THE GROUND RAISED, SUBMITTED THAT WITH R EGARD TO THE QUANTUM ASSESSMENT THE DEPARTMENT HAS NOT ACCEP TED THE FIRST APPELLATE AUTHORITYS ORDER AND HAS PREFE RRED FURTHER APPEAL, AND THEREFORE, IN THE EVENT THE TAX PAYABLE UNDER THE NORMAL PROVISIONS ARE HIGHER THAN THE MAT PROVISION , NECESSARILY PENALTY U/S 271(1)(C) OF THE ACT HAS TO BE IMPOSED. THE LEARNED DR ALSO REFERRED TO THE BOARD CIRCULAR NO.25/2015. 3.6 THE LEARNED AR, ON THE OTHER HAND, SUBMITTED TH AT THE ISSUE IN QUESTION IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF NALWA SONS INVESTMENT LTD. (SUPRA) . IT WAS FURTHER SUBMITTED BY THE LEARNED AR THAT THE SLP PREFERRED BY THE REVENUE AGAINST THE JUDGMENT OF THE HONBLE DELHI H IGH COURT WAS DISMISSED BY THE HONBLE SUPREME COURT (S UPRA). 4. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED T HE MATERIAL ON RECORD. THE HONBLE DELHI HIGH COURT IN THE CASE OF NALWA SONS INVESTMENT LTD.(SUPRA) HELD THAT WHEN THE TAX PAYABLE ON INCOME COMPUTED UNDER NORMAL PROCEDURE I S LESS THAN THE TAX PAYABLE UNDER THE DEEMING PROVISIONS O F SECTION 115JB OF THE ACT, THEN PENALTY U/S 271(1)(C) OF THE ACT COULD NOT BE IMPOSED WITH REFERENCE TO ADDITIONS / DISALL OWANCES MADE UNDER NORMAL PROVISIONS. SUBSEQUENTLY, THE PRO VISIONS ITA NO.1145/BANG/2017. M/S.TECNOTREE CONVERGENCE LTD. 4 OF EXPLANATION 4 TO SUB-SECTION (1) OF SECTION 271 OF THE ACT HAVE BEEN SUBSTITUTED BY FINANCE ACT, 2015, WHICH P ROVIDE FOR THE METHOD OF CALCULATING THE AMOUNT OF TAX SOU GHT TO BE EVADED FOR SITUATIONS EVEN WHERE THE INCOME DETERMI NED UNDER THE GENERAL PROVISIONS IS LESS THAN THE INCOM E DECLARED FOR THE PURPOSE OF MAT U/S 115JB OF THE ACT. THE SU BSTITUTED EXPLANATION 4 IS APPLICABLE PROSPECTIVELY W.E.F. 01.04.2016. 4.1 THE CBDT CIRCULAR NO.25/2015 HAD ADMITTED THAT THE SUBSTITUTED EXPLANATION 4 TO SECTION 271(1)(C) IS APPLICABLE ONLY PROSPECTIVELY. SINCE WE ARE CONCERNED WITH THE ASSESSMENT YEAR 2008-2009, THE AMENDED PROVISION WI LL NOT HAVE APPLICATION TO THE FACTS OF THE PRESENT CASE. THEREFORE, WE HOLD THAT THE PENALTY IS NOT ATTRACTED IN THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE. IT IS ORDERED AC CORDINGLY. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED ON THIS 03 RD DAY OF NOVEMBER, 2017. SD/- SD/- (A.K.GARODIA) (GEORGE GEORGE K.) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE ; DATED : 03 RD NOVEMBER, 2017. DEVDAS* ITA NO.1145/BANG/2017. M/S.TECNOTREE CONVERGENCE LTD. 5 COPY OF THE ORDER FORWARDED TO : TRUE COPY BY ORDER, (ASSTT. REGISTRAR) ITAT, BANGALORE 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT, BENGALURU. 4. CIT(A)-15, BENGALURU 5. DR, ITAT, BANGALORE 6. GUARD FILE.