Joint commissioner of Income Tax (OSD), Ludhiana V. M/s Vardhma Holdings Ltd., Ludhiana

ITA 1149/CHANDI/2011

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6664 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 year(s) 11 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-11-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 08-09-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 02-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBHASH AGGARWAL
• Keywords: Deemed to accrue or arise in india; Difference of opinion; Capital receipt
• Section: 80HHC; 115JB

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER & DR. B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NO. 1137/CHD/2011 ASSESSMENT YEAR: 2003-04 M/S VARDHMAN HOLDINGS LIMITED, VS. THE ACIT, CIRCLE -1, LUDHIANA LUDHIANA PAN NO. AABCV8088P & ITA NO. 1149/CHD/2011 ASSESSMENT YEAR: 2003-04 THE JCIT (OSD), CIRCLE-1, VS. M/S VARDHMAN HOLDINGS LIMITED, LUDHIANA LUDHIANA PAN NO. AABCV8088P (APPELLANT) (RESPONDENT) APPELLANT BY : SH. SUBHASH AGGARWAL RESPONDENT BY : SMT. CHANDERKANTA DATE OF HEARING : 23.08.2017 DATE OF PRONOUNCEMENT : 15.11.2017 ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE CAPTIONED APPEALS, ONE BY THE ASSESSEE AND OTHE R BY THE REVENUE, HAVE BEEN PREFERRED AGAINST THE ORDER OF THE COMMIS SIONER OF INCOME TAX (APPEALS), [HEREINAFTER REFERRED TO AS CIT(A)]-II, LUDHIANA DATED 16.09.2011. 2 2. THE ASSESSEE IS AGGRIEVED BY THE ACTION OF THE C IT(A) IN CONFIRMING THE LEVY OF PENALTY ON CERTAIN ISSUES / ADDITIONS M ADE BY THE ASSESSING OFFICER WHEREAS THE REVENUE IS AGGRIEVED BY THE ACT ION OF THE CIT(A) IN DELETING THE PENALTY ON CERTAIN ISSUES / ADDITIONS MADE BY THE ASSESSING OFFICER. 3. AT THE OUTSET, THE LD. AR OF THE ASSESSEE HAS BR OUGHT OUR ATTENTION TO THE IMPUGNED ASSESSMENT ORDER AS WELL AS THE PENAL TY ORDER PASSED U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'TH E ACT') AND HAS SUBMITTED THAT THE ADDITIONS IN THIS CASE WERE MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF DEDUCTION CLA IMED BY THE ASSESSEE U/S 10B, 80IB, SALES TAX SUBSIDY AS TO WHETHER THE SAME WAS CAPITAL RECEIPT OR REVENUE RECEIPT, ISSUE OF DEDUCTION CLAIMED BY T HE ASSESSEE ON DEPB, ISSUE OF DEDUCTION U/S 80HHC ETC. HE HAS FURTHER S UBMITTED THAT ADDITIONS IN THIS RESPECT WERE MADE BY LOWER AUTHORITIES BEC AUSE OF THE DIFFERENCE OF OPINION. THOUGH THE ASSESSEE WAS UNDER BONAFIDE BEL IEF THAT IT WAS LEGALLY ENTITLED TO CLAIM THE AFORESAID DEDUCTIONS / QUANTU M OF DEDUCTIONS. HOWEVER, THE ASSESSING OFFICER WAS OF THE OTHER OPI NION AND HAS THUS REDUCED / DISALLOWED THE DEDUCTIONS TO SOME EXTENT. HE, THEREFORE, SUBMITTED THAT IT WAS NEITHER A CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME NOR OF CONCEALMENT OF INCOME. 4. THE LD. AR HAS FURTHER SUBMITTED THAT EVEN OTHER WISE THE INCOME OF THE ASSESSEE COMPUTED UNDER NORMAL PROVISIONS DESPI TE THE AFORESAID DISALLOWANCE WAS NEGATIVE I.E. IN LOSSES. THE TAX H AS BEEN LEVIED BY THE ASSESSING OFFICER UNDER THE PROVISIONS OF SECTION 1 15JB OF THE ACT. HE IN THIS CONTEXT HAS RELIED UPON THE DECISION OF THE HO N'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. NALWA SONS INVESTMENTS LTD . IN ITA NO. 3 1420/2009 DATED AUGUST 26, 2010 REPORTED IN [2010] 194 TAXMAN.387 (DELHI). 5. THE LD. DR, ON THE OTHER HAND, HAS RELIED THE FINDINGS OF THE LOWER AUTHORITIES. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND HAV E ALSO GONE THROUGH THE RECORD. ADMITTEDLY, IN THIS CASE THE INCOME UN DER THE NORMAL PROVISIONS OF THE ASSESSEE HAS BEEN ASSESSED IN LOS SES CARRIED FORWARD TO NEXT YEAR AT RS. (-) 5,27,82,779/-. HOWEVER, THE TA X HAS BEEN COMPUTED UNDER SECTION 115JB OF THE ACT AT RS. 2,67,10,292/- . THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. NALWA SONS INVES TMENTS LTD IN ITA NO. 1420/2009 DATED AUGUST 26.2010 HAS HELD THAT WH EN THE ASSESSMENT AS PER NORMAL PROCEDURE HAS NOT BEEN ACTED UPON BUT TH E BASIS OF ASSESSMENT IS MADE ON THE DEEMED INCOME ASSESSED U/S 115JB OF THE ACT BEING HIGHER OF THE TWO AND THE TAX IS THUS PAID ON THE INCOME A SSESSED U/S 115JB OF THE ACT, ANY CONCEALMENT OF INCOME FOUND UNDER NORMAL C OMPUTATION HAS NO ROLE TO PLAY AND SUCH CONCEALMENT DID NOT LEAD TO T AX EVASION AT ALL. AS PER LAW LAID DOWN BY THE HON'BLE HIGH COURT, PENALTY CA NNOT BE IMPOSED ON TAX SOUGHT TO BE EVADED UNDER NORMAL COMPUTATION WH EN THE NORMAL COMPUTATION WAS IN FACT NOT ACTED UPON WHILE ASSESS ING THE INCOME OF THE ASSESSEE. THE SLP AGAINST THE SAID ORDER OF THE HO N'BLE DELHI HIGH COURT IS ALSO DISMISSED BY THE HON'BLE SUPREME COURT VIDE ORDER DATED 4.5.2012 REPORTED IN [2012] 21 TAXMAN 184 (SC). EVEN OTHER WISE, WE FIND IT IS NOT A CASE OF CONCEALMENT OF INCOME OR FURNISHING OF IN ACCURATE PARTICULARS OF INCOME AS DISCUSSED ABOVE, THE ASSESSEE UNDER BONAF IDE BELIEF HAD CLAIMED THE DEDUCTION AND THOUGH SOME OF WHICH HAS BEEN REJ ECTED OR AMOUNT OF DEDUCTION HAD BEEN REDUCED WHILE MAKING THE ASSESSM ENT BUT THAT ITSELF IS 4 NOT SUFFICIENT TO HOLD IT IS A CASE OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME 7. IN VIEW OF THIS, WE DO NOT FIND ANY JUSTIFICATIO N ON THE PART OF THE LOWER AUTHORITIES IN CONFIRMING THE LEVY OF PENALTY . IN VIEW OF THE ABOVE, THE APPEAL OF THE ASSESSEE IS ALLOWED AND THE PENAL TY CONFIRMED BY THE CIT(A) IS ORDERED TO BE DELETED. THE APPEAL OF THE REVENUE, ON THE OTHER HAND, IS HEREBY DISMISSED. 8. IN THE RESULT, THE APPEAL PREFERRED BY THE ASSES SEE IS ALLOWED WHEREAS THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15.11.2017 SD/- SD/- (DR. B.R.R. KUMAR) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 15 TH NOV.,2017 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR