ADIT Intl. Taxation, Dehradun V. M/s. Dolphin Drilling Ltd., Dehradun

ITA 1183/DEL/2012

• Counselvise Citation: 118320114 RSA 2012
• Duration Of Justice: 2 year(s) 1 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 07-04-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 07-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJEEV SHARMA
• Assessee Lawyers: ASHUTOSH JAIN; AMIT A RORA CAS
• Keywords: Depreciation; Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH B BB B : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND SHRI SHRI SHRI SHRI I.C. SUDHIR I.C. SUDHIR I.C. SUDHIR I.C. SUDHIR, ,, , JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ITA NO ITA NO ITA NO ITA NO. .. .1183/DEL/2012 1183/DEL/2012 1183/DEL/2012 1183/DEL/2012 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2006 2006 2006 2006- -- -07 0707 07 ASSISTANT DIRECTOR OF ASSISTANT DIRECTOR OF ASSISTANT DIRECTOR OF ASSISTANT DIRECTOR OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, INTERNATIONAL TAXATION, INTERNATIONAL TAXATION, INTERNATIONAL TAXATION, INTERNATIONAL TAXATION, DEHRADUN. DEHRADUN. DEHRADUN. DEHRADUN. VS. VS. VS. VS. M/S DOLPHIN DRILLING LIMITED, M/S DOLPHIN DRILLING LIMITED, M/S DOLPHIN DRILLING LIMITED, M/S DOLPHIN DRILLING LIMITED, C/O NANGIA & CO., C/O NANGIA & CO., C/O NANGIA & CO., C/O NANGIA & CO., 75/7, RAJPUR ROAD, 75/7, RAJPUR ROAD, 75/7, RAJPUR ROAD, 75/7, RAJPUR ROAD, DEHRADUN. DEHRADUN. DEHRADUN. DEHRADUN. PAN : AABCD8263C. PAN : AABCD8263C. PAN : AABCD8263C. PAN : AABCD8263C. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SANJEEV SHARMA, CIT-DR. RESPONDENT BY : SHRI ASHUTOSH JAIN AND SHRI AMIT ARORA, CAS. ORDER ORDER ORDER ORDER PER G. PER G. PER G. PER G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VP VPVP VP : : : : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE O RDER OF LEARNED CIT(A)-II, DEHRADUN DATED 19 TH DECEMBER, 2011 FOR THE AY 2006-07. 2. GROUND NO.1 RAISED BY THE REVENUE READS AS UNDER:- WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAD ERRED IN DELETING THE PENALTY IMPOSED UND ER SECTION 271(1)(C) HOLDING THAT THE ASSESSEE DID NOT FURN ISH INACCURATE PARTICULARS. 3. ALL OTHER GROUNDS RAISED BY THE REVENUE ARE ONLY A RGUMENTS IN SUPPORT OF GROUND NO.1. 4. THE FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER L EVIED THE PENALTY OF ` 70,19,223/- UNDER SECTION 271(1)(C) OF THE INCOME-T AX ACT, ITA-1183/DEL/2012 2 1961 ON ACCOUNT OF CERTAIN DISALLOWANCES UNDER SECTI ON 40(A)(IA), 44C ETC. ON APPEAL, LEARNED CIT(A) CANCELLED THE PENAL TY RELYING UPON THE DECISION OF HONBLE APEX COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT.LTD. 322 ITR 158 (SC). THE REVENUE, AGGRIEVED WITH THE ORDER OF THE CIT(A), IS IN APPEAL BEFORE U S. 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND P ERUSED RELEVANT MATERIAL PLACED BEFORE US. THE RELEVANT FA CTS AS GIVEN IN PAGE 1 OF THE PENALTY ORDER READ AS UNDER:- THE ASSESSEE IS A COMPANY INCORPORATED UNDER THE LAWS OF THE UNITED KINGDOM HAD FILED ITS RETURN OF INCOME ON 23.10.2006 DECLARING LOSS OF RS.7,96,49,700/-. ASSESSMENT WAS COMPLETED U/S 143(3)/144C(13) OF THE INCOME TAX A CT, 1961 ON 22.10.2010 AT A LOSS OF RS.54,51,48,532/- AS UNDER: INCOME AS PER P/L ACCOUNT (405,809,146) ADD : DEPRECIATION AS PER BOOKS OF ACCOUNT 2,424,084 PROVISION FOR TAX 55,000,000 PROVISION FOR DOUBTFUL DEBTS 2,769,286 PROVISION FOR CONTINGENCY 20,500,000 INTEREST U/S 210(1A) 2,113,367 DISALLOWANCE U/S 40(A) 17,368,443 DISALLOWANCE U/S 40(A) 9,40,604 DISALLOWANCE U/S 40(A)(I) 6,425,769 HEAD OFFICE EXPENDITURE U/S 44C 9,417,995 DONATIONS 22,000 116,981,548 (288,827,598) LESS : EXPENSES DISALLOWED U/S 40(A)(I) LAST YEAR ALLOWABLE THIS YEAR 172,856,234 DEPRECIATION ALLOWABLE U/S 32(1) 1,159,501 EXPENSES DISALLOWED U/S 40(A)(I) LAST YEAR ALLOWABLE THIS YEAR 8,23,05,200 25,63,20,935 LOSS CARRIED FORWARD (54,51,48,532) ITA-1183/DEL/2012 3 6. FROM THE ABOVE, IT IS EVIDENT THAT THE ASSESSEE FURNI SHED RETURN DECLARING A LOSS OF ` 7,96,49,700/-. THE ASSESSING OFFICER DETERMINED THE LOSS AT ` 54,51,48,532/-. FROM THE ADJUSTMENT MADE, WHICH IS EVIDENT FROM THE RELEVANT PORTION OF THE PENALTY OR DER WHICH IS REPRODUCED ABOVE, WE FIND THAT THOUGH THE CERTAIN D ISALLOWANCES WERE MADE UNDER SECTION 40(A) AND 40(A)(I), HOWEVER, THE SET OFF GIVEN BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCES MADE IN THE PRECEDING YEAR WAS MUCH MORE THAN THE DISALLOWANCES M ADE IN THE YEAR UNDER CONSIDERATION AND, THEREFORE, FINALLY, TH E LOSS DETERMINED IS MUCH MORE THAN THE LOSS RETURNED BY THE ASSESSEE. MOREOV ER, FROM A PERUSAL OF THE PENALTY ORDER AS WELL AS ASSESSMENT ORDER, IT IS EVIDENT THAT MAJOR DISALLOWANCES HAVE BEEN MADE BECAUSE OF THE ASSESSEES FAILURE TO DEDUCT AND PAY THE TAX IN TIME. THEREFO RE, THOUGH THE DEDUCTION CLAIMED HAS BEEN DISALLOWED IN ONE YEAR, TH E SAME HAS BEEN ALLOWED IN THE SUBSEQUENT YEAR. THE HEAD OFFICE EXP ENSES HAVE BEEN DISALLOWED ON THE GROUND THAT THE ASSESSEE COULD NOT GIV E SATISFACTORY EXPLANATION TO SUBSTANTIATE THE CLAIM OF EXPENDITUR E. IN OUR OPINION, ON THESE FACTS, THE DECISION OF HONBLE APEX COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT.LTD. (SUPRA) WOULD BE SQUARELY APPLICABLE, WHEREIN THEIR LORDSHIPS HELD AS UNDER:- WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED B Y THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING TH E PENALTY UNDER SECTION 271(1)(C). A MERE TAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AM OUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOM E OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. 7. IN THE CASE OF THE ASSESSEE, THERE IS NO ALLEGATION FR OM THE REVENUES SIDE THAT THE ASSESSEE EITHER FURNISHED INACCURA TE PARTICULARS OR WRONG FACTS OR ANY DETAILS FURNISHED BY THE ASSESSEE ITA-1183/DEL/2012 4 WERE FOUND TO BE FALSE. THAT MERELY BECAUSE CERTAIN CLAIM OF EXPENSES IS DISALLOWED CANNOT BE SUFFICIENT FOR LEVYING THE PEN ALTY UNDER SECTION 271(1)(C). IN VIEW OF THE ABOVE, WE, RESPECTFULLY F OLLOWING THE DECISION OF HONBLE APEX COURT, UPHOLD THE ORDER OF LEARNED CIT(A) AND DISMISS THE REVENUES APPEAL. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED . DECISION PRONOUNCED IN THE OPEN COURT ON 11 TH APRIL, 2014. SD/- SD/- ( (( (I.C. SUDHIR I.C. SUDHIR I.C. SUDHIR I.C. SUDHIR) )) ) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 11.04.2014 VK. COPY FORWARDED TO: - 1. APPELLANT : ASSISTANT DIRECTOR OF INCOME TAX , ASSISTANT DIRECTOR OF INCOME TAX, ASSISTANT DIRECTOR OF INCOME TAX, ASSISTANT DIRECTOR OF INCOME TAX, INTERNATIONAL TAXATION, DEHRADUN. INTERNATIONAL TAXATION, DEHRADUN. INTERNATIONAL TAXATION, DEHRADUN. INTERNATIONAL TAXATION, DEHRADUN. 2. RESPONDENT : M/S DOLPHIN DRILLING LIMITED, M/S DOLPHIN DRILLING LIMITED, M/S DOLPHIN DRILLING LIMITED, M/S DOLPHIN DRILLING LIMITED, C/O NANGIA & CO C/O NANGIA & CO C/O NANGIA & CO C/O NANGIA & CO.,75/7, RAJPUR ROAD, DEHRADUN. .,75/7, RAJPUR ROAD, DEHRADUN. .,75/7, RAJPUR ROAD, DEHRADUN. .,75/7, RAJPUR ROAD, DEHRADUN. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR