M/s International Institute of Neuro Sciences and Oncology Limited, Chandigarh V. DCIT, Chandigarh

ITA 1242/CHANDI/2012

• Counselvise Citation: 124221514 RSA 2012
• Duration Of Justice: 2 year(s) 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 06-10-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 29-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: AJAY JAIN
• Keywords: Depreciation; Wrong claim; Unabsorbed depreciation
• Section: 40A(3); 143(3); 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO.1242/CHD/2012 (ASSESSMENT YEAR : 2005-06) M/S INTERNATIONAL INSTITUTE OF VS. THE D.C.I.T., NEURO SCIENCES & ONCOLOGY LIMITED, CIRCLE 4(1), SCO 18-19, SECTOR 34A, CHANDIGARH. CHANDIGARH. PAN: AAACI3572N AND ITA NO.30/CHD/2013 (ASSESSMENT YEAR : 2005-06) THE A.C.I.T., VS. M/S INTERNATIONAL INSTITUTE OF CIRCLE 4(1), NEURO SCIENCES & ONCOLOGY LIMITED, CHANDIGARH. SCO 18-19, SECTOR 34A, CHANDIGARH. PAN: AAACI3572N (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AJAY JAIN DEPARTMENT BY : SHRI MANJIT SINGH, DR DATE OF HEARING : 06.10.2015 DATE OF PRONOUNCEMENT : 12.10.2015 O R D E R PER RANO JAIN, A.M . : BOTH THE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS), CH ANDIGARH DATED 17.10.2012 FOR ASSESSMENT YEAR 2005-06. 2 2. THE ORDER OF THE LEARNED CIT (APPEALS) IS AGAIN ST THE LEVY OF PENALTY BY THE ASSESSING OFFICER UNDER SECT ION 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT TH E ACT), WHEREBY HE HAS GIVEN PARTIAL RELIEF TO THE ASSESSEE . 3. BRIEFLY, THE FACS OF THE CASE ARE THAT THE PENA LTY UNDER SECTION 271(1)(C) OF THE ACT WAS LEVIED BY TH E ASSESSING OFFICER ON THE FOLLOWING ADDITIONS AND DISALLOWANC ES MADE BY THE ASSESSING OFFICER IN PROCEEDINGS UNDER SECTION 143(3) OF THE ACT : (I) ADDITION UNDER SECTION 40(A)(IA) RS.1,22,35,47 4/- (II) PAYMENT THROUGH CREDIT CARD RS.11,13,777/- (III) WRONG CLAIM OF DEPRECIATION AND CORRESPONDING INTEREST ON LOAN RS. 5,10,625/- (IV) WRONG CLAIM OF DEPRECIATION ON PLANT & MACHINERY AND CORRES- PONDING INTEREST ON LOAN RS. 5,50,349/- (V) WRONG CLAIM OF DEPRECIATION ON FURNITURE AND CORRESPONDING INTEREST ON LOAN. RS. 43,102/- (VI) ADDITION UNDER SECTION 40A(3) RS. 62,852/- (VII) ADDITION ON ACCOUNT OF EMPLOYEES CONTRIBUTION TO PF/OTHER FUNDS RS.1,87,976/- (VIII) COMMISSION PAID TO DOCTORS RS.21,75,771/- 4. THE LEARNED CIT (APPEALS) DELETED THE PENALTY L EVIED BY THE ASSESSING OFFICER ON ACCOUNT OF ADDITION MAD E IN POINT NOS.(I),(VI),(VII) AND (VIII). IN THIS WAY, PENALT Y LEVIED BY THE ASSESSING OFFICER ON AN ADDITION OF RS.1,46,6 2,073/- WAS 3 CANCELLED BY THE LEARNED CIT (APPEALS) WHILE PENALT Y ON AN ADDITION OF RS.22,17,853/- WAS CONFIRMED. 5. NOW, THE ASSESSEE HAS COME UP IN APPEAL AGAINST THE CONFIRMATION OF PENALTY, WHILE THE DEPARTMENT HAS C OME UP IN APPEAL AGAINST THE DELETION OF PENALTY. 6. WHILE MAKING THE ARGUMENTS BEFORE US, OUR ATTENTION WAS INVITED BY THE LEARNED COUNSEL FOR TH E ASSESSEE TO THE FACT THAT THE TAX IN THIS CASE HAS BEEN ASSE SSED UNDER SECTION 115JB OF THE ACT SINCE THERE WERE UNABSORBE D LOSSES AND UNABSORBED DEPRECIATION RELATED TO EARLIER YEAR S. THE TAX WAS LEVIED UNDER THE PROVISIONS OF MAT UNDER SE CTION 115JB OF THE ACT. IN THIS BACKGROUND, RELIANCE WAS PLACED ON THE JUDGMENT OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. M/S VARDHMAN ACRYLICS LIMITED, IN I TA NO.346 OF 2013 (O&M), DATED 4.8.2014, WHEREBY IT HAS BEEN HELD THAT THE ASSESSMENT HAVING BEEN MADE UNDER THE PROVISION S OF MAT UNDER SECTION 115JB OF THE ACT, PENALTY UNDER SECTI ON 271(1)(C) OF THE ACT CANNOT BE LEVIED ON ADDITIONS AND DISALLOWANCES MADE IN REGULAR INCOME. RELIANCE WA S ALSO PLACED ON THE JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. NALWA SONS INVESTMENTS LIMITED (20 10) 37 ITR 543 (DEL). 7. THE LEARNED D.R. COULD NOT CONTROVERT THE SAID SUBMISSIONS MADE BY THE LEARNED CIT (APPEALS). 4 8. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BO TH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHORITIE S BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECORD. FROM THE DOCUMENTS FILED BY THE LEARNED COUNSEL FOR THE ASSE SSEE WE SEE THAT THE ASSESSEE HAD GONE IN APPEAL TILL THE S TAGE OF I.T.A.T. AGAINST THE QUANTUM ORDER OF THE RELEVANT ASSESSMENT YEAR, WHICH WAS DECIDED BY THE CHANDIGARH BENCH OF THE I.T.A.T. ON 24.7.2014 IN ITA NO.409 OF 2010. EVEN THE APPEAL EFFECT ORDER PLACED ON RECORD GIVING EFFECT TO THE ORDER OF THE I.T.A.T. SHOWS THAT THE REGULAR INCOME HAS BEEN COM PUTED AS NIL. SINCE THERE WERE BROUGHT FORWARD LOSSES AND DEPRECIATION, THE RETURN WAS FILED DECLARING THE I NCOME UNDER THE MAT AND EVEN AFTER APPEAL EFFECT, THE INCOME AS SESSED UNDER SECTION 115JB OF THE ACT, THE RATIO LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT OF PUNJAB & HARYA NA HIGH COURT IN THE CASE OF M/S VARDHMAN ACRYLICS LIMITED (SUPRA) IS SQUARELY APPLICABLE TO THE CASE OF THE ASSESSEE. THE HON'BLE PUNJAB & HARYANA HIGH COURT HAS RELIED UPON THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF NAL WA SONS INVESTMENTS LIMITED (SUPRA), WHEREBY IT HAS BEEN HE LD AS UNDER : UNDER THE SCHEME OF THE INCOME TAX ACT, 1961, TH E TOTAL INCOME OF THE ASSESSEE IS FIRST COMPUTED UNDER THE NORMAL PROVISIONS OF THE ACT AND TAX PAYABLE ON SUCH TOTAL INCOME IS COMPUTED WITH THE PRESCRIBED PERCENTAGE OF THE BOOK PROFITS COMPUTED UNDER SECTION 115JB OF THE ACT. THE HIGHER OF THE TWO AMOUNTS IS REGARDED AS TOTAL INCOME AND TAX IS PAYABLE WITH REFERENCE TO SUCH TOTAL INCOME. IF THE TAX PAYABLE UNDER THE NORMAL PROVISIONS IS HIGHER, SUCH AMOUNT I S THE TOTAL INCOME OF THE ASSESSEE, OTHERWISE THE BOOK PRO FITS ARE DEEMED AS THE TOTAL INCOME OF THE ASSESSEE IN TERMS OF 5 SECTION 115JB OF THE ACT. WHERE THE INCOME COMPUTED IN ACCORDANCE WITH THE NORMAL PROCEDURE IS LESS THAN TH E INCOME DETERMINED BY LEGAL FICTION NAMELY, THE BOOK P ROFITS UNDER SECTION 115JB OF THE ACT AND THE INCOME OF THE A SSESSEE IS ASSESSED UNDER SECTION 115JB AND NOT UNDER THE N ORMAL PROVISIONS, THE TAX IS PAID ON THE INCOME ASSESSED UNDER SECTION 115JB OF THE ACT, CONCEALMENT OF INCOME W OULD HAVE NO ROLE TO PLAY AND WOULD NOT LEAD TO TAX EVASIO N. THEREFORE, PENALTY CANNOT BE IMPOSED ON THE BASIS OF DISALLOWANCE OR ADDITIONS MADE UNDER THE REGULAR PROVIS IONS. 5. IN VIEW OF THE ABOVE, WE FIND THAT THE ASSESSE E BEING ASSESSED UNDER SECTION 155JB OF THE ACT, THE PENALT Y UNDER SECTION 271(1)(C) OF THE ACT CANNOT BE LEVIED. IN VIEW OF THIS, THE TOTAL PENALTY LEVIED BY THE ASSESSING OFFICER U NDER SECTION 271(1)(C) OF THE ACT IS HEREBY DELETED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO.1242/CHD/2012 IS ALLOWED AND THE APPEAL OF THE R EVENUE IN ITA NO.30/CHD/2013 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 12 TH DAY OF OCTOBER, 2015. SD/- SD/- (BHAVNESH SAINI) (RANO JAIN) JUDICIAL MEMBER ACOUNTANT MEMBER DATED : 12 TH OCTOBER, 2015 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH 6