TECHNVISION VENTURES LTD ( FORMELRY KNOWN SOLIX TECHNOLOGIES LTD), SECUNDERABAD V. DCIT RG 8(3), MUMBAI

ITA 1287/MUM/2013

• Counselvise Citation: 128719914 RSA 2013
• Duration Of Justice: 2 year(s) 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2015
• Appeal Filed By: Assessee
• Bench Allotted: E
• Next Hearing Date: 01-06-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 14-02-2013
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Assessee Lawyers: JITENDRA SINGH
• Keywords: Wrong claim
• Section: 32

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E , BENCH MUMBAI . . , , BEFORE SHRI R.C.SHARMA , A M & MS. SUSHMA CHOWLA , J M ./ I TA NO. 1287 / MUM/20 1 3 ( / ASSESSMENT YEAR : 200 2 - 0 3 ) TECHNVISION VENTURES LTD. (FORMERLY SOLIX TECHNOLOGIES LTD.) 1486 (12 - 13 - 522), LANE NO.13, STREET NO.14, TARNAKA, SECUNDERABAD - 500017 (AP) VS. DCIT RG.8(3), MUMBAI - 20 ./ ./ PAN/GIR NO. : A A C CA 5943 R ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI JITENDRA SINGH /REVENUE BY : SHRI NEIL PHILIP / DATE OF HEARING : 0 1 /0 6 / 2015 / DATE OF PRONOUNCEMENT 10/06 /2015 / O R D E R PER R.C.SHARMA (A.M) : TH IS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 18 , MUMBAI , DATED 10 - 12 - 2012 FOR THE ASSESSMENT YEAR 200 2 - 03 , IN THE MATTER OF IMPOSITION OF PENALTY U/S.271 (1)(C) OF THE I.T. ACT. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED . IN THIS CASE, PENALTY HAS BEEN LEVIED FOR REVISION IN THE AMOUNT OF DEDUCTION CLAIMED U/S.10A. WHILE FRAMING THE ASSESSMENT THE AO HAS EXCLUDED THE INCOME ON AC COUNT OF FOREIGN EXCHANGE FLUCTUATION FOR COMPUTING ELIGIBLE INCOME FOR DEDUCTION U/S.10A. IN THE APPEAL, THE CIT(A) HAS REVERSED THE ORDER OF AO AND HELD THAT THIS INCOME IS ELIGIBLE FOR CLAIM OF DEDUCTION ITA NO. 1287 /1 3 2 U/S.10A. THE TRIBUNAL CONFIRMED THE ORDER OF THE CIT(A) ON THIS GROUND. HOWEVER, THE CIT(A) HAS ENHANCED THE INCOME BY RS. 50 LAKHS ON THE PLEA THAT ASSESSEE HAS CLAIMED EXPENDITURE OF THIS UNIT AGAINST OTHER UNIT NOT ELIGIBLE FOR DEDUCTION U/S.10A, THEREBY PROFIT OF ELIGIBLE UNIT WAS INCREASED FOR CLAIMI NG HIGHER DEDUCTION. 3. SIMILARLY WHILE COMPUTING TOTAL TURNOVER THE STPI LINK CHARGES AMOUNTING TO RS.8,03.258/ - WAS REDUCED FROM EXPORT TURNOVER TREATING THE SAME AS BEING TELECOMMUNICATION CHARGES AS PER EXPLANATION TO SECTION 2(IV) OF THE ACT. 4. BY THE IMPUGNED ORDER, THE CIT(A) MODIFIED THE ORDER OF THE AO BY OBSERVING THAT STPI LINK CHARGES CANNOT BE PART OF EXPORT TURNOVER AND HELD THAT SAME SHOULD ALSO BE EXCLUDED FROM THE TOTAL TURNOVER. 5. WITH RESPECT TO THE ADDITIONS DISCUSSED ABOVE, THE AO L EVIED PENALTY U/S.271(1)(C) OF THE ACT AND THE SAME WAS CONFIRMED BY THE CIT(A) ON THE PLEA THAT ASSESSEE HAS WRONGLY CLAIMED EXPENDITURE OF ELIGIBLE UNIT AGAINST OTHER UNIT. AGAINST THE ORDER OF CIT(A) ASSESSEE IS IN FURTHER APPEAL BEFORE US. 6. IT WAS C ONTENDED BY THE LD. AR THAT MAINLY PENALTY IS IMPOSED WITH REFERENCE TO INCOME OF RS.50 LAKHS ENHANCED BY THE AO BY REVISING THE CLAIM OF DEDUCTION U/S.10A. HE CONTENDED THAT SINCE THE ENHANCEMENT WAS DONE BY CIT(A), THEREFORE, HE SHOULD INITIATE THE PENA LTY AND RECORD HIS SATISFACTION FOR THE SAME, HOWEVER, THE CIT(A) HAS NOT INITIATED PENALTY IN HIS ORDER, THEREFORE, PENALTY IMPOSED BY THE AO WITH REFERENCE TO THE ENHANCEMENT MADE BY THE CIT(A) WAS NOT JUSTIFIED. ITA NO. 1287 /1 3 3 7. WITH REGARD TO MERIT OF THE PENALTY L D. AR CONTENDED THAT IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS LTD.322 ITR 158, DECLINE OF CLAIM OF DEDUCTION WILL NOT BE SUFFICIENT TO LEVY OF PENALTY U/S.271(1)(C) OF THE ACT. 8. ON THE OTHER HAND, THE CO NTENTION OF LD. DR WAS THAT ASSESSEE HAS WRONGLY CLAIMED EXPENDITURE OF ELIGIBLE UNIT AGAINST NON - ELIGIBLE UNIT SO AS TO CLAIM HIGHER DEDUCTION U/S.10A, ACCORDINGLY THE AO WAS JUSTIFIED IN LEVYING PENALTY FOR SUCH A WRONGFUL CLAIM. 9. WE HAVE CONSIDERED R IVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT PENALTY HAS BEEN LEVIED WITH REFERENCE TO VARIATION IN THE CLAIM OF DEDUCTION U/S.10A. IN THE QUANTUM PROCEEDINGS THE AO HAS DISALLOWED THE CLAIM ON SOME INCOME/EXP ENDITURE WHICH WAS PARTLY ALLOWED BY THE CIT(A). HOWEVER, THE CIT(A) HAS REDUCED THE CLAIM U/S.10A BY ALLOWING CERTAIN EXPENDITURE WHICH WERE CLAIMED BY ASSESSEE AGAINST OTHER UNIT. ON THE ISSUE OF IMPOSITION OF PENALTY FOR WRONG CLAIM OF EXPENDITURE, T HE HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS LTD. (SUPRA) HELD AS UNDER : - MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHERE CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD N OT, IN OUR OPINION ATTRACT THE PENALTY UNDER SECTION 271(1)(C). IF WE ACCEPT THE CONTENTIO N OF THE REVENUE THEN IN CASE OF EVE R Y RETURN WHERE THE CLAIM MADE IS N OT ACCEPTED BY AS S ESSING OFFICER FOR ANY REASON, THE ASSESSEE WOULD INVITE PENALTY UNDER SECTION271(1)(C). THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE. 10. IN THE INSTANT CASE BEFORE US, THE ENHANCEMENT OF RS.50,00,000/ - WAS MADE BY CIT(A). THE PENALTY PROCEEDINGS SHOUL D BE COMMENCED IN THE COURSE OF, AND BEFORE THE COMPLETION OF THE PROCEEDINGS IN WHICH T HE ITA NO. 1287 /1 3 4 INCOME TAX AUTHORITY IS SATISFIED ABOUT THE DEFAULT WHICH ATTRACTS THE PENALTY. HERE IN THIS CASE THE CIT(A) WAS SATISFIED AND COMPLET ED THE PROCEEDINGS BY MAKING ENHANCEMENT. HOWEVER, ,HE HAS NOT INITIATED ANY PENALTY PROCEEDING. 11. IN VIEW OF THE A BOVE DISCUSSION, WE DO NOT FIND ANY MERIT IN THE PENALTY LEVIED WITH REFERENCE TO VARIATION IN THE AMOUNT OF CLAIM FOR DEDUCTION U/S.10A OF THE ACT. 12 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 10/06 / 201 5 . SD/ - SD/ - ( ) ( SUSHMA CHOWLA ) ( . . ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 10/06 /201 5 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, M UMBAI 6. / GUARD FILE. //TRUE COPY/