M/s N.L. Engineering Pvt. Ltd., Mohali V. DCIT, Mohali

ITA 1340/CHANDI/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80906 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-09-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-09-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 24-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J S NAGAR
• Keywords: Capital asset; Depreciation
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH BEFORE SHRI T.R.SOOD ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 1340/CHD/2012 ASSESSMENT YEAR : 2009-2010 M/S N.L.ENGINEERING PVT. LTD., VS THE DY. CO MMISSIONER OF C-114, INDUSTRIAL AREA, INCOME TAX, PHASE VII, CIRCLE 6(1), MOHALI. MOHALI. PAN : AAACN5006G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI TEJ MOHAN SINGH RESPONDENT BY : SHRI J.S.NAGAR DATE OF HEARING : 10.09.2014 DATE OF PRONOUNCEMENT : 17.09.2014 O R D E R PER SUSHMA CHOWLA, JM THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), CHANDI GARH DATED 19.10.2012 RELATING TO ASSESSMENT YEAR 2009-10 AGAI NST THE PENALTY ORDER PASSED UNDER SECTION 271(1)(C) OF INCOME TAX ACT, 1961 (IN SHORT 'THE ACT'). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) H AS ERRED IN UPHOLDING THE IMPOSITION OF PENALTY UNDER SECTION 2 71(L)(C) ON DISALLOWANCE OF DEPRECIATION OF RS.3,30,900/- CLAIM ED ON CAPITAL SUBSIDY WHICH IS ARBITRARY AND UNJUSTIFIED. 2. THAT NO PENALTY UNDER SECTION 271(L)(C) OF THE ACT IS CALLED FOR IN AS MUCH AS THERE HAS NEITHER BEEN ANY CONCEALMENT OF I NCOME NOR FURNISHING OF INACCURATE PARTICULARS OF INCOME AS SUCH THE ORD ER IS UNJUSTIFIED AND ARBITRARY. 3. THAT THE ORDER OF THE LD. COMMISSIONER OF INCOME TA X IS ERRONEOUS, ARBITRARY, OPPOSED TO LAW AND FACTS OF THE CASE AND IS, THUS, UNTENABLE. 2 3. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS A GAINST LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT AT RS. 3 30,900/-. 4. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT THO UGH THE ASSESSING OFFICER HAD LEVIED THE PENALTY ON VARIOUS ADDITIONS MADE, HOWEVER THE COMMISSIONER OF INCOME TAX (APPEALS) HA D RESTRICTED THE PENALTY ONLY TO ONE ADDITION I.E. NON-REDUCTION OF SUBSIDY RECEIVED FROM THE COST OF ASSETS FOR CALCULATING TH E DEPRECIATION ON ASSETS. 5. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT TH E ISSUE RAISED WAS PURELY DEBATABLE AND AS COMPLETE FACTS WERE DIS CLOSED IN THE RETURN OF INCOME, THERE WAS NO MERIT IN THE PENALTY LEVIED. 6. THE LD. DR FOR THE REVENUE, ON THE OTHER HAND, P LACED RELIANCE ON THE ORDER OF THE COMMISSIONER OF INCOME TAX (APP EALS). 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSING OFFICER, WHILE COMPLETING THE ASSESSM ENT IN THE CASE HAD MADE ADDITION ON SEVERAL ACCOUNTS AND PENALTY U NDER SECTION 271(1)(C) OF THE ACT WAS ALSO LEVIED ON ALL THOSE A DDITIONS. HOWEVER, THE COMMISSIONER OF INCOME TAX (APPEALS) H AS HELD THE EXPLANATION OF THE ASSESSEE TO BE JUSTIFIED AND HAD DELETED THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT O N VARIOUS ADDITIONS EXCEPT ONE I.E. ADDITION OF RS. 330,990/- ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION CLAIMED ON CAPITAL SUB SIDY. 8. THE ASSESSEE HAD RECEIVED CAPITAL SUBSIDY OF RS. 22,06,000/- AND SINCE THE SAID CAPITAL SUBSIDY WAS PROVIDED TOW ARDS ACQUISITION OF CAPITAL ASSETS, THE COST OF THE SAID ASSETS ACQU IRED DURING THE YEAR HAD TO BE REDUCED BY THE AMOUNT OF SUBSIDY AND DEPR ECIATION HAD TO BE CALCULATED ON THE REDUCED COST OF ASSETS. HOWEV ER, THE ASSESSEE 3 HAD CLAIMED DEPRECIATION ON THE FULL VALUE OF THE A SSETS. THE ASSESSING OFFICER REWORKED THE VALUE OF THE ASSETS AND MADE AN ADDITION OF RS. 330,900/- BY REDUCING THE COST OF C APITAL SUBSIDY TO THE COST OF ASSETS AND THEREAFTER, REDUCING THE FIL ING OF DEPRECIATION ALLOWABLE IN THE HANDS OF THE ASSESSEE. THE ASSESS ING OFFICER AND THE COMMISSIONER OF INCOME TAX (APPEALS) WERE OF TH E VIEW THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS O F INCOME AND AS THE ISSUE WAS NOT DEBATABLE, PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS LEVIABLE ON THE SAID ADDITION. 9. PENALTY UNDER SECTION 271(1)(C) IS LEVIABLE IN C ASES WHERE THE ASSESSEE HAS EITHER CONCEALED ITS INCOME OR FURNISH ED INACCURATE PARTICULARS OF INCOME. MERELY BECAUSE THE CLAIM OF THE ASSESSEE HAS NOT BEEN ACCEPTED, DOES NOT IP-SO-FACTO WARRANT LEV Y OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 10. THE HON'BLE SUPREME COURT OF INDIA IN CIT, AHEM DABAD VS. RELIANCE PETROPRODUCTS PVT. LTD (SUPRA) WHILE REFER RING TO THE WORD PARTICULARS IN INACCURATE PARTICULARS OF INCOME, OBSERVED, A S PER LAW LEXICON, THE MEANING OF WORD PARTICULAR IS A DE TAIL OR DETAILS, THE DETAILS OF A CLAIM, OR THE SEPARATE ITEMS OF AN ACC OUNT. THEREFORE, THE WORD PARTICULARS USED IN SECTION 271 (1)(C) WOUL D EMBRACE THE MEANING OF THE DETAILS OF THE CLAIM MADE. IT WAS FURTHER HELD AS UNDER:- WE HAVE ALREADY SEEN THE MEANING OF THE WORD PARTICULARS IN THE EARLIER PART OF THIS JUDGMENT. READING THE WORDS IN CONJUNCTION, THEY MUST MEAN THE DETAIL S SUPPLIED IN THE RETURN, WHICH ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TRUTH OR ERRONEOUS. WE MU ST HASTEN TO ADD HERE THAT IN THE CASE, THERE IS NO FINDING T HAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN WERE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE. SUCH NOT BEING THE CASE, THERE WOULD BE NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INC OME OF 4 THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO INACCURATE PARTICULARS . (UNDERLINED SUPPLIED BY US) 11. THE HON'BLE SUPREME COURT IN CIT, AHEMDABAD VS. RELIANCE PETROPRODUCTS PVT LTD (SUPRA) FURTHER NOTED THAT IN THE FACTS OF THE CASE BEFORE IT, THERE WERE NO FINDINGS THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN OF INCOME WERE NOT INCORRECT OR ERRON EOUS OR FALSE NOR ANY STATEMENT MADE OR ANY DETAILS SUPPLIED WAS FOUND TO BE FACTUALLY INCORRECT. THE COURT THUS HELD THAT MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT, ATTRACT PENA LTY UNDER SECTION 271 (1)(C) OF THE ACT. IT WAS ALSO LAID DOWN BY THE COURT THAT THE INTENDMENT OF THE LEGISLATURE IS NOT TO LEVY PENALTY U/S 271 ( 1)(C) OF THE ACT IN CASE OF EVERY NON ACCEPTANCE OF CLAIM MADE BY THE ASSESS EE IN THE RETURN OF INCOME. 12. THE HON'BLE SUPREME COURT IN CIT VS RELIANCE PE TROPRODUCTS P.LTD. (SUPRA) FURTHER HELD AS UNDER : READING THE WORDS 'INACCURATE' AND 'PARTICULARS' IN CONJUNCTION, THEY MUST MEAN THE DETAILS SUPPLIED IN THE RETURN, WHICH ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TRUTH OR ERRONEO US. IN THIS CASE, THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSE SSEE IN ITS RETURN WERE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE. SUCH N OT BEING THE CASE, THERE WOULD BE NO QUESTION OF INVITING THE PENALTY UNDER S. 271(L)(C). A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REG ARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO THE INACCURATE PARTICULARS. THE ASSESSEE HAD FURNISHED ALL THE DETAILS OF ITS EXPENDITURE AS WELL AS INCOME IN ITS RETURN, WHICH DETAILS, IN THEMSELVES, WERE NOT FOUND TO BE INACCURATE NOR COULD BE VIEWED AS THE CONCEALMENT OF INCOME ON ITS PART. IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS CLAIM IN THE RETURN OR NOT. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NO T ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT ATTRACT THE PENAL TY UNDER S. 271(L)(C). IF THE CONTENTION OF THE REVENUE IS ACCEPTED THEN IN C ASE OF EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTED BY AO FOR ANY REASON, THE ASSESSEE WILL INVITE PENALTY UNDER S. 271(L)(C). THAT IS CLE ARLY NOT THE INTENDMENT OF THE LEGISLATURE. THE TRIBUNAL, AS WELL AS, THE C IT(A) AND THE HIGH COURT HAVE CORRECTLY REACHED THIS CONCLUSION.SREE KRISHNA ELECTRICALS VS. STATE OF TAMIL NADU & ANR. (2009) 23 VST 249 (S C) APPLIED; RELIANCE PETROPRODUCTS (P) LTD. (JUDGMENT DT. 23RD OCT., 2007 OF THE GUJARAT HIGH COURT IN TAX APPEAL NO. 1149 OF 2007) AFFIRMED. 5 13. ADMITTEDLY THE ASSESSEE WAS IN RECEIPT OF CAPIT AL SUBSIDY WHICH HAD TO BE ADJUSTED AGAINST THE COST OF ASSETS PURCH ASED DURING THE YEAR AND THE DEPRECIATION ON SUCH ASSETS HAD TO BE ALLOW ED ON REDUCED VALUE. THE ASSESSEE HAD DECLARED THE COMPLETE INFO RMATION IN RESPECT OF THE SAID TRANSACTION IN THE RETURN OF INCOME. H OWEVER, UNDER BONAFIDE IMPRESSION, THE DEPRECIATION ON ASSETS HAD BEEN CLAIMED AT A HIGHER VALUE BUT THAT ITSELF WOULD NOT ESTABLISH TH AT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME. THE CL AIM MADE BY THE ASSESSEE WAS BONAFIDE. WHERE THE ASSESSEE HAD SUBMI TTED COMPLETE INFORMATION AND MERELY BECAUSE THE CLAIM OF DEPRECI ATION HAD BEEN MADE ON A HIGHER FIGURE, DOES NOT MAKE THE ASSESSEE EXIGIBLE TO LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 13. IN THE TOTALITY OF THE FACTS AND CIRCUMSTANCES, WE FIND NO MERIT IN THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS ) IN LEVYING THE PENALTY FOR CONCEALMENT UNDER SECTION 271(1)(C) OF THE ACT. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO DEL ETE THE SAME. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE ALLOWE D. 14. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH SEPTEMBER,2014. SD/- SD/- ( T.R.SOOD) (S USHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL M EMBER DATED:.17 TH SEPTEMBER,2014 POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR ITAT/CHD