STANDARD INDUSTRIES LTD, MUMBAI V. DCIT RG 3(3), MUMBAI

ITA 1377/MUM/2011

• Counselvise Citation: 137719914 RSA 2011
• Duration Of Justice: 2 year(s) 11 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 29-01-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 15-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHOK KUMAR SURI
• Assessee Lawyers: K K VED
• Section: 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH H, MUMBAI BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO. 1377/MUM/2011 ASSESSMENT YEAR: 2003-04 M/S. STANDARD INDUSTRIES LTD. VIJYALAXMI MAFATLAL CENTRE, 57A, DR. G. DESHMUKH MARG MUMBAI-. 400 026 VS. DCIT-3(3) MUMBAI. (APPELLANT) (RESPONDENT) PERMANENT ACCOUNT NO. AABCS 8888 C APPELLANT BY : SHRI K.K. VED RESPONDENT BY : SHRI ASHOK KUMAR SURI DATE OF HEARING : 29.01.2014 DATE OF PRONOUNCEMENT : 07.02.2014 O R D E R PER DR. S.T.M. PAVALAN, JM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD.CIT(A)-7, MUMBAI DATED 07.12.2010 CONFIRMING THE PENALTY OF RS.5,84,068/- LEVIED BY THE AO FOR THE ASSESSMENT YEAR 2003-04. 2. THE RELEVANT FACTS ARE THAT THE ASSESSEE, A COMP ANY ENGAGED IN THE BUSINESS OF MANUFACTURER AND SALES OF TEXTILES GOODS, READYM ADE GARMENTS AND CHEMICALS FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION PAYING A TAX OF RS.24,00,495/- U/S 115JB OF INCOME TAX ACT. IN C OMPUTING THE INCOME UNDER THE HEAD PROFIT AND GAINS OF BUSINESS & PROFESSION, T HE ASSESSEE CLAIMED A DEDUCTION OF RS.15,89,300/- BEING FOREIGN TRAVEL EXPENSES INCURR ED BY THE DIRECTORS OF THE ASSESSEE COMPANY. HOWEVER, IN THE ASSESSMENT FRAMED U/S 143(3), THE AO DISALLOWED THE SAID EXPENDITURE ON THE BASIS OF THA T THE TRAVELLING EXPENDITURE WAS ITA NO. 1377/MUM/2011 M/S. STANDARD INDUSTRIES LTD. ASSESSMENT YEAR: 2003-04 2 NOT WHOLLY AND EXCLUSIVELY INCURRED FOR THE PURPOSE S OF BUSINESS. IN THE QUANTUM APPEAL, THE LD.CIT(A) CONFIRMED THE DISALLOWANCE AN D THERE WAS NO FURTHER APPEAL TO THE TRIBUNAL. CONSEQUENTLY IN THE PENALTY PROCEEDIN GS, THE AO LEVIED THE IMPUGNED PENALTY U/S 271(1) (C) OF THE ACT. ON APPEAL, THE L D.CIT(A) CONFIRMED THE LEVY OF PENALTY. AGGRIEVED BY THE IMPUGNED ORDER, ASSESSEE IS IN APPEAL BEFORE US. 3. AT THE OUTSET, IT IS OBSERVED THAT THE ASSESSEE HAS FILED THE RETURN OF INCOME DECLARING THE TOTAL INCOME AS PER SPECIAL PROVISION S U/S 115JB AND ON THE BASIS OF THE ASSESSMENT COMPLETED THEREON, THE PENALTY HAS B EEN LEVIED. IN THIS CONNECTION, IT IS RELEVANT TO STATE THAT THE PENALTY IS NOT SUS TAINABLE CONSIDERING THE FACT THAT THE ASSESSEE HAS FILED THE RETURN OF INCOME IN ACCORDAN CE WITH THE SPECIAL PROVISIONS OF MAT AND THE ASSESSMENT HAS ALSO BEEN COMPLETED IN A CCORDANCE WITH THE SAID PROVISION. THERE ARE PLETHORA OF DECISIONS TO SUPPO RT THE SAID PROPOSITION INCLUDING THE DECISIONS OF THE DELHI HIGH COURT IN THE CASES OF CIT VS. NALWA SONS INVESTMENT LTD. 327 ITR 543 , UNISON HOTELS LTD. VS. DCIT AND ACIT VS. SERI INFRASTRUCTURE FINANCE LTD. 154 TTJ 111 AND THE DECISIONS OF THE TRIBUNAL IN TH E CASES OF DCIT VS. USHDEV INTERNATIONAL LTD. 129 ITD 167 AND BSEL INFRASTRUCTURE REALTY LTD. VS. ACIT 150 TTJ 159. FOLLOWING THE RATIO LAID DOWN IN THE S AID CASES TO THE EFFECT THAT WHERE THE INCOME COMPUTED IN ACCORDANCE WITH THE NORMAL P ROCEDURE IS LESS THAN THE INCOME DETERMINED BY LEGAL FICTION, NAMELY THE BOOK PROFIT U/S 115JB OF THE ACT AND THE INCOME OF THE ASSESSEE IS ASSESSED U/S 115JB AN D NOT UNDER THE NORMAL PROCEDURE, THE TAX IS PAID ON THE INCOME U/S 115JB OF THE ACT. CONCEALMENT OF THE INCOME WOULD HAVE NO ROLE TO PLAY AND WOULD NOT LEA D TO TAX EVASION. ACCORDINGLY, THE PENALTY LEVIED/SUSTAINED BY THE AO/LD.CIT(A) ST ANDS DELETED. 4. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 7 TH DAY OF FEBRUARY, 2014. SD/- SD/- (P.M. JAGTAP) (DR. S.T.M. PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 07.02.2014 *SRIVASTAVA ITA NO. 1377/MUM/2011 M/S. STANDARD INDUSTRIES LTD. ASSESSMENT YEAR: 2003-04 3 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR H BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.