Deputy Commissioner of Income-tax, V. Aggreko Energy Rental India Pvt. Ltd., Pune

ITA 1436/PUN/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7391 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 13-09-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 02-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR VIVEK AGGARWAL
• Assessee Lawyers: K VENKATACHALAM
• Section: 143(3); 37

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.1436/PUN/2015 / ASSESSMENT YEAR : 2010-11 DY. COMMISSIONER OF INCOME - TAX, CIRCLE 1(1), 2 ND FLOOR, PMT BUILDING, SWARGATE, SHANKARSHET ROAD, PUNE 411 037. . / APPELLANT V/S AGGREKO ENERGY RENTAL INDIA PVT. LIMITED, PLOT NO.4/12/13, OFFICE NO.501, VIMAN NAGAR, PUNE. PAN : AAHCA2440E. . / RESPONDENT ASSESSEE BY : SHRI K. VENKATACHALAM REVENUE BY : SHRI DR. VIVEK AGGARWAL / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY THE REVENUE IS EMANATING OUT OF THE ORDER OF COMMISSIONER OF INCOME-TAX (A) 1, PUNE DT.24.0 8.2015 FOR A.Y. 2010-11. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN THE BUS INESS OF RENTAL OF POWER GENERATION AND TEMPERATURE CONTROL EQ UIPMENTS. / DATE OF HEARING : 13.09.2017 / DATE OF PRONOUNCEMENT: 29.09.2017 2 ASSESSEE FILED ITS ORIGINAL RETURN OF INCOME ON 07.10.2010 DE CLARING TOTAL LOSS AT RS.4,29,30,969/-. THE CASE WAS SELECTED FOR S CRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED U/S 143(3) R.W.S. 92 CA(4) OF THE ACT VIDE ORDER DT.11.03.2014 AND THE TOTAL LOSS WAS C OMPUTED AT RS.3,56,88,610/- BY DISALLOWING DEALERS COMMISSION AND DECOMMISSIONING CHARGES OF RS.72,42,359/-. ON THE AFORESA ID DISALLOWANCE OF DEALERS COMMISSION AND DECOMMISSIONING CHARGE S, AO VIDE ORDER DT.29.09.2014 PASSED U/S 271(1)(C) OF THE ACT HELD THAT BY CLAIMING DEDUCTION WHICH WAS NOT ALLOWABLE ASSESSE E HAD FURNISHED INACCURATE PARTICULARS OF INCOME AND HAD COMMITTE D DEFAULT IN VIEW OF PROVISIONS OF SEC.271(1)(C) OF THE ACT AND THEREFORE LIABLE FOR PENALTY. HE ACCORDINGLY LEVIED PENALTY O F RS. 22,37,890/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CAR RIED THE MATTER BEFORE LD.CIT(A), WHO VIDE ORDER DT.24.08.2015 (IN APPE AL NO.PN/CIT(A)-1/DCIT CIR.1(1)/PN/644/14-15) ALLOWED THE APPE AL OF THE ASSESSEE BY HOLDING AS UNDER : 5. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE AS WELL AS SUBMISSIONS MADE BY THE APPELLANT. IN THIS CASE TH E PENALTY U/S 271(1)(C) HAS BEEN LEVIED BY THE ASSESSING OFFICER IN RESPECT OF DISALLOWANCE OF EXCESS PROVISION (BEING DIFFERENCE OF OPENING AND CLOSING BALANCE OF PROVISION) AMOUNTING TO RS.72,42 ,359/- REPRESENTING PROVISION FOR DEALERS COMMISSION AMOUN TING TO RS.71,45,084/- AND PROVISION FOR DECOMMISSIONING CH ARGES AMOUNTING TO RS.97,275/-. IN MERCANTILE SYSTEM OF ACCOUNTING PROVISIONS ARE ALLOWABLE EXPENDITURE AS HELD BY HON BLE APEX COURT IN THE CASE OF ROTORK CONTROLS INDIA P. LTD., VS. C IT, 223 CTR 425, PROVIDED IT IS WORKED OUT IN SCIENTIFIC BASIS. THE APPELLANT CONTENDS THAT DURING THE PREVIOUS YEAR, IT HAD ACQUIRED GENS ET RENTAL BUSINESS OF CUMMINS INDIA LTD., (CIL) AS A GOING CO NCERN CONSISTING OF ASSETS, LIABILITIES, CONTRACT AND EMPLOYEES. TH E APPELLANT FURTHER CONTENDS THAT AS A PART OF THE SAID ACQUISITION, TH E DEALERS CONTRACT OF CUMMINS INDIA LTD. WERE TAKEN OVER BY THE APPELL ANT ON AN AS IS BASIS AS PER WHICH THE COMMISSION AMOUNT WAS PA YABLE AS TO CERTAIN PERCENTAGE OF SALES IN THAT AREA EVEN IF SA LE WAS NOT DONE THROUGH THE DEALER DIRECTLY. THIS BEING THE FIRST YEAR, IT TOOK TIME FOR THE APPELLANT TO ASSESS THE TRUE LIABILITY AND EVEN BEFORE ISSUE OF NOTICE U/S 143(2) THE EXCESS LIABILITY WAS REVISED AND OFFERED FOR TAXATION IN THE NEXT YEAR. 3 6. THIS BEING SO, THERE APPEARS TO BE SUFFICIENT M ERIT IN THE CONTENTION OF THE APPELLANT THAT CHARGE OF FURNISHI NG OF INACCURATE PARTICULARS OF INCOME CANNOT BE MADE IN THE CASE OF THE APPELLANT FOR THE SIMPLE REASON THAT EVERYTHING WAS DISCLOSED IN THE RETURN OF INCOME / BOOKS OF ACCOUNT AND DISALLOWANCE OF THE A MOUNT CANNOT BE EQUATED WITH TAX SOUGHT TO BE EVADED AS THERE WAS ONLY TIME GAP IN OFFERING THE AMOUNT FOR TAXATION AND NOT EVAD ING OF TAX PER SE. THIS CAN BE APPRECIATED BY THE FACT THAT IN TH E ASSESSMENT YEAR 2011-12 THE ASSESSING OFFICER FAIRLY CONCEDED THE C LAIM OF THE APPELLANT AND ALLOWED RELIEF IN THIS REGARD AS THE SAME AMOUNTED TO DOUBLE TAXATION. THE RELEVANT DISCUSSION IS MADE I N PARA 6 OF THE ASSESSMENT ORDER WHICH IS REPRODUCED FOR THE SAKE O F CLARITY : IN THE ASSESSMENT ORDER U/S 143(3) FOR THE A.Y. 20 10-11, PROVISION FOR DEALERS COMMISSION OF RS.71,45,084/- AND PROVISION FOR DECOMMISSIONING CHARGES OF RS.97,275/ - TOTALING TO RS.72,42,359/- WERE DISALLOWED BY THE A O AND THEREFORE ADDED TO THE TOTAL INCOME OF THE ASSESSEE RESULTING IN ASS ESSED LOSS OF RS.3,56,88,610/-. FURTHER THE ASSESS EE HAD SUO MOTO REVERSED THE ABOVE PROVISION THE PROFI T AND LOSS A/C IN A.Y. 2011-12. HENCE, IT WILL AMOUNT TO DOUBLE TAXATION OF THE SAME INCOME IN A.Y. 2011-12 AND 201 0-11. THEREFORE, THE ASSESSEE GETS CONSEQUENTIAL RELIEF O F RS.71,55,002/-. THIS BEING SO, IT IS HELD THAT THE ASSESSING OFFICE R WAS NOT JUSTIFIED IN LEVYING THE PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 AMOUNTING TO RS.22,37,890/-. ACCORDINGLY, HE IS DI RECTED TO DELETE THE SAME. THUS, GROUND NO.1 IS ALLOWED. 3. AGGRIEVED BY THE ORDER OF LD.CIT(A), REVENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS : 1. THE ORDER OF THE LD.COMMISSIONER OF INCOME-TAX (APP EALS) IS CONTRARY TO THE LAW AND ON FACTS AND IN THE CIRCUMS TANCES OF THE CASE. 2. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) HAS ER RED IN LAW AND ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE I N DELETING THE PENALTY U/S 271(1)(C) OF THE INCOME-TAX ACT LEV IED BY THE ASSESSING OFFICER IGNORING THE PRINCIPLE LAID DOWN BY THE HON'BLE APEX COURT IN THE CASE OF RELIANCE PETRO PR ODUCTS PVT. LTD. 322 ITR 158. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE I N FAILING TO APPRECIATE THAT MERE SUBMITTING A CLAIM WHICH IS IN CORRECT IN LAW WOULD NOT AMOUNT TO GIVING INACCURATE PARTICULA RS OF THE INCOME OF THE ASSESSEE, BUT IT CANNOT BE DISPUTED T HAT THE CLAIM NEEDS TO BE BONAFIDE AS HELD BY THE HON'BLE DELHI H IGH COURT IN THE CASE OF CIT VS ZOOM COMMUNICATION PVT. LTD IN I TA NO.07/2010 DATED 24/05/2010. 4. FOR THESE AND SUCH OTHER GROUNDS AS MAY BE URGED AT THE TIME 4 OF HEARING, THE ORDER OF THE LEARNED CIT(A) MAY BE VACATED AND THAT OF ASSESSING OFFICER BE RESTORED. 4. BEFORE US, AT THE OUTSET, LD.D.R. SUBMITTED THAT THOUGH THE REVENUE HAS RAISED VARIOUS GROUNDS BUT THE SOLE CONTRO VERSY IS WITH RESPECT TO DELETION OF PENALTY U/S 271(1)(C) THAT WAS LE VIED BY AO. 5. BEFORE US, LD DR TOOK US THROUGH THE ORDER OF AO AND SUBMITTED THAT THE ASSESSEE HAS CLAIMED EXPENDITURE ON ACCOUNT OF PROVISION FOR ACCRUED EXPENSES OF DEALERS COMMISSION AND DECOMMISSIONING CHARGES WHICH WAS NOT ALLOWABLE EXPENDITURE U/S 37 OF THE ACT. HE SUBMITTED THAT ONLY WHEN THE AO ENQUIRED ABOUT THE DETAILS OF EXPENDITURE, ASSESSEE CAME FORWARD WITH THE EXPLANATION THAT IT WAS A PROVISION FOR ACCRUED EXPENDITUR E. HE THEREFORE SUBMITTED THAT THE ASSESSEE HAD CLAIMED FALSE D EDUCTION WHICH AMOUNTS TO CONCEALMENT OF INCOME AND THEREFORE AO HAD RIGHTLY LEVIED THE PENALTY U/S 271(1)(C) OF THE ACT. HE THUS SUPPORTED THE ORDER OF AO. LD.A.R. ON THE OTHER HAND, R EITERATED THE SUBMISSIONS MADE BEFORE AO AND LD.CIT(A) AND FURTHER SUBMITTED THAT THE PROVISION FOR DEALERS COMMISSION AND DECOMMISSIONING CHARGES WERE ACCOUNTED IN THE ACCOUNTS BASED ON A PRUDENCE, RATIONAL AND RELIABLE ESTIMATION OF ITS OBLIGAT ION FOR THAT YEAR AND THAT THERE WAS NO CASE OF FURNISHING OF IN ACCURATE PARTICULARS OF INCOME. HE FURTHER SUBMITTED THAT THE ASSE SSEE HAD DISCLOSED ALL THE RELEVANT FACTS RELATING TO THE EXPENDITURE . HE FURTHER SUBMITTED THAT EVEN AFTER THE DISALLOWANCE OF EXPE NSES THERE WAS LOSS UNDER THE NORMAL PROVISION OF THE ACT AND THE NET 5 TAX PAYABLE WAS NIL AND THEREFORE THERE WAS NO ATTEMPT TO CONCEAL THE INCOME BY THE ASSESSEE AND THAT ASSESSEE WOULD NO T HAVE GAINED ANYTHING BY FURNISHING INACCURATE PARTICULARS. IT W AS FURTHER SUBMITTED THAT THE EXCESS PROVISION MADE DURING THE YEAR WAS REVERSED IN SUBSEQUENT YEARS AND OFFERED TO TAX. H E THEREFORE SUBMITTED THAT THE LD.CIT(A) HAS RIGHTLY DELETED THE PENALTY. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT ON THE DISALLOWANCE O F EXCESS PROVISION OF DEALERS COMMISSION AND DECOMMISSIONING CHARGES. WE FIND THAT LD.CIT(A) WHILE DELETING THE PENALTY HA S GIVEN A FINDING THAT ASSESSEE HAD DISCLOSED ALL THE RELEVANT MATERIAL IN THE RETURN OF INCOME / BOOKS OF ACCOUNTS AND THEREFOR E THERE CANNOT BE A CHARGE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. WE FURTHER FIND THAT IN THE ASSESSMENT ORDER PA SSED U/S 143(3) R.W.S. 92CA(4) OF THE ACT FOR A.Y. 2010-11, AO HAS NO TED THAT IN A.Y. 2011-12 ASSESSEE HAD SUO-MOTU REVERSED TH E PROVISION. HE THEREFORE GRANTED RELIEF AS OTHERWISE IT WOULD HAVE AMOUNTED TO DOUBLE TAXATION ON THE SAME INCOME FOR A.YS. 2010- 11 AND 2011-12. FURTHER IT IS A SETTLED LAW THAT PARAM ETERS OF JUDGING THE DECISION FOR THE ADDITION / DISALLOWANCE OF EXPEN SES MADE IN THE ASSESSMENT IS DIFFERENT FROM THE PENALTY IMPOSE D ON ACCOUNT OF INCOME AND THAT CERTAIN ADDITIONS / DISALLOWANCES COULD LEGALLY BE MADE IN THE ASSESSMENT PROCEEDINGS ON THE PREPONDERANCE OF PROBABILITIES BUT NO PENALTY COULD BE IMPO SED U/S 271(1)(C) OF THE ACT ON THE PREPONDERANCE OF THE PROB ABILITIES 6 AND THE REVENUE HAS TO PROVE THAT THE CLAIM MADE BY T HE ASSESSEE WAS NOT GENUINE. CONSIDERING THE TOTALITY OF THE AFORESAID FACTS, WE ARE OF THE VIEW THAT IN THE PRESENT CASE, NO INTERFERENCE TO THE ORDER OF LD.CIT(A) IS CALLED FOR AND THUS, THE GROUNDS OF THE REVENUE ARE DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED ON 29 TH SEPTEMBER, 2017. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) ! / JUDICIAL MEMBER '! / ACCOUNTANT MEMBER PUNE; DATED : 29 TH SEPTEMBER, 2017. YAMINI #$%&'('% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3 . 4. 5. 6. CIT(A)-1, PUNE PR.CIT-1, PUNE. '#$ %%&',) &', / DR, ITAT, B PUNE; $+,-/ GUARD FILE. / BY ORDER , / //TRUE COPY// ./0%1&2 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE