ACIT, Faridabad V. M/s C & C Construction Ltd., New Delhi

ITA 1492/DEL/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3928 (ITAT-DELHI)
• Duration Of Justice: 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 25-05-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 25-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Keywords: Depreciation

Judgement Text

ITA NO. 1492/DEL/2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DELHI BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 1492/DEL/2011 A.Y. : 2003-04 ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-II, FARIDABAD VS. M/S C&C CONSTRUCTION LTD., G-11, HEMKUNT CHAMBERS, NEHRU PLACE, NEW DELHI (PAN/GIR NO. : AAACC4543R) (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSEESSEE BY : SH. AMAR JEET SINGH, CA DEPARTMENT BY : MS. Y. KAKKAR, SR. D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE OR DER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 16.12.2010 PERTAINING TO ASSESSMENT YEAR 2003-04. 2. THE ISSUE RAISED READS AS UNDER:- THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED BOTH IN LAW AND ON FACTS OF THE CASE IN DELETING PENALTY U/S 271(1 )(C) IMPOSED BY THE ASSESSING OFFICER WITHOUT APPRECIATING THE FINDING S OF THE ITAT THAT THE EXPENDITURE OF ` 20,26,181/- CLAIMED TO BE INCU RRED ON TEMPORARY STRUCTURE WAS HELD TO BE A PERMANENT CONSTRUCTION AND THUS FURNISHED INACCURATE PARTICULARS AND THAT THE DEPRECIATION WAS ALLOWABLE @10% INSTEAD OF 100% WRONGLY CLAIMED BY THE ASSESSEE. ITA NO. 1492/DEL/2011 2 3. IN THIS CASE ASSESSEE HAD CLAIMED DEPRECIATION @ 100% ON SHEDS AMOUNTING TO ` 41,36,577/-. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE EXPENDITURE CANNOT BE SAID TO BE RELATED TO TEMPORAR Y SHEDS. ACCORDINGLY, HE RESTRICTED THE DEPRECIATION ON THESE SHEDS @ 10%. T HE DETAIL OF THIS EXPENDITURE WAS THAT ` 20,26,181/- HAD BEEN INCUR RED AT KOLKATA REGIONAL OFFICE AND ` 10,75,297/- AND ` 10,14,599/- HAD BEE N INCURRED AT TWO OTHER SITES. 4. LD. COMMISSIONER OF INCOME TAX (APPEALS) UPHELD THE ORDER WITH REGARD TO ALLOWING THE DEPRECIATION @ 10% CONCERNIN G THE CONSTRUCTION AT THE KOLKATA REGIONAL OFFICE. HOWEVER, IT WAS FOUND BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) THAT OTHER TWO SITES EXPENSES OF ` 10,75,297/- AND ` 10,14,599/- PERTAINING TO OTHER PROJECTS WHERE THE C ONSTRUCTION WAS OF TEMPORARY SHEDS AND @100% DEPRECIATION ON THESE TWO SITES WAS ALLOWED. 5. THE ITAT UPON ASSESSEES APPEAL HAD CONFIRMED THE DI SALLOWANCE WITH REGARD TO KOLKATA REGIONAL OFFICE. PENALTY IN THI S REGARD WAS ALSO IMPOSED U/S 271(1)(C) OF THE IT ACT BY THE ASSESSING OFFICER. 6. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ADJUDI CATED THE ISSUE OF PENALTY AS UNDER:- DURING THE PROCEEDINGS BEFORE ME, IT WAS SUBMITTED TH AT THE CASE IS NOT COVERED UNDER THE EXPRESSION CONCEALMENT OF PA RTICULARS OF INCOME. THE ASSESSEE HAD FILED RELEVANT DETAILS DURING THE ASSESSMENT PROCEEDINGS REGARDING THESE CLAIMS. FURTHER, WHAT HAS BEEN TREATED AS FURNISHING OF INACCURATE PARTICULARS IS MAKING OF A CLAIM WHICH WAS NOT ADMITTED BY THE ASSESSING OFFICER. THE ADMISSION OR REJECTION OF A CLAIM IS A SUBJECTIVE EXERCISE AND WHETHER A CLAIM IS ACCEPTED OR REJECTED HAS NOTHING TO DO WITH FURNISHIN G OF INACCURATE PARTICULARS OF INCOME. IT WAS FURTHER SUBMITTED THAT T RIBUNAL HAS ALLOWED RELIEF ON THE DISALLOWANCE OF ` 2,96,801/-. THE APPELLANT DID NOT APPEAL AGAINST THE DISALLOWANCE OF ` 2,62,637/-. ON THE ADDITION ON ITA NO. 1492/DEL/2011 3 ACCOUNT OF TEMPORARY STRUCTURES AMOUNTING TO ` 41,37 ,577/-, AFTER ASSESSMENT UNDER SECTION 143(3), THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ALLOWED DEDUCTION @100% ON ADDITION OF ` 20,89,896/-. THE SAME ISSUE WAS DECIDED BY ITAT, NEW DELHI IN THE CA SE OF THE ASSESSEE ITSELF FOR THE ASSESSMENT YEAR 1998-99 ALSO ALTHOUGH THE ADDITION FOR THE YEAR UNDER APPEAL IS CONFIRMED BY T HE TRIBUNAL. HOWEVER, THESE ARE DEBATABLE POINTS AND PROVISIONS OF SECTION 271(1)(C) ARE NOT APPLICABLE. HONBLE DELHI HIGH COURT IN THE CASE OF C.I.T. VS. AIMIL LTD. & OTHERS 229 CTR 418 HAS DECIDED THAT EMPLOYEES CONTRIBUTION TO PROVIDED FUND, IF PAID BEFORE THE D UE DATE OF FILING OF THE RETURN, IS ALSO AN ALLOWABLE EXPENDITURE. IT WA S SUBMITTED THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ASSESSE E COULD NOT BE SAID TO HAVE CONCEALED THE PARTICULARS OF INCOME O R FURNISHED INACCURATE PARTICULARS OF INCOME AND ALSO THE CASE OF THE ASSESSEE IS NOT EVEN HIT BY THE MISCHIEF OF ANY OF THE THREE EVE NTUALITIES ENVISAGED BY THE DEEMING FICTION UNDER EXPLANATION 1 TO SECT ION 271(1)(C). I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE A.R. AND HAVE GONE THROUGH THE PENALTY ORDER. MY OBSERVATIONS ON T HE ISSUE ARE AS UNDER:- (I) THE ASSESSING OFFICER HAS IMPOSED PENALTY ON THE DISALLOWANCE MADE ON ACCOUNT OF DEPRECIATION ON SHEDS AND DELAYED DEPOSIT OF EMPLOYERS/EMPLOYEES CONTRIBUTION TO PROVIDENT FUND. AS FAR AS DISALLOWA NCE OF DEPRECIATION ON SHEDS IS CONCERNED, THE ADDITION WAS MA DE BY THE ASSESSING OFFICER BY OBSERVING THAT THE EXPENSES O F ` 20,26,181/- AT KOLKATA REGIONAL OFFICE AND ` 10,7 5,297/- AND ` 10,14,599/- AT TWO SITES WERE INCURRED ON CONSTRUCTION OF OFFICE BUILDINGS. THE LD. COMMISSIONE R OF INCOME TAX (APPEALS) ALLOWED DEPRECIATION @ 100% ON TWO SITES, BUT HE UPHELD THE ASSESSING ITA NO. 1492/DEL/2011 4 OFFICERS ORDER ON THE ISSUE OF DEPRECIATION ON CONSTRUCTION AT KOLKATA REGIONAL OFFICE. THE ASSESSE ES APPEAL ON THIS ISSUE HAS BEEN REJECTED BY ITAT. ON CAREFUL CONSIDERATION, I FIND THAT THE ISSUE AS TO WHETHER OR NOT THE CONSTRUCTION AT KOLKATA REGIONAL OFFICE IS A TEMPORARY CONSTRUCTION, IS A DEBATABLE ISSUE. IT H AS BEEN HELD IN VARIOUS DECISIONS THAT PENALTY PROVISIONS O F SECTION 271(1)(C) CANNOT BE INVOKED ON THE ISSUES WHERE TWO OPINIONS ARE POSSIBLE. IN THE CASE OF C.I.T. VS. BA CARDI MARTINI INDIA LTD. 288 ITR 585, HONBLE DELHI HIGH COURT HAS HELD THAT MERELY BECAUSE THERE IS DIFFERENCE OF OPINI ON FOR ALLOWING OR DISALLOWING THE EXPENDITURE BETWEEN THE ASSESSEE AND THE ASSESSING OFFICER, IT CANNOT BE SAID THAT ASSESSEE HAD INTENTION TO CONCEAL THE INCOME. AS THE ISSUE INVOLVED IS A DEBATABLE ISSUE, HENCE THE ASSESSING OFFICER WAS NOT JUSTIFIED IN IMPOSING PENALTY U/S 271(1)(C) OF THE ACT AND THE SAME IS, THEREFORE, DIRE CTED TO BE DELETED. 7. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEA L BEFORE US. 8. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF T HE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. WE FIND THAT OUT OF THE TOTAL ADDITION IN THIS REGARD, AMOUNTING TO ` 41,37,577/-, LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS GRANTED RELIEF WITH REGARD TO THE ADDIT ION OF ` 2089896/- AND ONLY THE BALANCE HAS BEEN CONFIRMED BY HIM WHICH PERTAIN TO KOLKATA REGIONAL OFFICE. IN THE PREVIOUS YEAR, AD DITION FOR THE DISALLOWANCE OF 100% CLAIM IN THE CASE OF SHEDS WAS DELE TED BY THE ITAT. IN THIS BACKGROUND, WE FIND OURSELVES IN AGREEMENT WITH T HE ADJUDICATION OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) THAT THE ISSUE WAS DEBATABLE AND PROVISIONS OF SECTION 271(1)(C) ARE NOT APPLICABLE. ITA NO. 1492/DEL/2011 5 9. SECTION 271(1)(C) OF THE INCOME TAX ACT POSTULATE S THE LEVY OF PENALTY FOR FURNISHING OF INACCURATE PARTICULARS OR CONCEALM ENT OF INCOME. IN THE PRESENT CASE, WE FIND THAT WHETHER OR NOT KOLKATA RE GIONAL OFFICE IS A TEMPORARY CONSTRUCTION WAS A DEBATABLE ISSUE AND IN SUCH CIRCUMSTANCES, LEVY OF PENALTY U/S 271(1)(C) IN THIS REGARD CANNOT BE SUSTAINED. THERE IS NO CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS. ALL THE DETAILS OF THE ADDITION AND THE CLAIM HAVE BEEN DULY FURNISHED. IT IS ONLY A MATTER OF OPINION AS TO WHETHER DEPRECIATION IS APPLICABLE @10% OR 100%. THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF C.I.T. VS. BACARDI MARTINI INDIA LTD. 288 ITR 585 IS ALSO RELEVANT. IN THIS DECISION, THE HONBLE HIGH COURT HAS HELD THAT MERELY BECAUSE THERE IS DIFFE RENCE OF OPINION FOR ALLOWING OR DISALLOWING THE EXPENDITURE BETWEEN THE ASSESSEE AND THE ASSESSING OFFICER , IT CANNOT BE SAID THAT THE ASSESSEE HAD INTENTION TO CONCEAL THE INCOME. 10. WE WOULD LIKE TO REFER TO THE HONBLE APEX COURT DECISION IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS LTD. IN CIVIL A PPEAL NO. 2463 OF 2010. IN THIS CASE VIDE ORDER DATED 17.3.2010 IT HAS BEEN HELD THAT THE LAW LAID DOWN IN THE DILIP SHEROFF CASE 291 ITR 519 (SC) AS TO THE MEANING OF WORD CONCEALMENT AND INACCURATE CONTINUES TO BE A GO OD LAW BECAUSE WHAT WAS OVERRULED IN THE DHARMENDER TEXTILE CASE WAS ONLY THAT PART IN DILIP SHEROFF CASE WHERE IT WAS HELD THAT MENSREA WAS A ESSENTI AL REQUIREMENT OF PENALTY U/S 271(1)(C). THE HONBLE APEX COURT ALSO O BSERVED THAT IF THE CONTENTION OF THE REVENUE IS ACCEPTED THEN IN CASE OF EVERY RETURN WHERE THE CLAIM IS NOT ACCEPTED BY THE AO FOR ANY REASON, T HE ASSESSEE WILL INVITE THE PENALTY U/S 271(1)(C). THIS IS CLEARLY NOT THE I NTENDMENT OF LEGISLATURE. 11. WE WOULD ALSO LIKE TO REFER THE DECISION OF THE HONBLE APEX COURT RENDERED BY A LARGER BENCH COMPRISING OF THREE OF T HEIR LORDSHIPS IN THE CASE OF HINDUSTAN STEEL VS. STATE OF ORISSA IN 83 ITR 2 6 WHEREIN IT WAS HELD THAT AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI-CRIMINAL PROCEEDINGS, AND PENA LTY WILL NOT ORDINARILY ITA NO. 1492/DEL/2011 6 BE IMPOSED UNLESS THE PARTY OBLIGED EITHER ACTED DELIB ERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST , OR ACTED IN CONSCIOUS DISREGARD OF ITS OBLIGATION. PENALTY WILL NO T ALSO BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPOSED FOR FAILURE TO PERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCR ETION OF THE AUTHORITY TO BE EXERCISED JUDICIALLY AND ON A CONSIDERATION OF AL L THE RELEVANT CIRCUMSTANCES. EVEN IF A MINIMUM PENALTY IS PRESCRIBED , THE AUTHORITY COMPETENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY, WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT, OR WHERE THE BREACH FLOWS FROM A BONAFIDE BELIE F THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE . 12. IN THE BACKGROUND OF THE AFORESAID DISCUSSION AND P RECEDENTS, WE DO NOT FIND ANY INFIRMITY OR ILLEGALITY IN THE ORDER O F THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AND HENCE, WE UPHOLD THE SAME. 13. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25/5/2011, UP ON CONCLUSION OF HEARING. SD/- SD/- [ [[ [A.D. JAIN A.D. JAIN A.D. JAIN A.D. JAIN] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 25/5/2011 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES