DCIT, New Delhi V. M/s Nalwa Steel & Power Ltd., New Delhi

ITA 1558/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 91209 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 15-06-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 15-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B DHAMKANUNJNA
• Assessee Lawyers: V K TULSIAN
• Keywords: Depreciation; Additional depreciation; Deemed to accrue or arise in india
• Section: 143(3); 14A; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : E , NEW DELHI BEFORE SHRI H.S.SIDHU, JUDICIAL MEMBER AND SHRI J.SUDHAKAR REDDY, ACCOUNTANT MEMBER I.T.A.NO. 15 58 /DEL/2013 A.Y. 200 5 - 06 DC IT , CIRCLE 13(1) NEW DELHI 110 002 VS. NALWA STEEL & POWER LTD. 28, NAJAFGARH ROAD NEW DELHI PAN: AABCN 3209 L (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. VK TULSIAN, C.A. DEPARTMENT BY : SH. B.DHAMKANUNJNA, SR.DR ORDER PER J. SUDHAKAR REDDY, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD.CIT(APPEALS) XVI, NEW DELHI DATED 2 7.12.2012 PERTAINING TO THE A.Y. 200 5 - 06 . 2 . FACTS IN BRIEF : - THE ASSESSEE IS A COMPANY AND IT FILED ITS RETURN OF INCOME ON 21.10.2005 DECLARING TOTAL INCOME OF RS.4,51,27,183/ - UNDER THE NORMAL PROVISIONS OF THE INCOME TAX ACT, 1961 (THE ACT) AND BOOK PROFIT OF RS.82,97,30,572/ - U/S 115 JB OF T HE ACT. THE ASSESSING OFFICER ( A.O.) COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT ON 20.12.2007 INTER ALIA MAKING THE FOLLOWING COMPUTATION UNDER THE NORMAL PROVISIONS OF THE ACT. UNDER NORMAL PROVISIONS OF THE ACT. TOTAL INCOME AS DECLARED IN THE RETU RN ADD: (1) ADDITIONAL DEPRECIATION DISALLOWED (2) DISALLOWANCE U/S 14A OF THE ACT RS.5,64,30,426/ - RS.1,20,540/ - RS.4,51,27,183/ - RS. 5,65,50,966/ - TOTAL INCOME UNDER NORMAL PROVISIONS OF THE ACT RS.10,16,78,149/ - ITA 1558/DEL/2013 AY 2005 - 06 NALWAS STEEL & POWER LTD., NEW DELHI 5 AS FAR AS BOOK PROFITS U/S 115 JB OF THE ACT ARE CONCERNED, THE A.O. HAS DETERMINED THE SAME AS FOLLOWS. BOOK PROFIT U/S 115 JB OF THE ACT: BOOK PROFIT AS CALCULATED IN THE RETURN ADD: (I) PROVISION FOR GRATUITY (II) EXPENDITURE RELATABLE TO INCOME U/S 10 RS.8,04,337/ - RS. 1,20,540 RS.82,97,30,572/ - RS. 9,24,877/ - BOOK PROFIT U/S 115 JB OF THE ACT RS.83,06,55,449 ROUNDED OFF RS.83,06,55,450/ - THE TAX PAYABLE U/S 115 JB OF THE ACT IS HIGHER THAN THE TAX PAYABLE UNDER NORMAL PROVISIONS OF THE ACT, AND THE ASSESSEE WAS ASSESSED U/S 115 JB OF THE ACT I.E. ON BOOK PROFITS. THE A.O. LEVIED PENALTY U/S 271(1)(C ) OF THE ACT VIDE ORDER DT. 30.3.2011. IN THIS ORDER OF PENALTY, THE A.O. CONSIDERED DISALLOWANCE MADE UNDER THE NORMAL PROVISIONS OF THE ACT WHERE THE DEPRECIA TION CLAIMED BY THE ASSESSEE U/S 32(1)(IIA) OF THE ACT WAS DISALLOWED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THIS WAS ONLY ITEM OF DISALLOWANCE MADE UNDER THE NORMAL PROVISIONS OF THE ACT, WHICH WAS THE SUBJECT MATTER OF LEVY OF PENALTY U/S 2 71(1)(C ) OF THE ACT. ON APPEAL THE FIRST APPELLATE AUTHORITY DELETED THE PENALTY LEVIED APPLYING THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. NALWA SONS INVESTMENT LTD. REPORTED IN 327 ITR 543. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS. 1. THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE PENALTY U/S 27L(L)(C) OF THE INCOME TAX ACT 1961 AMOUNTING TO RS. 2,06,49,304/ - IMPOSED FOR FURNISHING INACCURATE PARTICULARS OF ITS INCOME; 2. THE LD. C IT(A) HAS ERRED IN LAW AND FACTS IN NOT APPRECIATING THE FACT THAT PROVISIONS OF THE INCOME TAX ACT 1961 ARE APPLICABLE IN THE CASE OF THE ASSESSEE & NOT THE PROVISIONS OF THE COMPANIES ACT 1956 EVEN IF THE TAX PAID BY THE ASSESSEE AS PER THE BOOK PROFIT W HICH IS CALCULATED AS PER THE PROVISIONS OF THE COMPANIES ACT 1956; 3. THE LD CIT (A) HAS ERRED IN LAW AND ON FACTS IN IGNORING THE PROVISIONS OF SECTION 115JB (5) OF THE ACT, WHICH CLEARLY MENTIONS THAT 'SAVE AS OTHERWISE ITA 1558/DEL/2013 AY 2005 - 06 NALWAS STEEL & POWER LTD., NEW DELHI 6 PROVIDED IN THIS SECTION, ALL OT HER PROVISIONS OF THIS ACT SHALL APPLY TO EVERY ASSESSEE, BEING A COMPANY, MENTIONED IN THIS SECTION.' 4. THE APPELLANT CRAVES TO BE ALLOWED TO ADD ANY FRESH GROUNDS OF APPEAL AND/OR DELETE OR AMEND ANY OF THE GROUNDS OF APPEAL. 3 . WE HAVE H EARD SHRI P.DHAMKANUNJA, LD.SR.D.R. ON BEHALF OF THE REVENUE AND SHRI V.K.TULSIAN, C.A. THE LD.COUNSEL FOR THE ASSESSEE. 4 ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, ON PERUSAL OF MATERIAL ON RECORD , ORDERS OF THE AUTHORITIES BELOW, CA SE LAWS CITED, WE HOLD AS FOLLOWS. 5. THE UNDISPUTED FACT IS THAT THE PENALTY IN QUESTION RELATED TO AN ITEM OF DISALLOWANCE, WHICH THE AO SOUGHT TO MAKE, WHILE COMPUTING THE TOTAL TAXABLE INCOME UNDER THE NORMAL PROVISIONS OF THE ACT. ULTIMATELY THE AO DID NOT BRING TO TAX THE ASSESSEE UNDER NORMAL PROVISIONS OF THE ACT. THIS IS FOR THE REASON THAT THE BOOK PROFITS DETERMINED U/S 115 JB OF THE ACT RESULTED IN HIGHER INCOME. THE A.O. HAD ASS ESSED THE INCOME OF THE ASSESSEE ONLY U/S 115 JB OF THE ACT. UNDER THESE CIRCUMSTANCES THE FIRST APPELLATE AUTHORITY WAS RIGHT IN APPLYING THE BINDING DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. NALWA SONS INVESTMENTS P.LTD. REPORTED IN 327 ITR 543. THUS, WE UPHOLD THE FOLLOWING FINDING OF THE FIRST APPELLATE AUTHORITY. 5.4. HON BLE JURISDICTIONAL DELHI HIGH COURT IN THE CASE OF CIT VS. NALWA SONS INVESTMENTS LTD. REPORTED IN 327 ITR 543 HELD THAT: ONCE, WE APPLY THIS RATIONALE TO EXPLANATION 4 GIVEN BY THE SUPREME COURT, IN THE PRESENT CASE, IT WILL BE DIFFICULT TO SUSTAIN THE PENALTY PROCEEDINGS. REASON IS SIMPLE. NO DOUBT, THERE WAS CONCEALMENT BUT THAT HAD ITS REPERCUSSIONS ONLY WHEN THE ASSES SMENT WAS DONE UNDER THE NORMAL PROCEDURE. THE ASSESSMENT AS PER THE NORMAL PROCEDURE WAS HOWEVER NOT ACTED UPON. ON THE CONTRARY, IT IS THE DEEMED INCOME ASSESSED U/S 115 JB OF THE ACT WHICH HAS BECOME THE BASIS OF ASSESSMENT AS IT WAS HIGHER OF THE TW O. TAX IS THUS PAID ON THE INCOME ASSESSED U/S 115 JB OF THE ACT. HENCE, WHEN THE COMPUTATION WAS MADE U/S 115 JB OF THE ACT, THE AFORESAID CONCEALMENT HAD NO ROLE TO PLAY AND WAS TOTALLY IRRELEVANT. THEREFORE, THE CONCEALMENT DID NOT LEAD TO TAX EVASIO N AT ALL. ITA 1558/DEL/2013 AY 2005 - 06 NALWAS STEEL & POWER LTD., NEW DELHI 7 SLP FILED BY THE DEPARTMENT AGAINST THE AFORESAID DECISION OF THE HIGH COURT HAS ALSO BEEN DISMISSED BY THE SUPREME COURT VIDE ORDER DT. 4.5.2012 IN SLP NO.18564/2011. 6 . IN THE RESULT REVENUE S APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH JUNE, 2015. SD/ - SD/ - [H.S.SIDHU] [J. SUDHAKAR REDDY] JUDICIAL MEMBER ACCOUNTANT MEMBER DT. THE 24 TH JUNE, 2015 MANGA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES