ACIT, New Delhi V. M/s Moradabad Toll Road Co. Ltd., New Delhi

ITA 158/DEL/2009

• Counselvise Citation: 15820114 RSA 2009
• Duration Of Justice: 6 year(s) 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 20-05-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 15-01-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S GUPTA CA SHRI LOKESH GUPTA
• Assessee Lawyers: RIS GILL
• Keywords: Depreciation; Question of law; Difference of opinion
• Section: 260A; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : C NEW DELHI BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER ITA NO: 158/DEL/2009 ASSTT. YEAR : - 2003-04 ACIT, CIRCLE 5(1) VS. M/S. MORA DABAD TOLL ROAD CO. LTD. NEW DELHI. G-5 & 6 SECTOR-10, DWARKA, N EW DELHI 110 045. (PAN AABCM9154B) (APPELLANT) (RESPONDENT) AND ITA N O. 67/DEL/2009 ASST T. YEAR 2004-05 MORADABAD TOLL ROAD CO. LTD. V S. DCIT, G-5 & 6, SECTOR 10, DWARKA, CIRCLE 5(1), NEW DELHI 110 075. NEW DELHI. (PAN AABCM9154B) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.S . GUPTA, CA, SHRI LOKESH GUPTA, CA RESPONDENT BY :SHRI R.I. S GILL, CIT(DR) DATE OF HEARING :20.5.2015 DATE OF PRONOUNCEMENT : 02. 06.2015 O R D E R PER G.C. GUPTA, VICE PRESIDENT THESE TWO APPEALS BY THE REVENUE AND TH E ASSESSEE FOR THE ASSESSMENT YEARS 2003-04 AND 2004-05 RESPECTIVELY ARE DIRECTED AGAINST THE ORDER OF THE CIT(A). SINCE THE IDENTICAL ISSUE OF IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT IS INVOLVED IN BOTH THESE APPEALS THESE ARE BEING DISPOSED OF W ITH THIS CONSOLIDATED ORDER. ITA NOS. 158, 67/DEL/2009 2 2. THE GROUNDS OF APPEAL OF REVENUE FOR THE AS SESSMENT YEAR 2003-04 ARE AS UNDER :- 1. THE ORDER OF THE LEARNED CIT(A) IS ERRONEOUS & C ONTRARY TO FACTS & LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LEARNED CIT(A) HAS ERRED IN DELETING PENALTY IMPOSED U/S 271(1)(C) OF THE RS. 5.50 CRORE IGNORING THAT THE PROVISIONS OF SECTION 271(1)(C) ARE ATTRACTED IN THIS CASE AS THE ASSESSEE HAS FILED INACCURATE PARTICULARS OF INCOME BY CLAIMING DEPRECIATION ON ROAD @ 25% TREATING THE ROAD AS PLA NT & MACHINERY INSTEAD OF BUILDING ON WHICH DEPRECIATION IS ALLOWABLE @ 10%. 3. THE GROUNDS OF APPEAL OF ASSESSEE FOR THE AS SESSMENT YEAR 2004-05 ARE AS UNDER :- 1. THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW I N UPHOLDING THE IMPUGNED ORDER OF PENALTY WHICH IS CONTRARY TO LAW, EQUITY A ND JUSTICE AND FACTS AND MATERIAL ON RECORD. 2. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN UPHOLDING IMPOSITION OF THE IMPUGNED PENALTY OF RS. 3,75,00,000/- ON A NATI ONAL ORGANIZATION, CONSTITUTED UNDER AN ACT OF THE PARLIAMENT ENGAGED IN THE DEVELOPMENT OF INFRASTRUCTURE FOR THE NATION AND EXEMPTED U/S 10(2 3G) AND WHOSE INCOME IS EXEMPT FROM TAXATION U/S 10(23C)(IV) OF THE IT ACT. RENEWAL OF APPROVAL IS PENDING WITH THE DGIT EXEMPTION, DELHI FOR NO FAULT OF THE ASSESSEE. 4. THE LD. DR SUBMITTED THAT THE FACTS OF THE CASE OF THE ASSESSEE FOR BOTH THE RELEVANT ASSESSMENT YEARS 2003-04 AND 2004-05 ARE I DENTICAL AND A CONSOLIDATED ORDER FOR BOTH THESE ASSESSMENT YEARS WAS PASSED BY THE CIT(A). HE SUBMITTED THAT THE PENALTY U/S 271(1)(C) OF THE ACT WAS IMPOSED F OR BOTH THE RELEVANT ASSESSMENT YEARS IN THIS CASE ON THE DISALLOWANCE OF DEPRECIAT ION ON ROAD. HE SUBMITTED THAT THE ASSESSEE HAS CLAIMED DEPRECIATION @ 25% UNDER T HE HEAD PLANT AND MACHINERY TREATING TOLL ROAD AS THE PLANT ALTHOUG H THE DEPRECIATION WAS ALLOWABLE @ 10% ONLY AS IT WAS APPLICABLE TO A BUILDING. H E SUBMITTED THAT THE ASSESSEE HAS TAKEN THE MATTER IN QUANTUM CASE TO THE HONBLE HIG H COURT AND THE HONBLE HIGH ITA NOS. 158, 67/DEL/2009 3 COURT HAS DECIDED THE CASE AGAINST THE ASSESSEE AND HELD THAT THE ASSESSEE WAS ENTITLED TO DEPRECIATION @ 10% ON TOLL ROAD AND NOT 25% AS CLAIMED BY THE ASSESSEE. THE LD. DR REFERRED TO THE RELEVANT PORTI ON OF THE ASSESSMENT ORDER AS WELL AS THE PENALTY ORDER AND THE ORDER OF THE CIT( A) FOR THE ASSESSMENT YEAR 2004- 05 IN WHICH THE PENALTY U/S 271(1)(C) WAS CONFIRME D BY HIM AND SUBMITTED THAT THERE WAS NO VALID REASON FOR THE ASSESSEE TO CLAIM A HIGHER RATE OF DEPRECIATION ON TOLL ROAD AND THE ASSESSEE COULD NOT DISCHARGE ITS BURDEN FOR PROVING THAT THE CLAIM MADE WAS BONAFIDE. HE RELIED ON THE ORDER OF THE AO . 5. LD. COUNSEL FOR THE ASSESSEE HAS OPPOSED T HE SUBMISSION OF THE LD. DR. HE SUBMITTED THAT ALL THE MATERIAL FACTS RELEVANT FOR THE ASSESSMENT WERE DISCLOSED BY THE ASSESSEE AT THE TIME OF ASSESSMENT ITSELF. THE CONDUCT AND THE EXPLANATION OF THE ASSESSEE WAS BONAFIDE. THE ISSUE THAT WHETHER T HE TOLL ROAD MADE BY THE ASSESSEE WERE PLANT OR WERE BUILDING IS A HIGHL Y DEBATABLE ISSUE. THE ASSESSEE HAS TAKEN THE ISSUE TO THE LEVEL OF THE HONBLE JUR ISDICTIONAL HIGH COURT AND THIS SHOWS THE BONAFIDE CONDUCT OF THE ASSESSEE AS WELL AS THE FACT THAT THE ISSUE WAS HIGHLY DEBATABLE. MERELY BECAUSE THE HONBLE HIGH C OURT ULTIMATELY IN THE QUANTUM APPEAL OF THE ASSESSEE HAS DECIDED THE ISSUE IN FAV OUR OF THE REVENUE AND HAS HELD THAT THE ASSESSEE WOULD BE ENTITLED TO DEPRECIATION AT 10% AS APPLICABLE IN THE CASE OF BUILDING, IT DOES NOT FOLLOW THAT THE ASSESSEE COULD BE HELD GUILTY FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN THE CASE OF THE ASSESSEE THE ISSUE OF HIGHER CLAIM OF DEPRECIATION @ 25% ON THE TOLL ROAD WAS ADMITTED BY THE HONBLE HIGH COURT BEING A SUBSTANTIAL QUESTION OF LAW IN T HE QUANTUM APPEALS OF THE ASSESSEE AND THEREFORE THIS ITSELF SHOWS THAT THE I SSUE WAS DEBATABLE IN NATURE. HE ITA NOS. 158, 67/DEL/2009 4 RELIED THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. LIQUID INVESTMENT AND TRADING CO. ITA 240/2009 DATED 5.1 0.2010 WHEREIN HELD THAT THE ASSESSEE HAS PREFERRED AN APPEAL U/S 260A OF THE AC T WHICH WAS ALSO BEEN ADMITTED AND SUBSTANTIAL QUESTION OF LAW FRAMED AND THIS ITS ELF SHOWS THAT THE ISSUE IS DEBATABLE. REGARDING THE ASSESSMENT YEAR 2004-05, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THOUGH THERE WAS AN AMENDME NT IN THE RELEVANT PROVISION OF DEFINITION OF PLANT BUT THE ASSESSMENT YEAR 2004 -05 IS THE FIRST ASSESSMENT YEAR AFTER THE AMENDMENT AND THE ASSESSEES MISTAKE WAS BONAFIDE AND THERE WAS NO MENS REA ON THE PART OF THE ASSESSEE. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSION S AND HAVE PERUSED THE ORDER OF THE CIT AND AO. WE FIND THAT THE ASSESSEE HAS DISCL OSED ALL THE MATERIAL FACTS FOR BOTH THE RELEVANT ASSESSMENT YEARS 2003-04 AND 2004 -05 BEFORE THE AO AT THE TIME OF ASSESSMENT ITSELF. THE ASSESSEE HAS FILED THE DE TAILS OF DEPRECIATION AND ALSO THE FACT THAT IT HAS TREATED THE TOLL ROAD AS PLANT A ND HAS CLAIMED A HIGHER RATE OF DEPRECIATION AT 25%. THE ASSESSEE HAS FILED AN EXPL ANATION IN THIS REGARD WHICH COULD NOT BE SAID TO BE NOT BONAFIDE. THIS IS A CAS E OF DIFFERENCE OF OPINION BETWEEN THE ASSESSEE AND THE DEPARTMENT WITH REGARD TO THE CORRECT RATE OF DEPRECIATION ALLOWABLE TO THE ASSESSEE ON ITS TOLL ROAD AND THA T WHETHER THE TOLL ROAD IS A PLANT OR IS A BUILDING. IT IS NOT A CASE THAT REVENUE H AS GATHERED SOME MATERIAL NOT DISCLOSED BY THE ASSESSEE. IT IS A CASE OF FURNISHI NG OF CORRECT PARTICULARS OF INCOME, BUT THE DIFFERENCE WAS IN THE FIGURE OF ALLOWANCE O F DEDUCTION ON ACCOUNT OF DEPRECIATION DUE TO THE DIFFERENCE IN THE INTERPRET ATION OF THE RELEVANT PROVISION OF LAW. THE ISSUE THAT WHETHER THE TOLL ROAD IS A PLA NT OR A BUILDING IS CLEARLY DEBATABLE IN NATURE AND IT IS FURTHER PROVED BY THE EFFECT THAT THE ASSESSEES APPEAL ITA NOS. 158, 67/DEL/2009 5 TO THE HONBLE JURISDICTIONAL HIGH COURT WAS ADMIT TED IN THE QUANTUM CASE OF THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEARS. ALTHOUG H THE ISSUE WAS DECIDED AGAINST THE ASSESSEE BY THE HONBLE HIGH COURT AND IT WAS HELD THAT THE ASSESSEE WAS ENTITLED TO DEPRECIATION @ 10% AS APPLICABLE IN THE CASE OF BUILDING AND NOT 25% AS APPLICABLE TO PLANT BUT IT WILL NOT LEAD TO TH E CONCLUSION THAT THE ASSESSEE WAS GUILTY OF CONCEALMENT OF INCOME OR FILING OF INACCU RATE PARTICULARS OF INCOME. MERELY BECAUSE THERE WAS AN AMENDMENT AND THE LEGAL POSITI ON WAS CLARIFIED BY THE FINANCE ACT 2003 W.E..F ASSESSMENT YEAR 2004-05 IN THIS REG ARD, IT DOES NOT FOLLOW THAT THE CONDUCT AND EXPLANATION OF THE ASSESSES FOR THE ASS ESSMENT YEAR 2004-05 WAS MALAFIDE. THE FACTS OF THE CASE OF THE ASSESSEE FOR BOTH THE ASSESSMENT YEARS 2003- 04 AND 2004-05 WERE SIMILAR AND THERE IS NO VALID R EASON FOR THE CIT(A) TO CONFIRM THE PENALTY IMPOSED U/S 271(1)(C) FOR THE LATER ASS ESSMENT YEAR 2004-05, WHILE DELETING THE PENALTY FOR THE EARLIER ASSESSMENT YEA R 2003-04 BY THE SAME ORDER. WE FIND THAT THE DECISION OF THE HONBLE DELHI HIGH CO URT IN CIT VS. LIQUID INVESTMENT AND TRADING COMPANY (SUPRA) CLINCHES THE ISSUE IN F AVOUR OF THE ASSESSEE. IN THIS CASE IT WAS HELD BY THE HONBLE HIGH COURT THAT WHE RE THE ASSESSEE HAS PREFERRED AN APPEAL U/S 260A OF THE ACT WHICH HAS ALSO BEEN ADMI TTED AND SUBSTANTIAL QUESTION OF LAW FRAMED, THIS ITSELF SHOWS THAT THE ISSUE IS DE BATABLE. IN OUR CONSIDERED VIEW NO PENALTY U/S 271(1)(C) OF THE ACT COULD BE IMPOSED O N A DEBATABLE ISSUE. IN THIS VIEW OF THE ORDER WE HOLD THAT THE CASE OF THE ASSESSEE IS NOT A FIT CASE FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT AND ACCORDINGLY THE GROUND S OF THE APPEAL OF THE REVENUE FOR THE ASSESSMENT YEAR 2003-04 ARE DISMISSED AND T HE GROUNDS OF THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2004-05 IS ALLOWED . ITA NOS. 158, 67/DEL/2009 6 7. IN THE RESULT APPEAL FILED BY THE REVEN UE FOR THE ASSTT. YEAR 2003-04 IS DISMISSED AND THE APPEAL FILED BY THE ASSESSEE FOR THE ASSTT. YEAR 2004-05 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 02.06.2015. SD/- SD/- (T.S. KAPOOR) (G.C. GUPTA) ACCOUNTANT MEMBER VICE PRESIDE NT DATED: 02.06.2015 *VEENA COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GUARD FILE BY ORDER DY. REGISTRAR SL. NO. DESCRIPTION DATE 1. DATE OF DICTATION BY THE AUTHOR 20.5.2015 2. DRAFT PLACED BEFORE THE DICTATING MEMBER 21.5.2015 3. DRAFT PLACED BEFORE THE SECOND MEMBER 4. DRAFT APPROVED BY THE SECOND MEMBER 5. DATE OF APPROVED ORDER COMES TO THE SR. PS 6. DATE OF PRONOUNCEMENT OF ORDER 7. DATE OF FILE SENT TO THE BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER ITA NOS. 158, 67/DEL/2009 7