Raj Video Visiion, CHENNAI V. ACIT, CHENNAI

ITA 1582/CHNY/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8471 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2016
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 21-09-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 09-07-2015
• Court: TRIBUNAL
• Department Lawyers: R DURAI
• Assessee Lawyers: R PADMANABHANC A
• Keywords: Difference of opinion; Revenue expenditure; Capital expenditure

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI , . ! '# BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G.PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A.NOS.1581 & 1582/MDS./2015 / ASSESSMENT YEAR : 2007-08 M/S.RAJ VIDEO VISION, 703,ANNA SALAI, THOUSAND LIGHTS, CHENNAI. VS. COMMISSIONER OF INCOME TAX,CHENNAI-34. [PAN AAAFR 5226 M ] ( $% / APPELLANT) ( &'$% /RESPONDENT) / APPELLANT BY : MR.R.PADMANABHAN,C.A /RESPONDENT BY : MR.R.DURAIPANDIAN,SR.AR / DATE OF HEARING : 21 - 0 9 - 201 6 !' / DATE OF PRONOUNCEMENT : 21 - 0 9 - 2016 ( / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THESE TWO APPEALS OF THE ASSESSEE ARE DIRECTED A GAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)- 4,CHENNAI DATED 30.03.2015PERTAINING TO ASSESSMENT YEAR 2007- 08. ITA NO.1581/MDS./2015 2. THE FIRST GROUND IN THIS APPEAL IS WITH REGARD TO NON-SERVING OF NOTICE U/S.147 OF THE ACT AS PER THE PROCEDURE L AID DOWN UNDER THE ITA NO. 1581,1582/MDS./2015 :- 2 -: ACT. SINCE THIS GROUND IS NOT PRESSED BY THE COUNS EL OF ASSESSEE, ACCORDINGLY, IS DISMISSED. 3. THE NEXT GROUND IS WITH REGARD TO DISALLOWANCE U/S.40(A)(IA) OF THE ACT AND CONSEQUENT LEVY OF INTEREST U/S.23 4B & 234C OF THE ACT. 4. IN THIS CASE, THE DISALLOWANCE OF ` 32 LAKHS PAID TOWARDS DIFFERENT RIGHTS PURCHASE BY ASSESSEE WITHOUT DEDUC TING TDS U/S.194J(1)(C). 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. SIMILAR ISSUE CAME UP FOR CONSIDERATION BEF ORE THIS TRIBUNAL IN THE CASE OF SHRI N.PALANIVELU VS. ITO REPORTED IN [2015] 40 ITR (TRIB) 325 [CHENNAI] VIDE ORDER DATED 29.04.2015 WHEREIN H ELD THAT:- 4. WE HAVE HEARD BOTH SIDES AND PERUSED THE MATERI AL ON RECORD. WE FIND THAT THE SPECIAL BENCH OF THE TRIBU NAL IN THE CASE OF MERILYN SHIPPING AND TRANSPORTS V. ADDL. CI T [2012] 16 ITR (TRIB) 1 (VISAKHAPATNAM) [SB] AND JUDGMENT O F THE GUJARAT HIGH COURT IN THE CASE OF CIT V. VECTOR SHI PPING SERVICES (P.) LTD. IN I. T. A. NOS. 122 OF 2013 DAT ED JULY 9, 2013 [2013] 357 ITR 642 (ALL) HELD THAT SECTION 40( A)(IA) IS NOT APPLICABLE WHEN THERE IS NO OUTSTANDING BALANCE AT THE END OF THE CLOSE OF THE YEAR RELEVANT TO THE ASSESS MENT YEAR IN RESPECT OF THESE PAYMENTS. HOWEVER, THE ASSESSEE HAS NOT BROUGHT ON RECORD, THE DETAILS OF OUTSTANDING EXPEN SES OR SCHEDULE OF SUNDRY CREDITORS SHOWING WHETHER THE IM PUGNED AMOUNT IS OUTSTANDING AT THE END OF THE CLOSE OF TH E PREVIOUS ITA NO. 1581,1582/MDS./2015 :- 3 -: YEAR RELEVANT TO THE ASSESSMENT YEAR EITHER IN THE NAME OF THE PARTY OR OUTSTANDING EXPENSES. HENCE, IN THE IN TEREST OF JUSTICE, WE ARE REMITTING THE ISSUE BACK TO THE FIL E OF THE ASSESSING OFFICER WITH DIRECTION TO VERIFY THE CLAI M OF THE ASSESSEE AND THE ASSESSEE SHALL PLACE NECESSARY EVI DENCE IN SUPPORT OF HIS CLAIM. 5. FURTHER, WE MAKE IT CLEAR THAT IF THE IMPUGNED A MOUNT IS NOT OUTSTANDING AT THE END OF THE CLOSE OF THE ASSE SSMENT YEAR IN RESPECT OF THE EXPENSES EITHER AS OUTSTANDI NG EXPENSES OR AS SUNDRY CREDITORS, THIS AMOUNT CANNOT BE DISALLOWED. THIS GROUND IS REMITTED BACK TO THE ASS ESSING OFFICER FOR FRESH CONSIDERATION. IN VIEW OF THIS, DISALLOWANCE UNDER SECTION 40(A)(I A) IS ONLY APPLICABLE TO THOSE PAYMENTS WHICH ARE OUTSTANDING AT THE END OF THE CLOSE OF THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR IN RESPECT OF THESE PAYMENTS. ACCORDINGLY, THE ISSUE IS REMITTED TO TH E FILE OF AO IN THE LIGHT OF ABOVE ORDER OF THE TRIBUNAL CITED SUPRA. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO.1582/MDS./2015 7. IN THIS APPEAL, THE ASSESSEE CHALLENGES THE LE VY OF PENALTY U/S.271(1)(C) OF THE ACT AT ` 4,53,296/-. ITA NO. 1581,1582/MDS./2015 :- 4 -: 8. THE FACTS OF THE ISSUE ARE THAT THE LD. ASSESSI NG OFFICER COMPLETED THE ASSESSMENT U/S.143(3) OF THE ACT ON 26.11.2009 RAISING A DEMAND OF ` 6,42,110/-. THE AO FOUND THAT THE ASSESSEE HAD MANIPULATED THE ENTRIES IN BOOKS OF ACCOUNTS IN SUC H A MANNER THAT INCOME HAS GOT CONCEALED AS REVENUE EXPENDITURE INS TEAD OF CAPITAL EXPENDITURE, PENALTY PROCEEDINGS U/S.271(1)(C) OF T HE ACT WAS INITIATED AND A PENALTY OF ` 4,53,296/- WAS LEVIED. AGGRIEVED, THE ASSESSEE CARRIED THE APPEAL BEFORE THE LD.CIT(A). ON APPEAL , THE LD.CIT(A) OBSERVED THAT SINCE THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE REBUTTING THE CONCLUSIONS DRAWN BY THE AO, THE PENA LTY WAS CONFIRMED BY THE LD.CIT(A). AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE MAIN CONTENTION OF THE LD.D.R IS THAT T HE ASSESSEE CLAIMED THE CAPITAL EXPENDITURE AS A REVENUE EXPENDITURE. O N THE OTHER HAND, THE CONTENTION OF LD.A.R IS THAT THE ASSESSEE INCUR RED SUCH EXPENDITURE TOWARDS INTERIOR DESIGN AND CIVIL EXTERIOR WORK FO R MOUNT ROAD SHOWROOM DEMOLITION WORK INCLUDING CHIPPING, BREAKI NG EXISTING EXTERIOR AND LAYING WHITE MARBLE AND TILES DOES NOT GIVE ANY ENDURING BENEFIT. ACCORDING TO HIM, THERE IS CLEAVAGE OF OPI NION REGARDING TREATMENT OF EXPENDITURE AS REVENUE OR CAPITAL AND THE MISTAKE IS BONA FIDE, WHICH DOES NOT WARRANT LEVY OF PENALTY. IN O UR OPINION, THE EXPENDITURE IN DISPUTE WHICH WAS CLAIMED AS REVENUE EXPENDITURE, ITA NO. 1581,1582/MDS./2015 :- 5 -: WHICH IS BEING A BONA FIDE MISTAKE AS STATED BY THE LD.A.R. IT CANNOT BE SAID THAT THE ASSESSEE HAS CONCEALED ANY PARTICU LARS OF INCOME OR FURNISHING ANY INACCURATE PARTICULARS, ONLY BECAUSE OF DIFFERENCE IN OPINION IN TREATING THE EXPENDITURE AS CAPITAL, OR REVENUE, IT WAS CLAIMED AS REVENUE EXPENDITURE. THE CLAIM OF ASSESS EE MAY NOT BE ALLOWED WHILE COMPUTING THE INCOME OF ASSESSEE, BUT THAT ITSELF NOT LEAD TO CONCLUSION THAT ASSESSEE HAS FURNISHED INAC CURATE PARTICULARS AND CONCEALMENT OF INCOME TO LEVY OF PENALTY U/S.27 1(1)(C) OF THE ACT. IN OUR OPINION, THE JUDGEMENT OF SUPREME COURT IN T HE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. REPORTED IN [2010] 322 ITR 158 (SC) WHEREIN HELD THAT:- 12. - - -- WE DO NOT AGREE, AS THE ASSESSEE HAD FU RNISHED ALL THE DETAILS OF ITS EXPENDITURE AS WELL AS INCOME IN ITS RETURN, WHICH DETAILS, IN THEMSELVES, WERE NOT FOUND TO BE INACCU RATE NOR COULD BE VIEWED AS THE CONCEALMENT OF INCOME ON ITS PART. IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS CLAIM IN THE RETURN O R NOT. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, W HICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVEN UE, THAT BY ITSELF WOULD NOT, IN OUR OPINION, ATTRACT THE PENAL TY UNDER SECTION 271(1)(C). IF WE ACCEPT THE CONTENTION OF THE REVEN UE THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE IS NOT AC CEPTED BY THE ASSESSING OFFICER FOR ANY REASON, THE ASSESSEE WILL INVITE PENALTY UNDER SECTION 271(1)(C). THAT IS CLEARLY NOT THE IN TENDMENT OF THE LEGISLATURE. ITA NO. 1581,1582/MDS./2015 :- 6 -: ACCORDINGLY, THE LEVY OF PENALTY U/S.271(1)(C) OF T HE ACT IS UNWARRANTED AND THE PENALTY IS DELETED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN I TA NO.1582/MDS./15 IS ALLOWED. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE ITA NO.1581/MDS./15 IS PARTLY ALLOWED FOR STATISTICAL P URPOSES THE APPEAL OF THE ASSESSEE IN ITA NO.1582/MDS./15 IS ALLOWED ORDER PRONOUNCED IN THE OPEN HEART AT THE TIME OF H EARING ON 21 ST SEPTEMBER, 2016, AT CHENNAI. SD/ - SD/ - ( . ) ( G.PAVAN KUMAR ) ! / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED: 21 ST SEPTEMBER, 2016 K S SUNDARAM &'(()*( +* / COPY TO: ( 1 . / APPELLANT 3. ( ,(- . / CIT(A) 5. */0 (1 / DR 2. / RESPONDENT 4. ( , / CIT 6. 02(3 / GF