The DCIT(OSD)Circle-8, Ahmedabad V. M/s. Torrent Pharmaceuticals Ltd., Ahmedabad

ITA 1586/AHD/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1273 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 08-06-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 29-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revenue expenditure; Capital expenditure
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH (BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER) ITA. NO: 1586/AHD/2013 (ASSESSMENT YEAR: 2005-06) THE DCIT (OSD), CIRCLE- 8, AHMEDABAD V/S M/S. TORRENT PHARMACEUTICALS LIMITED TORRENT HOUSE, NR. DINESH HALL, ASHRAM ROAD, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AAACT5456A APPELLANT BY : SHRI KAMLESH MAKWANA, SR. D.R. RESPONDENT BY : SHRI S.N. SOPARKAR, SR. ADV. ( )/ ORDER DATE OF HEARING : 08-06-201 6 DATE OF PRONOUNCEMENT : 14 -06-2016 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. THIS APPEAL BY THE REVENUE IS PREFERRED AGAINST THE ORDER OF LD. CIT(A)-XIV, AHMEDABAD DATED 21.03.2013 PERTAINING T O A.Y. 2005-06. ITA NO .1586 /AHD/2013 . A.Y. 2005-06 2 2. THE GRIEVANCE OF THE REVENUE RELATES TO THE DELETIO N OF THE PENALTY OF RS. 39,58,942/- LEVIED U/S. 271(1)(C) OF THE ACT. 3. THE ROOTS FOR THE LEVY OF PENALTY LIE IN THE ASSESS MENT ORDER DATED 26.12.2008 MADE U/S. 143(3) OF THE ACT WHEREIN THE RETURNED INCOME OF RS. 12,79,35,253/- WAS ASSESSED AT RS. 15,20,85, 816/-. THE ASSESSMENT WAS COMPLETED BY MAKING FOLLOWING ADDITI ONS:- ( I) EXPENDITURE CAPITALIZED RS. 25,20 ,000/- (II) DISALLOWANCE OF GARDEN EXPENSES RS. 27, 06,563/- (III) DISALLOWANCE OF R & D EXPENDITURE RS. 1,86,2 4,000/- (IV) DISALLOWANCE OF U/S. 14A OF THE ACT RS. 3,00, 000/- 4. THESE QUANTUM ADDITIONS TRAVELLED UP TO THE TRIBUNA L AND THE TRIBUNAL IN ITA NO. 1869 & 1881/AHD/2009 VIDE ORDER DATED 31 .05.2012 DELETED THE ADDITIONS MADE ON ACCOUNT OF (I) REVENUE EXPENDITURE TREATED AS CAPITAL EXPENDIT URE (II) GARDEN EXPENDITURE (III) OUT OF R & D EXPENSES ADDITION OF RS. 82,99,0 00/- WAS UPHELD (IV) DISALLOWANCE U/S. 14A WAS DELETED. 5. THUS, THE ONLY ADDITION OF RS. 82,99,000/- REMAINS FOR THE LEVY OF PENALTY MADE U/S. 271(1)(C) OF THE ACT. 6. A PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW AN D ALSO THE ORDER OF THE TRIBUNAL IN QUANTUM APPEAL (SUPRA) SHOW THAT TH E ASSESSEE HAS CLAIMED WEIGHTED DEDUCTION ON PURCHASE OF MOTOR VEH ICLES FOR EMPLOYEES. WHILE CONFIRMING THE DENIAL OF THE CLAI M OF DEDUCTION, THE TRIBUNAL AT PAGE 7 OF ITS ORDER OBSERVED AS UNDER:- ITA NO .1586 /AHD/2013 . A.Y. 2005-06 3 EXPENDITURE ON PURPOSE OF CAR CANNOT BE ACCEPTED A S EXPENDITURE WHETHER CAPITAL OR REVENUE INCURRED ON IN-HOUSE RES EARCH & DEVELOPMENT. IN OUR CONSIDERED OPINION, CAPITAL EXPENDITURE FOR EQUIPMENTS TO BE USED FOR IN-HOUSE RESEARCH IS ELIGIBLE FOR THIS BENEFIT BUT NOT THE MOTOR CAR BECAUSE WHETHER THE EMPLOYEES CAME INTO CAR PROVIDE D BY THE EMPLOYER OR BY PUBLIC TRANSPORT OR HIRED CAR HAS NO BEARING ON IN-HOUSE RESEARCH & DEVELOPMENT. 7. A PERUSAL OF ALL THAT MENTIONED HEREINABOVE CLEARLY SHOWS THAT THE CLAIM OF DEDUCTION WAS DENIED WHICH BY ITSELF WOULD NOT JUSTIFY THE LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT. THE FACTS IN ISSUES ARE IDENTICAL TO THE FACTS CONSIDERED BY THE HONBLE SUPREME COURT I N THE CASE OF RELIANCE PETRO PRODUCTS 322 ITR 158. WE FIND THAT T HE FIRST APPELLATE AUTHORITY HAS VERY RIGHTLY FOLLOWED THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT (SUPRA), WE, THEREFORE, DECLINE TO IN TERFERE. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 14- 06 - 2016 . SD/- SD/- (RAJPAL YADAV) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE.