DCIT 10(1), MUMBAI V. INFRASTRUCTURE LEASING & FINANCIAL SERVICES LTD, MUMBAI

ITA 1633/MUM/2014

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 5972 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 10 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 09-12-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 10-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AWANGSHI GIMSON
• Assessee Lawyers: PRASHANT BHOJWANI
• Keywords: Depreciation; Rule of consistency; Set aside
• Section: 271(1)(c); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C , MUMBAI BEFORE SHRI C.N. PRASAD, HON'BLE JUDICIAL MEMBER AND SHRI G. MANJUNATHA , HON'BLE ACCOUNTANT MEMBER ITA.NOS. 1631, 1632 & 1633 /MUM/2 014 (A.YS: 2005 - 06, 2006 - 07 & 2007 - 08) DY. COMMISSIONER OF INCOME TAX RANGE 10(1) ROOM NO. 455, 4 TH FLOOR AAYAKAR BHAVAN M.K. ROAD, MUMBAI 400 020 V. M/S. INFRASTRUCTURE LEASING & FINANCIAL SERVICES LTD., THE IL & FS FINANCIAL CENTRE PLOT NO. C - 22, G BLOCK BANDRA KURLA COMPLEX BANDRA (E), MUMBAI 400 051 PAN: AAACI0989F (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SANDEEP BHALLA & SHRI PRASHANT BHOJWANI DEPARTMENT BY : SHRI AWANGSHI GIMSON DATE OF HEARING : 28 .11.2019 DATE OF PRONOUNCEMENT : 07 .02 .2020 O R D E R PER C. N. PRASAD (JM) 1. ALL THESE APPEALS ARE FILED BY THE REVENUE AGAINST DIFFERENT ORDERS OF THE LEARNED COMMISSIONER OF INCOME T AX (APPEALS) 21 , MUMBAI [HEREINAFTER IN SHORT LD.CIT(A)] DATED 09.12.2013 , 10.12.2013 & 10.12.2013 F OR THE A.Y S . 2005 - 06, 2006 - 07 & 2007 - 08 RESPECTIVELY IN DELETING THE PENALTY L EVIED U/S. 271(1)(C) OF THE ACT . 2. AT THE OUTSET, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN ALL THESE THREE ORDERS PENALTY U/S. 271(1)(C) OF THE ACT WAS LEVIED ON THE 2 ITA.NOS. 1631, 1632 & 1633/MUM/2014 M/S. INFRASTRUCTURE LEASING & FINANCIAL SERVICES LTD., ADDITIONS/DISALLOWANCE MADE AND MOST OF TH E ADDITIONS/DISALLOWANCE WERE EITHER DELETED OR SET - ASIDE BY THE TRIBUNAL AND IN SOME CASES THE ASSESSING OFFICER HIMSELF DID NOT IMPOSE PENALTY ON SIMILAR ADDITIONS M ADE IN EARLIER ASSESSMENT YEARS . LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE I S NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS BY THE ASSESSEE IN MAKING SUCH CLAIMS. LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMIT TED THAT CONSIDERING THE FACT S THE TRIBUNAL EITHER DELETED OR SET - ASIDE THE QUANTUM ADDITION. THE LD.CIT( A) DELETED THE PENALTIES LEVIED BY THE ASSESSING OFFICER AND IN SOME INSTANCES SINCE THE ASSESSING OFFICER HIMSELF DID NOT IMPOSE PENALTIES ON IDENTICAL ADDITIONS/DISALLOWANCE MADE IN EARLIER ASSESSMENT YEARS FOLLOWING THE CONSISTENCY RULE THE LD.CIT(A) DE LETED THE PENALTY LE VIED U/S. 271(1)(C) OF THE ACT. LD. COUNSEL FOR THE ASSESSEE STRONGLY SUPPORTED THE ORDER OF THE LD.CIT (A) IN DELETING THE PENALTIES. 3. LD. DR VEHEMENTLY SUPPORTED THE O RDERS OF THE ASSESSING OFFICER. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF THE AUTHORITIES BELOW. IN THE COURSE OF HEARING THE L D. COUNSEL FOR THE ASSESSEE SUBMITTED A CHART SHOWING THE DETAILS OF QUANTUM ADDITIONS/DISALLOWANCE EITHER DELETED BY THE TRIBUNAL OR SET ASIDE TO THE ASSESSING OFFICER AND ALSO N OT LEVYING OF PENALTY ON IDENTICAL ADDITION/DISALLOWANCE MADE BY THE ASSESSING OFFICER IN EARLIER ASSESSMENT YEARS. THE DETAILS ARE AS UNDER: - 3 ITA.NOS. 1631, 1632 & 1633/MUM/2014 M/S. INFRASTRUCTURE LEASING & FINANCIAL SERVICES LTD., ASSESSMENT YEAR PENALTY UNDER SECTION 271 (1)(C) OF THE ACT IN RESPECT OF ADDITION / DISALLOWANCE COMMISSIONER (APPEALS) ORDER ASSESSEE'S SUBMISSIONS 2005 - 06 2006 - 07 2007 - 08 AY 2005 - 06 AY 2006 - 07 AY 2007 - 08 1. 1(A) - AMORTIZATION OF LEASE PREMIUM PAGE 4, PARA 3.2 PAGE 4, PARA 3.2 - TRIBUNAL DELETED PENALTY IN AY 2003 - 04 [PAGE 15, PARA 5]. NO PENALTY LEVIED BY AO IN AYS 2004 - 05 AND 2007 - 08 ON IDENTICAL FACTS. AMORTISATION OF LEASE PREMIUM REFLECTED SEPARATELY IN COMPUTATION OF INCOME FILED ALONGWITH RETURN OF INCOME. ISSUE OF ALLOWABILITY OF LEASE PREMIUM ALSO REFERRED TO AND ADJUDICATED BY SP ECIAL BENCH OF TRIBUNAL (DATED 15 FEBRUARY 2007) IN CASE OF MUKUND LIMITED. SUN PHARMACEUTICALS LIMITED, GUJARAT HIGH COURT AND LUPIN LIMITED, MUMBAI TRIBUNAL HELD IN FAVOUR OF ASSESSEE. 2 1(B) 1 DEPRECIATION ON RESIDENTIAL PREMISES PAGE 5, PARA 4.2 PAGE 5, PARA 4.2 PAGE 3, PARA 3.2 TRIBUNAL HELD IN FAVOUR OF IL&FS IN AY 2004 - 05 [PAGE 4, PARA 3.2] AND IN AYS 2005 - 06 TO 2007 - 08 [PAGE 9, PARA 9]. THEREAFTER, AO ALLOWED DEPRECIATION IN AY 2004 - 05 VIDE ORDER DATED 31 DECEMBER 2018. NO PENALTY LEVIED BY AO IN AYS 2003 - 04 AND 2004 - 05 ON IDENTICAL FACTS. NO APPEAL FILED BY DEPARTMENT AGAINST CIT(A) ORDER DELETING PENALTY IN AY 2002 - 03 ON SAME ISSUE. 3 1(C) 2 DEDUCTION OF LEASE EQUALIZATION RESERVE PAGE 9, PARA 5.2 PAGE 9, PARA 5.2 PAGE 6, PARA 5.2 TRIBUNAL IN AY 2004 - 05 [PAGE 12, PARA 7.2] AND IN AYS 2005 - 06 TO 2007 - 08 [PAGE 17, 18, PARA 24, 25] HELD IN FAVOUR OF IL&FS. THEREAFTER, AO ALLOWED DEDUCTION FOR LEASE EQUALIZATION IN AY 2004 - 05 VIDE ORDER DATED 31 DECEMBER 2018 [PAGE 24, PARA 5.3]. BOMBAY HIGH COURT HAS DISMISSED REVENUE'S APP EAL FOR AYS 1994 - 95 TO 1998 - 99. SUPREME COURT IN VIRTUAL SOFT SYSTEM LIMITED'S CASE HELD IN FAVOUR OF ASSESSEE. 4 ITA.NOS. 1631, 1632 & 1633/MUM/2014 M/S. INFRASTRUCTURE LEASING & FINANCIAL SERVICES LTD., ASSESSMENT YEAR PENALTY UNDER SECTION 271 (1)(C) OF THE ACT IN RESPECT OF ADDITION / DISALLOWANCE COMMISSIONER (APPEALS) ORDER ASSESSEE'S SUBMISSIONS 2005 - 06 2006 - 07 2007 - 08 AY 2005 - 06 AY 2006 - 07 AY 2007 - 08 1(D) --- DEDUCTION UNDER SECTION 35D --- PAGE 10, PARA 6.2 --- NO PENALTY LEVIED BY AO IN AYS 2004 - 05, 2005 - 06 AND 2007 - 08 ON IDENTICAL FACTS. TRIBUNAL RESTORED THE ISSUE BACK TO AO'S FILE IN AYS 2005 - 06 TO 2007 - 08 [PAGE 24, PARA 36]. TRIBUNAL REMITTED THE ISSUE TO AO'S FILE IN AYS 1996 - 97 AND 1997 - 98 [PAGE 7, PARA 14]. 1(E) --- DEPRECIATION ON TOLL ROAD --- PAGE 1 1 , PARA 7.2 --- TRIBUNAL IN AY 2004 - 05 [PAGE 25, PARA 11.12] AND IN AYS 2005 - 06 TO 2007 - 08 [PAGE 22, PARA 31] HELD IN FAVOUR OF IL&FS. THEREAFTER, AO ALLOWED DEPRECIATION ON TOLL ROAD IN AY 2004 - 05 VIDE ORDER DATED 31 DECEMBER 2018 [PAGE 27, PA RA 8.2]. NO PENALTY LEVIED BY AO IN AYS 2005 - 06 AND 2007 - 08. 1(F) --- DEDUCTION UNDER SECTION 10(23G ) --- PAGE 13, PARA 9.2 --- TRIBUNAL IN AYS 2005 - 06 TO 2007 - 08 HAS HELD IN FAVOUR OF IL&FS IN RESPECT OF TAMIL NADU ROAD DEVELOPMENT COMPANY [PAGE 31, PARA 53] . NO PENALTY LEVIED BY AO IN AYS 2004 - 05, 2005 - 06 ON IDENTICAL FACTS. DEDUCTION UNDER SECTION 10(23G) OF THE ACT REFLECTED SEPARATELY IN COMPUTATION OF INCOME FILED ALONGWITH RETURN OF INCOME. 1(G) --- DISALLOWANCE UNDER SECTION 14A --- PAGE 14, PARA 10.2 --- SUPREME COURT IN CASE OF RELIANCE PETROPRODUCTS PRIVATE LIMITED HELD THAT MERELY BECAUSE ASSESSEE'S CLAIM WAS NOT ACCEPTED BY REVENUE, THAT ITSELF WOULD NOT ATTRACT PENALTY. TRIBUNAL IN AY 2004 - 05 [PAGE 10, PARA 6.2] AND AYS 2005 - 07 TO 2 007 - 08 [PAGE 14, PARA 19] SET ASIDE MATTER TO AO'S FILE. TRIBUNAL SET ASIDE TO AO'S FILE FOR DETERMINATION OF AVERAGE VALUE OF INVESTMENT AND QUANTUM OF DISALLOWANCE OF INTEREST AND OTHER EXPENSE CONSIDERING SC'S DECISION IN MAXOPP INVESTMENT LIMITED'S CAS E (AYS 2005 - 06 TO 2007 - 08). VARIOUS DECISIONS HAVE HELD THAT ONLY THOSE INVESTMENTS FROM WHICH DIVIDEND IS EARNED DURING THE YEAR ARE TO BE CONSIDERED FOR THE PURPOSE OF DISALLOWANCE UNDER SECTION 14A OF THE ACT. NO PENALTY IS INITIATED IN AYS 2003 - 04 AND 2004 - 05 AND NO PENALTY LEVIED IN AYS 2005 - 06 AND 2007 - 08 5 ITA.NOS. 1631, 1632 & 1633/MUM/2014 M/S. INFRASTRUCTURE LEASING & FINANCIAL SERVICES LTD., ASSESSMENT YEAR PENALTY UNDER SECTION 271 (1)(C) OF THE ACT IN RESPECT OF ADDITION / DISALLOWANCE COMMISSIONER (APPEALS) ORDER ASSESSEE'S SUBMISSIONS 2005 - 06 2006 - 07 2007 - 08 AY 2005 - 06 AY 2006 - 07 AY 2007 - 08 --- 1(H) 3 DISALLOWANCE OF INCOME/ LOSS FROM OTHER SOURCES --- PAGE 14, PARA 11 .2 PAGE 9, PARA 5.2 NO PENALTY INITIATED BY AO IN AYS 2004 - 05 AND 2005 - 06 ON IDENTICAL FACTS. --- 1(I) --- DISALLOWANCE UNDER SECTION 14A WHILE COMPUTING BOOK PROFITS --- PAGE 16, PARA 12.2 --- TRIBUNAL IN AY 2004 - 05 AND IN AYS 2005 - 06 TO 2007 - 08 [PAGE 28, PARA 49] RESTORED ISSUE TO AO'S FILE. VIREET INVESTMENTS PRIVATE LIMITED AND BENGAL FINANCE INVESTMENT LIM ITED HAVE HELD IN FAVOUR OF ASSESSEE - NO DISALLOWANCE UNDER SECTION 14A OF THE ACT UNDER MINIMUM ALTERNATE TAX ('MAT'). IL&FS TAXABLE UNDER NORMAL PROVISIONS, HENCE NO PENALTY LEVIABLE FOR DISALLOWANCE UNDER MAT. NO PENALTY INITIATED BY AO IN AYS 2005 - 06 A ND 2007 - 08. 5. AS COULD BE SEEN FROM THE ABOVE, MOST OF THE ADDITIONS/DISALLOWANCE MADE BY THE ASSESSING OFFICER WERE EITHER DELETE D OR SET - ASIDE BY THE TRIBUNAL TO THE ASSESSING OFFICER . IN SOME OF THE CASE S THE ASSESSING OFFICER HIMSELF NOT INITIATED PENALTY PROCEEDINGS IN EARLIER ASSESSMENT YEARS WHERE SIMILAR ADDITIONS/DISALLOWANCE WERE MADE. THE LD.CIT(A) HAS RIGHTLY APPRECIATED THE SUBMISSIONS OF THE ASSESSEE AND TAKING NOTE OF THE FACT THAT ADDITIONS /D ISALLOWANCES WERE EITHER DELETED OR SET ASIDE , HE HELD THAT THERE WAS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS BY THE ASSESSEE IN MAKING ITS CLAIMS AND THE PENALTY WAS LEVIED ON MERE CHANGE OF OPINIO N AND T HE LD.CIT(A) HAS RIGHTLY D ELETED THE PENALTY LEVIED FOR ALL THESE THREE ASSESSMENT YEARS. WE FURTHER OBSERVED THAT ASSESSING OFFICER LEVIED PENALTY ON THE DISALLOWANCE 6 ITA.NOS. 1631, 1632 & 1633/MUM/2014 M/S. INFRASTRUCTURE LEASING & FINANCIAL SERVICES LTD., MADE U/S. 14A OF THE ACT WHILE COMPUTING INCOME UNDER NORMAL PROVISIONS OF THE ACT AS WELL AS UNDER BOOK PROFITS COMPUTATION. PENALTY CANNOT ATTRACT SIMPLY WHEN THERE IS AN ADDITION/DISALLOWANCE IS MADE. THERE IS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS IN MAKING CLAIM U/S. 14A OF THE ACT. THUS, NO PENALTY IS ATTRACTED ON DISALLOWANCE MADE U /S. 14A OF THE ACT. THUS, WE SUSTAIN THE ORDER OF THE LD.CIT(A) AND REJECT THE GROUNDS RAISED BY THE REVENUE. 6. IN THE RESULT, APPEAL S OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 07 TH FEBRUARY , 2020 SD/ - SD/ - ( G. MANJUNATHA ) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI / DATED 07 / 0 2 / 2020 GIRIDHAR, SR.PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER (ASSTT. REGISTRAR) ITAT, MUM