Interlink Petrolium Ltd., Vadodara V. The ACIT, Circle-1(2), Baroda

ITA 1636/AHD/2015

• Counselvise Citation: 163620514 RSA 2015
• Duration Of Justice: 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 08-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUNIL H TALATI
• Keywords: Wrong claim; Bad and doubtful debts; Capital expenditure

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ ITA NO. 1636/AHD/2015 / ASSESSMENT YEAR: 2009-10 INTERLINK PETROLEUM LTD., 206, GAYATRI CHAMBERS, R C DUTT ROAD, ALKAPURI, VADODARA PAN : AAACI 4175 K VS. ACIT, CIRCLE 1(2), BARODA / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI SUNIL H. TALATI, AR REVENUE BY : SHRI ASHISH POPHARE, SR. DR / DATE OF HEARING : 20/10/2015 / DATE OF PRONOUNCEMENT: 30/11/2015 / O R D E R PER KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-1, VAD ODARA DATED 28.04.2015 PERTAINING TO ASSESSMENT YEAR 2009-10. 2. THE SOLE GROUND RAISED BY THE ASSESSEE READS AS UNDER:- LEARNED A.O. HAS ERRED IN LAW AND FACT BY LEVYING PENALTY OF RS.37,33,000/- ON THE BASIS OF CONATION OF EXPRESSI ON INACCURATE PARTICULARS DO NOT EXTENT TO THE ISSUE OF INTERPRET ATION OF LAWS AND AS SUCH MAKING A CLAIM WHICH IS FOUND UNACCEPTABLE IN LAW, CANNOT BE TREATED AS FURNISHING OF INACCURATE PARTICULARS OF INCOME. 3. BRIEFLY STATED FACTS ARE THAT WHILE MAKING ASSES SMENT THE ASSESSING OFFICER DISALLOWED THE CLAIM OF BAD DEBTS AND LOANS & ITA NO. 1636/AHD/2015 INTERLINK PETROLEUM LTD VS. ACIT AY 2009-10 2 ADVANCES GIVEN TO EX-MANAGING DIRECTOR, AMOUNTING T O RS.1,09,80,800/- AND ALSO INITIATED PENALTY PROCEED INGS FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE ASSESSING OF FICER THEREAFTER PASSED PENALTY ORDER U/S 271(1)(C) OF THE ACT ON 25 .03.2014 IMPOSING THE PENALTY OF RS.37,33,000/-. THE ASSESSEE, AGGR IEVED BY THE AFORESAID ORDER, PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO, AFTER CONSIDERING THE SUBMISSIONS, SUSTAINED THE PENALTY AND DISMISSED THE APPEAL OF THE ASSESSEE. THE ASSESSEE, BEING AGGRIE VED BY THE AFORESAID ORDER OF THE LD. CIT(A), IS NOW IN APPEAL BEFORE US . 4. THE LD. COUNSEL FOR THE ASSESSEE HAS REITERATED THE SUBMISSIONS AS WERE MADE IN THE WRITTEN SUBMISSIONS BEFORE THE LD. CIT(A) AND SUBMITTED THAT THERE IS NO FURNISHING OF INACCURATE PARTICULARS OF INCOME AS THE ASSESSEE HAD DISCLOSED ALL MATERIAL F ACTS BEFORE THE ASSESSING OFFICER. HE FURTHER SUBMITTED THAT THE LO AN WAS GIVEN TO ASSESSEE-COMPANYS MANAGING DIRECTOR FOR HIS MEDICA L TREATMENT. HE SUBMITTED THAT DUE TO THE DEMISE OF MANAGING DIRECT OR, THE ASSESSEE- COMPANY WAS NOT IN A POSITION TO RECOVER THE ADVANC ED AMOUNT FROM HIM AND ACCORDINGLY THE COMPANY HAS WRITTEN OFF THE AMOUNT TO THE PROFIT & LOSS ACCOUNTS WHICH WAS DULY PASSED IN TH E ASSESSEE- COMPANYS ANNUAL GENERAL MEETING HELD ON 01.09.2009 . HE SUBMITTED THAT THE ISSUE BEING DEBATABLE, THEREFORE, NO PENAL TY OUGHT TO HAVE BEEN LEVIED. IN SUPPORT OF HIS CONTENTION, THE LD. COUNSEL FOR THE ASSESSEE PLACED RELIANCE ON THE DECISIONS OF CO-ORD INATE BENCH OF THIS TRIBUNAL RENDERED IN THE CASE OF ITO VS. SHREE KRIS HNA KESHAV LABORATORIES IN ITA NO.3879/AHD/2007 AND DCIT VS. M /S. ICICI BANK LTD IN ITA NO.3310/MUM/2008 AND ALSO THE JUDGM ENT OF THE ITA NO. 1636/AHD/2015 INTERLINK PETROLEUM LTD VS. ACIT AY 2009-10 3 HONBLE APEX COURT RENDERED IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS (P.) LTD, 322 ITR 158 (SC), WHEREIN T HEIR LORDSHIPS HELD AS UNDER:- WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIE D BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS O R FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271( 1)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDI NG THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNO T AMOUNT TO FURNISHING INACCURATE PARTICULARS.. 5. THE LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTHE R HAND, OPPOSED THE SUBMISSIONS OF THE ASSESSEE AND SUBMITT ED THAT THE ASSESSEE IS A COMPANY DULY ADVISED BY THE PROFESSIO NALS. IT IS NOT THE CASE WHERE THE ASSESSEE BEING INDIVIDUAL WAS NOT AW ARE OF THE LEGAL PROVISIONS. HE SUBMITTED THAT THE DEBT WRITTEN OFF IS CAPITAL EXPENDITURE; EVEN OTHERWISE THE EXPENDITURE WAS NOT OF BUSINESS NATURE; THEREFORE, CLAIMING SUCH EXPENDITURE ITSELF PROVES TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN THIS REGAR D, HE RELIED UPON THE JUDGMENT OF HONBLE DELHI COURT IN THE CASE OF CIT VS. HCIL KALINDEE ARSSPL. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THERE IS NO DISPUTE WITH REGA RD TO THE FACT THAT THE ASSESSEE HAD DISCLOSED THE ADVANCES GIVEN TO IT S MANAGING DIRECTOR FOR HIS MEDICAL TREATMENT. UPON THE DEATH OF THE M ANAGING DIRECTOR, THE LOAN WAS WRITTEN OFF. THE AUTHORITIES BELOW IN ITIATED PENALTY PROCEEDINGS FOR MAKING A WRONG CLAIM THEREBY FURNIS HING INACCURATE PARTICULARS OF INCOME. THE DISALLOWANCE WAS MADE O N THE BASIS THAT ITA NO. 1636/AHD/2015 INTERLINK PETROLEUM LTD VS. ACIT AY 2009-10 4 THE CLAIM OF BAD DEBT IS ALLOWABLE IN CASE IT IS OF FERED AS INCOME IN THE PRECEDING YEAR. THE ASSESSING OFFICER OBSERVED THA T THE BAD DEBT OF RS.1,09,80,800/- IS NOT A TRADE DEBT BUT A LOAN DEB T AND PROCEEDED TO ADD BACK THE SAME TO THE INCOME OF THE ASSESSEE. T HE LD. COUNSEL HAS ALSO PLACED RELIANCE ON THE DECISION OF CO-ORDINATE BENCH OF THIS TRIBUNAL RENDERED IN THE CASE OF ITO VS. SHREE KRIS HNA KESHAV LABORATORIES IN ITA NO.3879/AHD/2007, WHEREIN THE F ACTS WERE THAT IN THE ASSESSMENT ORDER THE ASSESSING OFFICER DISALLOW ED RS.1,33,35,818 BEING ADVANCES WRITTEN OFF AND THE LOANS WRITTEN OF F AMOUNTING TO RS.1,46,345/- AND INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. THE CO-ORDINATE BENCH OF THIS TRIBUNAL, AFTER CONSIDERING THE SUBMISSIONS OF THE PARTIES, CANCELLED THE PENALTY B Y OBSERVING THAT THE LOANS WERE GIVEN IN THE COURSE OF NORMAL BUSINESS O F THE ASSESSEE- COMPANY; THEREFORE, PENALTY U/S 271(1)(C) IN RESPEC T OF THIS ADDITION/DISALLOWANCE IS NOT LEVIABLE. FURTHER, ANO THER CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF DCIT VS. M/S. ICICI BANK LTD IN ITA NO.3310/MUM/2008, DELETED THE PENALTY ON THE AM OUNT WRITTEN OFF IN RESPECT OF LOAN GIVEN TO ONE OF THE EMPLOYEE S OF THE ASSESSEE- COMPANY. IN THE PRESENT CASE, THE ASSESSEE HAD GIV EN LOAN TO THE MANAGING DIRECTOR OF THE ASSESSEE-COMPANY FOR HIS M EDICAL TREATMENT. UPON HIS DEATH, THE AMOUNT WAS WRITTEN OFF. THEREF ORE, IN OUR CONSIDERED OPINION, THE RATIO OF DECISION OF HONBL E APEX COURT IN THE CASE OF RELIANCE PETROPRODUCTS (P.) LTD. (SUPRA), A S RELIED UPON BY THE ASSESSEE-COMPANY, WOULD BE SQUARELY APPLICABLE TO T HE CASE OF THE ASSESSEE BECAUSE THE DETAILS FURNISHED BY THE ASSES SEE HAVE NOT BEEN FOUND TO BE INACCURATE, FALSE OR INCORRECT. THEREFO RE, FOLLOWING THE ABOVE SAID DECISIONS OF CO-ORDINATE BENCH OF THIS T RIBUNAL IN THE CASES ITA NO. 1636/AHD/2015 INTERLINK PETROLEUM LTD VS. ACIT AY 2009-10 5 OF SHREE KRISHNA KESHAV LABORATORIES AND M/S. ICICI BANK LTD (SUPRA); AND THE JUDGMENT OF HONBLE APEX COURT IN THE CASE OF RELIANCE PETROPRODUCTS (P.) LTD. (SUPRA), WE HEREBY DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 30 TH NOVEMBER, 2015 AT AHMEDABAD. SD/- SD/- (G.D. AGRAWAL) VICE-PRESIDENT (KUL BHARAT) JUDICIAL MEMBER AHMEDABAD; DATED 30/11/2015 BIJU T., PS !'#$#%! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. ! / THE RESPONDENT. 3. '# $ / CONCERNED CIT 4. $ ( ) / THE CIT(A) 5. '() # , # , ' / D R, ITAT, AHMEDABAD 6. ). / / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD