Jagdamba Textile Engineers, Surat V. The ACIT.,Circle-9, Surat

ITA 1647/AHD/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 50835 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 10-10-2011
• Assessment Year: 1998-1999
• Appeal Filed On: 20-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, B BENCH, AHMEDABAD BEFORE SHRI T.K. SHARMA ,JUDICIAL MEMBER AND SHRI A. K. GARODIA, ACCOUNTANT MEMBER I.T.A. NO. 1647/ AHD/2009 (ASSESSMENT YEAR 1998-99) M/S. JAGDAMBA TEXTILE ENGINEERS A.K. ROAD, HIRALAL COLONY, SURAT VS. ACIT, CIRCLE 9, SURAT PAN/GIR NO. : AABFG9653P (APPELLANT) .. (RESPONDENT) APPELLANT BY: WRITTEN SUBMISSION RESPONDENT BY: SHRI SAMIR TEKRIWAL, SR. DR DATE OF HEARING: 10.10.2011 DATE OF PRONOUNCEMENT: 14.10.11 O R D E R PER SHRI A. K. GARODIA, AM:- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LD. CIT(A) V, AHMEDABAD DATED 17.02.2009 FOR THE ASSESS MENT YEAR 1998- 99. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDE R: 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(A) ERRED IN CONFIRMING THE ACTION OF A.O. I N PASSING TIME BARRED ORDER. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT(A) ERRED IN CONFIRMING THE ACTION OF THE A. O. FOR LEVYING PENALTY OF RS.90246/-. 3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT(A) ERRED IN MISCONSTRUING THE PROVISIONS OF LAW WITH REGARD TO LEVY OF PENALTY. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E DID NOT CLAIM DEPRECIATION IN RESPECT OF DAMAN & SILVASA UNITS, W HICH ARE ELIGIBLE FOR DEDUCTION U/S 80I/80IA OF THE INCOME TAX ACT, 1961. I.T.A.NO. 1647/AHD/2009 2 3. APART FROM THIS, ASSESSEE ALSO INCLUDED INTEREST INCOME IN THE INCOME OF THE ASSESSEE FOR CALCULATING DEDUCTION U/ S 80I/80IA. IN THE QUANTUM APPEAL THE TRIBUNAL DECIDED AGAINST THE ASS ESSEE IN RESPECT OF BOTH THESE ADDITIONS AND THE A.O. INITIATED PENALTY PROCEEDINGS AND IMPOSED PENALTY OF RS.90246/- U/S 271(1)(C) OF THE ACT. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LD. CIT(A) AGAI NST PENALTY ORDER ALSO BUT WITHOUT SUCCESSES AND NOW, THE ASSESSEE IS IN F URTHER APPEAL BEFORE US. 4. NONE APPEARED ON BEHALF OF THE ASSESSEE BUT A WR ITTEN SUBMISSION OF THE ASSESSEE IS AVAILABLE ON RECORD AND HENCE, W E DECIDE THIS APPEAL OF THE ASSESSEE AFTER CONSIDERING THE WRITTEN SUBMISSI ONS AND AFTER HEARING LD. D.R. OF THE REVENUE. THE LD. D.R. PLACED RELIA NCE ON THE FOLLOWING JUDGEMENTS: (A) PSB INDUSTRIES INDIA PVT. LTD. VS CIT IN I.T.A. NO. 792 OF 2011 DATED 11.07.2011 (DEL. H.C.) (B) ZOOM COMMUNICATIONS PVT. LTD. 327 ITR 510 (C) GUJARAT STATE FINANCIAL SERVICES LTD. VS ACIT 3 9 SOT 570 5. HE ALSO SUBMITTED THAT HONBLE DELHI HIGH COURT IN THE CASE OF ZOOM COMMUNICATIONS PVT. LTD. (SUPRA) HAS DULY CONS IDERED THE JUDGEMENT OF HONBLE APEX COURT RENDERED IN THE CA SE OF RELIANCE PETRO PRODUCTS PVT. LTD. AS REPORTED IN 230 CTR 320 ON WH ICH RELIANCE HAS ALSO BEEN PLACED BY THE ASSESSEE IN THE WRITTEN SUBMISSI ON. 6. AS AGAINST THIS, IN THE WRITTEN SUBMISSIONS, ASS ESSEE ALSO PLACED RELIANCE ON THE JUDGMENT OF HONBLE APEX COURT REND ERED IN THE CASE OF CIT VS RELIANCE PETRO PRODUCTS PVT. LTD. 230 CTR 32 0. IT IS ALSO SUBMITTED IN THE WRITTEN SUBMISSION THAT THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 80I/80IA AFTER CONSIDERING INTEREST I NCOME AS A PART OF ELIGIBLE BUSINESS WAS DEBATABLE IN NATURE AND IT WA S DECIDED BY THE TRIBUNAL IN THE CASE OF MEERA INDUSTRIES 87 ITD 47. REGARDING PENALTY IN RESPECT OF CLAIM OF DEDUCTION U/S 80I/80IA WITHOUT CONSIDERING I.T.A.NO. 1647/AHD/2009 3 DEPRECIATION, THE ASSESSEE HAS PLACED RELIANCE ON T HE TRIBUNAL DECISION RENDERED IN THE CASE OF HIMSON TEXTILE ENGINEERING LTD. IN I.T.A.NO. 2476/AHD/2009 DATED 30.06.2011, A COPY OF WHICH HAD BEEN ENCLOSED ALONG WITH THE WRITTEN SUBMISSION. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIND THAT IN THE PRESENT CASE, THE PENALTY HAS BEEN IMPO SED IN RESPECT OF DEDUCTION EXTRA CLAIMED BY THE ASSESSEE U/S 80I/80I A. THERE ARE TWO REASONS FOR PARTLY DISALLOWING THE CLAIM OF THE ASS ESSEE REGARDING DEDUCTION U/S 80I/80IA. THE FIRST REASON IS THAT S UCH DEDUCTION WAS CLAIMED BY THE ASSESSEE WITHOUT DEDUCTION OF DEPREC IATION FROM BUSINESS PROFIT IN RESPECT OF ASSETS OF THOSE UNITS WHICH WE RE ELIGIBLE FOR SUCH DEDUCTION U/S 80I/80IA. THE 2 ND REASON IS THAT THE ASSESSEE HAS WRONGLY INCLUDED THE INTEREST INCOME FOR THE PURPOSE OF CAL CULATING DEDUCTION U/S 80I/80IA. IN THE PRESENT CASE, THE RETURN OF INCOM E WAS FILED BY THE ASSESSEE ON 31.10.1998 WHEREAS THE TRIBUNAL DECISIO N IN THE CASE OF DCIT VS MEERA INDUSTRIES (SUPRA) WAS RENDERED ON 25 .04.2003 AND IT WAS HELD THAT DEDUCTION U/S 80I IS NOT ALLOWABLE IN RES PECT OF INTEREST INCOME. THIS ISSUE WAS VERY MUCH DEBATABLE AT THE TIME OF F ILING OF RETURN OF INCOME AND HENCE, ALTHOUGH DISALLOWANCE WAS MADE FO R DEDUCTION CLAIMED BY THE ASSESSEE U/S 80I/80IA IN RESPECT OF INTEREST INCOME, PENALTY IS NOT JUSTIFIED ON THIS ACCOUNT. 8. SIMILARLY, ON THE 2 ND ISSUE ALSO, I.E. AS TO WHETHER DEDUCTION U/S 80I/80IA IS ALLOWABLE AFTER REDUCING DEPRECIATION F ROM BUSINESS PROFITS, THE ISSUE WAS VERY MUCH DEBATABLE AT THE TIME OF FI LING OF RETURN OF INCOME BY THE ASSESSEE AND THE SAME HAS SETTLED MUC H LATER AFTER A DECISION OF SPECIAL BENCH OF THE TRIBUNAL AND HENCE , IN OUR CONSIDERED OPINION, FOR THIS DISALLOWANCE ALSO, PENALTY IS NOT JUSTIFIED ALTHOUGH THE DISALLOWANCE IS ALRIGHT. WE, THEREFORE, HOLD THAT IN THE FACTS OF THE I.T.A.NO. 1647/AHD/2009 4 PRESENT CASE, NO PENALTY IS JUSTIFIED. THE JUDGEME NTS CITED BY THE LD. D.R. ARE OF NO HELP TO THE REVENUE BECAUSE WE HAVE SEEN THAT BOTH THE ISSUES WERE DEBATABLE AT THE TIME WHEN RETURN OF IN COME WAS FILED BY THE ASSESSEE AND HENCE, THESE JUDGEMENTS ARE OF NO HELP TO THE REVENUE IN THE FACTS OF THE PRESENT CASE. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . 10. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH OCT., 2011. SD./- SD./- (T.K. SHARMA) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED : 14.10. 2011 SP COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD 1. DATE OF DICTATION 10/10 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 13/10.OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S.13/10 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 14/10/11 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.14/10 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 14/1 0/11 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. ..