Assistant Commissioner of Income-tax, Circle - 12, Pune V. Zawar Sales Limited, Pune

ITA 1684/PUN/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8092 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 20-02-2020
• Assessment Year: 2007-2008
• Appeal Filed On: 06-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARISES OUT OF DATED PASSED
• Keywords: Business income; Difference of opinion
• Section: 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE VIRTUAL COURT BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO. 1684/PUN/2017 / ASSESSMENT YEAR : 2007-08 ACIT, CIRCLE-12, PUNE VS. ZAWAR SALES LIMITED, 25, ASHA HERITAGE, S.NO.12/1B, HADAPSAR, PUNE 411028 PAN : AAACZ0593N APPELLANT RESPONDENT / ORDER PER R.S.SYAL, VP : THIS APPEAL BY THE REVENUE ARISES OUT OF THE ORDER DATED 30-09-2016 PASSED BY THE CIT(A)-14, MUMBAI DELETING THE PENALTY AMOUNTING TO RS.1,66,43,021/- IMPOSED BY THE ASSESSING O FFICER (AO) U/S.271(1)(C) OF THE INCOME-TAX ACT, 1961 (HEREINAF TER ALSO CALLED THE ACT) IN RELATION TO THE ASSESSMENT YEAR 2007-08 . 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSE SSEE SOLD CERTAIN LAND AND DECLARED LONG TERM CAPITAL GAIN ON SALE THEREO F. THE AO OPINED THAT SUCH INCOME SHOULD HAVE BEEN OFFERED AS ASSESSEE BY NONE REVENUE BY SHRI S.P. WALIMBE DATE OF HEARING 11-08-2020 DATE OF PRONOUNCEMENT 11-08-2020 ITA NO.1684/PUN/2017 ZAWAR SALES LIMITED 2 BUSINESS INCOME INSTEAD OF LONG TERM CAPITAL GAIN. ACCOR DINGLY, PENALTY WAS IMPOSED, WHICH CAME TO BE DELETED IN THE FIRST AP PEAL. 3. WE HAVE HEARD THE LD. DR THROUGH VIRTUAL COURT AND GONE THROUGH THE RELEVANT MATERIAL ON RECORD. IT IS SEEN THAT THE ASSESSEE TREATED LAND AS FIXED ASSET SINCE EARLIER YEARS AND DID NOT CONVERT IT INTO STOCK IN TRADE. THE LONG TERM CAPITAL GAIN WAS OFFERED O N SALE OF SUCH LAND AND TAX WAS ACCORDINGLY PAID. THE AO TREATED THE GAIN ARISING FROM THE TRANSFER OF SUCH LAND AS BUSINESS IN COME INSTEAD OF LONG TERM CAPITAL GAIN AS OFFERED. IT IS A CASE OF DIFFERENCE OF OPINION BETWEEN THE ASSESSEE AND THE AO ON THE FACTS ALREADY DISCLOSED BY THE ASSESSEE. MERELY BECAUSE THE AO TREATED THE AMOUNT OF INCOME ALREADY OFFERED DIFFERENTLY FROM THE O NE PORTRAYED BY THE ASSESSEE, CANNOT IN OUR CONSIDERED OPINIO N BE A CAUSE FOR IMPOSING PENALTY U/S.271(1)(C) OF THE ACT. THE HONBLE SUPREME COURT IN CIT VS. RELIANCE PETRO PRODUCTS 322 ITR 158 (SC) HAS HELD THAT NO PENALTY SHOULD BE IMPOSED WHEN THE ASSE SSEE ADOPTS A BONA FIDE VIEW AND HAS DECLARED ALL THE NECESSARY PARTICULARS CONCERNING THE INCOME IN DISPUTE. SINCE THE VIEW OF THE LD. CIT(A) IS IN ACCORDANCE WITH THE RATIO LAID DOWN IN THE RELIANCE PETROPRODUCTS (SUPRA) , WE ENDORSE THE SAME. ITA NO.1684/PUN/2017 ZAWAR SALES LIMITED 3 4. THE SECOND ISSUE ON WHICH PENALTY HAS BEEN IMPOSED IS DISALLOWANCE OF FOREIGN TOUR AND TRAVELLING EXPENSES AMOUNTING TO RS.4,45,482/-. THE AO MADE DISALLOWANCE BECAUSE RELATIV ES OF THE DIRECTORS ALSO JOINED IN THE FOREIGN TOURS. THIS WAS FOLLOWED BY THE PENALTY. THE CIT(A) DELETED THE PENALTY AGAINST WHICH THE REVENUE HAS COME UP IN APPEAL BEFORE THE TRIBUNAL. 5. WE HAVE HEARD THE LD. DR AND GONE THROUGH THE RELEVA NT MATERIAL ON RECORD. IT IS SEEN FROM THE IMPUGNED ORDER THAT THE ASSESSEE INCURRED FOREIGN TOUR EXPENSES FOR CONDUCTING MEETINGS WITH CEMENT DEALERS OF INDIA CEMENT LTD. AND VISAKA INDUSTR IES LTD., FOR WHICH IT WAS ACTING AS C&F AGENT. THESE EXPENSE S INCLUDED SOME AMOUNT SPENT ON MINOR SONS AND DAUGHTERS OF THE DIRECTORS. THE LD. CIT(A) HAS RIGHTLY RELIED ON ACIT VS. TRB EXPORTS P. LTD. 40 SOT 22 (ITAT) CHANDIGARH AT PARA 5.4 OF THE IMPUGNED ORDER, IN WHICH THE TRIBUNAL DELETED THE PENALTY UN DER SIMILAR CIRCUMSTANCES. NO CONTRARY PRECEDENT HAS BEEN BROUGHT ON RECORD BY THE LD. DR. WE, THEREFORE, UPHOLD THE DELETION OF PENALTY. ITA NO.1684/PUN/2017 ZAWAR SALES LIMITED 4 6. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH AUGUST, 2020. SD/- SD/- (S.S. VISWANETHRA RAVI) (R.S.SYAL) JUDICIAL MEMBER VIC E PRESIDENT PUNE; DATED : 11 TH AUGUST, 2020 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT(A)-14, MUMBAI 4. 5. THE CIT-8, MUMBAI , , / DR A, ITAT, PUNE 6. / GUARD FILE / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE ITA NO.1684/PUN/2017 ZAWAR SALES LIMITED 5 DATE 1. DRAFT DICTATED ON 11-08-2020 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 11-08-2020 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *