DBK INDIA TECHNOLOGIES P. LTD ( NOW ZOBELE INDIA P.LTD), MUMBAI V. ACIT 8(1), MUMBAI

ITA 1834/MUM/2010

• Counselvise Citation: 183419914 RSA 2010
• Duration Of Justice: 1 year(s) 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 10-10-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 09-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ALEXANDER CHANDY
• Keywords: Revenue expenditure; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, D BENCH, MUMBAI. BEFORE SHRI D.K. AGARWAL, JUDICIAL MEMBER AND PRAMOD KUMAR, ACCOUNTANT MEMBER I.T.A NO.1834/ MUM/2010 ASSESSMENT YEAR: 2003-04 DBK INDIA TECHNOLOGIES P.LTD. .. APPELLANT (NOW ZOBELE INDIA P.LTD) 504, ACME PLAZA, ANDHERI KURLA ROAD, ANDHERI(E), MUMBAI. PA NO.AAACD 9939 Q VS ACIT 8(1) .. RESPONDENT AAYAKAR BHAVAN, M.K. ROAD, MUMBAI. APPEARANCES: HARESH P SHAH, FOR THE APPELLANT ALEXANDER CHANDY, , FOR THE RESPONDENT DATE OF HEARING : 10.10.2011 DATE OF PRONOUNCEMENT : 14-10-2011 O R D E R PER PRAMOD KUMAR: 1. BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT HAS CALL ED INTO QUESTION CORRECTNESS OF CIT(A)S ORDER DATED 28 TH JANUARY, 2010, UPHOLDING PENALTY OF RS.7,80,230 IMPOSED UNDER SECTION 271(1)(C) OF THE IN COME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2003-04. I.T.A NO.1834/ MUM/2010 ASSESSMENT YEAR: 2003-04 2 2. THE ISSUE IN APPEAL LIES IN A NARROW COMPASS OF MATER IAL FACTS. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING HOUSEHOLD INSEC TICIDES LIKE MOSQUITO REPELLANT LIQUID, AND IS ELIGIBLE FOR DEDUCTION U/S.1 0C OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT T HE ASSESSEE HAS INCLUDED SUNDRY BALANCES WRITTEN BACK AMOUNTING TO RS.4,37,325 AND MISC INCOME OF RS.5,76,884. THE ASSESSING OFFICER WAS, HOWEVER, OF THE VIEW THAT SINCE EXPRESSION USED IN SECTION 10C IS INCOME DERIVED FROM AN INDUS TRIAL UNDERTAKING AND SINCE THESE INCOMES ARE NOT FROM MANUFACTURING ACTIVITIES, D EDUCTION U/S.10C IS NOT AVAILABLE IN RESPECT OF THE SAME. THE ASSESSING OFFICER FURTHER NOTED THAT THE ASSESSEE HAS CLAIMED DEDUCTION IN RESPECT OF FACTORY SHED BUT HE WAS OF THE VIEW THAT EXPENDITURE ON FACTORY SHED, EVEN IF TEMPORARY, IS TO BE TREATED AS CAPITAL EXPENDITURE. THE MATTER DID NOT REST WITH THESE DISAL LOWANCES. THE ASSESSING OFFICER ALSO IMPOSED PENALTY ON THE GROUND THAT IN T HE INSTANT CASE, THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME AND THAT BY FURNISHING INACCURATE PARTICULARS OF INCOME, THE ASSESSEE HAS TRIED TO GET UNDU E BENEFITS. ACCORDINGLY, A PENALTY OF RS.7,80,230 WAS IMPOSED. AGGRIEVED, ASSESSEE C ARRIED THE MATTER IN APPEAL BUT WITHOUT ANY SUCCESS. THE ASSESSEE IS NOT SATISFI ED AND IS IN FURTHER APPEAL BEFORE US. 3. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTUAL MATRIX OF THE CASE AS ALSO THE APPLICABLE LEGAL POSITION. 4. WE FIND THAT THE IMPUGNED PENALTY HAS BEEN LEVIED FOR ASSESSEES HAVING BEEN FURNISHED INACCURATE PARTICULARS OF INCOME BUT W HAT HAVE BEEN TERMED AS INACCURATE AND FURNISHING PARTICULARS OF INCOME, ARE IN FACT LEGAL CLAIM WHICH HAVE BEEN HELD TO BE INADMISSIBLE. THE ADMISSIBILITY OF DE DUCTION U/S.10C IN RESPECT OF SUNDRY DEBTORS WRITTEN BACK AND MISC INCOME MAY NOT BE SUSTAINABLE IN LAW IN THE PRESENT CASE AND THAT ASPECT OF THE MATTER IS NOT DISPU TED ANY LONGER BUT, BY NO STRETCH OF LOGIC, THIS CLAIM CAN BE TREATED AS AMOUNT S TO FURNISHING INACCURATE PARTICULARS. RIGHT NOW WE ARE NOT CONCERNED ABOUT THE LEGAL MERITS OF THE CLAIM SO MADE BY THE ASSESSEE NOR ARE THAT THE ISSUE ANY LONGER UP ON THE ISSUE BEFORE US. WE ARE ONLY CONCERNED WHETHER THE ASSESSEE CAN BE VITIATED WITH THE PENALTY FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE ASSESSE E MADE THIS CLAIM IN ITS RETURN OF INCOME. SIMILARLY, WHETHER EXPENDITURE O N TEMPORARY FACTORY SHED IS I.T.A NO.1834/ MUM/2010 ASSESSMENT YEAR: 2003-04 3 CAPITAL EXPENDITURE OR REVENUE EXPENDITURE IS A HIG HLY CONTENTIONS AND SUBJECTIVE ISSUE, AND MAKING CLAIM OF THIS EXPENSE AS REVENUE EXPE NDITURE CANNOT BE SAID TO BE FURNISHING OF INACCURATE PARTICULARS EITHER. IN OU R CONSIDERED VIEW MERELY THE ASSESSEE HAS MADE A LEGAL CLAIM, WHETHER IT IS FINALLY A DMISSIBLE OR NOT, DO NOT AMOUNTS TO FURNISHING INACCURATE PARTICULARS. THE HO NBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS (P) LTD., (322 ITR 158) HAS HELD THAT MERE MAKING AN INACCURATE CLAIM CANNOT BE CONSTRUED AS FURNISHING INA CCURATE PARTICULARS AND SINCE IN THE PRESENT CASE, PENALTY HAS BEEN IMPOSED ON THE G ROUND THAT THE ASSESSEE ALLEGEDLY HAVING FURNISHED INACCURATE PARTICULARS, TH E RATIO OF THE DECISION SQUARELY APPLIES ON THE FACTS BEFORE US. IN ANY CASE, IN VIEW OF THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS L TD (SUPRA),WE NEED NOT GO ANY FURTHER TO THE ADMISSIBILITY OF CLAIMS BEING A BONAFID E POSSIBLE VIEW. SUFFICE TO SAY THAT GIVEN ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CLAIM MADE BY THE ASSESSEE COULD NOT BE CONSIDERED AS FURNISHING INACCURATE PARTI CULARS OF INCOME. THEREFORE, THE LEVY OF PENALTY UNDER SECTION 271(1)(C), ON THE FACTS AND CIRCUMSTANCES OF THIS CASE, IS INDEED INAPPROPRIATE AND UNJUSTIFIED. WE, TH EREFORE, DELETE THE PENALTY LEVIED BY THE AO AND CONFIRMED BY THE CIT(A). 5. IN THE RESULT, APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 14 TH OCTOBER, 2011 SD/- (D.K.AGARWAL) JUDICIAL MEMBER SD/- (PRAMOD KUMAR) ACCOUNTANT MEMBER MUMBAI, DATED 14 TH OCTOBER, 2011 PARIDA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)16,, MUMBAI 4. COMMISSIONER OF INCOME TAX,8 , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH D MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI