Asiatic Colour Chem Industries Ltd., Ahmedabad V. The Dy.CIT.,(OSD)Range-1, Ahmedabad

ITA 1933/AHD/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9600 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 18-11-2015
• Assessment Year: 2001-2002
• Appeal Filed On: 03-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH AHMADABAD , BEFORE: SHRI RAJPAL YADAV, JUDICIAL MEMBER SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO. 1933/AHD/2011 ASSESSMENT YEAR : 2001-02 ASIATIC COLOUR CHEM INDU. LTD., 1503, GIDC, ESTATE, PHASE-I, NARODA, AHMEDABAD V S . CIT, APPEALS-VI, AHMEDABAD PAN NO. AABCA6297R (APPELLANT) .. (RESPONDENT) /BY ASSESSEE NONE /BY REVENUE SMT. PRAJNA PARAMITA, SR. D.R. /DATE OF HEARING 18.11.2015 /DATE OF PRONOUNCEMENT 10.02.2016 O R D E R PER : RAJPAL YADAV, JUDICIAL MEMBER THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF LD. CIT(A)-VI, AHMEDABAD DATED 17.06.2011 PASSED FOR A.Y. 2001-02. 2. SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT THE L D. CIT(A) HAS ERRED IN CONFIRMING THE PENALTY IMPOSED U/S.271(1)(C) OF THE INCOME TAX ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 01.02.2002 DECLARING TOTAL INCOME OF RS .1,16,780/-. THE ASSESSMENT ORDER WAS PASSED U/S.143(3) OF THE INCOM E TAX ACT ON 26.03.2004 DETERMINING THE TOTAL INCOME AT RS.59,34,440/-. AS SESSEE CARRIED THE DISPUTE UP ITA NO. 1933/AHD/11 A.Y.01-02 (ASIATIC COLOUR CHEM INDU. LTD. VS. CIT) PAGE 2 TO THE TRIBUNAL AND THE TRIBUNAL HAS SET ASIDE THE ISSUE WITH REGARD TO COMPUTATION OF DEDUCTION ADMISSIBLE U/S.80HHC OF TH E ACT TO THE FILE OF A.O. VIDE ORDER DATED 11.11.2008 PASSED IN ITA NO.1199/A HD/2005. IN PURSUANCE OF THE TRIBUNALS ORDER, A.O. PASSED A FRESH ASSESSMEN T ORDER ON 06/11/2009 U/S.143(3) R.W.S. 254 OF THE INCOME TAX ACT. THE A .O. DETERMINED THE TAXABLE INCOME OF THE ASSESSEE AT RS.59,34,438/-. THE A.O. HAS INITIATED THE PENALTY PROCEEDINGS AGAINST THE ASSESSEE U/S.271(1)(C) OF T HE ACT. HE IMPOSED A PENALTY OF RS.13,50,559/- VIDE ORDER DATED 30.03.2006. THE ASSESSEE CHALLENGED THE PENALTY ORDER BEFORE THE LD. CIT(A). THE APPEAL O F THE ASSESSEE WAS DISMISSED VIDE ORDER DATED 08.11.2006 BECAUSE THE AUTHORIZED PERSON DID NOT SIGN THE APPEAL MEMO. AGAINST THIS ORDER, ASSESSEE WENT TO THE TRIBUNAL. THE TRIBUNAL HAS ALLOWED THE APPEAL VIDE ORDER DATED 27 TH AUGUST, 2010 AND SET ASIDE THE ORDER OF LD. CIT(A) AND RESTORED THE ISSUES BACK TO THE FILE OF LD. CIT(A) WITH A DIRECTION THAT ASSESSEE BE GIVEN CHANCE TO REMOVE T HE DEFECTS WITHIN THE 30 DAYS OF THE RECEIPT OF THE ORDER. ACCORDINGLY, LD. CIT( A) HAS ENTERTAINED THE APPEAL OF THE ASSESSEE AGAINST THE PENALTY ORDER. 4. THE LD. CIT(A) HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 5. BEFORE US, IN RESPONSE TO THE NOTICE OF HEARING, NO ONE HAS COME PRESENT ON BEHALF OF THE ASSESSEE. ASSESSEE HAS FILED WRIT TEN SUBMISSIONS. 6. WITH THE ASSISTANCE OF LD. D.R., WE HAVE GONE TH ROUGH THE WRITTEN SUBMISSIONS. ON PERUSAL OF PENALTY ORDER, IT WOULD REVEAL THAT BASICALLY LD. A.O. HAS LEVIED PENALTY FOR TWO REASONS, NAMELY, (A) THE CLAIM OF DEDUCTION MADE BY ASSESSEE U/S.80IA OF THE ACT HAS NOT BEEN APPROVED TO THE EXTENT OF RS.21,28,089/-, (B) SIMILARLY, THE CLAIM MADE U/S. 80HHC HAS BEEN REDUCED BY A SUM OF RS.12,86,726/-. AS FAR AS REDUCTION WITH REGARD TO THE CLAIM MADE U/S.80IA IS CONCERNED, THE ASSESSING OFFICER HAS EX CLUDED FOLLOWING ITEMS: ITA NO. 1933/AHD/11 A.Y.01-02 (ASIATIC COLOUR CHEM INDU. LTD. VS. CIT) PAGE 3 PARTICULAR AMOUNT INTEREST RECD. 5,02,076 MISC. INCOME 6,66,404 DUTY DRAW BACK 5,80,874 SALE PROCEEDS OF DEPB LICENSE 1,33,97,037 TOTAL 1,51,46,391 WHILE DEALING WITH THIS ISSUE, LD. CIT(A) HAS DELET ED THE PENALTY COMPUTED WITH REGARD TO EXCLUSION OF INTEREST INCOME AND MISCELLA NEOUS INCOME FOR THE PURPOSE OF DEDUCTION U/S.80IA. IN OTHER WORDS, THE LD. CIT (A) HAS HELD THAT THE AMOUNTS REPRESENTING INTEREST AND MISCELLANEOUS INCOME FOR WHICH ASSESSEE HAS CLAIMED DEDUCTION U/S.80IA BUT WAS NOT GRANTED BY THE A.O., WOULD NOT BE CONSIDERED AS FURNISHING OF INACCURATE PARTICULARS OR CONCEALMENT OF INCOME. AS FAR AS THE OTHER TWO ITEMS ARE CONCERNED I.E. DUTY DRAW BACK A ND SALE PROCEEDS OF DEPB LICENSE ARE CONCERNED, WE FIND THAT ASSESSEE HAS FI LED THE RETURN OF INCOME ON 01.02.2002. THERE WAS A CONTROVERSY, WHETHER THE I NCOME RESULTING ON TRANSFER OF DUTY DRAW BACK OR DEPB LICENSE WOULD BE CONSIDER ED AS DERIVED FROM INDUSTRIAL UNDERTAKING. THIS CONTROVERSY HAS BEEN RESOLVED FINALLY BY THE HONBLE SUPREME COURT ON 31.08.2009 IN THE CASE OF LIBERTY INDIA LTD. V. CIT 317 ITR 218(SC). WHEN ASSESSEE HAS FILED THE RETUR N, THIS DECISION WAS NOT IN PICTURE. THE DECISION OF HONBLE GUJARAT HIGH COUR T IN THE CASE OF INDIA GELATINE & CHEMICALS LTD., REPORTED IN 275 ITR 284 (GUJ) WAS IN FAVOUR OF THE ASSESSEE. THEREFORE, AT THAT TIME, IT WAS A QUITE DEBATABLE ISSUE. THE LD. CIT(A) HAS OBSERVED THAT IN VIEW OF THE DECISION OF HONBL E SUPREME COURT IN THE CASE OF PANDIAN CHEMICALS LTD. V CIT (2003) 262 ITR 278 (SC) OR IN THE CASE OF CIT V. STERLING FOODS (1999) 237 ITR 579 (SC), ASSESSEE OUGHT TO HAVE NOT MADE THIS CLAIM IS CONCERNED THAT INSPITE OF THESE DECIS IONS, THE DEDUCTION WAS GRANTED TO THE ASSESSEE. THEREFORE, IN OUR OPINION, BEFORE THE DECISION OF LIBERTY INDIA LTD. V. CIT(A) (SUPRA), IT WAS A DEBATABLE ISSUE AN D FOR INCLUSION OF THESE AMOUNTS FOR THE PURPOSE OF CLAIMING DEDUCTION U/S.8 0IA, ASSESSEE CANNOT BE HELD GUILTY OF CONCEALING THE PARTICULARS OF INCOME . WE DELETE THE PENALTY WITH REGARD TO DISALLOWANCE MADE IN THE CLAIM OF DEDUCTI ON U/S.80IA OF THE ACT. ITA NO. 1933/AHD/11 A.Y.01-02 (ASIATIC COLOUR CHEM INDU. LTD. VS. CIT) PAGE 4 7. AS FAR AS THE DEDUCTION CLAIMED U/S.80HHC IS CON CERNED, IT EMERGES OUT THAT AGAINST THE ORIGINAL DISALLOWANCE THE ISSUE TR AVELLED UP TO THE TRIBUNAL. THE TRIBUNAL HAS SET ASIDE THE MATTER TO THE ASSESSING OFFICER. IN THE FRESH ASSESSMENT ORDER, LD. A.O. HAS NOT INITIATED PENALT Y PROCEEDINGS AGAINST THE ASSESSEE U/S.271(1)(C) OF THE ACT. THE A.O. HAS NO WHERE IN THE ASSESSMENT ORDER OBSERVED THAT THE PENALTY PROCEEDINGS AGAINST THE ASSESSEE WOULD BE TAKEN UP. THEREFORE, NO PENALTY CAN BE IMPOSED UPON THE ASSESSEE ON THIS ISSUE. IN VIEW OF ABOVE, NO PENALTY IS SUSTAINABLE UPON THE I SSUE. WE ALLOW THE APPEAL OF THE ASSESSEE AND DELETE THE PENALTY OF RS.13,50,559 /- ALLEGED TO HAVE BEEN CONFIRMED BY THE LD. CIT(A). 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . THIS ORDER PRONOUNCED IN OPEN COURT ON 10/02/20 16 SD/- SD/- ( MANISH BORAD) (RAJPAL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 10 /02/2016 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. ! / RESPONDENT 3. '#'$% ! ! & / CONCERNED CIT 4. ! ! & - / CIT (A) 5. '( )! **$% , ! ! $% , # / DR, ITAT, AHMEDABAD 6. ) -. / GUARD FILE. BY ORDER/ , / ! ' ! ! $% , #