Swati Auto Link Pvt.Ltd., Ahmedabad V. The Income tax Officer, Ward-8(2), Ahmedabad

ITA 203/AHD/2010

• Counselvise Citation: 20320514 RSA 2010
• Duration Of Justice: 2 year(s) 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 10-04-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 21-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VINOD TANWANAI SRDR
• Assessee Lawyers: MRS URVASHI SHODHAN
• Keywords: Revenue expenditure; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE SHRI, A.K.GARODIA, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ITA NO.203 & 204/AHD/2010 ASSESSMENT YEARS :2003-04 & 2004-05 SWATI AUTOLINK PVT. LTD. NR. GANDHI ASHRAM, ASHRAM ROAD, AHMEDABAD PAN NO. AACCS1328L V/S . INCOME TAX OFFICER, WARD-8(2), AHMEDABAD (APPELLANT) .. (RESPONDENT) /BY ASSESSEE MRS. URVASHI SHODHAN, AR /BY REVENUE SHRI VINOD TANWANAI, SR-DR /DATE OF HEARING 10-04-2012 /DATE OF PRONOUNCEMENT 27-04-2012 O R D E R PER KUL BHARAT, JUDICIAL MEMBER:- THESE TWO APPEALS FLED BY THE ASSESSEE ARE DIRECTE D AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XIV, AH MEDABAD VIDE APPEAL NO. CIT(A)-XIV/WD.8(2)/12 & 79/08-09 PASSED U/S. 27 1(1)(C) FOR THE ASSESSMENT YEARS 2003-04 AND 2004-05 RESPECTIVELY. GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS UNDER:- ITA NO.203/AHD/2010 FOR A.Y. 2003-04. 1.1. THAT THE ORDER PASSED BY HONBLE CIT(A) CONFIR MING THE PENALTY OF RS.9,75,000/- IMPOSED BY A.O. U/S.271 (1) (C ) OF T HE ACT IS UNTENABLE IN LAW. ITA NO.203-204/AHD/2010 A.YS. 03-04 & 04-05 SWATI AUTOLINK PVT. LTD. V. ITO WD-8(2) ABD PAGE 2 1.2. THAT THE VARIOUS REASONS ADVANCED BY THE LD.CI T(A) IN CONFIRMING THE PENALTY OF RS.9,75,000/- ARE CONTRARY TO THE FACTS OF THE CASE AND EVIDENCE ON RECORD. THE LD.CIT(A) HAS MISCONSTRUED THE PROVISIO NS OF LAW. 1.3. THE APPELLANT FURTHER SUBMITS THAT DURING THE YEAR THE DISCOUNT HAS TO BE OFFERED TO CUSTOMERS AS PER CIRCULARS ISSUED BY TELCO. THE DETAILS OF SUCH DISCOUNT TO BE GIVEN TO THE CUSTOMERS AS PER C IRCULAR OF TELCO. FURTHER IN CASE OF SALE THROUGH FINANCE COMPANIES, DISCOUNT HAS TO BE OFFERED TO FINANCE COMPANIES. DURING THE YEAR THE APPELLANT HA S GIVEN DISCOUNT OF RS.8,34,980/- TO HDFC BANK LIMITED. THAT THE APPELL ANT HAS OBTAINED CONFIRMATION FROM MORE THAN 20 PARTIES FOR DISCOUNT GIVEN TO THEM. ALL SUCH CONFIRMATIONS ARE FILED DURING THE ASSESSMENT PROCE EDINGS. 1.4. IN CONNECTION WITH DISALLOWANCE OF RS.6,53,212 /- AS CAPITAL EXPENDITURE, THE APPELLANT RESPECTFULLY SUBMITS THA T THE EXPENDITURE OF RS.6,53,212 IS INCURRED ON REPAIRING OF SHOW ROOM. THE EXPENDITURE IS SUPPORTED BY BILLS AND RECEIPTS. MAJORITY OF THE EX PENDITURE IS IN CONNECTION WITH REPAIRS AND REPLACEMENT AND THEREFORE THE SAME WAS CLAIMED AS REVENUE EXPENDITURE. 1.5. THE APPELLANT FURTHER RESPECTFULLY SUBMITS THA T WHETHER THE EXPENDITURE IS CAPITAL EXPENDITURE OR REVENUE EXPENDITURE IS A HIGHLY DEBATABLE ISSUE ON WHICH THERE IS A SHARP JUDICIAL CONTROVERSY. THEREF ORE, FOR DISALLOWANCE OF SUCH EXPENDITURE NO PENALTY SHOULD BE IMPOSED U/S. 271(1)(C ) OF THE ACT. 1.6. THE APPELLANT THEREFORE SUBMITS THAT THE PENAL TY OF RS.9,75,000/- IMPOSED U/S. 271(1)(C ) OF THE ACT BE DELETED. 1.7. THE APPELLANT FURTHER RESPECTFULLY SUBMITS THA T THERE IS NO CONSCIOUS CONCEALMENT ON THE PART OF THE APPELLANT NOR THERE IS ANY DELIBERATE DEFIANCE OF LAW. IT IS THEREFORE SUBMITTED THAT NO PENALTY C AN BE IMPOSED UNDER SECTION 271(1)(C ) OF THE ACT. ITA NO.204/AHD/2010 FOR A.Y. 2004-05. 1.1 THAT THE ORDER PASSED BY HONBLE CIT(A) CONFIR MING THE PENALTY OF RS.90,000/- IMPOSED BY A.O. U/S. 271(1) (C) OF THE ACT IS UNTENABLE IN LAW. 1.2. THAT THE VARIOUS REASONS ADVANCED BY THE LD. C IT(A) IN CONFIRMING THE PENALTY OF RS.90,000/- ARE CONTRARY TO THE FACTS OF THE CASE AND EVIDENCE ON RECORD. THE LD.CIT(A) HAS MISCONSTRUED THE PROVISIO NS OF LAW. 1.3. IN RESPECT OF DISALLOWANCE OF 50% OF THE TOT AL DISCOUNT OF RS. 2,28,961 {50% OF RS.4,57,922} THE APPELLANT RESPECTFULLY SUB MITS THAT THE EXPENSES OF DISCOUNT IS INCURRED BY OUR CLIENT WHOLLY AND EXCLU SIVELY FOR THE PURPOSE OF THE BUSINESS. THE EXPENSES IS SUPPORTED BY VOUCHERS, DE BIT NOTES ETC. DISCOUNT EXPENSES IS NOT COVERED BY SECTION 40A(2)(B) OF THE ACT. 1.4. FURTHER THE DISALLOWANCE IS MADE ON ESTIMATED BASIS AT 50%.NO PENALTY CAN BE IMPOSED OR DISALLOWANCE MADE ON ESTI MATED BASIS. ITA NO.203-204/AHD/2010 A.YS. 03-04 & 04-05 SWATI AUTOLINK PVT. LTD. V. ITO WD-8(2) ABD PAGE 3 1.5. THE APPELLANT FURTHER RESPECTFULLY SUBMITS THA T THERE IS NO CONSCIOUS CONCEALMENT ON THE PART OF THE APPELLANT NOR THERE IS ANY DELIBERATE DEFIANCE OF LAW. IT IS THEREFORE SUBMITTED THAT NO PENALTY C AN BE IMPOSED UNDER SECTION 271(1)(C ) OF THE ACT. 1.6. THE APPELLANT THEREFORE SUBMITS THAT THE PENA LTY OF RS.90,000/- IMPOSED U/S. 271(1)(C ) OF THE ACT BE DELETED. 2. THE ASSESSEE, AGGRIEVED BY THE ORDER OF A.O. PRE FERRED APPEAL BEFORE THE CIT (A). CIT (A) CONFIRMED THE PENALTIE S LEVIED U/S. 271(1)(C ) FOR BOTH THE ASSESSMENT YEARS UNDER APPEAL. 3. LD. A.R. FOR THE ASSESSEE SUBMITTED BEFORE US TH AT IN THE QUANTUM APPEAL IN ITA NO.1213/AHD/2007 & ITA NO.358/AHD/2008 VIDE ORDER DATED 10-12-2010 FOR THE A.YS 2003-04 AND 2004-05, THE CO-ORDINATE BENCH OF THE TRIBUNAL HAS ALLOWED THE APPEAL OF THE ASSESSEE. THEREFORE, NO PENALTY CAN BE SUSTAINED. LD. AR FOR THE ASSESSEE HAS PLACED ON RECORD A COPY OF ORDER DATED 10-12-2010 P ASSED BY THE HONBLE CO-ORDINATE BENCH IN ITA NO.1213/AHD/2007 & ITA NO.358/AHD/2008 (SUPRA). FIRST WE TAKE UP ASSESSEES APPEAL IN ITA NO.203/AH D/2010. 4. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD, AND ORDER PASSED BY THE CO-ORDINATE BENCH I N ITA NO.1213/AHD/2007 & ITA NO.358/AHD/2008 IN ASSESSEES OWN CASE FOR A.YS. 2003-04 & 2004-05 RESPECTIVELY HAS PARTLY ALLOWED THE APPEALS OF THE ASSESSEE. IT IS TRANSPIRED FROM RECORDS THAT THE ASSESSING OFFICER HAS LEVIED PENALTY ON DISALLOWANCE OF RS.19,88,211/ - WHICHWAS MADE OUT OF DISCOUNT EXPENSES AND RS.6,53,212/- OF REPAI RING EXPENSES FOR THE A.Y. 2003-04. THE ISSUE OF DISALLOWANCE OF RS.19,88 ,211/- MADE OUT OF DISCOUNT EXPENSES IS REMITTED BACK TO THE FILE OF A SSESSING OFFICER BY THE CO-ORDINATE BENCH (SUPRA). THE ISSUE OF DISALLOWANC E MADE OUT OF REPAIR ITA NO.203-204/AHD/2010 A.YS. 03-04 & 04-05 SWATI AUTOLINK PVT. LTD. V. ITO WD-8(2) ABD PAGE 4 EXPENSES HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE . IN VIEW OF THIS MATTER, THE PENALTY AS LEVIED BY AO AND CONFIRMED B Y LD. CIT(A) CANNOT BE SUSTAINED. ACCORDINGLY, THE AO IS DIRECTED TO DE LETE THE PENALTY OF RS.9.75 LAKH AS LEVIED VIDE ORDER DATED 07-03-2008. COMING TO ASSESSEES APPEAL IN ITA NO.204/AHD/2010. 5. THE ISSUE IN THIS CASE IS THAT PENALTY OF RS.90, 000/- IS CONFIRMED BY LD. CIT(A). THE PENALTY SO LEVIED IS ON ACCOUNT OF DISA LLOWANCE MADE OUT OF DISCOUNT EXPENSES. THIS ISSUE IN ITA NO.358/AHD/2008 IN ASSESSEES OWN CASE HAS BEEN REMITTED BACK TO THE FILE OF AO BY TH E CO-ORDINATE BENCH. THEREFORE IN VIEW OF THIS THE MATTER AND OUR DECISI ON IN ITA NO.203/AHD/2010, WE ALLOW THE APPEAL FILED BY THE ASSESSEE AND DIREC T THE ASSESSING OFFICER TO DELETE THE PENALTY OF RS.90,000/- AS LEVIED VIDE OR DER DATED 16-07-2008. 6. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE. SD/- SD/- (A.K.GARODIA) (KUL BHARAT) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, *DKP - 27/04/2012 '#$ % & ' ' ' ' ())*+, ())*+, ())*+, ())*+, '-+ '-+ '-+ '-+ / COPY OF ORDER FORWARDED TO:- 1. ',/* 01 / APPELLANT 2. (2301 / RESPONDENT 3. %)5 3 36 / CONCERNED CIT 4. 3 36- ',/* / CIT (A) 5. +8 9/3 ()))5, 3 ',/*/3 ')5, '#$ % / DR, ITAT, AHMEDABAD 6. 9 <= > ?* / GUARD FILE. 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