DCIT, New Delhi V. M/s Groz Engineering Tools Pvt. Ltd., New Delhi

ITA 2149/DEL/2015

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5582 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 10-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI
• Assessee Lawyers: ASHISH CHADHA
• Keywords: Depreciation; Royalty expenses
• Section: 10B; 10; 154

Judgement Text

PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C : NEW DELHI BEFORE SHRI S.K.YADAV , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 2149/DEL/2015 (ASSESSMENT YEAR: 2007 - 08 ) DCIT, CIRCLE - 10(2), NEW DELHI VS. GROZ ENGINEERING TOOLS PVT LTD, C - 717, NEW FRIENDS COLONY, NEW DELHI PAN: AABCG1047H (APPELLANT) (RESPONDENT) REVENUE BY : SHRI SL ANURAGI, SR. DR ASSESSEE BY: SHRI ASHISH CHADHA, CA DATE OF HEARING 17/05 / 2018 DATE OF PRONOUNCEMENT 2 2 / 05 / 2018 O R D E R PER PRASHANT MAHARISHI , A. M. 1. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD CIT(A) - 4, NEW DELHI DATED 30.01.2015 FOR THE ASSESSMENT YEAR 2007 - 08, WHEREIN THE LD CIT(A) HAS DELETED THE PENALTY OF RS. 2082912/ - LEVIED BY THE LD ASSESSING OFFICER FOR FURNISHING INACCURATE PARTICULARS OF INCOME WITH RESPECT TO CAPITALIZATION OF ROYALTY EXPENSES AND DISALLOWANCE U/S 10B OF THE INCOME TAX ACT, 1961 . 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) ERRED IN DELETING THE PENALTY OF RS. 2082912/ - MADE ON ACCOUNT OF FILING OF INACCURATE PARTICULARS OF INCOME IN RESPECT OF CAPITALIZATION OF ROYALTY EXPENSES. 3. THE BRIEF FACTS OF THE CASE IS THAT ASSESSEE IS A MANUFACTURER OF ENGINEERING TOOLS , FILED HIS RETURN OF INCOME ON 31.10.2010 WHEREIN , IT HAS CLAIMED ROYALTY EXPENSES OF RS. 3339732/ - PAID TO M/S. MACNAUGHT LTD. THE LD ASSESSING OFFICER CONSIDERED THE SAME AS CAPITAL EXPE NDITURE DCIT VS GROZ ENGINEERING TOOLS PVT LTD ITA NO. 2149/DEL/2015 (ASSESSMENT YEAR: 2007 - 08) PAGE | 2 AND ALLOWED THE DEPRECIATION @25%. CONSEQUENTLY, DISALLOWANCE OF RS. 2504802/ - WAS MADE. 4. THE ASSESSEE ALSO CLAIMED DEDUCTION U/S 10 B OF THE ACT, HOWEVER, THE LD ASSESSING OFFICER EXCLUDED FREIGHT, INSURANCE, TELEPHONE EXPENSES AND TRAVELLING EXPEN SES FROM THE EXPORT TURNOVER SHOWN BY THE ASSESSEE AND THEREBY THE TOTAL DEDUCTION U/S 10B WAS RESTRICTED. HE FURTHER EXCLUDED LOCAL SALES FROM THE TURNOVER. SUBSEQUENTLY, THE ASSESSEE PREFERRED APPEAL BEFORE THE HIGHER FORUM AND CONSEQUENTLY, THE LD ASSES SING OFFICER INITIATED PENALTY PROCEEDINGS ON THE ABOVE TWO ISSUES. THE LD ASSESSING OFFICER ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE ON 16.08.2013 WHICH WAS REPLIED BY THE ASSESSEE ON 10.09.2013. HOWEVER, THE LD ASSESSING OFFICER PASSED PENALTY ORDER ON 3 0.09.2013 LEVYING A PENALTY OF RS. 2131248/ - . 5. THE ASSESSEE CHALLENGED THE SAME BEFORE THE LD CIT(A) WHO DELETED THE PENALTY ON DISALLOWANCE OF ROYALTY AS THE COORDINATE BENCH DELETED THE ADDITION. WITH RESPECT TO DISALLOWANCE U/S 10B HE HELD THAT AS PER O RDER U/S 154 DATED 25.08.2013 THE DEDUCTION ALLOWED TO THE APPELLANT OF RS. 223523890/ - COMPARED TO THE DEDUCTION CLAIMED BY THE ASSESSEE OF RS. 221121400/ - . THEREFORE, HE HELD THAT THE CHARGES OF FURNISHING INACCURATE PARTICULARS OF INCOME ARE NOT TRUE. HE FURTHER STATED THAT THERE WOULD BE A MARGINAL DIFFERENCE IN THE CLAIM OF THE ASSESSEE AND CLAIM ALLOWED TO THE ASSESSEE AND THEREFORE, HE RESTRICTED THE PENALTY TO RS. 48336/ - AND DELETED THE BALANCE PENALTY. 6. THE REVENUE AGGRIEVED WITH THE ORDER OF THE LD CIT(A) HAS PREFERRED THIS APPEAL. 7. THE LD DR RELIED UPON THE ORDER OF THE LD AO WHEREAS, THE LD AR RELIED ON THE ORDER OF THE LD CIT(A). 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND ALSO PERUSED THE ORDERS OF THE LOWER AUTHORITIES. THE TWO AD DITIONS ON WHICH THE PENALTY HAS BEEN LEVIED ARE DISALLOWANCE OF ROYALTY EXPENDITURE WHICH HAS BEEN DELETED BY THE COORDINATE BENCH AND FURTHER UPHELD BY THE HON'BLE HIGH DCIT VS GROZ ENGINEERING TOOLS PVT LTD ITA NO. 2149/DEL/2015 (ASSESSMENT YEAR: 2007 - 08) PAGE | 3 COURT VIDE ORDER DATED 04.09.2015. THEREFORE, THAT ADDITION DID NOT SURVIVE , HENCE, T HERE IS NO QUESTION OF ANY PENALTY THEREON. ON THE SECOND ISSUE WHERE THE DISALLOWANCE HAS BEEN RESTRICTED FINALLY FROM RS. 221121400/ - TO RS. 221073064/ - . ON THE DIFFERENCE AMOUNT THE LD CIT(A) HAS CONFIRMED THE PENALTY TO THE EXTENT OF RS. 48336/ - . ON TH E ADDITION WHICH STOOD DELETED LATER ON , THE LD CIT(A) HAS DELETED PENALTY TO THAT EXTENT ONLY. THE LD DR COULD NOT POINT OUT ANY INFIRMITY IN THE ORDER OF THE LD CIT(A). AS THE LD CIT(A) HAS DELETED THE PENALTY TO THE EXTENT OF DELETION OF THE ORIGINAL AD DITION , WE DO NOT FIND ANY INFIRMITY IN HIS ORDER. HENCE, WE CONFIRM HIS ORDER. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 2 / 05 / 2018 . - S D / - - S D / - ( S.K.YADAV ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 2 / 05 / 2018 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI