ITO 24(1)(2), MUMBAI V. TRIO PACKAGING, MUMBAI

ITA 2176/MUM/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 101096 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2008-2009
• Appeal Filed On: 01-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PREMANAND J
• Keywords: Depreciation; Capital expenditure

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI N.K . BILLAIYA, ACCOUNTANT MEMBER AND SHRI SANJAY GARG , JUDICIAL MEMBER / I .T.A. NO . 2176/MUM/2014 ( / ASSESSMENT YEAR : 2008 - 09 THE ITO - 24(1)(2), C - 13, PRATYAKSH KAR BHAVAN, BANDRA - KURLA COMPLEX, BANDRA (E), MUMBAI - 400 051 / VS. M/S. TRIO PACKAGING, BLDG., NO. 1, C - 9, SINGH INDUSTRIAL ESTATE, RAM MANDIR ROAD, GOREGAON (W), MUMBAI - 400 062 ./ ./ PAN/GIR NO. : AACFT 1632K ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI PREMANAND J. / RESPONDENT BY: SHRI ANIL THAKRAR / DATE OF HEARING : 22 .0 9 .2015 / DATE OF PRONOUNCEMENT : 22.09 .2015 / O R D E R PER N.K. BILLAIYA, AM: THIS IS AN APPEAL BY THE REVENUE PREFERRED AGAINST THE ORDER OF THE LD. CIT(A) - 34 ,MUMBAI D ATED 9 .1.201 4 PERTAINING TO ASSESSMENT YEAR 2008 - 09. 2. THE SUM AND SUBSTANCE OF THE GRIEVANCE OF THE REVENUE IS THAT THE LD. CIT(A) ERRED IN DELETING THE PENALTY OF RS. 4,90,221/ - LEVIED BY THE AO U/S. 271(1)(C) OF THE ACT. IT IS THE CLAIM OF THE REVEN UE THAT WHILE DELETING THE PENALTY, THE LD. CIT(A) ERRED IN RELYING ON THE ITA. NO. 2176/M/2014 2 DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF DCIT VS CORE HEALTH CARE LTD. 3. THE ASSESSEE IS IN THE BUSINESS OF MANUFACTURING CORRUGATED BOXES AND PRINTING OF LABELS AND PAMPHLETS. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS DEPOSITED CERTAIN AMOUNTS IN FIXED DEPOSIT WITH DENA BANK. WHILE EXAMINING THE DETAILS FILED BY THE ASSESSEE, THE AO FOUND THAT THE A SSESSEE HAS BORROWED MONEY FROM SIDBI BANK AND THE SAME WAS PARKED IN FIXED DEPOSIT FOR A SHORT TERM. THE AO FURTHER NOTICED THAT THE ASSESSEE HAS DEBITED RS. 20,90,786/ - UNDER THE HEAD INTEREST ON BORROWINGS OUT OF WHICH INTEREST ON LOAN TAKEN FROM SIDB I BANK AGAINST MACHINERIES WAS AT RS. 20,18,941/ - . THE AO FOUND THAT THE ASSESSEE HAS NOT CLAIMED ANY DEPRECIATION ON THE SAID MACHINERY AND FORMED A BELIEF THAT THE SAME WAS NOT PUT TO USE AND THEREFORE THE CLAIM OF INTEREST OF RS. 15,86,477/ - WHICH WAS THE NET FIGURE OF INTEREST (DEBIT) RS. 20,18,941/ - MINUS INTEREST (CREDIT) RS. 4,32,464/ - . THE AO ALSO INITIATED PENAL PROCEEDINGS ON SUCH DISALLOWANCE. 3.1. DURING THE COURSE OF THE PENAL PROCEEDINGS, THE AO STATED THAT IT HAS NOT FURNISHED ANY INACC URATE PARTICULARS AND THE CLAIM OF INTEREST IS BONAFIDE WHICH IS PAID ON THE MONEY BORROWED FOR THE PURCHASE OF MACHINERIES. IT WAS EXPLAINED THAT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS ITSELF, IT WAS CLARIFIED THAT THE MACHINERIES WERE PUT TO US E BUT FOR SOME REASON, THE DEPRECIATION WAS NOT CLAIMED. THEREFORE, DISALLOWANCE OF INTEREST AND TREATING THE SAME AS CAPITAL EXPENDITURE DOES NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS AND CONCEALMENT OF THE PARTICULARS OF INCOME. ITA. NO. 2176/M/2014 3 THE AO DISMISS ED THE CLAIM OF THE ASSESSEE AND PROCEEDED BY LEVYING PENALTY U/S. 271(1)(C) OF THE ACT AT RS. 4,90,221/ - . 4. AGGRIEVED BY THIS, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) AND REITERATED WHAT HAS BEEN STATED BEFORE THE AO. THE LD. CIT(A) WAS CONVINCED THAT IT IS NOT A FIT CASE FOR THE LEVY OF PENALTY AND DIRECTED THE AO TO DELETE THE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT. 5. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. 6. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE FINDINGS OF TH E AO. 7. PER CONTRA, THE LD. COUNSEL FOR THE ASSESSEE ONCE AGAIN MADE THE SAME SUBMISSION AS WERE MADE BEFORE THE LOWER AUTHORITIES. 8. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE AUTHORITIES BELOW. IT IS AN UNDISPUTED FACT THAT THE INTEREST CLAIME D BY THE ASSESSEE WAS INTEREST PAID ON LOAN TAKEN FROM SIDBI. IT IS ALSO AN UNDISPUTED FACT THAT THE CLAIM OF INTEREST DEBITED HAS BEEN REDUCED BY THE AMOUNT OF INTEREST EARNED ON FIXED DEPOSIT. A PERUSAL OF THE ASSESSMENT ORDER CLEARLY SHOWS THAT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS ITSELF, THE ASSESSEE HAS MADE IT CLEAR THAT THE MACHINERIES WERE INSTALLED IN THE FACTORY AND THE REQUIRED POWER WAS CONNECTED AND ALL NECESSARY FORMALITIES WERE COMPLETED TO COMMENCE PRODUCTION. DUE TO SOME TECHN ICAL REASON, THE ASSESSEE COULD NOT TAKE FULL ADVANTAGE OF THE MACHINE. IT WAS ALSO EXPLAINED THAT ALTHOUGH THE ASSESSEE IS ENTITLED TO CLAIM DEPRECIATION BUT THE ITA. NO. 2176/M/2014 4 SAME HAS NOT BEEN CHARGED IN THE BOOKS TO PRESENT PROFIT INSTEAD OF LOSS. 8.1. IN OUR UNDERSTANDING OF THESE FACTS, WE DO NOT FIND THE CLAIM OF THE ASSESSEE DEVOID OF ANY BONAFIDE. WE ALSO DO NOT FIND THE CLAIM MADE BY THE ASSESSEE AGAINST THE PROVISIONS OF THE LAW. THE HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS PV T. LTD. 322 ITR 158 HAS CONSIDERED SIMILAR FACTS AND HELD AS UNDER: A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME - TAX ACT, 1961,SUGGESTS THAT IN ORDER TO BE COVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION 271(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRETCH O F IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PA RTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILITY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C) . A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSEL F, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. ITA. NO. 2176/M/2014 5 RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT, W E DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON 22 ND SEPTEMBER , 2015 SD/ - SD/ - ( SANJAY GARG ) (N.K. BILLAIYA) /JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 22 ND SEPTEMBER , 2015 . . ./ RJ , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI