CONTAINER MARINE AGENCIES P.LTD, MUMBAI V. DCIT CIR 2(1), MUMBAI

ITA 225/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8053 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 10-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M C NINGSHAN
• Keywords: Depreciation; Business expenditure; Initiation of penalty proceedings; Wrong claim

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , A M AND SHRI PAWAN SINGH, JM ./ I.T.A. NO. 225/MUM/2017 ( / ASSESSMENT YEAR: 2008 - 09) CONTAINER MARINE AGENCIES PVT. LTD. 502, GULAB BUILDING, 5 TH FLOOR, 237, P. DEMELLO ROAD, MUMBAI - 400 001 / VS. DCIT, CIRCLE 2(1), AAYKAR BHAVAN, MUMBAI - 400 020 ./ ./ PAN/GIR NO. AAACC 2032 M ( / APPELLANT ) : ( / RESPOND ENT ) / APPELLANT BY : MS. DINKLE HARIYA / RESPONDENT BY : SHRI M. C. NINGSHAN / DATE OF HEARING : 20.09.2017 / DATE OF PRONOUNCEMENT : 11.12 .2017 / O R D E R PER SHAMIM Y AHYA , A. M.: T HIS APPEAL BY THE ASSESSEE DIRECTED AGAINST ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS) - 3, MUMBAI DATED 21.11.2016 AND PERTAINS TO ASSESSMENT YEAR 2008 - 09. 2. T HE GROUND OF APPEAL READ AS UNDER : 1. THE DCIT CIRCLE 2(1) ERRED IN LEVYING PENALTY OF RS.5,55,858/ - BEING 100% TAX ON INCOME EVADED. 2 ITA NO. 225/MUM/2017 (A.Y. 2008 - 09) CONTAINER MARINE AGENCIES PVT. LTD. VS. DCIT 3. BRIEF FACTS OF THE CASE AS EMANATING OUT OF THE ASSESSMENT ORDER WHICH LED TO THE INITIATION OF PENALTY PROCEEDINGS READ AS UNDER : THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE IN THE B LOCK OF ASSETS OF BUILDINGS, WDV AS ON 01.4.2007 SHOWN AN AMOUNT OF RS.23297166/ - . ASSESSEE CLAIMED DEPRECATION OF RS.23,29,717/ - ON THE ENTIRE WDV, IRRESPECTIVE OF THE FACT THAT WHETHER THE PROPERTY IS USED FOR BUSINESS OR GIVEN ON LEAVE AND LICENSE BAS IS. THEREFORE, THE ASSESSEE WAS ASKED TO JUSTIFY THE CLAIM OF DEPRECATION ON PROPERTIES WHICH ARE LET OUT AND WHY IT SHOULD NOT BE DISALLOWED AND ADDED TO ITS TOTAL INCOME. IN RESPONSE TO THE SAME, THE REPRESENTATIVE OF THE ASSESSEE VIDE THEIR LETTER DATED 06.12.2010 SUBMITTED THAT THE PERCENTAGE OF PROPERTIES GIVEN ON LEAVE AND LICENSE VIS - - VIS TOTAL OFFICE PREMISES IS APPROXIMATELY 50%. IT WAS CONTENDED THAT INDIVIDUAL PROPERTIES ARE SUBMITTED IN BLOCK OF ASSETS, IT IS NOT POSSIBLE TO DETERMINE THE EXACT VALUE THEREOF. THE CONTENTION OF THE ASSESSEE WAS CONSIDERED BY THE ASSESSING OFFICER. HE HELD THAT I N THE ABSENCE OF BREAK - UP OF PROPERTIES WHICH ARE USED FOR BUSINESS AND WHICH ARE LET OUT, AS CONTENDED BY THE REPRESENTATIVE OF THE ASSESSEE, 50% OF THE PROPERTIES ARE HELD TO BE USED FOR BUSINESS, THE DEPRECATION CLAIM OF THE ASSESSEE ON BUILDINGS IS RESTRICTED TO RS.11,64,858/ - (23,97,717/2) AND BALANCE OF RS.11,64,858/ - IS DISALLOWED AND ADDED TO ASSESSEES TOTAL INCOME AND PENALTY PROCEEDINGS U/S. 271( 1)(C) OF THE I. T. ACT WERE HEREBY INITIATED FOR CONCEALING THE PARTICULARS OF INCOME. 4. ON THESE FACTS , THE A SSESSING O FFICER HELD THAT PENALTY PROCEEDINGS WERE BEING INITIATE D F OR CONCEALMENT OF INCOME. 5. IN THE PENALTY PROCEEDINGS AND IN THE PROCEE DINGS BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS), THE PENALTY WAS LEVIED AN D CONF I RMED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. 3 ITA NO. 225/MUM/2017 (A.Y. 2008 - 09) CONTAINER MARINE AGENCIES PVT. LTD. VS. DCIT 6. BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS), THE ASSESSEE HAS SUBMITTED THAT I T WAS CARRYING ON BUSINESS OF SHIPPING AGENCIES IN THE PAST. DUE TO DECREASE IN THE APPELLANT'S BUSINESS, COMPANY GAVE SOME OF ITS OFFICE PREMISES ON RENT. SINE THESE ASSETS WERE INITIALLY USED FOR THE BUSINESS OF THE COMPANY, DEPRECIATION HAD BEEN CLAIMED ON THE SAME AND S AID ASSETS CONSTITUTED PART OF THE BLOCK OF ASSETS. IT IS CONTENDED THAT AS THE INDIVIDUAL PROPERTIES ARE MERGED IN BLOCK OF ASSETS, IT IS NOT - POSSIBLE TO DETERMINE THE EXACT VALUE OF THE SAME. FURTHER, AFTER INTRODUCTION OF CONCEPT OF BLOCK OF ASSETS, IT IS NOT POSSIBLE TO SEGREGATE THE VALUE OF EACH ASSET WHICH ARE LEASED AND USED BY THE COMPANY AS ITS OWN AND THEREFORE DEPRECIATION WAS CLAIMED ON THE ENTIRE BLOCK OF ASSETS. THE APPELLANT RELIED IN THE CASE OF CIT VS OSWAL AGRO MILLS LTD. (ITA NO. 161 OF 2006). SINCE THE ASSET WAS INTRODUCED IN THE BLOCK OF ASSETS, WDV AND DEPRECIATION ON SELF OCCUPIED PROPERTY AND LET OUT PROPERTY C ANNOT BE SEPARATED. ACCORDINGLY, IT WAS SUBMITTED THAT THE ASSESSEE CLAIMED FULL DEPRECIATION ON BUILDING BUT 50% WAS DISALLO WED. THE SAME HAS BEEN CONFIRMED BY THE CIT(A), BUT THE ASSESSEE HAS NOT FURTHER CONTESTED AS TO BUY A PEACE OF MIND AND AVOID FARTHER LITIGATION BUT THAT DOES NOT A TTRACT PENALTY PROVISIONS. IT WAS FURTHER SUBMITTED THAT ASSESSING OFFICER HAS DISALLOWED E XPENSES RELATED TO PROSE OF RS.4,70,501 / - BEING 50% OF THE EXPENSES CLAIMED AS BUSINESS EXPENSES OF RENT, RATES AND TAXES. THE ASSESSING OFFICER DISALLOWED 50% OF RS.9,41,002 / - CONSIDERING THE EXPENSES NOT RELATED TO BUSINESS AND LEVIED PENALTY CONSIDERING AS SUBMISSION INACCURATE PARTICULARS. THE ASSESSEE RELIED ON THE DECISION OF CIT VS RELIANCE PETRO PRODUCTS . 7. HOWEVER , LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS LACONICALLY REJECTED THE SUBMISSIONS BY HOLDING AS UNDER; 6.3 I HAVE CAREFULLY CONSIDERE D THE RIVAL SUBMISSIONS AND THE FACTS OF THE CASE. THE APPELLANT HAS NOT BEEN ABLE TO EXPLAIN AS TO HOW THEY HAVE MADE A WRONG CLAIM OF DEPRECIATION AS WELL AS RENT, RATES AND TAXES. THE APPELLANT HAS FAILED TO DEMONSTRATE AS TO HOW IT HAS NOT COME UNDER T HE PURVIEW OF DEFINITION OF INACCURATE PARTICULARS OF INCOME. 4 ITA NO. 225/MUM/2017 (A.Y. 2008 - 09) CONTAINER MARINE AGENCIES PVT. LTD. VS. DCIT 8. A GAINST THE ABOVE ORDER , THE ASSESSEE IS IN APPEAL BEFORE US. 9. WE HAVE HEARD BOTH THE C OUNSEL AND PERUSED THE RECORDS. WE FIND THAT THE FACTS OF THE CASE CLEARLY INDICATE THAT ASSESSEE'S CONDUCT HAS BEEN BONAFIDE AND NOT AT ALL CONTUMACIOUS WARRANTING LEVY OF PENALTY U /S.271(1)(C) OF THE ACT . THE ASSESSEE HAS CLAIMED DEPRECATION ON THE WHOLE BUILDING AS IN EARLIER YEARS. NO IDENTIFICATION OF THE EXACT AMOUNT OF BUILDING LET OUT AND BUILDI NG USED FOR OFFICE PURPOSES HAS BEEN DONE BY THE ASSESSING OFFICER . HE HAS ACCEPTED TH E AD HOC IDENTIFICATION OF 50% BY THE ASSESSEE HIMSELF. HENCE ASSESSEES CLAIM THAT IT HAS MADE BONAFIDE CLAIM OF DEPRECIATION CANNOT BE SAID TO BE CONTUMACIOUS CONDUCT. H ENCE , IN OUR CONSIDERED OPINION , ON THE FACTS AND CIRCUMSTANCES OF THE CASE , NO PENALTY U /S. 271(1)(C) OF THE ACT IS LEVIABLE IN THIS CASE . FURTHERMORE , WE FIND THAT THE PENALTY LEVIED IS FURTHER VITIATED IN AS MU CH AS ASSESSING OFFICER HAS INITIATED PENA LTY FOR CONCEALMENT OF INCOME , BUT THE PENALTY HAS BEEN LEVIED BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) F OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. 10 ACCORDINGLY IN THE BACKGROUND OF AFORESAID DISCUSS ION , WE SET A SIDE THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS) AND DELETE THE LEVY OF PENALTY. 11. IN THE RESULT , THIS APPEAL BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11.12.2017 SD/ - SD/ - ( PAWAN SINGH ) (S HAMIM YAHYA ) / J UDICIAL MEMBER / A CCOUNTANT MEMBER MUMBAI ; DATED : 11.12.2017 . . ./ ROSHANI , SR. PS 5 ITA NO. 225/MUM/2017 (A.Y. 2008 - 09) CONTAINER MARINE AGENCIES PVT. LTD. VS. DCIT / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI