ACIT, New Delhi V. M/s. Eastern Medikit Ltd., New Delhi

ITA 2259/DEL/2015

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3530 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2001-2002
• Appeal Filed On: 16-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA NEB
• Keywords: Revised return
• Section: 271(1)(c); 80HHC; 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B, NEW DELHI BEFORE SH.H.S.SIDHU, JUDICIAL MEMBER AND SH. N. K. BILLAIYA, ACCOUNTANT MEMBER ITA NO.2259/DEL/2015 ASSESSMENT YEAR: 2001-02 ACIT CIRCLE 8 (2) NEW DELHI VS M/S. EASTERN MEDIKIT LTD 3, G. C. NARANG MARG, NEW DELHI PAN NO.AAACE0706G (APPELLANT) (RESPONDENT) APPELLANT BY MS. ASHIMA NEB, SR DR RESPONDENT BY NONE DATE OF HEARING: 21/02/2019 DATE OF PRONOUNCEMENT: 21/02/2019 ORDER PER N. K. BILLAIYA, AM: THIS APPEAL BY THE REVENUE PREFERRED AGAINST THE OR DER OF THE CIT(A)-14, NEW DELHI DATED 23.01.2015 PERTAINING TO A. Y. 2001- 02. 2. THE SOLITARY GRIEVANCE OF THE REVENUE IS THAT TH E CIT(A) ERRED IN DELETING THE PENALTY LEVIED U/S. 271 (1) (C) OF THE ACT AMOUNTING TO RS.85.31 LACS. 2 3. NONE APPEARED ON BEHALF OF THE ASSESSEE IN SPITE OF NOTICE BEING SERVED THROUGH THE DR. WE DECIDE TO PROCEED EXPARTE. THE DR WAS HEARD AT LENGTH. THE DR STRONGLY STATED THA T MENS REA IS NO MORE AN ESSENTIAL CONDITION FOR THE LEVY OF P ENALTY U/S 271 (1) (C) OF THE ACT. IT IS THE SAY OF THE DR THAT T HE ASSESSEE HAS CLAIMED DEDUCTION U/S 80 IA AND 80 HHC OF THE ACT SIMULTANEOUSLY WHICH WAS DENIED BY THE ASSESSING OF FICER WHILE COMPLETING THE ASSESSMENT U/S 143 (3) OF THE ACT. THE DR FURTHER STATED THAT THE ASSESSEE HAD INTENTIONALLY CLAIMED SIMULTANEOUS DEDUCTION AND, THEREFORE, LEVY OF PENALTY IS JUSTIF IABLE. THE DR PLACED RELIANCE ON THE JUDGMENT OF THE HONBLE DELH I HIGH COURT IN THE CASE OF ZOOM COMMUNICATIONS PRIVATE LIMITED IN ITA NO.07/2010. 4. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTH ORITIES BELOW. IN THIS CASE THE RETURN OF INCOME WAS FILED ON 30.10.2001 CLAIMING DEDUCTION U/S 80 IA AND U/S 80 HHC OF THE ACT. 5. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PRO CEEDINGS THE ASSESSEE FILED A REVISED RETURN FOR FOLLOWING R EASONS :- 1. REBATE U/S 80 IA / 80 IB OF THE ACT WAS CALCULATED BY ELIMINATING NOTIONAL PROFIT EARNED BY UNIT NO.206 (TOOL ROOM) OF THE ASSESSEE COMPANY. 2. REBATE U/S 80 HHC OF THE ACT WAS RECALCULATED UNIT-WISE, ELIMINATING THE PROFIT OR LOSS EARNED BY THE UNIT ENGAGED IN DOMESTIC SALE ONLY. 3. TAXABLE PROFIT FOR THE PURPOSE OF MINIMUM ALTERNATE TAX (MAT) WAS RE-CALCULAT ED KEEPING I N VIEW THE PROVISIONS CONTAINED UNDER SECTION 115 JB OF TH E ACT. 3 4. THE ASSESSE COMPANY CLAIMED REBATE U/S 80 JJAA OF THE ACT, WHICH WAS NOT CLAIMED EARLIER. 6. WHILE COMPLETING THE ASSESSMENT THE ASSESSING OF FICER REWORKED THE DEDUCTION U/S 80 HHC OF THE ACT AND RE DUCED THE SIMULTANEOUS CLAIM OF DEDUCTION U/S 80 IA OF THE AC T. 7. THE ASSESEE LOST THE APPEAL BEFORE THE FIRST APP ELLATE AUTHORITY, PENALTY PROCEEDINGS WERE SEPARATELY INIT IATED ON THE GROUND THAT THE ASSESEE CLAIMED DEDUCTION U/S 80 IA OF THE ACT AND SIMULTANEOUSLY CLAIMED U/S 80 HHC OF THE ACT WI THOUT REDUCING THE PROFIT TO THE EXTENT CLAIMED DEDUCTION U/S 80 IA OF THE ACT WHICH RESULTED IN ALLOWANCE OF DOUBLE DEDUC TION ON SAME PROFIT. THE ASSESSING OFFICER WAS CONVINCED THAT TH E ASSESEE HAS CONCEALED PARTICULARS OF INCOME, THEREFORE, INVOKIN G EXPLAINATION- 1 TO U/S 271 (1) (C) OF THE ACT PENALTY WAS LEVIED AT RS.85,13,868/-. 8. THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A ) AND STRONGLY CONTENDED THAT IT HAS NOT CLAIMED SIMULTAN EOUS DEDUCTION INTENTIONALLY AND THEREFORE, IT IS NOT A FIT CASE FOR LEVY OF PENALTY. STRONG RELIANCE WAS PLACED ON THE JUDGMEN T OF HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PROJECT S PRIVATE LIMITED REPORTED IN 322 ITR 158. AFTER CONSIDERING THE FACTS AND THE SUBMISSION AND DRAWING SUPPORT FROM VARIOUS JUD ICIAL DECISION THE CIT(A) DELETED THE PENALTY SO LEVIED. THE RELEVANT FINDINGS OF THE CIT (A) READ AS UNDER :- IN THE CASE UNDER CONSIDERATION. IT IS AN UNDISP UTED FACT THAT THE ISSUE OF SIMULTANEOUS CLAIM OF DEDUCT IONS U/S 80 HHC AND 80 IA WAS A DEBATABLE ISSUE. IN THE CASE O F ACIT 4 VS. ROGINI GARMENTS (SUPRA), THE HONBLE SPECIAL BE NCH OF ITAT HELD THAT LITERAL INTERPRETATION OF THE PROVIS IONS OF SECTION 80 IA (9) IS THAT RELIED U/S 80 IA SHOULD BE DEDUCT ED FROM THE PROFIT AND GAIN OF THE BUSINESS BEFORE COMPUTING RE LIEF UNDER SECTION 80 HHC OF THE ACT. SUBSEQUENTLY, THE HONB LE HIGH COURT OF MADRAS, IN THE CASE OF SCM CREATIONS REPOR TED IN 304 ITR 319 (MAD.), HELD THAT RELIEF UNDER SECTION 80 I A OF THE INCOME TAX ACT, 1961 SHOULD NOT BE DEDUCTED FROM PR OFITS AND GAIN OF BUSINESS BEFORE COMPUTING RELIEF UNDER SECT ION 80 HHC. AFTER THIS DECISION OF THE HONBLE MADRAS HIG H COURT IN THE CASE OF SCM CREATIONS (SURPA), HONBLE ITAT, SP ECIAL BENCH, DELHI IN THE CASE OF ACIT VS. HINDUSTAN MINT & AGRO PRODUCTS PVT. LTD. ( 2009) 119 ITD 107 HELD THAT DE DUCTION TO BE ALLOWED UNDER PROVISIONS OF CHAPTER VI-A WITH HE ADING C (SECTION 80 HHC, ETC.) IS TO BE REDUCED BY AN AMOUN T OF DEDUCTION ALLOWED UNDER SECTION 80 IA/ 80IB OF THE INCOME TAX ACT, 1961. THE AFORESAID DECISION OF THE SPECI AL BENCH OF HONBLE ITAT WAS AFFIRMED BY HONBLE HIGH COURT OF DELHI IN THE CASE OF GREAT EASTERN EXPORTS VS. CIT (SUPRA) A ND IT WAS HELD THAT FOR THE PURPOSE OF COMPUTING DEDUCTION U/ S 80HHC, THE DEDUCTION ALREADY ALLOWED U/S 80IA HAD TO BE RE DUCED FROM THE PROFITS OF THE BUSINESS. SIMILAR VIEW WAS TAKEN BY THE HONBLE KERALA HIGH COURT IN THE CASE OF OLAM E XPORTS (INDIA LTD.) VS. CIT 229CTR(KER.)206. HOWEVER, THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF ASSOCIATED CAPS ULES PVT. LTD. VS. DCIT, 237CTR, 408 HELD THAT THE AMOUNT OF DEDUCTION U/S 80IA IS NOT TO BE REDUCED IN COMPUTING THE EXPO RTS PROFIT FOR THE PURPOSE OF DEDUCTION U/S 80HHC. THUS, THERE WAS DIVERGENCE OF DECISIONS ON THE ISSUE OF SIMULTANEOU S CLAIM OF DEDUCTION U/S 80HHC AND 80IA AND THE ISSUE WAS A DEBATABLE ISSUE INVOLVING SUBSTANTIAL QUESTION OF L AW. THEREFORE, IN MY OPINION, PENALTY U/S 271(1)(C) IS NOT LEVIABLE IN THIS CASE. RELIANCE IN THIS REGARD IS ALSO PLACE D ON THE 5 DECISION OF HONBLE ITAT AHMADABAD IN THE CASE OF D CIT VS. ORNET INTERMEDIATES PVT. LTD. (ITA NO.477 AND 478/AHD/2007) WHEREIN IT WAS HELD THAT PENALTY U/S 271(1)(C) IS NOT LEVIABLE IN THE CASE OF DEBATABLE ISSUE. 9. A PERUSAL OF THE ABOVE CLEARLY SHOWS THAT THE CL AIM OF THE ASSESSEE IS A HIGHLY DEBATABLE ISSUE AS THERE ARE C ONFLICTING DECISIONS OF HIGH COURTS AND THE TRIBUNAL. THOUGH T HE JURISDICTIONAL HIGH COURT OF DELHI IS AGAINST THE A SSESSEE BUT THAT IS RELEVANT FOR QUANTUM PROCEEDINGS. FINDINGS IN QU ANTUM PROCEEDINGS MAY BE RELEVANT BUT ARE NOT CONCLUSIVE OR DETERMINATIVE OF THE PENALTY PROCEEDINGS. THE RELIA NCE PLACED BY THE LD. DR ON THE JUDGMENT OF THE HONBLE DELHI HIG H COURT IN THE CASE OF ZOOM COMMUNICATIONS PRIVATE LIMITED (SU PRA) IS MISPLACED BECAUSE THE SAID JUDGMENT WAS DELIVERED O N DIFFERENT SET OF FACTS. 10. CONSIDERING THE FACTS OF THE CASE IN HAND IN TO TALITY WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDINGS OF THE CIT (A). THE APPEAL FILED BY THE REVENUE IS ACCORDINGLY DISM ISSED. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21.02.2019. SD/- SD/- (H. S. SIDHU) ( N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNT ANT MEMBER *NEHA* DATE:- 21.02.2019 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT 6 DATE OF DICTATION 21.02.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 21.02.2019 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE HEAD CLERK. THE DATE ON WHICH FILE GOES TO THE ASSISTANT REGIST RAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER