TIVOLI INVESTMENT & TRADING CO. P.LTD, MUMBAI V. ACIT 7(3), MUMBAI

ITA 2273/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4298 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 09-07-2013
• Assessment Year: 1996-1997
• Appeal Filed On: 21-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Notional interest

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E MUMBAI . . , . !' , # $ BEFORE SHRI I.P. BANSAL, JM AND SHRI N.K. BILLA IYA, AM . / ITA NO.2273/MUM/2011 % % % % / ASSESSMENT YEAR 1996-97 TIVOLI INVESTMENT & TRADING CO. PVT. LTD., 101, CHAMPAKLAL UDYOG BHAVAN, SION (E), MUMBAI 400022. / VS. THE ACIT 7(3), ROOM NO.627, 6 TH FLOOR, AAYKAR BHAVAN, MK ROAD, MUMBAI 400020 & # ./ '( ./ PAN/GIR NO. : AAACT1591N ( &) / APPELLANT ) .. ( *+&) / RESPONDENT ) &) , / APPELLANT BY: SHRI NITESH JOSHI *+&) - , / RESPONDENT BY : SHRI RAJENDRA KUMAR - .# / DATE OF HEARING : 09/07/2013 /0% - .# / DATE OF PRONOUNCEMENT : 09/07/2013 1 / O R D E R PER I.P.BANSAL, J.M: THIS APPEAL IS FILED BY THE ASSESSEE. IT IS DIREC TED AGAINST THE ORDER PASSED BY LD. CIT(A)-13, MUMBAI DATED 11/11/2010 FOR ASSES SMENT YEAR 1996-97. GROUNDS OF APPEAL READ AS UNDER: THE APPELLANT APPEALS AGAINST THE IMPUGNED ORDER D ATED NOVEMBER 11, 2010 OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-13, MUMBAI (TH E CIT(A)) UNDER SECTION 253 OF THE INCOME-TAX ACT (THE ACT) ON THE FOLLOWING AMONG ST OTHER GROUNDS EACH OF WHICH IS IN THE ALTERNATIVE AND WITHOUT PREJUDICE TO ANY OTH ERS: 1. THE CIT(A) ERRED IN UPHOLDING THE LEVY OF PENALT Y OF RS.9,67,584 UNDER SECTION 271(1)(C) OF THE ACT. . / ITA NO.2273/MUM/2011 % % % % / ASSESSMENT YEAR 1996-97 2 2. THE CIT(A)S OBSERVATION THAT THERE WAS A DELIBE RATE ATTEMPT ON THE PART OF THE APPELLANT TO FURNISH INACCURATE PARTICULARS WHICH W AS NOT BONAFIDE THEREBY LEADING TO CONCEALMENT OF INCOME IS WITHOUT ANY BASIS AND N OT WARRANTED ON THE FACTS OF THE PRESENT CASE. 3. HAVING ACCEPTED THAT THE APPELLANT HAD DISCLOSED THE RELEVANT FACTS, THE CIT(A) OUGHT TO HAVE HELD THAT THE ISSUE WHETHER NOTIONAL INTEREST ON INTEREST FREE SECURITY DEPOSIT CAN BE ADDED TO THE ANNUAL VALUE RAISES A L EGAL ISSUE ON WHICH TWO VIEWS ARE POSSIBLE AND THEREFORE NO PENALTY COULD BE LEVI ED UNDER SECTION 271(1)(C) OF THE ACT. THE APPELLANT CRAVES LEAVE TO ADD, TO AMEND OR TO A LTER ANY OF THE ABOVE GROUNDS OF APPEAL. 2. THE QUANTUM ADDITION IN RESPECT OF WHICH THE IMP UGNED PENALTY WAS LEVIED WAS ON ACCOUNT OF NOTIONAL INTEREST ON INTEREST FRE E DEPOSITS RECEIVED BY THE ASSESSEE FROM ITS TENANT. THE CONTENTION OF AO IS THAT NOTIONAL INTEREST ON SUCH INTEREST FREE DEPOSITS CONSTITUTES INCOME OF THE AS SESSEE WHICH IS EXIGIBLE TO TAX AND SUCH VIEW OF THE AO HAS BEEN UPHELD BY THE TRIB UNAL IN RESPECT OF ASSESSMENT YEAR 1990-91 AND 1991-92 VIDE ORDER DAT ED 30/6/2003, REPORTED IN 90 ITD 163. IT IS THE CASE OF THE ASSESSEE THAT IN EARLIER YEARS ALSO CONCEALMENT PENALTY WAS LEVIED ON SIMILAR GROUND WH ICH HAS BEEN DELETED BY THE TRIBUNAL IN RESPECTIVE ASSESSMENT YEAR 1990-91, 199 1-92, 1992-93, 1993-94 AND 1995-96. REFERENCE WAS MADE TO THE FOLLOWING O RDERS OF THE TRIBUNAL 1. ITA NOS. 1441,1442/M/1997 & 4804/M/1998 ORDER D ATED 28/7/06 FOR A.YS 1992-93, 1993-94 AND 1995-96 2. ITA NO.3273 & 3275/BOM/94 ORDER DATED 11/12/20 06, A.YS 1990-91 & 1991-92 REFERENCE CAN BE MADE TO THE FOLLOWING OBSERVATIONS OF THE TRIBUNAL RENDERED VIDE ORDER DATED 28/7/2006 (SUPRA). 5.PARTIES HEARD AND RECORDS ARE PERUSED. WE ARE IN CONSIDERED AGREEMENT WITH THE VIEWS EXPRESSED BY THE LEARNED CIT(A) THAT THERE IS NEITHER CONCEALMENT OF ANY PARTICULARS NOR CONCEALMENT OF AN INCOME OR PARTICU LAR. THE ISSUE AS TO WHETHER OR NOT THE NOTIONAL INTEREST ON INTEREST FREE DEPOSITS RECEIVED BY THE ASSESSEE AS LANDLORD, IS A PURELY LEGAL ISSUE ON WHICH DIVERGEN T VIEWS HAVE BEEN EXPRESSED EVEN BY CO-ORDINATE BENCHES OF THIS TRIBUNAL. AS WE HAV E NOTED EARLIER THE DECISIONS RENDERED IN ASSESSEES OWN CASE IN FAVOUR OF THE R EVENUE HAVE BEEN REFERRED TO LARGER BENCH. THIS SHOWS THAT THE CORRECTNESS OF TH E SAID DECISION IS NOT ENTIRELY . / ITA NO.2273/MUM/2011 % % % % / ASSESSMENT YEAR 1996-97 3 FREE FROM DOUBT. AS A MATTER OF FACT, ANOTHER BENC H OF THIS TRIBUNAL IN THE CASE OF GAGAN TRADING CO. LTD V/S ACIT (93 ITD 426) HAS TAK EN A CONTRARY VIEW AND DISTINGUISHED TRIBUNALS DECISION IN THE CASE OF TR IVOLI INVESTMENT AND TRADING CO.(P) LTD ON THE GROUND THAT THE ASSESSEE RECEIV ED ONLY DEPOSITS AND NO RENT WAS STIPULATED. IN THE SAME ORDER, THE TRIBUNAL HAS ALS O OBSERVED NOTIONAL INTEREST ON INTEREST FREE DEPOSITS CANNOT BE TAKEN INTO CONSIDE RATION WHILE DETERMINING THE ANNUAL LETTING VALUE OF THE BUILDING UNDER SECTION 23 OF THE INCOME TAX ACT, 1961. IN THE LIGHT OF THIS DISCUSSION, WE AGREE WITH THE LD. CIT(A) THAT IMPUGNED ADDITION IS MADE ON THE BASIS OF A DEBATABLE INTERPRETATION OF LAW AND THEREFORE IT WAS NOT A FIT CASE FOR IMPOSITION OF PENALTY UNDER SECTION 271(1)(C ) OF THE ACT. THE LAW IS TRITE THAT THE PENALTY IS NOT AN AUTOMATIC CONSEQUENCE OF A QUANTUM ADDITION BEING MADE. IN THE LIGHT OF THIS DISCUSSION AND BEARING IN MIND THE ENTIRETY OF THE CASE, WE CONFIRM THE CONCLUSION ARRIVED AT BY THE CIT(A) AND DECLINED TO INTERFERE IN THE MATTER. 6. IN THE RESULT,. THE APPEALS OF THE REVENUE ARE D ISMISSED. IT WAS SO PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ITSELF. 3. HOWEVER, LD. DR RELIED UPON THE ORDER PASSED BY AO & LD. CIT(A). 4. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENT IONS HAVE CAREFULLY BEEN CONSIDERED. THE AO HAS ASSESSED A SUM OF RS.21,17, 500/- AS DEEMED INTEREST @15% ON INTEREST FREE DEPOSIT OF RS.1.54 CRORES FO R THE PERIOD 1/4/1995 TO 29/2/1996, ON WHICH THE IMPUGNED PENALTY HAS BEEN L EVIED. THE ISSUE REGARDING LEVY OF CONCEALMENT PENALTY IS THE SAME AS WERE DEC IDED BY THE TRIBUNAL IN CASE OF ASSESSEE ITSELF IN RESPECT OF A.YS 1990-91 TO 19 93-94 & 1995-96 VIDE AFOREMENTIONED TWO ORDERS OF THE TRIBUNAL. THEREFO RE, RESPECTFULLY FOLLOWING THE SAME WE DELETE THE PENALTY AND ALLOW THE APPEAL FIL ED BY THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 09/07/20 13 1 - /0% # 3 45 09/07/2013 0 - 6 7 SD/- SD/- ( !' / N.K.BILLAIYA ) ( . . / I.P. BANSAL ) # / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; 4 DATED 08/07/2013 . / ITA NO.2273/MUM/2011 % % % % / ASSESSMENT YEAR 1996-97 4 1 1 1 1 - -- - *.89 *.89 *.89 *.89 :9%. :9%. :9%. :9%. / COPY OF THE ORDER FORWARDED TO : 1. &) / THE APPELLANT 2. *+&) / THE RESPONDENT. 3. ; ( ) / THE CIT(A)- 4. ; / CIT 5. 9<6 *. , , / DR, ITAT, MUMBAI 6. 6= > / GUARD FILE. 1 1 1 1 / BY ORDER, +9. *. //TRUE COPY// ? ?? ? / @ @ @ @ ' ' ' ' (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . . ./ VM , SR. PS