STARLIGHT HOSPITALITY PVT. LTD. (NOW KNOWN AS DAMASK INFRACON PVT. LTD.), MUMBAI V. ACIT CENT CIR. 37, MUMBAI

ITA 2295/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0713 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 28-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 234B; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI RAJENDRA , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO. 2295 / MUM/ 20 1 6 ( / ASSESSMENT YEAR: 2011 - 12 ) M/S. STARLIGHT HOSPITALITY PVT. LTD. (NOW KNOWN AS DAMASK INFRACON PVT. LTD.) M/S. THAR & CO., CHARTERED ACCOUNTANTS, 203, CAPRI BUILDING, OPP. HDIL TOWER, ANANT KANEKAR MARG, BANDRA - EAST, MUMBAI - 400051 / VS. ACIT CENTRAL CIRCLE - 37 MUMBAI ./ ./ PAN/GIR NO. : AALCS 7231 D ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 11.12 .2017 / DATE OF PRONOUNCEMENT : 17 . 01.2018 / O R D E R PER AMARJIT SINGH, J M: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 26 .0 2 .201 6 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 53 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO TH E A.Y. 2010 - 11 WHERE IN THE PENALTY LEVIED BY THE AO BY VIRTUE OF ORDER DATED 27.06.2013 HAS BEEN CONFIRMED. 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - ASSESSEE BY : SHRI VIRAG SHAH REVENUE BY: SHRI VIDHYADHAR ITA. NO.2295 /M/201 6 A.Y. 20 10 - 11 2 1 THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER OF LEVYING PENALTY US/ 271(1)(C) OF RS.3,64,309/ - . 2. THE CIT(A) FURTHER ERRED IN THIS CONNECTION IN HOLDING THAT THE APPELLANT HAD FURNISHED INACCURATE PARTICULARS OF ITS INCOME BY WAY OF CLAIMING DEDUCTION OF INTEREST ON DELAYED PAYMENT OF TDS AMOUNTING TO RS.10,71,814/ IN ITS RETURN OF INCOME. 3. THE APPELLANT CRAVES LEAVE TO ADD TO AND/OR AMEND AND/OR DELETE AND/OR MODIFY AND /OR ALTER THE AFORESAID GROUNDS OF APPEAL AS AND WHEN THE OCCASION DEMANDS. 4. ALL THE AFORESAID GROUNDS OF APPEAL ARE INDEPENDENT, IN THE ALTERNATIVE & WITHOUT PREJUDICE TO ONE ANOTHER. 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE A.Y. 2010 - 11 ON 15.10.2010 DECLARING TOTAL INCOME TO THE TUNE OF RS.3,78,45,556/ - . THE CASE WAS SELECTED FOR SCRUTINY AND THE ASS ES SMENT WAS COMPLETED U/S 143(3 ) OF THE ACT, 1961 DATED 31.12.2012 DETERMINING TOTAL INCOME TO THE TUNE OF RS.3,89,98,804/ - UNDER THE NORMAL PROV ISIONS OF THE ACT AS THE TAXABILITY UNDER THE PROVISION OF SECTION 115JB OF THE ACT WAS LESS THAN THE TAXABILITY UNDER NORMAL PROVISION OF THE INCOME - TAX ACT. THE ASSESSEE COMPANY ENGAGED IN THE BUSINESS OF BUILDING CONSTRUCTION ACTIVITY. DURING ASSESSMENT PROCEEDING , IT WAS OBSERVED THAT THE ASSESSEE COMPANY HAS PAID THE INTEREST ON DE LAYED PAYMENT OF TAX DEDUCTED A T SOURCE AMOUNTING TO RS.10,71,814/ - . THE SAID INTEREST IS NOT DEDUCTIBLE U/S 40(A)(III ) OF THE INCOME TAX ACT, 1961 A S THE INTEREST U/S 139, 215, 217, 220(2), 234A, 234B, 234C IS TO BE REGARDED AS ACCRETION TO TAX AND CANNOT BE ALLOWED TO BE DEDUCTED. THE REFORE, THE SUM TO THE TUNE OF RS.10,71,814/ - WAS DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE. AFTER GIVING NOTICE , THE PENALTY TO THE TUNE OF RS.3,64,309/ - ITA. NO.2295 /M/201 6 A.Y. 20 10 - 11 3 WAS LEVIED BY VIRTUE OF ORDER DATED 27.06.2013. THEREAFTER THE ASSESSEE FILED A N A PPEAL BEFO RE THE CIT(A) WHO CONFIRM ED THE PENALTY ORDER , THEREFORE, THE ASSESSEE FILED THE PRESENT APPEAL BEFORE US. 4. WE HAVE HEARD THE ARGUMENT ADVANCED BY THE LD. REPRESENTATIVE OF THE PARTIES AND PERUSED THE RECORD. IN THIS CASE THE ASSESSEE COMPANY PAID THE I NTEREST ON DELAYED PAYMENT ON TDS TO THE TUNE OF RS.10,71,814/ - . THE ASSESSING OFFICER TREATED THE INTEREST TO BE ACCRETION TO TAX, THEREFORE, THE SAME WAS DISALLOWED AND ACCORDINGLY THE PENALTY WAS LEVIED . AT THE VERY OUTSET, THE LD. REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THE CASE OF THE ASSESSEE DULY BEEN COVERED BY THE DECISION OF THE HONBLE ITAT MUMBAI BENCH IN THE CASE OF ITA. NO. 2296/M/2016 TITLE D AS M/S. DAMASK INFRACON PVT. LTD. VS. DCIT DATED 25.01.2017. THEREFORE, NO PENALTY IS LEVIABLE IN ACCORDANCE WITH LAW. HOWEVER, ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE DEPARTMENT HAS REFUTED THE SAID CONTENTIONS. BEFORE GOING FURTHER , IT IS NECESSARY TO ADVERT THE FINDING OF THE CASE RELIED BY THE LD. REPRESENTATIVE OF THE ASSESSEE I.E. ITA . NO. 2296/M/2016 TITLED AS M/S. DAMASK INFRACON PVT. LTD. VS. DCIT DATED 25.01.2017. THE RELEVANT FINDING IS HEREBY REPRODUCED BELOW AS UNDER: - WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. UNDISPUTEDLY, THE ADDITION ON THE BASIS OF WHICH PENALTY U/S 271(1) HAS BEEN IMPOSED IS ON ACCOUNT OF INTEREST CHARGED U/S 201(IA), CLAIMED AS DEDUCTION BY THE ASSESSEE. IT IS ALSO NOT IN DISPUTE THAT THE ADDITION ITA. NO.2295 /M/201 6 A.Y. 20 10 - 11 4 MADE BY THE ASSESSING OFFICER OF THE SAID AMOUNT, FOR WHATEVER MAY BE THE REASON, HAS BEEN ACCEPTED BY THE ASSESSEE. HOWEVER, THE ISSUE BEFORE US IS, WHETHER PENALTY U/S 271(1) (C) CAN BE IMPOSED MERELY ON THE BASIS OF ADDITION MADE BY THE ASSESSING OFFICER AND AC CEPTED BY THE ASSESSEE. AS COULD BE SEEN FROM T HE ORDER OF THE ASSESSING OFFICER THE BASIS FOR DISALLOWANCE OF THE INTEREST U/S 201(1A), IS IT IS A RATE OR TAX AS PER SECTION 40(A)(II) OF THE ACT, WHILE COMING TO SUCH CONCLUSION, THE ASSESSING OFFICER HAS OBSERVED THAT INTEREST U/S 139,215,217,220(2), 234A, 234B AND 234C IS TO BE REGARDED AS ACCRETION TO TAX, HENCE, CANNOT BE ALLOWED AS DEDUCTION. HOWEVER, THERE IS NO REFERENCE TO INTEREST CHARGED U/S 201(1A). WE FURTHER FI9ND THAT IN CASE OF ARTHUR ANDERSON & CO. (SUPRA), WHILE CONSIDERING THE ISSUE OF RE - OPENING OF ASSESSMENT ARISING OUT OF DEDUCTIBILITY OF INTEREST CHARGED U/S 220(2) VIS - - VIS SECTION 40(A)(II) OF THE ACT, HONBLE JURISDICTIONAL HIGH COURT FOLLOWED THE DECISION OF THE HONBLE SUPREME COURT IN HARSHAD SHANTILAL MEHTA VS. CUSTODIAN, (19 98 231 ITR 871 (SC) WHEREIN IT IS HELD THAT THE DEFINITION OF TAX U/S 2(43) DOES NOT INCLUDE PENALTY OR INTEREST AND SET ASIDE THE NOTICE ISSUED FOR RE - OPENING THE ASSESSMENT. THUS, IN VIEW OF THE AFORESAID, DECISION OF USED U/S 40(A)(II) WOULD INCLUDE INT EREST CHARGED U/S 201(1A) IS NOT FREE FROM THE DOUBT, HENCE, A DEBATABLE ISSUE. MOREOVER, THE EXPLANATION OF THE ASSESSEE THAT IT CLAIMED DEDUCTION OF THE INTEREST PAID U/S 201(1A) UNDER A BONAFIED IMPRESSION THAT SUCH INTEREST IS COMPENSATORY IN NATURE CA NNOT BE DISCARDED OUTRIGHT, AS IN OUR VIEW , WHETHER SUCH INTEREST IS COMPENSATORY OR PENAL IS A DEBATABLE ISSUE. MOREOVER, THERE IS NOTHING ON RECORD TO SUGGEST THAT THE ASSESSEE HAS FAILED TO DISCLOSE FULL PARTICULARS RELATING TO TDS AND ITS REMITTANCE TO THE GOVERNMENT ACCOUNT. THEREFORE, THE ASSESSEE CANNOT BE ACCUSED OF CONCEALING OR FURNISHING INACCURATE PARTICULARS OF INCOME. IN THE AFORESAID VIEW OF THE MATTER, WE HOLD THAT IMPOSITION OF PENALTY U/S 271 (1)(C) OF THE ACT IN THE INSTANT CASE IS UNJUST IFIED. ACCORDINGLY, WE DELETE THE SAME . 5 . FACTS AND CIRCUMSTANCES OF THE PRESENT CASE IS QUITE SIMILAR TO THE FACTS MENTIONED ABOVE, THE PENALTY WAS LEVIED ON THE BASIS OF THE ADDITION ON ACCOUNT OF INTEREST CHARGE U/S 201(IA) CLAIMED AS DEDUCTION BY THE ASSESSEE. THE ASSESSING OFFICER WAS OF THE VIEW THE ITA. NO.2295 /M/201 6 A.Y. 20 10 - 11 5 INTEREST U/S 139, 215, 217, 220(2), 234A, 234B, 234C IS TO BE REGARDED AS ACCRETION TO TAX , H ENCE, IS NOT BE LIABLE TO BE ALLOWED AS DEDUCTION . W HILE PASSING THE ORDER , THE HONBLE ITAT HAS DISCUSSED T HE DECISION OF THE CASE TITLED AS ARTHUR ANDERSON & CO VS. ACIT, (2010) 190 TAXMANN.COM 279 (BOM) AND HARSHAD SHANTILAL MEHTA VS. CUSTODIAN (1998) 231 ITR 871 (SC), WHERE IT IS HELD THAT THE DEFINITION OF TAX U/S 2(43) OF THE ACT DOES NOT INCLUDE PENALTY O R INTEREST AND SET ASIDE THE NOTICE I SSUED FOR RE - OPENING THE ASSESSMENT . MOREOVER THIS ISSUE IS DEBATABLE . T HE ASSESSEE CLAIM ED THE INTEREST . T HE INTEREST IS COMPENSATORY OR PENAL I N NATURE , IS DEBATABLE ISSUE . D ISCLOSURE IS NOT IN DISPUTE . THE ASSESSEE D ISCLOSED ALL THE MATERIAL FACTS BEFORE THE AO AND DEPOSITED THE TAX ALONG WITH INTEREST. T AK ING INTO ACCOUNT OF ALL THE FACTS AND CIRCUMSTANCES AND BY RELYING UPON THE ORDER OF HONBLE ITAT IN ITA. NO. 2296/M/2016 TITLE AS M/S. DAMASK INFRACON PVT. LTD. VS . DCIT DATED 25.01.2017 , WE ARE OF THE VIEW THAT THE NO PENALTY IS LEVIABLE . THEREFORE, WE DELETE THE PENALTY. 6 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HEREBY ORDERED TO BE ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 17. 01 . 201 8 SD/ - SD/ - ( RAJENDRA ) (AMARJIT SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DATED : 17. 01 . 201 8 ITA. NO.2295 /M/201 6 A.Y. 20 10 - 11 6 VIJAY / 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