Margen Impex Ltd., Anand V. The ACIT.,Circle-4, Baroda

ITA 231/AHD/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67668 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 14-08-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 22-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J P JANGID SRDR
• Assessee Lawyers: A L THAKKAR
• Keywords: Cost of acquisition; Wrong claim; Difference of opinion; Revenue expenditure; Capital expenditure
• Section: 10B

Judgement Text

, , , , C, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, C BENCH . .. . . .. . , !' !' !' !', , , , #$ %&'( #$ %&'( #$ %&'( #$ %&'(, , , , )* + ) ' )* + ) ' )* + ) ' )* + ) ' BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND ANIL CHATURVEDI, ACCOUNTANT MEMBER) ITA NO.231/AHD/2010 [ASSTT.YEAR : 2006-2007] MARGEN IMPEX LTD. PLOT NO.801, ZONE-12 GIDC, VITHAL UDYOGNAGAR ANAND. PAN : AACCM 2105 R /VS. ASSTT.COMMISSIONER OF INCOME TAX CIRCLE-4, BARODA. ( (( (-. -. -. -. / APPELLANT) ( (( (/0-. /0-. /0-. /0-. / RESPONDENT) 1& 2 3 )/ ASSESSEE BY : SHRI A.L. THAKKAR + 2 3 )/ REVENUE BY : SHRI J.P. JANGID, SR.DR 5 2 &(*/ DATE OF HEARING : 11 TH AUGUST, 2013 678 2 &(*/ DATE OF PRONOUNCEMENT : 5.9.2013 )9 / O R D E R PER ANIL CHATURVEDI, ACCOUNTANT MEMBER: THIS IS ASSESSEES APPEAL DIRECTED AGAINST THE ORDER OF THE CIT(A)-III, BARODA DATED 14.10.2009 FOR THE ASSESSMENT YEAR 2006-2007 IN CONFIRMING THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE I.T.A CT OF RS.24,39,432/-. 2. BRIEFLY STATED FACTS, AS RECORDED IN THE IMPUGNE D ORDER OF THE LEARNED CIT(A) IS THAT THE ASSESSEE IS 100% EXPORT ORIENTED UNIT AND CLAIMING DEDUCTION UNDER SECTION 10B OF THE ACT. THE ASSESSEE-COMPANY HAD PURCHASED TECHNICAL DATA DESIGN ETC. FOR A SUM OF RS.2,89,89,095/- FOR PORTABLE TRAILER MOUNTED MULTI USE LOAD BANK. ONE FORTH OF THE AMOUNT VIZ. RS.72, 47,274/- WAS CLAIMED AS ITA NO.231/AHD/2010 -2- REVENUE EXPENDITURE DURING THE YEAR. ACCORDING TO THE ASSESSEE BENEFIT OF ACQUISITION WAS LIKELY TO SPREAD OVER 4 YEARS, AND THEREFORE, 1/4 TH OF THE COST OF ACQUISITION COULD BE CLAIMED AS REVENUE EXPENDITURE . THE AO DID NOT FIND THIS CLAIM TENABLE UNDER THE LAW AND TREATED THE COST OF ACQUISITION AS CAPITAL EXPENDITURE. THE AO ALSO LEVIED PENALTY BECAUSE, A CCORDING TO THE AO, THE ASSESSEE DELIBERATELY CLAIMED EXPENDITURE AS REVENU E EXPENDITURE WHICH COULD NOT BE CLAIMED AS REVENUE EXPENDITURE AND THEREBY FURNI SHED INACCURATE PARTICULARS. THEREAFTER, THE MATTER WENT IN APPEAL BEFORE THE CI T(A), WHO AFTER DETAILED DISCUSSIONS HELD THAT THE CLAIM MADE BY THE ASSESSE E WAS DECIDEDLY WRONG AND ARGUING IT AS A DEFERRED REVENUE EXPENDITURE WAS AT BEST OF A SELF-SERVING ARGUMENTS, AND ACCORDINGLY, CONFIRMED THE ACTION OF THE AO IN IMPOSING PENALTY UNDER SECTION 271(1)(C) OF THE ACT. STILL AGGRIEVE D, THE ASSESSEE IS NOW SECOND APPEAL BEFORE US. 3. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE REVENUE AUTHORITIES. THE LEARNED COUNSE L SUBMITTED THAT IT IS NOT CASE OF CONCEALMENT OF INCOME OR FILING OF INACCURATE PA RTICULARS OF INCOME, BUT DIFFERENCE OF OPINION ON THE ASPECT OF TREATMENT EX PENDITURE AS TO CAPITAL EXPENDITURE OR THE DEFERRED REVENUE EXPENDITURE, WH ICH IS DEBATABLE. IT IS SUBMITTED THAT THE ASSESSEE HAS CLAIMED DEFERRED RE VENUE EXPENDITURE IN RELATION TO DESIGN AND TECHNICAL DATA FOR PORTABLE TRAILER M OUNTED, AND THIS TECHNICAL INFORMATION WAS PURCHASED FROM FOREIGN COMPANY, TES TK INC., WHICH IS VERY MUCH SPECIFIC TO THE BUSINESS APPLICATION, AND COULD BE USED FOR APPROXIMATELY FOUR YEARS, AND THAT EXPENSES OF WHICH HAS BEEN DEFERRED OVER A PERIOD OF FOUR YEARS BEGINNING THE FINANCIAL YEAR 2005-2006. THE REVENU E HAS NOT DOUBTED THIS EXPENDITURE. THEREFORE, MERELY FOR THE REASON THAT THE ASSESSEE HAD CLAIMED THE EXPENDITURE TO BE DEFERRED REVENUE, AND ACCORDING T O THE DEPARTMENT IT WOULD OTHERWISE BE CAPITAL IN NATURE, WOULD NOT RENDER T HE ASSESSEE LIABLE TO PENALTY PROCEEDINGS, AND THEREFORE, THE ORDERS OF THE REVEN UE AUTHORITIES LIABLE TO QUASHED AND SET ASIDE. 4. THE LEARNED DR, ON THE OTHER HAND, RELIED ON THE ORDERS OF THE AUTHORITIES BELOW, AND SUBMITTED THAT SINCE THE ASSESSEE HAD MA DE A WRONG CLAIM UNDER ITA NO.231/AHD/2010 -3- SECTION 10B OF THE ACT, IT COULD NOT ESCAPE FROM PE NALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT FOR CONCEALMENT OF INC OME AND FURNISHING INACCURATE PARTICULARS OF ITS INCOME, AND THEREFORE BOTH THE A UTHORITIES BELOW ARE JUSTIFIED IN IMPOSING THE IMPUGNED PENALTY. 5. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND GONE TH ROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT IN THE PRESENT CA SE, PENALTY WAS NOT EXIGIBLE UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961 . AS THE FACTS EMERGES FROM THE RECORD THAT THE CLAIM OF THE ASSESSEE IS DEBATA BLE, WHICH IS MORE EVIDENT FROM THE FACT THAT THE AO HIMSELF HAS ISSUED A SHOW NOTI CE TO THE ASSESSEE DATED 18.11.2008 STATING AS UNDER: WHY YOU HAVE PURCHASED THE DESIGN AND TECHNICAL DA TA FOR PORTATABLE TRAILDER MOUNTED. EXPLAIN ITS USAGE FOR YOUR BUSIN ESS. EXPLAIN ITS NATURE WHETHER IT IS CAPITAL IN NATURE OR REVENUE IN NAT URE. ON ONE HAND, THE ASSESSEE HAS BONA FIDE MADE A CLAIM FOR DEDUCTION UNDER SECTION 10B OF THE ACT, ON THE BASIS OF ITS INTERPRETATION OF RELEVANT PROVISIONS OF THE ACT, BUT THE REVENUE HAS FOUND THE EXPENDITURE CLAIMED B Y THE ASSESSEE WAS NOT REVENUE BUT CAPITAL IN NATURE. THEREFORE, THE DIS ALLOWANCE HAS BEEN MADE ON ACCOUNT OF DIFFERENCE OF OPINION AND THERE WAS NO M ISSTATEMENT OR CONCEALMENT OF FACTS AT ANY STAGE, SO AS ATTRACT THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT OR TO RENDER THE ASSESSEE LIABLE FOR PENALTY PROCEEDINGS. THE REVENUE HAS NOT BROUGHT ANY MATERIAL TO SHOW THAT THE ASSESSEE GUILTY OF CO NCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. THE EXPENSES WERE GENUINE AND NOT DENIED BY THE REVENUE. THERE WAS NO DOUBT ON THE P ART OF THE REVENUE THAT THE ASSESSEE HAD PURCHASED TECHNICAL DATA FOR PORTABLE TRAILER MOUNTED MULTI USE LOAN BANK FROM TESTK INC., (USA) FOR ITS BUSINESS PURPOS E, AND ALL FACTS AND MATERIAL WERE DISCLOSED BY THE ASSESSEE, AND THEREFORE, ASSE SSEE CANNOT BE FAULTED AND PENALTY SHOULD NOT BE IMPOSED BECAUSE THE ASSESSEE HAD TAKEN A PARTICULAR STAND POINT, UNLESS THERE ARE GROUNDS OR REASONS TO SHOW THAT THE ASSESSEE HAD NOT DISCLOSED ALL THE FACTS BEFORE THE DEPARTMENTAL AUT HORITIES CONCERNED. THE REVENUE WAS CARRIED BY THE PRESUMPTION, AS RECORDED IN THE CIT(A)S ORDER THAT IT IS ALSO FOLLOWS THAT ALL DISALLOWANCE/ADDITION CANNOT BE SAVED FROM THE MISCHIEF OF SECTION 271(1)(C) OF THE I.T.ACT. MEREL Y BECAUSE IT IS DISPUTED BY A TAX ITA NO.231/AHD/2010 -4- PAYER ON ANY FANTASTIC AND FLIMSY GROUNDS SO AS TO RAISE AN ARTIFICIAL DISPUTE TO ANY OTHERWISE CLEAR PROVISION. THIS PRESUMPTION OF THE REVENUE IS WITHOUT ANY BASE OR MATERIAL SUPPORT. TO IMPOSE PENALTY UNDER SECTI ON 271(1)(C) OF THE ACT, BURDEN IS ON THE REVENUE WITH SOME POSITIVE MATERIAL TO SH OW CONCEALMENT OF INCOME OR FURNISHING INCORRECT PARTICULARS BY THE ASSESSEE, A ND IN THE ABSENCE THEREOF, NO PEANLTY COULD BE LEVIED UNDER SECTION 271(1)(C) OF THE ACT. IN THESE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE NOT CONVINCED WIT H REASONING GIVEN BY THE REVENUE AUTHORITIES FOR THE IMPOSITION OF THE PENAL TY UNDER SECTION 271(1)(C) OF THE ACT, ACCORDINGLY, WE ARE INCLINED TO SET ASIDE ORDERS OF THE AUTHORITIES BELOW AND CANCEL PENALTY LEVIED UNDER SECTION 271(1)(C) O F THE INCOME-TAX ACT, 1961. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONED HEREINABOVE. SD/- SD/- ( . .. . . .. . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT ( %&'( %&'( %&'( %&'( / ANIL CHATURVEDI) )* + )* + )* + )* + /ACCOUNTANT MEMBER C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD