Rotoflex Industries Ltd., Ahmedabad V. The Dy.CIT.,Circle-5, Ahmedabad

ITA 2381/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89241 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 1995-1996
• Appeal Filed On: 20-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Wrong claim

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD .., , BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ I.T.A. NO.2381/AHD/2011 ( / ASSESSMENT YEAR : 1995-96) ROTOFLEX INDUSTRIES LTD. 2 ND FLOOR, ASARPOTA CHAMBERS CG ROAD AHMEDABAD / VS. THE DCIT CIRCLE-5 AHMEDABAD ./ ./ PAN/GIR NO. : AACCR 0279R ( # / APPELLANT ) .. ( $% # / RESPONDENT ) #& / APPELLANT BY : SHRI SAKAR SHARMA, AR $% #'& / RESPONDENT BY : SHRI NIMESH YADAV, SR.DR ()'* / DATE OF HEARING 23/03/2015 +,-.'* / DATE OF PRONOUNCEMENT 10/04/2015 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-XI, AHMEDABA D (CIT(A) IN SHORT) DATED 10/08/2011 PERTAINING TO ASSESSMENT Y EAR (AY) 1995-96. THE ASSESSEE HAS RAISED SOLITARY GROUND WHICH READS AS UNDER:- 1. LD. CIT(A) ERRED ON FACTS AND IN LAW IN CONFIRMING PENALTY U/S.271(1)(C) OF THE ACT AMOUNTING TO RS.2,38,000/- . ITA NO.2381 /AH D/2011 ROTOFLEX INDUSTRIES LTD. VS. DCIT ASST.YEAR 1995-96 - 2 - 2. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE AS SESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143( 3) OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 30/03/1998, THEREBY THE ASSESSING OFFICER (AO IN SHORT) MADE DISALLOWANCE OF RS.7,38,496/- AND RS.7,21,781/- (TO TAL RS.14,60,277/-) TREATING THE EXPENDITURE AS LOAN RELATED EXPENSES A ND ADVERTISEMENT/PROJECT EXPENSES RESPECTIVELY. WHILE MAKING THE ADDITION, THE AO ALSO INITIATED PENALTY PROCEEDINGS U/S.271(1 )(C) OF THE ACT. IN QUANTUM PROCEEDINGS, MATTER TRAVELLED UPTO THE STAG E OF TRIBUNAL AND THE TRIBUNAL WAS PLEASED TO CONFIRM THE FINDING OF LD.C IT(A), WHO HAD REDUCED THE ADDITION FROM RS.14,60,277/- TO RS.7,21 ,781/-. THE LD.CIT(A) ALSO GAVE BENEFIT OF SECTION 35-D OF THE ACT AND ALLOWED THE DEDUCTION TO THE EXTENT OF 10% OF THE IMPUGNED ADDI TION AND SUSTAINED ADDITION OF RS.6,49,603/-. SUBSEQUENTLY, THE AO IMPOSED A PENALTY OF RS.2,98,900/- ON THE SUSTAINED ADDITION OF RS.6,49, 603/-. THE ASSESSEE FILED AN APPEAL BEFORE THE LD.CIT(A), WHO DISMISSED THE APPEAL. NOW, THE ASSESSEE IS IN APPEAL AGAINST THE CONFIRMATION OF PENALTY. 3. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT T HE LD.CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE PENALTY. HE SUBMIT TED THAT THE ASSESSEE HAD DISCLOSED ALL PARTICULARS OF INCOME. IT IS ONL Y THE ISSUE WHETHER A DEDUCTION WAS ALLOWABLE IN A PARTICULAR PROVISION O R NOT. THEREFORE, HE SUBMITTED THAT IN VIEW OF THE DECISION OF THE HONB LE SUPREME COURT RENDERED IN THE CASE OF CIT VS. RELIANCE PETRO PRO DUCTS REPORTED AT 322 ITA NO.2381 /AH D/2011 ROTOFLEX INDUSTRIES LTD. VS. DCIT ASST.YEAR 1995-96 - 3 - ITR 158(SC), THE ISSUE MAY BE DECIDED IN FAVOUR OF ASSESSEE. HE FURTHER SUBMITTED THAT THE LD.CIT(A) WAS NOT JUSTIFIED IN N OT FOLLOWING THE RATIO LAID DOWN BY THE HONBLE DELHI HIGH COURT IN THE C ASE OF CIT VS. SALORA INTERNATIONAL LTD. REPORTED AT 308 ITR 199 (DEL.) A ND BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. CO REHEALTH CARE LTD. REPORTED AT 308 ITR 263(GUJ.). 3.1. ON THE CONTRARY, THE LD.SR.DR SUPPORTED THE OR DER OF THE AUTHORITIES BELOW AND SUBMITTED THAT THERE IS NO ILLEGALITY IN THE ORDER OF THE LD.CIT(A). HE SUBMITTED THAT MAKING A WRONG CLAIM ALSO TANTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE AO HAD MADE ADDITION OF RS.7,38,49 6/- AND RS.7,21,781/- ON ACCOUNT OF LOAN RELATED EXPENSES A ND ADVERTISEMENT/PROJECT RELATED EXPENSES. IN APPEAL, THE LD.CIT(A) REDUCED THE SAID DISALLOWANCE TO RS.6,49,603/-. THE AO OBS ERVED THAT ALL THE EXPENSES WERE INCURRED IN CONNECTION WITH ESTABLISH MENT OF A NEW PRODUCTION UNIT AT SANTEJ, THEREFORE SUCH EXPENSES WERE REQUIRED TO BE CAPITALIZED. HE ALSO OBSERVED THAT THE EXPENSES ON ADVERTISEMENT, PROJECT CONSULTATION FEE WERE REQUIRED TO BE AMORTIZED U/S. 35D OF THE ACT, OVER A PERIOD OF TEN YEARS. IT IS SETTLED LAW THAT MAKING A WRONG CLAIM WOULD NO IPSO FACTO MAKE THE ASSESSEE LIABLE FOR PENALTY. I N THE CASE IN HAND, THE GENUINENESS OF EXPENDITURE IS NOT DOUBTED, THE AO W AS OF THE VIEW THAT ITA NO.2381 /AH D/2011 ROTOFLEX INDUSTRIES LTD. VS. DCIT ASST.YEAR 1995-96 - 4 - SUCH EXPENDITURE RELATES TO ESTABLISHMENT OF NEW PR ODUCTION UNIT AT SANTEJ, THEREFORE THE SAME WERE REQUIRED TO BE CAPI TALIZED. THE AO FURTHER OBSERVED THAT EXPENSES RELATED TO FEE FOR P ROJECT CONSULTANCY AND ADVERTISEMENT WERE REQUIRED TO BE AMORTIZED FOR A P ERIOD OF TEN YEARS. THE ASSESSEE HAS PLACED RELIANCE ON THE JUDGEMENT O F HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT.LTD. REPORTED AT (2010) 322 ITR 158 (SC), WHERE THE HONBLE APEX COU RT HAS HELD AS UNDER:- 9. WE ARE NOT CONCERNED IN THE PRESENT CASE WITH THE MENS REA. HOWEVER, WE HAVE TO ONLY SEE AS TO WHETHER IN THIS CASE, AS A M ATTER OF FACT, THE ASSESSEE HAS GIVEN INACCURATE PARTICULARS. IN WEBSTER'S DICT IONARY, THE WORD 'INACCURATE' HAS BEEN DEFINED AS : 'NOT ACCURATE, NOT EXACT OR CORRECT; NOT ACCORDING TO TRUTH; ERRONEOUS; AS AN INACCURATE STATEMENT, COPY OR TRANSCRIPT.' WE HAVE ALREADY SEEN THE MEANING OF THE WORD 'PARTI CULARS' IN THE EARLIER PART OF THIS JUDGMENT. READING THE WORDS IN CONJUNC TION, THEY MUST MEAN THE DETAILS SUPPLIED IN THE RETURN, WHICH ARE NOT ACCUR ATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TRUTH OR ERRONEOUS. WE MUST HASTEN TO ADD HERE THAT IN THIS CASE, THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN WERE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE. S UCH NOT BEING THE CASE, THERE WOULD BE NO QUESTION OF INVITING THE PENALTY UNDER S. 271(1)(C) OF THE ACT. A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTA INABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REG ARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOU NT TO THE INACCURATE PARTICULARS. 4.1. THEREFORE, RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE HONBLE APEX COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS ITA NO.2381 /AH D/2011 ROTOFLEX INDUSTRIES LTD. VS. DCIT ASST.YEAR 1995-96 - 5 - PVT.LTD.(SUPRA), ASSESSEES GROUND OF APPEAL IS HER EBY ALLOWED. ACCORDINGLY, THE AO IS DIRECTED TO DELETE THE PENAL TY. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON FRIDAY, THE 10 TH DAY OF APRIL, 2015 AT AHMEDABAD. SD/- SD/- ( .. ) ( ) ( N.S. SAINI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 10/ 04 /2015 2*..,(.../ T.C. NAIR, SR. PS !'#$%&' &$ / COPY OF THE ORDER FORWARDED TO : 1. # / THE APPELLANT 2. $% # / THE RESPONDENT. 3. 345 6 / CONCERNED CIT 4. 6 ( ) / THE CIT(A)-XI, AHMEDABAD 5. 7(8$45 , *45. , 3 / DR, ITAT, AHMEDABAD 6. 8:;<) / GUARD FILE. ! / BY ORDER, %7$ //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 24.3.15 (DICTATION-PAD 5-PA GES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER ..30.3.15 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.10.4.15 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 10.4.15 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER .. 10. DATE OF DESPATCH OF THE ORDER