ITO 9(2)-3, MUMBAI V. MAHARAJA BUILDERS P. LTD, MUMBAI

ITA 2499/MUM/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62562 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 03-05-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 30-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K NAYAK
• Assessee Lawyers: SUNIL SHAH
• Keywords: Depreciation; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIB UNAL MUMBAI BENCHES B, MUMBAI BEFORE SHRI R.S.SYAL, AM AND SHRI VIVEK VARMA, JM ITA NOS.2498 & 2499/MUM/2011 : ASST. YEARS 2002-20 03 & 2003-2004 THE INCOME TAX OFFICER WARD 9(2)-3 MUMBAI. M/S.MAHARAJA BUILDERS PRIVATE LIMITED 4A VIKAS CENTRE, 104 S.V.ROAD SANTACRUZ (WEST) MUMBAI 400 054. (APPELLANT) VS. (RESPONDENT) APPELLANT BY : SHRI A.K.NAYAK RESPONDENT BY : SHRI SUNIL SHAH DATE OF HEARING : 11.06.2012 DATE OF PRONOUNCEMENT : 15.06.2012 O R D E R PER R.S.SYAL, AM : THESE TWO APPEALS BY THE REVENUE RELATING TO THE AS SESSMENT YEARS 2002- 2003 AND 2003-2004 ARE AGAINST THE DELETION OF PENA LTY U/S 271(1)(C) OF THE ACT. SINCE BOTH THESE APPEALS ARE BASED ON SOME WHAT SIM ILAR FACTS, WE ARE, THEREFORE, PROCEEDING TO DISPOSE THEM OFF BY THIS C ONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ASSESSMENT YEAR 2002-2003 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE CLAIMED DEDUCTION TOWARDS INTEREST PAYMENT ON LOAN AMOUNTING TO ` 20,46,128. ON THE PERUSAL OF THE BALANCE SHEET, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD ADVANCED INTEREST FREE LOANS TO THE TUNE OF ` 25.93 CRORE. CONSIDERING THESE FACTS, THE ASSESSING OFFICER DISALLOWED THE CLAIM OF INTER EST AMOUNTING TO ` 20.46 LAKH, ON WHICH PENALTY WAS IMPOSED U/S 271(1)(C). T HE LEARNED CIT(A) GOT CONVINCED WITH THE SUBMISSIONS ADVANCED ON BEHALF O F THE ASSESSEE AND RELYING ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. [(2010) 322 ITR 158 (SC)] ORDERED FOR THE DELETION OF PENALTY. ITA NOS.2498 & 2499/MUM/2011 M/S.MAHARAJA BUILDERS PRIVATE LIMITED. 2 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. [(2010) 322 ITR 158 (SC)] HAS HELD THAT SIMPLY FOR THE REASON THAT THE ASSESSING OFFICER DID NOT FIND THE CLAIM O F THE ASSESSEE TO BE SUSTAINABLE IN LAW UP TO A CERTAIN EXTENT, IT CAN NOT BE A CASE F OR PENALTY U/S.271(1)(C) MORE SO WHEN THE PARTICULARS FURNISHED BY THE ASSESSEE WERE NOT INACCURATE. THE FACTS OF OUR CASE ARE SIMILAR INASMUCH AS THE ASSESSEE HAS NOT CONCEALED ANY INCOME OR FURNISHED ANY INACCURATE PARTICULARS OF INCOME. IT IS A SIMPLE CA SE WHERE THE ASSESSEE CLAIMED DEDUCTION FOR INTEREST, WHICH WAS NOT ALLOWED FOR T HE REASON THAT IN THE OPINION OF THE AO, THE ASSESSEE UTILIZED INTEREST BEARING FUNDS FO R THE PURPOSE OF MAKING INTEREST FREE ADVANCE. THE DISALLOWANCE OF INTEREST, WHEN THE ASS ESSEE DISCLOSED ALL THE NECESSARY FACTS, CANNOT BE A CASE FOR THE IMPOSITION OF PENAL TY U/S 271(1)(C) OF THE ACT. IN VIEW OF THE FOREGOING REASONS, WE ARE OF THE CONSIDERED OPINION THAT THE LEARNED CIT(A) WAS JUSTIFIED IN ORDERING FOR THE DELETION OF PENAL TY. WE, THEREFORE, UPHOLD THE IMPUGNED ORDER. 4. IN THE RESULT, THE APPEAL IS DISMISSED. ASSESSMENT YEAR 2003-2004 5. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE CLAIMED DEDUCTION FOR ` 65.46 LAKH TOWARDS PROPERTY DEVELOPMENT EXPENSES AT SHIRPUR AND DEPRECIATION ON PLANT AND MACHINERY. ON BEING CALLE D UPON TO FURNISH THE DETAILS IN THIS REGARD, THE ASSESSEE SUBMITTED THAT THE BOO KS WERE DESTROYED IN THE FLOOD. CONSIDERING THE FACT THAT THE ASSESSEE WAS ENGAGED IN REAL ESTATE DEVELOPMENT BUSINESS, THE AO HELD THAT SUCH EXPENSES COULD AT T HE MOST BE CONSIDERED AS CAPITAL EXPENDITURE. THEREAFTER PENALTY WAS IMPOSED U/S 271(1)(C) ON THIS AMOUNT WHICH CAME TO BE DELETED IN THE FIRST APPEAL . 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD IT IS OBSERVED THAT THE ASSESSEE DID NOT CONTEST THE MATTER OF DISALLOWANCE OF EXPENSES IN FURTHER APPEAL. HERE IS A CASE IN WHICH THE ASSESSEE ITA NOS.2498 & 2499/MUM/2011 M/S.MAHARAJA BUILDERS PRIVATE LIMITED. 3 CLAIMED DEDUCTION IN RESPECT OF PROPERTY DEVELOPMEN T EXPENSES AT SHIRPUR, WHICH CAME TO BE DISALLOWED BY THE ASSESSING OFFICE R, WHO CHOSE TO CAPITALIZE THE SAME. THE MERE FACT THAT THE ASSESSEE CLAIMED D EDUCTION IN THIS REGARD BY PLACING FULL DETAILS BEFORE THE A.O., CANNOT PER SE LEAD TO IMPOSITION OF PENALTY MERELY ON THE GROUND THAT THE AO HELD ITS CAPITALIZ ATION TO BE IN ORDER. THUS THE SHORT POINT WHICH EMERGES IS THAT THE ASSESSEE CLAI MED DEDUCTION FOR SUCH EXPENSES WHICH THE ASSESSING OFFICER ALLOWED TO CAP ITALIZE ON THE GROUND THAT THE PROJECT WAS NOT YET COMPLETE IN THIS YEAR. IN O UR CONSIDERED OPINION THIS CANNOT BE A CASE FOR IMPOSITION OF PENALTY BECAUSE THE ASSESSEE CLAIMED DEDUCTION IN A BONA FIDE MANNER BY PLACING ALL THE NECESSARY DETAILS ON REC ORD AND SUCH DETAILS HAVE NOT BEEN FOUND TO BE UNTRUE. FURTHER THE DISALLOWANCE OF DEPRECIATION WHICH WAS CLAIMED FIRSTLY REDUCED FROM THE COST OF SALES AND THEN SEPARATELY IN THE PROFIT AND LOSS ACCOUNT, WAS AN I NADVERTENT MISTAKE. WE, THEREFORE, UPHOLD THE IMPUGNED ORDER. 7. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED ON THIS 15 TH DAY OF JUNE, 2012. SD/- SD/- (VIVEK VARMA) (R.S.SYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI : 15 TH JUNE, 2012. DEVDAS* COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) - XX, MUMBAI. 5. THE DR/ITAT, MUMBAI. 6. GUARD FILE. ITA NOS.2498 & 2499/MUM/2011 M/S.MAHARAJA BUILDERS PRIVATE LIMITED. 4 TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, MUMBAI.