ACIT, New Delhi V. M/s DCM Ltd., New Delhi

ITA 2548/DEL/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1276 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 27-11-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 16-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEEPAK SEHGAL
• Keywords: Difference of opinion; Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : B NEW DELHI BEFORE SHRI J.SUDHAKAR REDDY, AM AND SHRI RAJPAL YADAV, JM ITA NO. 2548/DEL/2011 ASSESSMENT YEAR 2007-08 ACIT, CIRCLE 10(1) VS. DCM LTD. NEW DELHI 4, VIKRANT TOWER, RAJENDRA PLACE NEW DELHI PAN: AAACD 1012 E (APPELLANT) (RESPONDENT) APPELLANT BY:- SH.DEEPAK SEHGAL, SR.D.R. RESPONDENT BY:- S/SRI: PRADEEP DINODIA, VP GUPTA, BASANT KUMAR, ADV . O R D E R PER J.SUDHAKAR REDDY, AM THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED A GAINST THE ORDER OF THE LD.CIT(A)-XVII, NEW DELHI DT. 23.2.2011 PERTAINING TO THE ASSESSMENT YEAR 2006-07. 2. FACTS IN BRIEF :- THE FACTS OF THE CASE ARE BROUGHT OUT AT PARAS 2 AND 2.1 OF THE ASSESSING OFFICERS ORDER WHICH IS EXTRACTED FO R READY REFERENCE. 2. BRIEF FACTS IN RESPECT OF THE CLAIMS OF RS.14,24 ,000/- AND OF RS.38,72,000/- WITH REFERENCE TO WHICH PENALTY OF RS. 17,82,634/- HAS BEEN LEVIED BY THE ASSESSING OFFICER ARE THAT THE A PPELLANT COMPANY IN ASSESSMENT YEAR 2004-05 PURSUANT TO TRANSFER OF IT S REAL ESTATE PROJECT TO ANOTHER COMPANY HAD CLAIMED DEDUCTION FOR EXPENS ES INCURRED/TO BE INCURRED ON REAL ESTATE PROJECT ON ACCRUAL BASIS . AS A PART OF ITS PROJECT IT HAD ENTERED INTO AN AGREEMENT WITH M/S K AILASH NATH ASSOCIATES AND ANSAL PROPERTIES LIMITED FOR JOINT D EVELOPMENT OF THE ITA 2548/DEL/2011 PAGE 2 OF 8 ASSESSMENT YEAR 2007-08 DCM LTD. PROJECT. HOWEVER, THE SAME HAD BEEN SUBSEQUENTLY CA NCELLED. THERE WERE ISSUES PENDING FOR SETTLEMENT BETWEEN THE COMP ANY AND THE DEVELOPERS AND A SETTLEMENT HAD BEEN ARRIVED WITH M /S ANSAL PROPERTIES DATED 12.04.2006 AND THE COMPANY HAD CLA IMED DEDUCTION ON ACCOUNT OF INTEREST PAYABLE TO M/S ANSAL PROPERT IES AS PER THE SETTLEMENT. THE COMPANY HAD CLAIMED DEDUCTION FOR I NTEREST PAYABLE IN A. Y. 2004-05 RELATING TO THE YEAR ENDED 31.03.2004 . IT WAS STATED THAT INTEREST RELATABLE TO THE SUBSEQUENT YEARS WILL BE CLAIMED IN RESPECTIVE YEARS. THE ASSESSING OFFICER IN ASSESSING OFFICER 2 004-05 HAD NOT ALLOWED CLAIM TAKING A VIEW THAT DEDUCTION WILL BE ALLOWABLE ONLY WHEN ACTUAL PAYMENT IS MADE. THE LD. CIT (A) VIDE HIS OR DER DATED 24.06.2008 HAD TAKEN A VIEW THAT DEDUCTION FOR INTE REST WILL BE ALLOWABLE ONLY IN THE YEAR WHEN SETTLEMENT HAS BEEN ARRIVED AS THIS WAS A CONTRACTUAL LIABILITY. SINCE THE SETTLEMENT H AD BEEN MADE ON 12.04.2006, SAME WAS ALLOWABLE AS PER ORDER OF THE LD. CIT (A) IN A. Y. 2007-08. SINCE HE ISSUE HAD BEEN PENDING FOR ALLOWA BILITY OF DEDUCTION, THE COMPANY FOLLOWING ITS STAND IN A. Y. 2004-05, H AD CLAIMED DEDUCTION ON ACCRUAL BASIS OF INTEREST LIABILITY IN A. YRS.2005-06 AND 2006-06 FOR THE INTEREST RELATABLE TO THE PREVIOUS YEARS RELEVANT TO THE ABOVE ASSESSMENT YEARS. THE ASSESSING OFFICER HAD D ISALLOWED CLAIM IN A. Y. 2005-06 ALSO. THE APPELLANT CLAIM IN THIS ASSESSMENT YEAR WAS ALSO DISALLOWED BY FOLLOWING THE STAND TAKEN IN A. YRS. 2004-05 AND 2005-06. 2.1. THE ANOTHER POINT ON WHICH PENALTY HAS BEEN LE VIED IS OF RS.38,72,000/- BEING THE EXPENSES CLAIMED BY THE CO MPANY ON REMOVAL OF SQUATTERS. IN RESPECT OF THIS CLAIM THE COMPANY HAS SUBMITTED THAT IT HAD CLAIMED A DEDUCTION OF RS.4 CRORES IN A. Y. 200 4-05 ON ACCRUAL BASIS ESTIMATING THE EXPENDITURE TO BE INCURRED IN SUBSEQUENT YEARS. THE ASSESSING OFFICER IN A. Y. 2004-05 HAD NOT ALLO WED DEDUCTION FOR THE SAKE HOLDING IT TO BE CONTINGENT LIABILITY AND OBSERVING THAT ITA 2548/DEL/2011 PAGE 3 OF 8 ASSESSMENT YEAR 2007-08 DCM LTD. DEDUCTION CAN BE CLAIMED BY THE APPELLANT IN THE YE AR OF ACTUAL INCURRING THE EXPENDITURE. THE LD. CIT (A) ALLOWED THE APPELLANTS CLAIM ON ACCRUAL BASIS, ESTIMATING THE QUANTUM AT RS.3.5 CRORES AGAINST CLAIM OF RS. 4 CRORES. SINCE THE ISSUE WAS AT APPELLATE S TAGE, THE APPELLANT IN THE ALTERNATIVE HAD CLAIMED DEDUCTION FOR ACTUAL EX PENSES OF RS.38,72,000/- INCURRED DURING THE YEAR UNDER REFER ENCES IN VIEW OF OBSERVATIONS OF THE ASSESSING OFFICER THE ORDER OF THE ASSESSMENT FOR ASSESSMENT YEAR 2004-05. THE APPELLANT HAD ALSO MAD E SIMILAR CLAIM IN A. Y. 2005-06 UNDER THIS HEAD OF RS. 22 LACS. TH E ASSESSING OFFICER HAD DISALLOWED CLAIM IN ASSESSMENT YEAR 2005-06 FO R THE REASON THAT DEDUCTION HAD ALREADY BEEN CLAIMED BY THE COMPANY I N ASSESSMENT YEAR 2004-05 AND THE COMPANY HAD ALSO DECLINED TO GIVE UNDERTAKING TO WITHDRAW ITS CLAIM IN ASSESSMENT YEAR 2004-05, A PPEAL FOR WHICH YEARS WAS PENDING AT THAT TIME. CLAIM HAS ALSO BEEN DISALLOWED BY THE ASSESSING OFFICER IN ASSESSMENT YEAR UNDER APPEAL O BSERVING THAT CIT (A) HAS ALREADY ALLOWED CLAIM ON ACCRUAL BASIS IN A SSESSING OFFICER 2004-05 THOUGH QUANTUM WAS DETERMINED BY HIM ON EST IMATE BASIS . 3. THE ASSESSING OFFICER LEVIED PENALTY ON THE GROU ND THAT THE ASSESSEE FURNISHED INACCURATE PARTICULARS OF INCOME, AS THE ASSESSING OFFICER IN THE ASSESSMENT YEAR 2004-05 AND 2005-06 AS WELL AS IN THE ASSESSMENT YEAR 2006-07 REJECTED THE ABOVE TWO CLAIMS OF THE ASSESS EE. AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL. THE FIRST APPELLATE AUTHORITY CONSIDERED THE DETAILED SUBMISSIONS OF THE ASSESSEE AND HELD THAT, ON A PERUSAL OF THE ORDER OF THE ASSESSING OFFICER THE ADDITIONS/DISALLOWANCES W ERE CONFIRMED AS THERE WAS A DISPUTE OF THE YEAR OF ASSESSABILITY. HE ALSO O BSERVED THAT THERE WAS NO FINDING THAT THE CLAIMS IN QUESTION WERE BOGUS CLAI MS OR THAT THE EXPENSES WERE ILLEGAL. THE FIRST APPELLATE AUTHORITY FURT HER GAVE A FINDING THAT THE ITA 2548/DEL/2011 PAGE 4 OF 8 ASSESSMENT YEAR 2007-08 DCM LTD. ASSESSEE HAS CLAIMED THE SAID EXPENDITURE, BY FOLLO WING ITS CONSISTENT STAND TAKEN IN EARLIER YEARS AND THE AOS IN THE EARLIER Y EARS, ON SIMILAR FACTS LEVIED NO PENALTY. HE FURTHER RECORDED THAT THE ASSESSEE HAD MADE FULL DISCLOSURE IN RESPECT OF ITS CLAIMS IN THE REPLIES, RETURNS FILED BY IT. HE DELETED THE PENALTY. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS. 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRONEOUSLY CANCELLED THE PENALTY UNDER SECTION 271 (1)(C) AT RS.17,82,634/- LEVIED BY THE ASSESSING OFFICER. 2. THE APPELLANT CRAVES TO LEAVE, TO ADD, ALTER OR AMEND ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF THE HEARING. 4. WE HAVE HEARD SHRI DEEPAL SEHGAL, SR.D.R. ON BE HALF OF THE REVENUE AND SHRI PRADEEP DINODIA, LD.COUNSEL FOR THE ASSESSEE. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND PER USAL OF THE PAPERS ON RECORD, WE HOLD AS FOLLOWS. 5. ON THE REVISED RETURN OF INCOME THE ASSESSEE HAS GIVEN THE FOLLOWING NOTE. IN THE RETURN OF INCOME FILED FOR ASSESSMENT YEAR 2004-05 THE COMPANY HAD CLAIMED DEDUCTION ON ACCOUNT OF INTEREST PAYABL E TO MCD ON FLYOVER COST AND TO BUILDER (ANSAL PROPERTY) FOR THE PERIOD UPTO 31.3.2004. FACTS IN THIS REGARD WERE DULY EXPLAINED IN ABOVE ASSESSM ENT YEAR. THE COMPANY HAD NOT CLAIMED INTEREST FOR FUTURE PERIOD FOR THE REASON THAT INTEREST IS TIME RELATED LIABILITY. FOLLOWING THE SAME STAND, IN THIS RETURN THE COMPANY IS CLAIMING DEDUCTION FOR INTEREST PAYA BLE TO MCD AND TO BUILDER FOR THE YEAR ENDED 31.3.2006. THIS CLAIM I S BEING MADE IN VIEW OF THE STAND OF THE COMPANY NOTWITHSTANDING THAT AS SESSING OFFICER HAD TAKEN THE STAND IN ASSESSMENT YEAR 2004-05 THAT DED UCTION WILL BE ALLOWABLE ONLY ON PAYMENT BASIS. FURTHER IN THE BOOKS OF ACCOUNT DURING THIS YEAR, T HE COMPANY HAD ALSO DEBITED/PROVIDED AMOUNTS OF RS.520.64 LAKHS AND RS. 251.04 LAKHS ON ITA 2548/DEL/2011 PAGE 5 OF 8 ASSESSMENT YEAR 2007-08 DCM LTD. ACCOUNT OF INTEREST PAYABLE TO MCD AND BUILDER RESP ECTIVELY. KEEPING IN VIEW OF THE STAND OF THE COMPANY, AS EXPLAINED HERE INABOVE, AMOUNT DEBITED IN BOOKS OF ACCOUNT HAS ALSO BEEN ADDED BAC K IN THIS COMPUTATIONS. 6. THE ASSESSEE HAD MADE SIMILAR CLAIMS IN THE AYS 2004-05, 2005-06 AND THE ASSESSING OFFICER HAD DISALLOWED THE SAME ON TH E GROUND THAT THE DEDUCTION WILL BE ALLOWED ON PAYMENT BASIS AND NOT ON ACCRUAL BASIS. THE ASSESSING OFFICER MADE THE DISALLOWANCE BY HOLDING AS FOLLOWS: THE ASSESSEE COMPANY FOLLOWING ITS STAND HAS CLAIM ED INTEREST OF RS.14.24 LACS (NET OF RECOVERY) PAYABLE TO BUILDER FOR THE YEAR 31.3.2006 IN THE RETURN. THE ASSESSING OFFICER IN THE ASSESSMENT YEAR 2004-05 HAD DISALLOWED THE CLAIM AND HAD GIVEN THE FINDING THAT SUCH EXPENSES WILL BE ALLOWABLE IN THE YEAR OF ACTUAL PAYMENT. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ALSO DISALLOWED THE CLAIM OF THE ASSESSEE COMPANY AND HA S GIVEN THE FINDING THAT SUCH INTEREST WILL BE ALLOWABLE IN THE YEAR OF FINAL SETTLEMENT SIMILARLY, CLAIM OF THE COMPANY WAS ALSO DISALLOWED IN ASSESSMENT YEAR 2005-06, CLAIM OF THE COMPANY IS D ISALLOWED IN THIS YEAR ALSO AS PER THE STAND TAKEN IN ASSESSMENT YEAR 2004-05 AND ASSESSMENT YEAR 2005-06 THAT ANY LIABILITY ON T HIS ACCOUNT WOULD BE ALLOWED ON ACTUAL PAYMENT BASIS. 7. AS THE ISSUE HAS NOT ATTAINED FINALITY, THE COMP ANY HAS MAINTAINED ITS STAND. FROM THE ABOVE IT IS APPARENT THAT THE ISSU E IS THE YEAR OF ALLOWABILITY OF EXPENSES. 8. ON THE PENALTY LEVIED ON DISALLOWANCE OF EXPENDI TURE INCURRED ON VACATION OF QUARTER THE AO HAD DISALLOWED A SIMILAR CLAIM IN THE AY 2004-05, WITHOUT PREJUDICE TO ITS CLAIM OF ACCRUAL BASIS IN THE AY 2004-05, THE ASSESSEE CLAIMED DEDUCTION ON ACTUAL PAYMENT BASIS IN THE YE AR 2005-06 AND ALSO IN THE AY 2006-07. THE AO REJECTED THE CLAIM ON THE GROUN D THAT THE ASSESSEE HAD ALREADY MADE A CLAIM IN THE YEAR 2004-05 AND THAT IT DECLINED TO GIVE AN ITA 2548/DEL/2011 PAGE 6 OF 8 ASSESSMENT YEAR 2007-08 DCM LTD. UNDERTAKING TO WITHDRAW ITS CLAIM IN THE AY 2004-05 . THE OBSERVATIONS OF THE AO ARE AS FOLLOWS QUARTER VACATION EXPENSES: UNDER THIS HEAD THE ASS ESSEE HAS CLAIMED AN EXPENSES OF RS.4 CRORES. AGAIN NO BASIS HAVE BE EN GIVEN FOR WORKING OF THIS LIABILITY, AND IT IS A LIABILITY OF CONTING ENT NATURE. AS MENTIONED ABOVE, AN ESTIMATED CONTINGENT LIABILITY CANNOT BE ALLOWED TO BE DEDUCTED FROM TAXABLE PROFITS. HENCE, A DEDUCTION OF RS.4 C RORES CLAIMED FOR ESTIMATED EXPENSES FOR QUARTER VACATION CANNOT BE ALLOWED. HOWEVER, THE ASSESSEE IS FREE TO CLAIM THIS EXPENSES, IN THE YEAR IN WHICH IT IS ACTUALLY INCURRED AFTER FURNISHING NECESSARY DOCUME NTARY EVIDENCE. 9. THE CIT(A) HAD UPHELD THE CLAIM OF THE ASSESSEE FOR DEDUCTION ON ACCRUAL BASIS IN THE YEAR 2004-05. THE DEPARTMENT CARRIED THE MATTER IN APPEAL BEFORE THE TRIBUNAL. 10. ON THESE FACTS WE HAVE THE CONSIDERED OPINION T HAT THERE IS NO CONCEALMENT NOR FURNISHING OF INACCURATE PARTICULAR S IN THIS CASE. THE ASSESSEE HAD MADE DISCLOSURES AND HAD MADE CONSCIOU S CLAIMS IN VIEW OF THE DIFFERENCE OF OPINION ON THE ISSUE OF YEAR OF ALLOW ABILITY. THE HONBLE SUPREME COURT IN CIT VS.RELIANCE PETRO 322 ITR 158 HELD AS FOLLOWS A GLANCE AT THE PROVISIONS OF S.271(1)(C) OF THE I NCOME TAX ACT, 1961 SUGGESTS THAT IN ORDER TO BE COVERED BY IT, THERE H AS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS I NCOME. THE MEANING OF THE WORD PARTICULARS USED IN S.27191)(C) WOULD EMBRACE THE DETAILS FO THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN T HE RETURN IS FOUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. IN ORDER TO EXP OSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAG INATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNTS TO FURNISHING INACCU RATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPE ND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOC UMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILI TY WOULD ARISE. TO ITA 2548/DEL/2011 PAGE 7 OF 8 ASSESSMENT YEAR 2007-08 DCM LTD. ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FA LSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271( 1)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITS ELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INC OME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FU RNISHING OF INACCURATE PARTICULARS. DECISION OF THE GUJARAT HIGH COURT AFFIRMED. 11. IN OUR CONSIDERED OPINION THE FIRST APPELLATE A UTHORITY HAS RIGHTLY DELETED THE PENALTY IN QUESTION FOR THE DETAILED RE ASONS GIVEN IN HIS ORDER WHICH ARE ALREADY EXTRACTED ABOVE. IN THE RESULT WE DISM ISS THE APPEAL OF THE REVENUE. 12. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH FEBRUARY,2013. SD/- SD/- (RAJPAL YADAV) (J. SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: THE 13 TH FEB., 2013. *MANGA ITA 2548/DEL/2011 PAGE 8 OF 8 ASSESSMENT YEAR 2007-08 DCM LTD. COPY OF THE ORDER FORWARDED TO: 1. APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT (A); 5.DR; 6.GUARD FILE BY ORDER DY. REGISTRAR 1. DATE OF DICTATION: 2. DRAFT PLACED BEFORE THE AUTHOR ON: 3. DRAFT PROPOSED AND PLACED BEFORE SECOND MEMBER ON: 4. DRAFT DISCUSSED/APPROVED BY THE SECOND MEMBER ON: 5. APPROVED DRAFT CAME TO SR.P.S. ON: 6. DATE OF PRONOUNCEMENT : 7. FILE SENT TO BENCH CLERK ON : 8. DATE ON WHICH FILE GIVEN TO HEAD CLERK ON: 9. DATE OF DISPATCHING THE ORDER ON: