THE ACIT CIR 6(1), MUMBAI V. M/S. BRIGGS TRADING CO. P. LTD, MUMBAI

ITA 2576/MUM/2008

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2349 (ITAT-MUMBAI)
• Duration Of Justice: 8 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 01-07-2015
• Assessment Year: 2001-2002
• Appeal Filed On: 11-04-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: B S SHARMA
• Keywords: Earning of tax free income; Difference of opinion; Notional interest
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH F, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ITA NOS.2576 & 2577/M/2008 ASSESSMENT YEARS: 2001-02 & 2002-03 ACIT, CIR. 6(1), R. NO.506, 5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 VS. M/S. BRIGGS TRADING CO. PVT. LTD., CONTINENTAL BUILDING 135, DR. A.B. ROAD, WORLI, MUMBAI 400 018 PAN: AAACB4674J (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI B.S. SHARMA, A.R. & SHRI DALPA T SHAH, A.R. REVENUE BY : SHRI ANAND MOHAN, D.R. DATE OF HEARING : 22.06.2016 DATE OF PRONOUNCEMENT : 29.07.2016 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE ABOVE TITLED APPEALS RELEVANT TO A.Y. 2001-02 & 2002-03 HAVE BEEN PREFERRED BY THE REVENUE AGAINST TWO SEPARATE ORDER S DATED 20.12.2007 RELEVANT TO A.Y. 2001-02 AND 2002-03 RESPECTIVELY O F THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)]. 2. THE COMMON ISSUE RAISED IN BOTH THE APPEALS IS R EGARDING THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSI NG OFFICER (HEREINAFTER REFERRED TO AS THE AO) HAD MADE CERTAIN DISALLOWANC ES ON ACCOUNT OF NOTIONAL INTEREST OUT OF THE INTEREST EXPENDITURE ON ACCOUNT OF MONEY ADVANCED BY THE ASSESSEE TO M/S. CLASSIC CREDIT. THE AO HELD THAT THE SAID ADVANCE WAS NOT IN THE NORMAL COURSE OF BUSINESS. HE, THEREFORE, CALC ULATED THE NOTIONAL INTEREST ITA NOS.2576 & 2577/M/2008 M/S. BRIGGS TRADING CO. PVT. LTD. 2 ON THE AMOUNT ADVANCED BY THE ASSESSEE AND DISALLOW ED THE SAME OUT OF THE INTEREST CLAIMED BY THE ASSESSEE. 4. THE SECOND DISALLOWANCE HAS BEEN MADE BY THE AO ON ACCOUNT OF EXPENSES INCURRED IN CONNECTION WITH EXEMPT INCOME UNDER SECTION 14A OF THE ACT. THE AO ALSO LEVIED PENALTY UNDER SECTION 271( 1)(C) WITH REGARD TO THE ABOVE STATED DISALLOWANCES. 5. IN APPEAL, THE LD. CIT(A), CONSIDERING THE NATUR E OF THE DISALLOWANCES MADE BY THE AO AND THE EXPLANATION THERETO GIVEN BY THE ASSESSEE, HELD THAT IT WAS NOT A CASE OF FURNISHING OF INACCURATE PARTICUL ARS OF INCOME OR CONCEALMENT OF INCOME. HE OBSERVED JUST BECAUSE THESE EXPENSES HAVE NOT BEEN ALLOWED BY THE AO ON ACCOUNT OF DIFFERENCE OF OPINION, IT CANN OT BE HELD THAT THE ASSESSEE WAS GUILTY OF ANY CONCEALMENT OF INCOME OR FURNISHI NG OF INACCURATE PARTICULARS OF INCOME. HE THEREFORE DELETED THE PE NALTY SO LEVIED BY THE AO. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE REVENUE, THUS, HAS COME IN APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS. ADMITTEDLY , THE DISALLOWANCE IN RELATION TO THE INTEREST EXPENDITURE ON NOTIONAL BA SIS AND ON ACCOUNT OF EXPENDITURE UNDER SECTION 14A HAS NOT BEEN MADE ON ACCOUNT OF DETECTION OF SOME INACCURATE PARTICULARS OF INCOME OR CONCEALMEN T OF INCOME. THE SAID DISALLOWANCES HAVE BEEN MADE BY THE AO BECAUSE OF T HE DIFFERENCE OF OPINION REGARDING THE ADMISSIBILITY OF THE SAME. CONSIDERI NG THE NATURE OF THE EXPENSES AND THE DISALLOWANCES MADE BY THE AO, IN O UR VIEW, THE LD. CIT(A) HAS RIGHTLY HELD THAT IT IS NOT A CASE OF FURNISHIN G OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. EVERY CASE OF DIS ALLOWANCE OF A CLAIM OR AN EXPENDITURE CANNOT BY ITSELF BE HELD AS CASE OF FUR NISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. TH E HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS (2 010) 322 ITR 158 (SC) HELD THAT A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTA INABLE IN LAW, BY ITSELF, WILL ITA NOS.2576 & 2577/M/2008 M/S. BRIGGS TRADING CO. PVT. LTD. 3 NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. THE SAID DECISION OF THE HONBLE SUPREME COURT IS SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CASE. WE, T HEREFORE, DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN DELETIN G THE PENALTY LEVIED BY THE AO UNDER SECTION 271(1)(C) OF THE ACT. 7. SINCE THE FACTS AND CIRCUMSTANCES IN BOTH THE AP PEALS ARE IDENTICAL AND IN VIEW OF THE FINDINGS GIVEN ABOVE, BOTH THE APPEALS OF THE REVENUE ARE HEREBY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29.07.2016. SD/- SD/- (G.S. PANNU) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 29.07.2016. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.