JT.CIT (OSD)-6(2)(1), MUMBAI V. CROMPTON GREAVES LTD., MUMBAI

ITA 2676/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0462 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 08-02-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 11-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VISHNU DUTTA SHARMA
• Keywords: Revenue expenditure; Capital expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI BEFORE SHRI JOGINDER SINGH (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 2676 / MUM/20 16 ASSESSMENT YEAR: 2008 - 09 JT. CIT (OSD) 6(2)(1) VS. M/S. CROMPTON GREAVES LTD. 5 TH FLOOR, R. NO. 563 C.G. HOUSE, 6 TH FLOOR AAYAKAR BHAVAN, M.K. RD. DR. ANNIE BESANT RODD , WORLI MU MBAI 400020 MUMBAI - 400030 PAN NO. AAACC4330K (APPELLANT) (RESPONDENT) REVENUE BY : MR. PURUSHOTTAM KUMAR, DR ASSESSEE BY: MR. VISHNU DUTTA SHARMA, A R DATE OF HEARING : 23 /03 /2017 DATE OF PRONOUNCEMENT: 31/05/2017 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE REVENUE. THE RELEVANT ASSESSMENT YEAR IS 2008 - 09 . THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER (APPEALS) 12 , MUMBAI AND ARISES OUT OF THE ORDER U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (THE ACT). 2. THE GROUNDS OF APPEAL FILED BY THE REVENUE READ S AS UNDER : - I. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE LAW, THE LD. CIT(A) ERRED IN DELETING THE PENALTY LEVIED U/S 271(1)(C) OF RS. 13, 20,920/ - ON THE EXCESS AMOUNT OF DEDUCTION CLAIMED U/S 35(2AB) A ND IGNORING THE FACT THAT DURING THE APPELLATE PROCEEDING IN APPEAL AGAINST THE QUANTUM ADDITION BEFORE THE LD. CIT( A), THE ASSESSEE DID NOT PRESS THIS GROUND OF APPEAL AGAINST THE QUANTUM ADDITION AND THE SAME WAS DISMISSED ACCORDINGLY. ITA NO. 2676 /MUM/201 6 2 II. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE PENALTY BY RELYING ON JUDGEMENTS OF HON'BLE SUPREME COURTS WHERE THE FACTS WERE TOTALLY DIFFERENT AND AS PENALTY IS LIVEABLE IN THE GIVEN SET OF FACTS IGNORED THE FACTS RECORDED BY THE A.O. IN PARA 5 OF THE PENALTY ORDER. 3. BRIEFLY STATED THAT FACTS ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE A.Y 2008 - 09 ON 30.06.2009 SHOWING TOTAL INCOME AT RS.453,61,63,050/ - . THE ASSESSING OFFICER (A.O.) COMPLETED THE ASSESSMENT U/S 143(3) MAKING DISALLOWANCES INTER - ALIA RS.38,86,202/ - U/S 35(2AB) OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FILED BEFORE THE A.O. A COPY OF FORM 3CM AND FORM 3CL IN RELATION TO SECTION 35 (2AB). AS PER THE REPORT OF DSIR IN FORM NO. 3CL, THERE WAS A DIFFERENCE IN T HE ELIGIBLE AMOUNT AS COMPARED TO THE AMOUNT CLAIMED IN THE COMPUTATION. THE DETAILS ARE AS UNDER: ELIGIBLE AS PER FORM 3CL CLAIMED IN COMPUTATION REVENUE EXPENDITURE. RS.944.20 LACS RS.9,51,45,795 CAPITAL EXPENDITURE. RS.612.13 LACS RS.6,30,77,938 THE ASSESSEE , DURING THE COURSE OF ASSESSMENT PROCEEDINGS , VIDE NOTE - SHEET ENTRY DATED 22.12.2011 , AGREED BEFORE THE A.O. OF THE ABOVE AMOUNTS AS PER THE REPORT OF DSIR. THE EXCESS DEDUCTION CLAIMED WORKED OUT TO RS.38,86,202/ - (RS.23,73,35,702/ - MINUS R S.23,34,49,500/ - )THE A.O. MADE IN ADDITION OF RS.38,86,202/ - AND THEN IMPOSED A PENALTY OF RS.13,20,920/ - U/S 271(1)(C) OF THE ACT. 4. AGGRIEVED BY THE ORDER OF THE A.O. , THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A). WE FIND THAT THE LD. CIT(A) HAS HELD THAT (I) THE ASSESSEE HAS CLAIMED DEDUCTION U/S 35(2AB) AT THE TIME OF FILING OF THE RETURN AS PER THE PROVISIONS OF LAW AND THERE IS NEITHER CONCEALMENT OF INCOME NOR FURNISHING OF INACCURATE PARTICULARS OF ITA NO. 2676 /MUM/201 6 3 SUCH INCOME AND (II) MERE DISALLOWANCE OF THE PART OF THE EXPENSES WILL NOT ALTER THE BONA FIDE CLAIM OF THE ASSESSEE. THE LD. CIT(A) RELIED ON THE DECISION IN RELIANCE PETRO PRODUCTS (P.) LTD . 322 ITR 158 (S.C.), P V RAMMANNA REDDY V S. ITO (ITAT HYDERABAD), CIT V S. SIDDHARTH ENTERPRISES (184 TAXMANN 460) (P&H). THUS THE LD. CIT(A) DELETED WITH PENALTY OF RS.13,20,920/ - IMPOSED BY THE A.O. U/S 271(1)(C) OF THE ACT. 5. BEFORE US, THE LD. DR SUBMITS THAT ONLY AFTER BEING CONFRONTED BY THE A.O., THE ASSESSEE VIDE NOTE - SHEET ENTRY DATED 22. 12.2011 AGREED TO INCORPORATING THE AMOUNTS AS PER THE REPORT OF DSIR. THEREFORE, HE SUBMITS THAT THE A.O. HAS RIGHTLY IMPOSED THE PENALTY U/S 271(1)(C) OF THE ACT. THUS THE LD. DR ENTIRELY SUPPORTS THE ORDER OF PENALTY PASSED BY THE A.O. 6 . BEFORE US, TH E LEARNED COUNSEL OF THE ASSESSEE FILES A PAPER BOOK (P/B) CONTAINING (I) FACT SHEET AND SUBMISSIONS, (II) COPY OF THE TAX AUDIT REPORT CERTIFYING THE REVENUE EXPENDITURE AND CAPITAL EXPENDITURE ON R & D ELIGIBLE FOR WEIGHTED DEDUCTION U/S 35 (2AB), (III) RELEVANT PAGE OF THE GUIDANCE NOTE ON TAX AUDIT U/S 44AB OF THE INCOME TAX ACT, 1961 IN RESPECT OF C ERTIFICATION OF ELIGIBLE DEDUCTION U/S 35 (2AB), (IV) AUDITORS CERTIFICATION, AS PRESCRIBED BY DEPARTMENT OF SCIENTIFIC & INDUSTRIAL RESEARCH FOR THE CLAIM FOR WEIGHTED DEDUCTION U/S 35 (2AB). RELIANCE WAS ALSO PLACED BY HIM ON THE DECISION IN RELIANCE PETROPRODUCTS (P) LTD . (SUPRA) , ACIT VS . TORRENT PHARMACEUTICALS LTD. (2009) 28 CCH 781 (A HD ), ACIT VS MAHINDRA SHUBHLAB SERVICES LTD. (2009) 31 SOT 361 (MUM) , KANSARA BEARING LTD. VS ACIT (2013) 58 ITA NO. 2676 /MUM/201 6 4 SOT 156 (JODH . ), BANYAN TOUR & TRAVELS (P) LTD. VS ITO (2009) 120 ITD 404 (MUM). 6 .1. THE MAIN ARGUMENT OF THE LD. COUNSEL OF THE ASSESSEE IS THAT IN THE RETURN INCOME THE AMOUNT CLAIMED AS REVENUE EXPENDITURE WAS RS.1427.2 LACS AND CAPITAL EXPENDITURE RS.946.17 LACS TOTALLING TO RS.2373.37 LACS BASED ON T AX A UDIT R EPORT AND CERTIFICATE ISSUED BY THE STATUTORY AUDITOR. IN 3CL, THE ELIGIBLE AMOUNT MENTIONED ON ACCOUNT OF REVENUE EXPENDITURE WAS RS.1416.3 LACS AND CAPITAL EXPENDITURE RS.918.19 LACS , TOTALLING TO RS.2334.49 LACS. SO THERE WAS A DIFFERENCE OF RS.38.86 LACS AND THE A.O. ADDED THE SAM E TO THE INCOME OF THE ASSESSEE. THE LD. COUNSEL FURTHER SUBMITS THAT AT THE TIME OF FILING OF THE RETURN OF INCOME, FORM 3CL WAS NOT ISSUED TO THE ASSESSEE - COMPANY, THEREFORE, THE CLAIMED AMOUNT WAS RELIED BASED ON THE TAX AUDIT REPORT AND THE CERTIFICATE. IT IS THUS SUBMITTED THAT THE WEIGHTED DEDUCTION WAS CLAIMED AS PER THE PROVISIONS OF THE ACT. FURTHER IT IS STATED THA T THE ASSESSEE HAS WITHDRAWN THE DEDUCTION IN ASSESSMENT PROCEEDINGS AND HENCE PENALTY IS NOT LEVIABLE. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT IN THE CERTIFICATE DATED 26.09.2008 THE AUDITOR HAS C ERTIFIED THAT (I) THE ASSESSEE - COMPANY HAS MAINTAINED SEPARATE ACCOUNTS FOR THE R&D CENTRE APPROVED BY DSIR U/S 35 (2AB) AND (II) THE ACCOUNTS HAVE BEEN SATISFACTORILY MAINTAINED AND THE EXPENDITURE CERTIFIED ARE ALSO IN CONSONANCE WITH DSIR GUIDELINES. TH E ASSESSEE - COMPANYS CLAIM FOR WEIGHTED DEDUCTION IS SUPPORTED BY THE A UDITORS C ERTIFICATE AS PER THE FORM PRESCRIBED BY THE DSIR . IN THE PRESENT CASE, THE A UDITORS C ERTIFICATE FOR THE APPROVED R&D UNIT HAS CERTIFIED THE TOTAL ELIGIBLE EXPENDITURE ITA NO. 2676 /MUM/201 6 5 FOR WE IGHTED DEDUCTION U/S 35(2AB) AT RS.15.84 CRORES . FROM THE ABOVE, IT IS CLEAR THAT THE ASSESSEE - COMPANY HAS CLAIMED WEIGHTED DEDUCTION ON THE BASIS OF TAX AUDIT REPORT AND THE AUDITORS C ERTIFICATE. 7.1 . IN RELIANCE PETROPRODUCTS (P) LTD. (SUPRA), THE HON 'BLE SUPREME COURT HAS HELD THAT MERELY BECAUSE ASSESSEE HAD CLAIMED EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT ATTRACT PENALTY U/S 271(1)(C) OF THE ACT. 7.2. IN THE CASE OF BANYAN TOURS & TRAVELS (P) LTD. (SUPRA) , THE ASSESSEE - COMPANY WAS ENGAGED IN BUSINESS AS A TOUR OPERATOR. AS PER PROVISIONS OF SECTION 80HHD, AN INDIAN CO MPANY ENGAGED IN BUSINESS OF TOUR OPERATOR, APPROVED BY PRESCRIBED AUTHORITY, NAMELY, DIRECTORATE GENERAL OF TOURISM, WOULD BE ENTITLED TO CERTAIN PERCENTAGE OF DEDUCTION OF PROFITS DERIVED BY HIM FROM SERVICES PROVIDED TO FOREIGN TOURISTS. THE ASSESSEE IN ACCORDANCE WITH CONDITION LAID DOWN U/S 80HHD APPLIED TO PRESCRIBED AUTHORITY FOR APPROVAL OF ITS BUSINESS. THE PRES CRIBED AUTHORITY INITIALLY GRANTED APPROVAL ONLY W.E.F. 20.05.1998 AND THEREAFTER, APPROVAL WAS GRANTED W.E.F. 02.07.1997. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WROTE A LETTER TO THE A.O. STATING THAT SINCE PRESCRIBED AUTHORITY INITIALLY GR ANTED ONLY W.E.F. 20.05.1998, AND THEREAFTER, APPROVAL WAS GRANTED W.E.F. 02.07.1997, FOR THE YEAR UNDER CONSIDERATION, HE DID NOT HAVE APPROVAL OF THE PRESCRIBED AUTHORITY SO AS TO ENABLE IT TO CLAIM DEDUCTION U/S 80HHD. THEREFORE, ITS CLAIM FOR DEDUCTION U/S 80HHD MIGHT BE TAKEN AS WITHDRAWN. THE A.O., HOWEVER, IMPOSED PENALTY U/S 271(1)(C) FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE TRIBUNAL HELD THAT SINCE THE ASSESSEE PRIOR ITA NO. 2676 /MUM/201 6 6 TO COMPLETION OF ASSESSMENT HAD WITHDRAWN THE CLAIM, THERE WAS NO CONC EALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. 7.3. THE FACTS IN INSTANT APPEAL BEING SIMILAR, WE RESPECTFULLY FOLLOWED THE AFORESAID DECISIONS AND UPHOLD THE ORDER OF THE LD. CIT(A). 8. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN C OURT ON 31/05/2017 SD/ - SD/ - ( JOGINDER SINGH ) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 31/05/2017 RAHUL SHARMA , SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI