THE BOMBAY DYEING & MFG CO.LTD, MUMBAI V. ACIT (OSD) RG 2(1), MUMBAI

ITA 269/MUM/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71181 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 1997-1998
• Appeal Filed On: 11-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revenue expenditure; Capital expenditure
• Section: 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI BEFORE SHRI H L KARWA, PRESIDENT & SHRI N K BILLAIYA, ACCOUNTANT MEMBER ITA NO.269/MUM/2011 FOR ASST. YEAR: 1997-98 THE BOMBAY DYEING & MFG. CO. LTD., NEVILE HOUSE, J.N.HEREDIA MARG, BALLARD ESTATE, MUMBAI- 400001 PAN AAACT2328K VS. THE ACIT (OSD) RG 2(1), MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI YOGESH A THAR RESPONDENT BY : SHRI AARSI PRASAD DATE OF HEARING : 18.09.2013 DATE OF PRONOUNCEMENT :18.09.2013 O R D E R PER N.K.BILLAIYA (AM) : THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST TH E ORDER OF THE CIT(A)-4, MUMBAI, DATED 10.12.2010, PERTAINING TO A.Y. 1997-9 8. THE SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE CIT(A) ERRED IN CONFIRMING PEN ALTY OF RS.1,29,000/- LEVIED U/S. 271(1)(C) OF THE ACT. 2. THE PENALTY HAS BEEN LEVIED ON THE DISALLOWANCE OF EXPENDITURE ON GDR ISSUE TO THE TUNE OF RS.3,00,000/-. VIDE SHOW-CAUSE NOTI CE DATED 03.09.2009, THE ASSESSEE WAS ASKED TO EXPLAIN WHY PENALTY SHOULD NO T BE LEVIED ON THE DISALLOWANCE OF EXPENDITURE ON GDR ISSUE. THE ASSESSEE REPLIED THAT IT HAS NEITHER CONCEALED ANY PARTICULARS OF INCOME NOR HAS FURNISHED ANY INACCUR ATE PARTICULARS OF SUCH INCOME. 2 ITA NO.269/MUM/2011 AY: 1997-98 THE ENTIRE DETAILS RELATING TO THE GDR ISSUE HAS BE EN EXPLAINED IN DETAIL IN THE AUDITED STATEMENT OF ACCOUNTS AS ALSO BY A NOTE IN THE COMPUTATION OF INCOME FILED FOR THE YEAR UNDER CONSIDERATION. THE ASSESSING OF FICER DID NOT ACCEPT THE SUBMISSIONS MADE BY THE ASSESSEE. THE ASSESSING OF FICER WAS OF THE OPINION THAT THE EXPENDITURE IN CONNECTION WITH GDR IS NOTHING B UT CAPITAL EXPENDITURE AND, THEREFORE, THE ASSESSEE HAS FURNISHED INACCURATE PA RTICULARS BY CLAIMING THIS CAPITAL EXPENDITURE AS REVENUE EXPENDITURE AND, THUS, WENT ON TO LEVY PENALTY AT RS.1,29,000/-. THE ASSESSEE CARRIED THE MATTER BEF ORE THE CIT(A) BUT WITHOUT ANY SUCCESS. 3. BEFORE US THE COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO THE COMPUTATION OF TOTAL INCOME EXHIBITED AT PAGES 1-18 OF THE PAPE R-BOOK. THE COUNSEL SUBMITTED THAT THE ASSESSEE HAS EXPLAINED IN DETAIL EXPENSES ON GDR WHICH HAVE BEEN CLAIMED AS DEDUCTION U/S. 37(1) OF THE ACT. FOR CLAIMING T HESE EXPENSES AS REVENUE EXPENSES THE COUNSEL DREW OUR ATTENTION TO THE NOTE S TO THE COMPUTATION OF INCOME EXHIBITED AT PAGE 8 OF THE PAPER-BOOK. IT IS THE S AY OF THE COUNSEL THAT THE ASSESSEE HAS RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF INDIA CEMENTS LTD. 60 ITR 52 (SC), FEDERAL BANK LTD. 180 ITR 241 (KER), HINDUSTAN MACHINE TOOLS 40 TAXMANN 43 (KAR) AND GODAVARI SUGA R MILLS LTD. 57 TAXMAN 205 (BOM). THE COUNSEL SUBMITTED THAT ALL THE DETAILS WERE FURNISHED ALONG WITH THE RETURN AND THE ASSESSEE HAS ALSO EXPLAINED THE BASI S FOR CLAIMING THE EXPENDITURE AS REVENUE EXPENDITURE, THEREFORE, NO PENALTY SHOULD B E LEVIED. PER CONTRA, THE DR SUPPORTED THE FINDINGS OF THE LOWER AUTHORITIES AND SUBMITTED THAT THE ASSESSEE HAS NOT EXPLAINED THE BASIS FOR CLAIMING SUCH EXPENDITU RE BEFORE THE ASSESSING OFFICER. 4. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE LOWE R AUTHORITIES AND THE RELEVANT MATERIAL BROUGHT ON RECORD. WE DO NOT FIND ANY FOR CE IN THE CONTENTIONS OF THE DR BECAUSE THE ASSESSING OFFICER HAS DISCUSSED AT LENG TH AT PAGE 5 OF HIS ORDER THE DECISIONS RELIED UPON BY THE ASSESSEE FOR CLAIMING THE EXPENDITURE IN RELATION TO THE GDR ISSUE. THEREFORE, IT CANNOT BE SAID THAT DETAI LS WERE NOT AVAILABLE BEFORE THE ASSESSING OFFICER. FURTHER, WE FIND THAT IN THE CO MPUTATION OF INCOME ITSELF, THE 3 ITA NO.269/MUM/2011 AY: 1997-98 ASSESSEE HAS EXPLAINED WHY IT IS CLAIMING THE EXPEN DITURE ON GDR ISSUE AS REVENUE EXPENDITURE. THE ASSESSEE HAS ALSO SPECIFICALLY EX PLAINED THE BASIS I.E. THE JUDICIAL DECISIONS MENTIONED HEREINABOVE BY WHICH IT HAS CLA IMED THE EXPENDITURE AS REVENUE. CONSIDERING THESE FACTS IN TOTALITY, IN O UR HUMBLE OPINION, THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF RE LIANCE PETRO PRODUCTS P. LTD. 322 ITR 158 SQUARELY APPLY TO THE PRESENT CASE. TH E ASSESSING OFFICER IS DIRECTED TO DELETE THE PENALTY OF RS.1,29,000/-. 5. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH SEPTEMBER 2013. SD/- SD/- (H L KARWA) (N.K.BILLAIYA) PRESIDENT ACCOUNTANT MEMBER MUMBAI, DT : 18 TH SEPTEMBER, 2013 SA COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE C.I.T, MUMBAI 4. THE CIT (A)-4, MUMBAI 5. THE DR, B- BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI