The DCIT, Circle-6, Ahmedabad V. The Viramgam Mercantile Co.Op.Bank Ltd., Ahmedabad

ITA 2715/AHD/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9256 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 02-02-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 21-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N DIVETIA
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMEDABAD BEFORE SHRI S. S. GODARA, JM & SHRI MANISH BORAD, AM. ITA NO. 2715/AHD/2013 ASST. YEAR: 2008-09 DCIT, CIRCLE-6, AHMEDAAD. VS. VIRAMGAM MERCANTILE CO- OP. BANK LTD., MOHANBHAI PATEL MARKET, VIRAMGAM, DIST. AHMEDABAD. APPELLANT RESPONDENT PAN AABAT 4076B APPELLANT BY SHRI K. MADHUSUDAN, SR.DR RESPONDENT BY SHRI S. N. DIVETIA, AR DATE OF HEARING: 02/02/2017 DATE OF PRONOUNCEMENT: 06/02/2017 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER . THIS APPEAL OF REVENUE FOR ASST. YEAR 2008-09 IS D IRECTED AGAINST THE ORDER OF LD. CIT(A)-XI, AHMEDABAD, DATE D 17.09.2013 VIDE APPEAL NO.CIT(A)-XI/117/ACIT CIR.6/12-13, ARISING O UT OF ORDER U/S 271(1)(C) OF THE IT ACT, 1961 (IN SHORT THE ACT) FR AMED ON 27.06.2012 BY ACIT, CIR.6, AHMEDABAD. FOLLOWING GROUNDS HAVE B EEN RAISED BY THE REVENUE :- I) THE ID. CIT(A) HAS ERRED IN LAW AND ON FACTS ON DELETING LEVYING ON PENALTY OF RS. 15,03,270/- ,U/S.271(L)(C) OF THE LT. ACT. ITA NO. 2715/AHD/2013 ASST. YEAR 2008-09 2 II) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX (A) OUGHT TO HAVE UPHELD THE ORDER OF TH E ASSESSING OFFICER. III) IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (A) MAY BE SET-ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 2. BRIEFLY STATED FACTS AS CULLED OUT FROM THE RECO RDS ARE THAT ASSESSEE IS A CO-OP. SOCIETY ENGAGED IN THE BUSINES S OF BANKING ACTIVITIES AND FILED ITS RETURN OF INCOME ON 12/07/ 2008 DECLARING TOTAL INCOME OF RS.23,45,990/-. ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT AFTER MAKING CERTAIN ADDITIONS OF RS.49,49, 950/- AND ASSESSING THE INCOME AT RS. 69,80,008/-. PENALTY PR OCEEDINGS U/S 271(1)(C) OF THE ACT WERE INITIATED AND NOTICE U/S 271(1)(C) OF THE ACT ISSUED FOR FURNISHING INACCURATE PARTICULARS OF INC OME. IN THE QUANTUM APPEAL LD. CIT(A) PARTLY ALLOWED ASSESSEES APPEAL BY CONFIRMING ADDITION OF RS.48,64,950/- AS AGAINST RS.49,49,950/ - MADE BY LD. ASSESSING OFFICER. AGAINST THE ORDER OF LD. CIT(A) CONFIRMING THE QUANTUM ADDITION PARTLY, ASSESSEE WENT IN APPEAL BE FORE THE TRIBUNAL, AHMEDABAD AND VIDE ITA NO.2900/AHD/2011 VIDE ORDER DATED 12.09.2014 THE CO-ORDINATE BENCH ADJUDICATED THE QU ANTUM ISSUES WHICH RELATED TO FOLLOWING TWO DISALLOWANCES :- I) DISALLOWANCE ON GRATUITY PAYMENT OF RS.3,15,933/ - II) DISALLOWANCE ON DEPRECIATION ON INVESTMENT OF R S.45,49,019/- THE CO-ORDINATE BENCH VIDE ITS APPELLATE ORDER DATE D 12.09.2014 DELETED THE DISALLOWANCE OF RS.3,15,933/- AND AS RE GARDS THE SECOND DISALLOWANCE OF DEPRECIATION ON INVESTMENT OF RS.45 ,49,019/- ISSUE WAS REMITTED BACK TO THE FILE OF CIT(A) TO DECIDE T HE ISSUE AFRESH. ITA NO. 2715/AHD/2013 ASST. YEAR 2008-09 3 3. ON THE OTHER HAND AFTER THE ORDER OF LD. CIT(A) ON QUANTUM ADDITION PENALTY PROCEEDINGS WERE INITIATED AND ON THE ADDITION OF RS.48,64,950/- CONFIRMED BY LD. CIT(A) PENALTY @ 10 0% OF TAX WAS LEVIED AT RS.15,03,269/-. 4. AGGRIEVED AGAINST THE ORDER OF ASSESSING OFFICER IMPOSING PENALTY U/S 271(1)(C) OF THE ACT, ASSESSEE WENT IN APPEAL BEFORE LD. CIT(A) AND SUCCEEDED IN FULL AS LD. CIT(A) DELETED THE IMPUGNED PENALTY BY OBSERVING AS UNDER :- 2.4 I HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIO NS AND I'M INCLINED TO AGREE WITH THE CONTENTIONS RAISED BY THE APPELLANT. WITH REGAR D TO THE CLAIM OF GRATUITY PAYMENT IT IS SEEN THAT THE AMOUNT HAS BEEN ACTUALL Y TRANSFERRED TO THE ACCOUNT OF THE OUTGOING EMPLOYEE. THE REASON FOR DISALLOWAN CE WAS ONLY DUE TO THE FACT THAT THE PAYMENT HAS COME FROM THE ACCOUNT OF THE A PPELLANT MAINTAINED WITH LIFE INSURANCE CORPORATION OF INDIA. THE DISALLOWAN CE HAS BEEN MADE ON PURELY TECHNICAL REASONS. IT IS NOT THE CASE OF THE ASSESS ING OFFICER THAT ANY CRUCIAL FACTS HAVE BEEN HIDDEN BY THE APPELLANT OR THAT THE CLAIM WAS NOT BONAFIDE. I AM THEREFORE OF THE VIEW THAT THE LEVY OF PENALTY ON T HE ISSUE OF DISALLOWANCE OF GRATUITY PAYMENT IS NOT JUSTIFIED AND DESERVES TO B E DELETED. WITH REGARD TO LEVY OF PENALTY ON DISALLOWANCE OF I NVESTMENT DEPRECIATION, THE APPELLANT HAS RELIED UPON THE DECISION OF ITAT, 'A' BENCH, CHENNAI IN THE CASE OF INDIAN BANK IN WHICH THE LOSS ON ACCOUNT OF DEPRECIATION IN VALUATION OF SECURITIES HAS BEEN ALLOWED. A SIMILAR FINDING HAS BEEN GIVEN BY HIGH COURTS OF BOMBAY AND MADRAS ALSO. IT CAN BE SEEN FROM THE ABOVE DECI SIONS THAT THE ISSUE RELATING TO CLAIM OF INVESTMENT DEPRECIATION IS HIGHLY DEBAT ABLE AND CONTENTIOUS ISSUE. MY PREDECESSOR LEARNED CIT (A) HAS CONFIRMED ADDITION' BUT THERE ARE CONTRARY DECISIONS FROM OTHER JUDICIAL FORUMS. THE COURTS HA VE HELD THAT WHERE THE ISSUE INVOLVED IS OF DEBATABLE NATURE AND THE CLAIM MADE BY THE ASSESSEE IS BONA FIDE, THEN NO CONCEALMENT PENALTY IS LEVIABLE IN SUCH CAS ES. RELIANCE IS PLACED ON THE DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF GEETA PRINTS (P) LTD. VSI ASSISTANT COMMISSIONER OF INCOME TAX (2012) 247 CTR (GUJ) 620. RELIANCE IS ALSO PLACED ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS (P) LTD. (2010) 3221 TR158(SC). IN VIEW OF ABOVE DISCUSSIONS, I HOLD THAT THE CONCE ALMENT PENALTY ON DISALLOWANCE OF INVESTMENT DEPRECIATION IS NOT JUST IFIABLE AND DESERVES TO BE DELETED. ITA NO. 2715/AHD/2013 ASST. YEAR 2008-09 4 5. AGGRIEVED, REVENUE IS NOW IN APPEAL BEFORE US. 6. LD. DEPARTMENTAL REPRESENTATIVE (DR) SUPPORTED THE ORDER OF LD. ASSESSING OFFICER WHEREAS THE LD. AUTHORISED RE PRESENTATIVE (AR) RELIED ON THE ORDER OF LD. CIT(A). 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL PLACED BEFORE US AND GONE THROUGH THE DECISION OF T HE CO-ORDINATE BENCH RELATING TO QUANTUM ADDITION IN THE CASE OF A SSESSEE. IN THIS APPEAL REVENUE HAS CHALLENGED THE ORDER OF LD. CIT( A) DELETING THE PENALTY OF RS.15,03,270/- IMPOSED BY LD. ASSESSING OFFICER U/S 271(1)(C) OF THE ACT. WE FIND THAT THE IMPUGNED PEN ALTY OF RS.15,03,270/- WAS IMPOSED BY LD. ASSESSING OFFICER ON THE FOLLOWING TWO ADDITIONS CONFIRMED BY LD. CIT(A):- I) DISALLOWANCE ON GRATUITY PAYMENT OF RS.3,15,933/ - II) DISALLOWANCE ON DEPRECIATION ON INVESTMENT OF R S.45,49,019/- 8. WE FURTHER OBSERVE THAT IN THE QUANTUM APPEAL AB OVE TWO ISSUES WERE BEFORE THE CO-ORDINATE BENCH, WHEREIN D ISALLOWANCE OF RS.3,15,933/- ON ACCOUNT OF GRATUITY PAYMENT WAS DE LETED BY THE CO- ORDINATE BENCH BY OBSERVING AS UNDER :- 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL ON RECORD. BEFORE US, ID. A.R. HAS SUBMITTED THAT IT WAS MAINT AINING GRATUITY FUND WITH LIC OF INDIA IN ACCORDANCE WITH GUIDELINES OF RBI A ND WHEN THE PAYMENT WAS MADE TO LIC OF INDIA, ASSESSEE HAD NOT CLAIMED THE DEDUCTION BUT HAD CLAIMED THE SAME WHEN THE ACTUAL PAYMENT OF GRATUITY WAS MA DE TO THE CONCERNED EMPLOYEE AND THEREFORE IT IS NOT A CASE OF CLAIM OF DOUBLE DEDUCTION. BEFORE US, REVENUE HAS NOT PLACED ANY MATERIAL ON RECORD TO CO NTROVERT THE SUBMISSIONS OF ITA NO. 2715/AHD/2013 ASST. YEAR 2008-09 5 THE ASSESSEE. FURTHER REVENUE HAS ALSO NOT PLACED A NY MATERIAL ON RECORD TO SHOW THAT ASSESSEE HAS CLAIMED THE DEDUCTION OF EXP ENSES WHEN THE AMOUNT WAS PLACED WITH LIC . IN VIEW OF THE AFORESAID FACT S, WE ARE OF THE VIEW THAT THE ASSESSEE IS ENTITLED TO DEDUCTION IN THE YEAR UNDER REVIEW AND WE THEREFORE DELETE THE ADDITION MADE BY THE A.O. THUS THIS GROU ND OF ASSESSEE IS ALLOWED. 9. WHEREAS THE ISSUE RELATING TO DISALLOWANCE OF DE PRECIATION ON INVESTMENT OF RS. 45,49,019/- WAS SET ASIDE TO THE FILE OF LD. CIT(A) FOR DECIDING AFRESH BY OBSERVING AS FOLLOWS :- 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO TH E LOSS IN VALUE OF INVESTMENT IN MUTUAL FUNDS ARISING ON ACCOUNT OF THE DIFFERENCE B ETWEEN THE COST OF UNITS AND THE NAV ON THE LAST DAY OF THE ACCOUNTING YEAR ON A CCOUNT OF VALUATION . BEFORE US THE ID. A.R. HAS SUBMITTED THAT THE ISSUE IS COV ERED IN FAVOUR OF THE ASSESSEE IN VIEW OF THE DECISIONS CITED BY THE ID. A.R. WE F IND THAT THE AFORESAID DECISIONS WERE NOT BEFORE CIT(A) WHEN THE ISSUE WAS DECIDED BY HIM. WE THEREFORE FEEL THAT THE ISSUE NEEDS TO BE RE-LOOKED AT HIS END IN VIEW OF THE VARIOUS DECISIONS CITED BY ID. A.R. WE THEREFORE RE MIT THE ISSUE BACK TO THE FILE OF CIT(A) TO DECIDE THE ISSUE AFRESH IN THE LIGHT O F DECISIONS CITED BY AR AND IN ACCORDANCE WITH LAW. NEEDLESS TO STATE THAT CIT(A) SHALL GRANTED ADEQUATE OPPORTUNITY OF HEARING TO BOTH THE PARTIES. IN THE RESULT, THIS GROUND OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 10. IN THE GIVEN CIRCUMSTANCES AND IN THE LIGHT OF THE DECISION OF THE CO-ORDINATE BENCH IN THE QUANTUM APPEAL, AS THE QUA NTUM ADDITION OF RS.3,15,933/- RELATING TO DISALLOWANCE OF GRATUITY HAS BEEN DELETED BY THE CO-ORDINATE BENCH, WE ARE OF THE VIEW THAT PEN ALTY U/S 271(1)(C) OF THE ACT ON DISALLOWANCE OF GRATUITY PAYMENT OF R S.3,15,933/- HAS BEEN RIGHTLY DELETED BY LD. CIT(A). 11. AS REGARDS DISALLOWANCE ON DEPRECIATION ON INVE STMENT OF RS.45,49,019/- AS THE MATTER HAD BEEN SET ASIDE TO THE FILE OF LD. ITA NO. 2715/AHD/2013 ASST. YEAR 2008-09 6 CIT(A), WE ARE OF THE VIEW THAT PENALTY U/S 271(1)( C) OF THE ACT IS NOT CALLED FOR AT THIS JUNCTURE. HOWEVER, AFTER THE FRE SH DECISION OF LD. CIT(A) ON THIS ISSUE AS DIRECTED BY THE CO-ORDINATE BENCH IF THE DISALLOWANCE ON DEPRECIATION ON INVESTMENT IS SUSTA INED THEN THE REVENUE WILL BE AT LIBERTY TO AGAIN IMPOSE THE PENA LTY U/S 271(1)(C) OF THE ACT ON THE ADDITION SUSTAINED. 12. IN THE RESULT, WE FIND NO REASON TO INTERFERE W ITH THE ORDER OF LD. CIT(A) DELETING THE IMPUGNED PENALTY OF RS.15,03,2 70/- U/S 271(1)(C) OF THE ACT AND DISMISS THE APPEAL OF REVENUE. ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH FEBRUARY, 2017 SD/- SD/- (S. S. GODARA) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 06/02/2017 MAHATA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD ITA NO. 2715/AHD/2013 ASST. YEAR 2008-09 7 1. DATE OF DICTATION: 02/02/2017 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 03/02/2017 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 7/02/17 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: