ACIT, CC-38, MUMBAI V. M/S SKIL INFRASTRUCTURE LTD., MUMBAI

ITA 2725/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79379 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2008-2009
• Appeal Filed On: 08-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CAP PRADEEP SHORYA ARYA
• Assessee Lawyers: RUTURAJ H GUN JAN
• Keywords: Bonafide belief; Retrospective amendment; Wrong claim
• Section: 43B

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE HONBLE S/SHRI H.L. KARWA, PRESIDENT AND B. R.BASKARAN (AM) . . , . . , ./I.T.A. NO.2725/MUM/2013 ( / ASSESSMENT YEAR :2008-09 ) ASSTT. COMMISSIONER OF INCOME TAX, CC-38, ROOM NO.31(1), GROUND FLOOR, AAYAKAR BHAVAN, M K ROAD, MUMBAI-400020 / VS. M/S SKIL INFRASTRUCTURE LTD., SKIL HOUSE,209, BANK STREET CROSS LANE, FORT, MUMAI-400023 ( / APPELLANT) .. ( !' / RESPONDENT) ./ #$ ./PAN/GIR NO. : AABCS7689E % / APPELLANT BY : CAP.PRADEEP SHORYA ARYA !' & % /RESPONDENT BY : SHRI RUTURAJ H GUN JAN ' & ( ) / DATE OF HEARING : 10.7.2014 *+ & ( ) /DATE OF PRONOUNCEMENT : 10. 7.2014 / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE REVENUE IS DIRECTE D AGAINST THE ORDER DATED 23.01.2013 PASSED BY LD CIT(A)-39, MUMBAI AND IT RE LATES TO THE ASSESSMENT YEAR 2008-09. 2. THE REVENUE IS ASSAILING THE DECISION OF LD CIT(A) IN DELETING THE PENALTY OF RS.36,30,472/- LEVIED BY THE AO U/S 271(1)(C) OF TH E ACT. I.T.A. NO.2725/MUM/2013 2 3. THE FACTS THAT LED TO LEVY OF PENALTY ARE SE T OUT IN BRIEF. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF DEVELOPING IN FRASTRUCTURE FACILITIES. IN ITS RETURN OF INCOME, THE ASSESSEE CLAIMED AN AMOUNT OF RS.24,81,000/- RELATING TO AMORTIZATION OF PRELIMINARY EXPENSES AS DEDUCTION U /S 35D OF THE ACT. DURING THE YEAR UNDER CONSIDERATION, THE DEDUCTION U/S 35D WAS ALLOWABLE ONLY TO AN INDUSTRIAL UNDERTAKING. THE AO TOOK THE VIEW THAT THE ASSESSEE COMPANY DOES NOT FALL IN THE CATEGORY OF INDUSTRIAL UNDERTAKING AND HENCE DISALLOWED THE SAID CLAIM. THE ASSESSEE HAD ALSO CLAIMED A SUM OF RS.1 .55 CRORES AS LEGAL EXPENSES, WHICH INCLUDED A SUM OF RS.82,00,000/- PA ID TO M/S ERNST & YOUNG TOWARDS PROFESSIONAL FEES FOR SERVICES RENDERED IN LISTING OF THE SHARES OF THE ASSESSEE COMPANY. THE AO TOOK THE VIEW THAT THE AM OUNT PAID TOWARDS LISTING OF SHARES OF THE COMPANY WOULD BE COVERED BY THE DE DUCTION PRESCRIBED U/S 35D OF THE ACT. SINCE THE ASSESSEE COMPANY DOES NOT FA LL IN THE CATEGORY OF INDUSTRIAL UNDERTAKING AND HENCE DISALLOWED THE S AID CLAIM ALSO. THOUGH THE ASSESSEE CONTENDED BEFORE THE AO THAT THE TERM IND USTRIAL HAS BEEN OMITTED FROM SEC. 35D OF THE ACT BY THE FINANCE ACT 2008, Y ET THE AO TOOK THE VIEW THAT THE SAID AMENDMENT TAKES EFFECT FROM AY 2009-10 ONL Y AND ACCORDINGLY HELD THAT THE SAID AMENDMENT DOES NOT APPLY TO THE YEAR UNDER CONSIDERATION. 4. THE AO LEVIED A PENALTY OF RS.36,30,472/- U/S 271(1)(C) CALCULATED @ 100% OF THE TAX SOUGHT TO EVADED BY CLAIMING THE AB OVE SAID TWO AMOUNTS. IN THE APPEAL FILED BY THE ASSESSEE, THE LD CIT(A) DEL ETED PENALTY ON THE REASONING THAT THE IMPUGNED ADDITIONS HAVE RESULTED DUE TO WR ONG INTERPRETATION OF LAW. AGGRIEVED, THE REVENUE HAS FILED THIS APPEAL BEFORE US. I.T.A. NO.2725/MUM/2013 3 5. THE LD D.R PLACED STRONG RELIANCE ON THE ORD ER PASSED BY THE AO. HE SUBMITTED THAT WRONG CLAIM OF DEDUCTION WOULD ALSO AMOUNT TO CONCEALMENT OF PARTICULARS OF INCOME, SINCE THE DISALLOWANCE OF TH E SAID CLAIM WOULD INCREASE THE TOTAL INCOME. 6. ON THE CONTRARY, THE LD A.R SUBMITTED THAT THE ASSESSEE WAS UNDER BONAFIDE BELIEF THAT THE AMENDMENT BROUGHT OUT BY T HE FINANCE ACT 2008 HAVE RETROSPECTIVE APPLICATION. ACCORDINGLY HE SUBMITTE D THAT THE IMPUGNED DISALLOWANCES HAVE RESULTED DUE TO DIFFERENCE OF OP INION ON INTERPRETATION OF LAW. ACCORDINGLY HE CONTENDED THAT THE LD CIT(A) WAS JUS TIFIED IN DELETING THE PENALTY LEVIED BY THE AO. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED THE RECORD. WE NOTICE THAT THE ASSESSEE HAS AMORTIZED PRELIMINARY EXPENSE S AND ACCORDINGLY CLAIMED A SUM OF RS.24,81,000/- U/S 35D OF THE ACT. OUT OF T HE LEGAL AND PROFESSIONAL FEE CLAIMED BY THE ASSESSEE, THE AO TOOK THE VIEW THAT A SUM OF RS.82.00 LAKHS IS COVERED BY SEC. 35D OF THE ACT. HOWEVER, THE AO TO OK THE VIEW THAT THE ASSESSEE IS NOT ENTITLED TO CLAIM DEDUCTION U/S 35D OF THE ACT, SINCE THE ASSESSEE CANNOT BE CONSIDERED AS FALLING IN THE CATEGORY OF INDUSTRIAL UNDERTAKING. THE ASSESSEES CONTENTION THAT THE AMENDMENT BROUGHT OU T BY FINANCE ACT, 2008 W.E.F. 1.4.2009, WHEREBY THE TERM INDUSTRIAL WAS OMITTED IS CURATIVE IN NATURE AND HENCE IT SHALL HAVE RETROSPECTIVE EFFECT, WAS N OT ACCEPTED BY THE ASSESSING OFFICER. THE AO TOOK THE VIEW THAT THE SAID AMENDM ENT IS SUBSTANTIVE IN NATURE AND HENCE IT SHALL HAVE PROSPECTIVE EFFECT. THE LD CIT(A) HAS NOTICED THAT THE EXPLANATION OFFERED BY THE ASSESSEE IS A BONAFIDE O NE. BEFORE LD CIT(A), THE ASSESSEE HAD PLACED RELIANCE ON THE DECISION RENDER ED BY HONBLE SUPREME COURT I.T.A. NO.2725/MUM/2013 4 IN THE CASE OF ALOM EXTRUSIONS LTD (319 ITR 306)(SC ), WHEREIN THE APEX COURT HAD HELD THAT THE AMENDMENT BROUGHT OUT IN SEC. 43B OF THE ACT IS RETROSPECTIVE IN NATURE. 8. THE EXPLANATIONS OFFERED BY THE ASSESSEE WOU LD SHOW THAT THE ASSESSEE WAS UNDER BONAFIDE BELIEF THAT THE AMENDMENT BROUGH T OUT BY FINANCE ACT, 2008 IS RETROSPECTIVE IN NATURE. THE SAID BELIEF WAS NO T FOUND TO BE FALSE BY THE ASSESSING OFFICER. THUS, WE FIND MERIT IN THE CONT ENTIONS OF THE ASSESSEE THAT THE IMPUGNED DISALLOWANCES HAVE OCCURRED DUE TO DIFFERE NCE OF OPINION ABOUT THE INTERPRETATION OF LAW. THOUGH THE LD D.R WOULD CON TEND THAT THE AMENDMENT WAS MADE EFFECTIVE FROM 1.4.1989 AND HENCE THERE IS NO SCOPE FOR TWO INTERPRETATION, YET WE ARE UNABLE TO ACCEPT THE SAI D CONTENTIONS. IN OUR VIEW, THE BELIEF ENTERTAINED BY THE ASSESSEE CANNOT BE CO NSIDERED AS ALTOGETHER WRONG. ACCORDINGLY, IN OUR VIEW, THE LD CIT(A) WAS JUSTIFI ED IN DELETING THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. ACCORDINGLY WE UP HOLD HIS ORDER. 9. IN THE RESULT, THE APPEAL FILED BY THE REVEN UE IS DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT O N 10TH JULY, 2014 . *+ ' , -. / 0 10TH JULY, 2014 + & 2 3 SD SD ( . . / H.L. KARWA) ( . . , / B.R. BASKARAN ) / PRESIDENT / ACCOUNTANT MEMBER - ' MUMBAI: 10 TH JULY,2014. . . ./ SRL , SR. PS I.T.A. NO.2725/MUM/2013 5 ! ' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT. 3. ' 5( ( ) / THE CIT(A)- CONCERNED 4. ' 5( / CIT CONCERNED 5. 67 2 !(8 , ) 8 , - ' / DR, ITAT, MUMBAI CONCERNED 6. 2 9 : / GUARD FILE. ; ' / BY ORDER, TRUE COPY < # (ASSTT. REGISTRAR) ) 8 , - ' /ITAT, MUMBAI