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

ITA 281/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83511 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 14-08-2014
• Assessment Year: 1998-1999
• Appeal Filed On: 11-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V R PATIL
• Assessee Lawyers: YOGESH A THAR
• Keywords: Revenue expenditure; Capital expenditure
• Section: 37(1); 154

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI .., ! , ' , # BEFORE SHRI I.P.BANSAL, JM AND SHRI RAJENDRA, AM ITA NO.281/MUM/2011 (A.Y.1998-99) THE BOMBAY DYEING & MFG. CO. LTD., NEVILLE HOUSE, J.N.HEREDIA MARG, BALLARD ESTATE, MUMBAI 400001 PAN: AAACT 2328K THE ACIT (OSD) RG.2(1), AAYKAR BHAVAN, MK ROAD, MUMBAI 400020 ( $% / // / APPELLANT) ' ' ' ' / VS. ( ()$%/ RESPONDENT) $% * + * + * + * + /APPELLANT BY : SHRI YOGESH A. THAR ()$% * + * + * + * + /RESPONDENT BY :SHRI V.R.PATIL ' * ,-' / / / / DATE OF HEARING : 14.8.2014 ./0 * ,-' / DATE OF PRONOUNCEMENT : 14.08.2014 1 1 1 1 / / / / O R D E R PER I.P.BANSAL (JM) : THIS APPEAL IS FILED BY THE ASSESSEE AND IT IS DIR ECTED AGAINST THE ORDER PASSED BY LD. CIT(A)-4 MUMBAI DATED 10/12/2010 FOR ASSESSM ENT YEAR 1998-99. GROUNDS OF APPEAL READ AS UNDER: 1. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT WITHOUT APPRECIATING THE FACT THAT THE ASSE SSEE HAS FURNISHED FULL AND ACCURATE PARTICULARS OF INCOME. 2. WITHOUT PREJUDICE TO ABOVE, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE PENALTY AMOUNT OF RS.32,55,000/- INSTEAD OF CORRECT FIGURE OF RS.2,45,077/-. 3. WITHOUT PREJUDICE TO ABOVE, THE LEARNED CIT(A) HAS ERRED IN NOT CONSIDERING THE ALTERNATE PLEA THAT SINCE THE TAX WAS LEVIED U/S. 115JA, THE PENALTY SHOULD BE RESTRICTED TO THE AMOUNT OF TAX SOUGHT TO BE EVADED AS PER SECTION 115JA. 2. IN THE PRESENT CASE CONCEALMENT PENALTY LEVIED I S ON ACCOUNT OF DISALLOWANCE OF EXPENDITURE ON GDR ISSUE AMOUNTING TO RS.93.00 L ACS. CONCEALMENT PENALTY WAS LEVIED AT RS.32,55,000/- ON THE DISALLOWANCE OF RS. 93.00. IN QUANTUM APPEAL ITAT REDUCED THE ADDITION OF RS.93.00 LACS TO A SUM OF RS.7,00,219/- AND AO VIDE ORDER DATED 9/1/1/2009 PASSED UNDER SECTION 154 R.W.S. 271(1)(C) OF THE INCOME TAX ACT, ITA NO.281/MUM/2011 (A.Y.1998-99) 2 1961 (THE ACT) HAS REDUCED THE PENALTY TO AN AMOUN T OF RS.2,45,077/-. THE COPY OF ORDER HAS BEEN PLACED ON OUR FILE. THEREFORE, THE PENALTY WHICH THE ASSESSEE IS AGITATING IN THE PRESENT APPEAL IS A SUM OF RS.2,4 5,077/-. 3. AT THE OUTSET IT WAS POINTED BY LD. AR THAT SIM ILAR DISALLOWANCE WAS MADE IN RESPECT OF ASSESSMENT YEAR 1997-98 AND CONCEALMENT PENALTY WAS ALSO LEVIED AMOUNTING TO RS.1,29,000/- AND THE SAID PENALTY HA S BEEN DELETED BY THE TRIBUNAL VIDE ORDER DATED 18/09/2013 IN ITA NO.269/MUM/2011. THEREFORE, IT WAS PLEADED BY LD. AR THAT THE ISSUE IS COVERED BY THE AFOREMEN TIONED ORDER OF THE TRIBUNAL AND APPROPRIATE RELIEF SHOULD BE GRANTED TO THE ASSESSE E. 4. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDER PASSED BY LD. CIT(A) VIDE WHICH IMPUGNED PENALTY HAS BEEN CONFIRMED. 5. AFTER HEARING BOTH THE PARTIES AND AFTER CONSIDE RING THEIR CONTENTIONS, WE ARE OF THE OPINION THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE AFOREMENTIONED ORDER OF THE TRIBUNAL. FOR THE SAKE OF COMPLETENESS THE SAID ORDER OF THE TRIBUNAL IS REPRODUCED BELOW: THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST T HE ORDER OF THE CIT(A)-4, MUMBAI, DATED 10.12.2010, PERTAINING TO A.Y. 1997-98. THE SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE CIT(A) ERRED IN CONFIRMING PENALTY 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 NOTICE DATED 03.09.2009, THE ASSESSEE WAS ASKED TO EXPLAIN WHY PENALTY SHOULD NOT BE LEVI ED ON THE DISALLOWANCE OF EXPENDITURE ON GDR ISSUE. THE ASSESSEE REPLIED THA T IT HAS NEITHER CONCEALED ANY PARTICULARS OF INCOME NOR HAS FURNISHED ANY INACCUR ATE PARTICULARS OF SUCH INCOME. THE ENTIRE DETAILS RELATING TO THE GDR ISSUE HAS BEEN E XPLAINED IN DETAIL IN THE AUDITED STATEMENT OF ACCOUNTS AS ALSO BY A NOTE IN THE COMP UTATION OF INCOME FILED FOR THE YEAR UNDER CONSIDERATION. THE ASSESSING OFFICER DID NOT ACCEPT THE SUBMISSIONS MADE BY THE ASSESSEE. THE ASSESSING OFFICER WAS OF THE OPI NION THAT THE EXPENDITURE IN CONNECTION WITH GDR IS NOTHING BUT CAPITAL EXPENDIT URE AND, THEREFORE, THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS BY CLAIMING TH IS CAPITAL EXPENDITURE AS REVENUE EXPENDITURE AND, THUS, WENT ON TO LEVY PENALTY AT R S.1,29,000/-. THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A) BUT WITHOUT ANY SUCCES S. 3. BEFORE US THE COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO THE COMPUTATION OF TOTAL INCOME EXHIBITED AT PAGES 1-18 OF THE PAPER-B OOK. THE COUNSEL SUBMITTED THAT THE ASSESSEE HAS EXPLAINED IN DETAIL EXPENSES ON GDR WH ICH HAVE BEEN CLAIMED AS DEDUCTION U/S. 37(1) OF THE ACT. FOR CLAIMING THES E EXPENSES AS REVENUE EXPENSES THE COUNSEL DREW OUR ATTENTION TO THE NOTES TO THE COMP UTATION OF INCOME EXHIBITED AT PAGE 8 OF THE PAPER-BOOK. IT IS THE SAY OF THE COUNSEL TH AT THE ASSESSEE HAS RELIED UPON THE ITA NO.281/MUM/2011 (A.Y.1998-99) 3 DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F INDIA CEMENTS LTD. 60 ITR 52 (SC), FEDERAL BANK LTD. 180 ITR 241 (KER), HINDUSTAN MACH INE TOOLS 40 TAXMANN 43 (KAR) AND GODAVARI SUGAR MILLS LTD. 57 TAXMAN 205 (BOM). THE COUNSEL SUBMITTED THAT ALL THE DETAILS WERE FURNISHED ALONG WITH THE RETURN AN D THE ASSESSEE HAS ALSO EXPLAINED THE BASIS FOR CLAIMING THE EXPENDITURE AS REVENUE E XPENDITURE, THEREFORE, NO PENALTY SHOULD BE LEVIED. PER CONTRA, THE DR SUPPORTED THE FINDINGS OF THE LOWER AUTHORITIES AND SUBMITTED THAT THE ASSESSEE HAS NOT EXPLAINED THE B ASIS FOR CLAIMING SUCH EXPENDITURE 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 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 OUR HUMBLE OPINION, THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS P. LTD. 322 ITR 158 SQUARELY APPLY TO THE PRESENT CASE. THE ASSESSING OFFICER IS DIRECTED TO DELETE THE PENALTY OF RS.1,29,000/-. 5. IN THE RESULT, THE APPEAL IS ALLOWED. 5.1 RESPECTFULLY FOLLOWING THE AFOREMENTIONED ORDE R OF THE TRIBUNAL IN ASSESSEES OWN CASE ON THE SAME ISSUE, WE DELETE THE PENALTY A ND APPEAL FILED BY THE ASSESSEE IS ALLOWED. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 14 TH AUG., 2014. 1 * ./0 2'3 14.08.2014 / * 9 SD/- SD/- (RAJENDRA) (I.P.BANSAL) ' ' ' ' / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; 2' DATED : 14TH AUG. 2014. VM. ITA NO.281/MUM/2011 (A.Y.1998-99) 4 1 * (,: ; :0, 1 * (,: ; :0, 1 * (,: ; :0, 1 * (,: ; :0,/ COPY OF THE ORDER FORWARDED TO : 1. $% / THE APPELLANT 2. ()$% / THE RESPONDENT. 3. <() / THE CIT, MUMBAI. 4. < / CIT(A)-13, MUMBAI 5. :?9 (,' , , / DR, ITAT, MUMBAI 6. 9@ A / GUARD FILE. 1' 1' 1' 1' / BY ORDER, ):, (, //TRUE COPY// B BB B/ // / C C C C (DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI