DCIT, New Delhi V. M/s. Ansal Housing & Construction Ltd., New Delhi

ITA 2843/DEL/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3131 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 08-02-2017
• Assessment Year: 2002-2003
• Appeal Filed On: 08-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K JAIN
• Keywords: Revised return; Revenue expenditure; Capital expenditure
• Section: 143(3); 80IB; 263

Judgement Text

I.T.A. NO. 2843/DEL/2013 ASSESSMENT YEAR 2002-03 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES A BENCH DELHI BEFORE SHRI S.V. MEHROTRA, VICE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 2843/DEL/2013 ASSTT. YEAR: 2002-03 DY.COMMISSIONER OF INCOME TAX, VS M/S ANSAL HOSIN G & CONSTRUCTION CENTRAL CIRCLE-20, NEW DELHI. LTD., UGF-15, INDRAPRAKASH BUILDI NG, 21, BARAKHAMBA ROAD, NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI S.K. JAIN, DR RESPONDENT BY: SHRI AJAY VOHRA, SR. DR SHRI GAURAV JAIN , ADVOCATE DATE OF HEARING: 08.02.2017 DATE OF ORDER: 11.05.2017 ORDER PER SUDHANSHU SRIVASTAVA, J.M. THIS IS AN APPEAL PREFERRED BY THE DEPARTMENT AGAIN ST THE ORDER PASSED BY THE LD. CIT(A)-XXXI , NEW DELHI VID E ORDER DATED 28.2.2013 DELETING THE PENALTY IMPOSED U/S 271(1)(C ) OF THE INCOME TAX ACT, 1961 FOR ASSESSMENT YEAR 2002-03. 2. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE COMPA NY HAD FILED ITS RETURN DECLARING A TOTAL INCOME OF RS.91,76,558 /-. SUBSEQUENTLY, A REVISED RETURN WAS FILED DECLARING TOTAL INCOME OF I.T.A. NO. 2843/DEL/2013 ASSESSMENT YEAR 2002-03 2 RS. 96,24,702/-. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT) AT A TOTAL INC OME OF RS. 4,28,29,480/- AGAINST WHICH THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO PARTLY ALLOWED THE APPEAL OF THE COMPANY. 2.1 AGGRIEVED BY THE ORDER OF THE LD. CIT (A), THE ASSESSEE AS WELL AS THE DEPARTMENT, BOTH PREFERRED AN APPEAL BE FORE THE ITAT, NEW DELHI BENCH WHEREIN THE ITAT DISMISSED THE APPE AL OF THE ASSESSEE ON THE ISSUE OF TREATMENT OF EXPENDITURE O F CONSULTATION/DEVELOPMENT FEE AS REVENUE EXPENDITURE AND PARTLY ALLOWED THE DEPARTMENTS APPEAL ON ALLOWANCE OF DED UCTION U/S 80IB(10) OF THE ACT. THE ITAT DIRECTED THAT THE D EDUCTION U/S 80IB(10) IN RESPECT OF AVANTIKA & AAKRITI PROJECTS AT GHAZIABAD BE ALLOWED AS PER THE DIRECTIONS GIVEN BY THE ITAT A BENCH VIDE ORDER DATED 12.06.2009 WHEREAS CONSULTATION/DEVELOP MENT FEE WAS HELD AS CAPITAL EXPENDITURE INCURRED FOR STARTI NG OF NEW LINE OF BUSINESS. FURTHER, THE ITAT VIDE ORDER DATED 12 .06.2009 PARTLY ALLOWED THE APPEAL OF THE ASSESSEE FILED AGA INST ORDER U/S 263 OF THE ACT. THE APPEAL EFFECT OF THE ORDER OF THE ITAT WAS GIVEN AND DEDUCTION U/S 80IB OF THE ACT WAS SUBSTAN TIALLY ALLOWED AMOUNTING TO RS. 93,27,958/- AGAINST DEDUCT ION OF I.T.A. NO. 2843/DEL/2013 ASSESSMENT YEAR 2002-03 3 CLAIMED AMOUNT OF RS. 98,40,391/-. THUS, AN AMOUNT OF RS. 7,44,403/- WAS HELD AS INADMISSIBLE FOR THE PURPOSE OF DEDUCTION U/S 80IB(10) OF THE ACT. FURTHER, IN RESPECT OF CONSULTATION/DEVELOPMENT FEE, AN AMOUNT OF RS. 931, 114/- WAS ALLOWED AS DEDUCTION BEING 1/5 TH OF THE TOTAL EXPENDITURE OF RS.46,55,570/- HELD TO BE CAPITAL EXPENDITURE. TH E ASSESSING OFFICER, VIDE ORDER DATED 31ST MARCH, 2012 IMPOSED PENALTY U/S 271(1)( C) OF THE ACT AMOUNTING TO RS. 14,35,000/- ON THE INADMISSIBLE AMOUNT OF DEDUCTION CLAIMED U/S 80IB(1 0) AND CONSULTATION/DEVELOPMENT FEE. 2.2 THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD . CIT (A) AGAINST THE IMPOSITION OF PENALTY WHO WAS PLEASED T O DELETE THE ENTIRE PENALTY. NOW, THE DEPARTMENT HAS APPROACHED THE ITAT AND HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE ORDER OF THE LD. CIT (A) IS NOT CORRECT IN LAW AND FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. CIT(A) HAS ERRED IN DELETIN G THE PENALTY OF RS. 14,35,000/- IMPOSED BY THE ASSESSING OFFICER U/S 271(1)( C) OF THE INCOME TAX ACT. 3. LD. DR SUBMITTED THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME AND HAD CLAIMED EX CESS I.T.A. NO. 2843/DEL/2013 ASSESSMENT YEAR 2002-03 4 DEDUCTION U/S 80IB (10) OF THE ACT IN RESPECT OF SI X UNITS OF AVANTIKA & AAKRITI PROJECTS AT GHAZIABAD. IT WAS S UBMITTED THAT THE CLAIM OF DEDUCTION U/S 80IB WAS NOT PURELY ON L EGAL ISSUE BUT INVOLVED THE ASCERTAINMENT OF FACTS AS TO THE ELIGI BILITY OF THE ASSESSEE TO CLAIM DEDUCTION. LD. DR SUBMITTED THAT THE ASSESSEE HAD CLAIMED EXCESS DEDUCTION U/S 80-IB OF THE ACT, 1961 FOR WHICH THE ASSESSEE IS LIABLE TO PENALTY U/S 271(1)( C) OF THE ACT WHICH HAD WRONGLY BEEN DELETED BY THE LD. CIT(A). 3.1 IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HA D CLAIMED CONSULTATION/DEVELOPMENT FEE AMOUNTING TO R S. 46,55,570/- AS REVENUE EXPENDITURE WHICH WAS HELD B Y THE ASSESSING OFFICER TO BE CAPITAL EXPENDITURE WHICH W AS UPHELD BY THE LD. CIT(A) AND ALSO BY THE ITAT ON FURTHER APPE AL. THUS, THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS IN TR EATING THE CONSULTATION/DEVELOPMENT FEE AMOUNTING TO RS.46,55, 570/- AS REVENUE EXPENDITURE WHEREAS THE SAME WAS CAPITAL EX PENDITURE AND ON THIS ISSUE ALSO, THE PENALTY U/S 271(1)( C) WAS RIGHTLY IMPOSED BUT WAS DELETED BY THE LD. CIT(A) WITHOUT C ORRECT APPRECIATION OF FACTS. IT WAS SUBMITTED THAT THE O RDER OF THE LD. CIT (A) BE SET ASIDE AND THAT OF THE ASSESSING OFFI CER RESTORED. I.T.A. NO. 2843/DEL/2013 ASSESSMENT YEAR 2002-03 5 4. LD. AR, ON THE OTHER HAND, PLACED EXTENSIVE RELI ANCE ON THE ORDER OF THE LD. CIT(A) AND SUBMITTED THAT THE ASSE SSING OFFICER HAD NOT RECORDED HIS SATISFACTION BEFORE THE INITIA TION OF PENALTY PROCEEDINGS AND THEREFORE, THE PENALTY ORDER WAS BA D IN LAW. IT WAS FURTHER SUBMITTED THAT THE PENALTY U/S 271(1)( C) WAS IMPOSABLE ONLY IF THE ASSESSEE HAS FURNISHED INACCU RATE PARTICULARS OF INCOME OR CONCEALED ANY PARTICULARS OF SUCH INCOME WHEREAS IN THE ASSESSEES CASE, NEITHER ANY INACCURATE PARTICULARS HAVE BEEN FURNISHED NOR ANY INCOME HAS BEEN CONCEALED. IT WAS FURTHER SUBMITTED THAT THE CLAIM OF EXPENSES IN RESPECT OF CONSULTATION/DEVELOPMENT FEE AS WELL AS DEDUCTION U/S 80IB (10) WERE MADE IN A TRANSPARENT MANNER WITHOUT CONCEALING ANY MATERIAL FACT AND BY GIVING ALL NECESSARY DISCL OSURES AND DETAILS IN THE DOCUMENTS ACCOMPANYING THE ITR. IT WAS FURTHER SUBMITTED THAT IT IS NOT THE DEPARTMENTS CASE THAT ANY MATERIAL FACT HAD BEEN WITHHELD OR CONCEALED BY THE ASSESSEE . IT WAS FURTHER SUBMITTED THAT THE QUESTION AS TO WHETHER T HE EXPENDITURE INCURRED ON CONSULTATION/DEVELOPMENT FE E WAS REVENUE OR CAPITAL IN NATURE WAS A DEBATABLE ISSUE AND PENALTY U/S 271(1)( C) CANNOT BE IMPOSED ON DEBATABLE ISSUE S. IT WAS FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAD MA DE AN I.T.A. NO. 2843/DEL/2013 ASSESSMENT YEAR 2002-03 6 ADDITION TO INCOME ONLY ON THE BASIS OF MATERIAL AN D INFORMATION SUBMITTED BY THE ASSESSEE AND SINCE THE CLAIM RAISE D BY THE ASSESSEE WAS BONA FIDE , MERE REJECTION OF THE SAME WOULD NOT EMPOWER THE AUTHORITIES TO IMPOSE A PENALTY U/S 271 (1)( C). IT WAS SUBMITTED THAT IN THE LIGHT OF FACTS, THE ORDER DELETING THE PENALTY BE UPHELD. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE PER USED THE RELEVANT MATERIAL PLACED ON RECORD. A PERUSAL OF T HE IMPUGNED ORDER SHOWS THAT THE LD. CIT (A) HAS DISCUSSED THE ISSUE IN PARA 4.1 TO 4.3 OF THE IMPUGNED ORDER WHICH ARE BEING RE PRODUCED HEREUNDER FOR A READY REFERENCE:- 4.1 I HAVE CONSIDERED THE SUBMISSIONS OF THE AR, THE PENALTY ORDER AND THE ASSESSMENT ORDER DATED 30.03. 2005. IT IS SEEN THAT THE ASSESSING OFFICER INITIATED PEN ALTY PROCEEDINGS U/S 271 (1)(C) IN THE ASSESSMENT ORDER PASSED U/S 143(3) ON 30-03-2005. IN THE SAID ORDER, HOWEVE R, THE AO HAS FAILED TO RECORD HIS SATISFACTION FOR INITIA TING THE PROCEEDINGS U/S 271 (1 )(C). HE HAS ONLY WRITTEN AT THE END OF THE COMPUTATION INCOME THAT PENALTY PROCEEDINGS U/S 27L(1)(C) IS INITIATED SEPARATELY'. HONBLE HIGH CO URT OF DELHI HAS HELD IN MANY CASES THAT THE PENALTY PROCEEDINGS ARE VOID IF THE AO FAILS TO RECORD HIS SATISFACTION ABO UT THE CONCEALMENT OR FURNISHING INACCURATE PARTICULARS OF INCOME I.T.A. NO. 2843/DEL/2013 ASSESSMENT YEAR 2002-03 7 IN THE ASSESSMENT ORDER ITSELF. IN CIT VS. EDWARDS LIFE SCIENCES INDIA PVT. LTD. (2008) 166 TAXMANN 489 (DE L), THE HONBLE HIGH COURT HAS HELD AS UNDER:- A.O. IN THE ASSESSMENT ORDER HAVING SIMPLY MENTIONED PENALTY PROCEEDINGS U/S 271 (1)(C) HAVE BEEN INITIATED. IT CANNOT BE SAID THAT SATISFACTIO N OF AO ABOUT THE CONCEALMENT OR FURNISHING INACCURATE PARTICULARS OF INCOME WAS DISCERNABLE FROM THE ASSESSMENT ORDER, HENCE PENALTY LEVIED U/S 27L(L)(C ) WAS INVALID. 4.2 ASSESSING AUTHORITY IS REQUIRED TO FORM HIS OP INION AND RECORD HIS SATISFACTION BEFORE INITIATING PENALTY P ROCEEDINGS U/S 271 (1)(C). IN THE ORDER THERE IS NO WHISPER OF THE AO HAVING COME TO THE CONCLUSION THAT .THE DISALLOWANC ES MADE CALLED FOR INITIATION OF THE PENALTY PROCEEDINGS. T HEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE JURISDIC TIONAL HIGH COURT (SUPRA), I HEREBY DELETE THE PENALTY LEVIED. 4.3 IN THE RESULT THE APPEAL IS ALLOWED. 5.1 THIS FINDING BY THE LD. CIT(A) COULD NOT BE CON TROVERTED BY THE LD. DR BEFORE US. FURTHER, THE ASSESSEES CASE IS SQUARELY COVERED BY THE JUDGMENT OF THE HONBLE KARNATAKA HI GH COURT IN THE CASE OF CIT VS MANJUNATHA COTTON & GINNING FACT ORY REPORTED 359 ITR 565 (KAR) AND ALSO ANOTHER JUDGMEN T OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS SSAS EMERALD MEADOWS REPORTED IN 73 TAXMANN.COM 241 (KAR ). I.T.A. NO. 2843/DEL/2013 ASSESSMENT YEAR 2002-03 8 THEREFORE, WE FIND NO REASON TO INTERFERE WITH THE FINDINGS OF THE LD. CIT (A) ON THIS ISSUE AND WHILE UPHOLDING HIS A DJUDICATION, WE DISMISS THE APPEAL OF THE DEPARTMENT. 6. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMEN T STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON11TH MAY, 2017 . SD/- SD/- (S.V. MEHROTRA) (SUDHANSHU SRIVASTAVA) VICE PRESIDENT JUDICIAL MEMBER DT. 11 TH MAY 2017 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSTT. REGISTRAR