DCIT 1(3)(2), MUMBAI V. SUMITOMO CHEMICAL INDIA P.LTD, MUMBAI

ITA 294/MUM/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2230 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 12-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RADHIKA THAKKAR; ALPESH GANDHI
• Keywords: Depreciation; Wrong claim; Capital expenditure
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE HONBLE S/SHRI JOGINDER SINGH (JM), AND RAJESH KUMAR, ( AM ) ./ I.T.A. NO . 294 /MUM/20 1 5 ( / ASSESSMENT YEAR : 200 6 - 07 ) DY.COMMISSIONER OF INCOME TAX, 1(3)(2), 564, 5 TH FLOOR, AAYAKAR BHAV A N , M K ROAD, MUMBAI - 400020 / VS. M/S SUMITOMO CHEMICALS INDIA PVT.LTD., 7 TH FLOOR, MOTI MAHAL, 195 J TATA ROAD, CHURCHGA T E MUMBAI - 400020 ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN/GIR NO. : AAECS3750L / APPELLANT BY: SHRI KAILASH KANOJIYA / RESPONDENT BY MS RADHIKA THAKKAR AND SHRI ALPESH GANDHI / DATE OF HEA RING : 20 . 7 .201 6 / DATE OF PRONOUNCEMENT : 27. 7.2016 / O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE AND IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) - 7, MUMBAI D ATED 22.10.2014 PERTAINING TO A.Y. 20 0 6 - 07 . 2. THE ISSUE RAISED BY THE REVENUE IN THE SOLE GROUND OF APPEAL IS AGAINST T HE DELETION OF PENALTY BY LD. CIT(A) AS IMPOSED BY THE AO UNDER SECTION 271(1)(C ) OF THE INCOME TAX A CT, 1961. 3. THE FACTS IN BRI EF ARE THAT THE ASSESSE FILED ITS RETURN OF INCOME ON 29.11.2006 DECLARING TOTAL INCOME OF RS.1,68,87,722/ - . THE ASSESSMENT ITA NO. 294/MUM/2015 2 WAS COMPLETED UNDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 31.12.2009 DETERMINING TOTAL AT RS.4,53,090/ - AFTER MAKING VAR IOUS DISALLOWANCES INCLUDING THE DISALLOWANCE OF AN AMOUNT OF RS.14,27,727/ - UNDER SECTION 35 OF THE ACT , RS.23,74,987/ - UNDER SECTION 40A(IA), EXCESS CLAIM OF DEPRECIATION OF RS.1,13,57,742/ - , CAPITAL EXPENDITURE OF RS.2,10,000/ - AGGREGATING TO RS.1, 53,70,456/ - . THE AO, U LTIMATELY, IMPOSED PENALTY VIDE ORDER DATED 28.3.2013 U/S 271 (1)( C ) OF THE ACT OF RS.51,73,696/ - BEING 100% OF THE TAX SOUGHT TO BE EVADED BY HOLDING THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME AND CONCEAL ED THE PARTICULARS OF INCOME QUA THE SAID ITEMS OF EXPENSES. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE CARRIED THE MATTER BEFORE THE FIRST APPELLATE AUTHORITY, WHO DELETED THE PENALTY IN RESPECT OF THREE ITEMS VIZ EXCESS CLAIM OF DEPRECIATION OF R S.1,13,57,742/ - , DISALLOWANCE U/S 40(A)(IA) AMOUNTING TO RS.23,74,987/ - AND DISALLOWANCE U/S 35D OF RS.14,27,727/ - ON THE BASIS OF DECISION OF MUMBAI BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE IN QUANTUM APPEAL IN ITA NO.3078/MUM/2012 (AY - 2006 - 07) DA TED 28.3.2014 , WHEREBY THE TRIBUNAL THE SET ASIDE THE QUANTUM ADDITION IN RESPECT OF DISALLOWANCE U/S 35D RS. .14,27,727/ - AND DISALLOWANCE U/S 40(A)(IA) RS.23,74,987/ - TO THE FILE OF AO AND THE ADDITION AS MADE IN RESPECT OF CLAIM OF DEPRECATION OF RS .1,13,57,742/ - WAS DELETED. AS REGARD FOURTH ADDITION ON WHICH THE PENALTY WAS IMPOSED I.E. EXPENSES INCURRED ON INCREASE IN SHARE CAPITAL OF RS.2,10,000/ - , THE LD. ITA NO. 294/MUM/2015 3 CIT(A) DELETED THE PENALTY BY PLACING RELIANCE ON THE DECISION OF CIT V/S RELIANCE PETRO PRODUCT PVT LTD REPORTED IN 322 ITR 158 (SC) BY HOLDING THAT THE WRONG CLAIM MADE BY THE ASSESSE WHICH WAS FULLY DISCLOSED IN THE RETURN OF INCOME AND COULD NOT BE CONSTRUED AS FURNISHING AS INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME AND TH EREFORE THE PENALTY COULD NOT BE IMPOSED , ON THE SAID DISALLOWANCE. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD INCLUDING THE ORDERS OF AUTHORITIES BELOW AND RELIED UPON BY THE PARTIES AND THE ORDER OF TRIBUNAL DATED 28.3.201 4 (SUPRA) IN THE QUANTUM APPEAL. WE FIND THAT THE PENALTY LEVIED U/S 271 (1)( C) OF THE ACT IMPOSED ON FOUR ITEMS VIZ . (1) EXCESS CLAIM OF DEPRECIATION OF RS.1,13,57,742/ - (2) DISALLOWANCE U/S 40(A)(IA) AMOUNTING TO RS.23,74,987/ - (3) DISALLOWANCE U/S 35D OF RS.14,27,727/ - AND EXPENSES FOR INCREASE IN AUTHORIZED SHARE CAPITAL OF RS.2,10,000/ - . ON PERUSAL OF THE AFORESAID DECISION IN THE QUANTUM ADDITION THAT THE DISALLOWANCE U/S 35D AND DISALLOWANCE U/S 40(A)(IA) WERE SET ASIDE TO THE FILE OF THE AO AND DISALLOWANCE FOR EXCESS CLAIM OF DEPRECIATION WAS DELETED. THUS, THE PENALTY WAS RIGHTLY DELETED BY HE LD. CIT(A) IN RESPECT OF THESE ITEMS BY FOLLOWING THE DECISION OF THE TRIBUNAL DATED 28.3.2014. AS REGARDS THE FOUR TH ITEM ON WHICH THE PENALTY WAS IMPOSED I.E EXPENSES INCURRED FOR SHARE CAPITAL RS.2,10,000/ - , T HE LD. CIT(A) DELETED THE PENALTY BY HOLDING THAT THE PENALTY WAS NOT IMPOSABLE ON THE WRONG CLAIM MADE BY THE ASSESSEE THE PARTICULARS ITA NO. 294/MUM/2015 4 WHEREOF WERE FULLY DISCLOSED IN THE RETURN OF INCOME AND HE SAME DID NOT AMOUNT TO FURNISHING INACCURATE OF PARTICULARS OF INCOME OR CONCEALMENT OF INCOME AND ALSO HELD THAT THE PENALTY WAS NOT IMPOSABLE ON THE DEBATABLE ISSUE . FROM THE FOREGOING FACTS, AND THE DECISION OF THE TRIBUNAL , WE FIND THAT THE ORDER OF LD. CIT(A) IS CORRECT AND DOES NOT REQUIRE ANY INTERFERENCE FROM OUR SIDE. WE, THEREFORE, UPHOLD THE ORDER OF LD. CIT(A) AND DISMISS THE APPEAL OF THE REVENUE. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 27TH JULY, 2016 . 27TH JULY, 2016 SD SD (JOGINDER S INGH ) ( RAJESH KUMAR ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 27TH JULY, 2016 . . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. 6. , , / DR, ITAT, MUMBAI CONCERNED / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI