NAMDEV SILICATES & CHEMICAL P. LTD, RAIGAD V. ITO WD 3, NAVI MUMBAI

ITA 297/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7936 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2004-2005
• Appeal Filed On: 19-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR LD
• Assessee Lawyers: PRADEEP JAJODIALD
• Keywords: Depreciation; Cost of acquisition; Revenue expenditure
• Section: 143(3)

Judgement Text

ITA.NO.297/MUM/2016 NAMDEV SILICATES & CHEMICALS PRIVATE LIMITED ASSESSMENT YEAR-2004-05 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI . . , , BEFORE SHRI D.T. GARASIA, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.297/MUM/2016 ( / ASSESSMENT YEAR: 2004-05) TEAM ELEVEN METCHEM TECHNOLOGY PVT LTD. (EARLIER KNOWN AS- NAMDEV SILICATES & CHEMICALS PVT. LTD.) W-73,MIDC AREA TALOJA,DISTRICT-RAIGAD RAIGAD-400 072 / VS. INCOME TAX OFFICER WARD 3 3 RD FLOOR, TRIFER TOWER SECTOR-17, PANVEL CIRCLE PANVEL NAVI MUMBAI- 410 221 !' ./ ./PAN/GIR NO. AAACN-2765-Q ( '$ /APPELLANT ) : ( %&'$ / RESPONDENT ) A SSESSEE BY : PRADEEP JAJODIA,LD.AR RE VENUE BY : SUMAN KUMAR, LD. SR. DR / DATE OF HEARING : 02/11/2017 / DATE OF PRONOUNCEMENT : 13/12 /2017 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2004-05 ASSAILS THE ORDER OF THE LD. COMMISSIONER O F INCOME-TAX (APPEALS)-2 [CIT(A)], THANE, APPEAL NO.018/11-12 DATED 29/10/2015 QUA CONFIRMATION OF PENALTY U/S 271(1)(C) FOR RS.2,60,1 05/-. THE ORIGINAL ITA.NO.297/MUM/2016 NAMDEV SILICATES & CHEMICALS PRIVATE LIMITED ASSESSMENT YEAR-2004-05 2 ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. INCOME TAX OFFICER- WARD 3, PANVEL [AO] U/S 143(3) ON 27/10/2006 WHEREAS PENALTY U/S 271(1)(C) WAS LEVIED BY LD. INCOME TAX OFFICER, WARD-3, PANVEL ON 23/06/2011. 2.1 FACTS LEADING TO THE SAME ARE THAT THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE ENGAGED IN MANUFACTURING OF CHEMICAL PRODUCTS WAS ORIGINALLY ASSESSED U/S 143(3) ON 27/10/2006 AFTER CERTAIN ADDITIONS /ADJUSTMENTS WHICH WERE CONTESTED UP-TO THE LEVEL O F THIS TRIBUNAL. THE TRIBUNAL VIDE ORDER DATED 23/09/2009 RESTORED THE M ATTER BACK TO THE FILE OF LD. AO WITH CERTAIN DIRECTIONS. CONSEQUENTLY, LD . AO PASSED ORDER U/S 143(3) READ WITH SECTION 254 ON 30/12/2010 WHERE THE INCOME WAS DETERMINED AT RS.10.60 LACS AS AGAINST RETURNED LOS S OF RS.2,08,281/- FILED BY THE ASSESSEE ON 01/11/2004. 2.2 DURING ASSESSMENT PROCEEDINGS, IT WAS NOTED THA T THE ASSESSEE EARNED PROFIT ON SALE OF CERTAIN PROPERTY CONSISTIN G OF LAND & BUILDING ALONG WITH ELECTRICAL INSTALLATIONS FOR RS.15.62 LA CS. THE PROFIT FROM LAND, IN THE OPINION OF LD. AO WAS ASSESSABLE AS LONG TERM CAPITAL GAINS WHEREAS PROFIT ON BUILDINGS ETC. WAS ASSESSABLE AS SHORT TERMS CAPITAL GAINS SINCE DEPRECIATION WAS CLAIMED BY THE ASSESSEE AGA INST THE SAME. HENCE, THE COST OF ACQUISITION AS WELL AS SALE CONS IDERATION WAS REQUIRED TO BE BIFURCATED TOWARDS LAND AND BUILDING TO ARRIV E AT RESULTANT GAIN. IT WAS NOTED THAT THE LAND WAS ACQUIRED AT A COST OF R S.4,52,830/- AND THE ASSESSEE CLAIMED ANOTHER AMOUNT OF RS.3.47 LACS TOW ARDS THE SAME, BEING INTEREST PAID TO THE BANK ON LOAN TAKEN TO PU RCHASE THE LAND. HOWEVER, UPON PERUSAL OF FACTUAL MATRIX, IT WAS FOU ND THAT THE ASSESSEE PAID COMPOSITE INTEREST OF 13.72 LACS IN FINANCIAL YEAR 1998-99 AND ITA.NO.297/MUM/2016 NAMDEV SILICATES & CHEMICALS PRIVATE LIMITED ASSESSMENT YEAR-2004-05 3 CLAIMED THE SAME AS REVENUE EXPENDITURE IN THAT YEA R AND INTEREST LIABILITY WAS NOT CAPITALIZED WITH THE COST OF LAND AFTER SETTLEMENT WITH THE BANK. THE ASSESSEE ALSO CLAIMED CERTAIN OTHER EXPEN SES LIKE LAND FILLING EXPENSES, COST OF BOUNDARY WALL ETC. AS PART OF COST OF LAND. HOWEVER, THE SAME COULD NOT BE SUBSTANTIATED. UPON PERUSAL O F FINANCIAL STATEMENTS, LD. AO NOTED THAT INTEREST AND BOUNDARY WALL EXPENSES WERE NOT CAPITALIZED WITH LAND IN THE BOOKS OF ACCOUNTS WHEREAS LAND FILLING EXPENSES WERE CAPITALIZED WITH BUILDING AND THEREFORE, THE SAME DO NOT FORM COST OF LAND. THE LD. AO, THUS, REWORKED THE C APITAL GAINS ON LAND AT RS.14.44 LACS. 3. CONSEQUENTLY, PENALTY PROCEEDINGS U/S 271(1)(C) WERE INITIATED IN THE QUANTUM ORDER DATED 30/12/2010 AND THE ASSESSEE HAS BEEN SADDLED WITH IMPUGNED PENALTY OF RS.2,60,105/- VIDE ORDER DATED 23/06/2011 FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE LD. AO NOTED THE ASSESSEE CLAIMED CAPITALIZATION OF CERTAI N EXPENSES WITH LAND HOWEVER, THE PERUSAL OF FINANCIAL STATEMENTS REVEAL ED THAT NO SUCH CAPITALIZATION WAS DONE BY THE ASSESSEE IN THE BOOK S OF ACCOUNT AND THEY DO NOT FORM PART OF COST OF LAND. 4. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITHO UT ANY SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 29/10/2 015 WHERE THE LD. CIT(A) AFTER CONSIDERING ASSESSEES SUBMISSIONS, UP HELD THE STAND OF LD. AO . AGGRIEVED, THE ASSESSEE IS IN FURTHER APPE AL BEFORE US. 5. THE LD. COUNSEL FOR ASSESSEE [AR] DREW ATTENTION TO THE FACT THAT THE RECORDS OF THE ASSESSEE GOT DESTROYED DUE TO FI RE AT THE PREMISES AND THEREFORE, THE ASSESSEE COULD NOT SUBSTANTIATE HIS CLAIM. THE LD. AR FURTHER CONTENDED THAT THERE WAS NO FURNISHING OF I NACCURATE PARTICULARS ITA.NO.297/MUM/2016 NAMDEV SILICATES & CHEMICALS PRIVATE LIMITED ASSESSMENT YEAR-2004-05 4 OF INCOME SINCE COMPLETE DETAILS WERE AVAILABLE ON RECORD AND ONLY THE COMPUTATIONS HAVE BEEN CHANGED AND HENCE THE PENALT Y WAS NOT JUSTIFIED. PER CONTRA , LD. DEPARTMENTAL REPRESENTATIVE [DR] PLACED RELIANCE ON THE STAND OF LOWER AUTHORITIES. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED RELEVANT MATERIAL ON RECORD. UPON PERUSAL OF THE SAME, WE FIND THAT T HE ASSESSEE OFFERED PROFIT ON SALE OF PROPERTY IN A COMPOSITE MANNER, W HICH, IN THE OPINION OF LD. AO WAS REQUIRED TO BE BIFURCATED BETWEEN LAND & BUILDING SINCE THE RESPECTIVE COMPUTATIONS OF LONG TERM / SHORT TERM C APITAL GAIN WERE DIFFERENT. THE LD. AO REWORKED THE SAME ON THE BASI S OF MATERIAL AVAILABLE ON RECORD. HOWEVER, THE FACTS DO NOT JUST IFY THE IMPOSITION OF PENALTY SINCE THERE WAS NO FURNISHING OF INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) SO AS TO AT TRACT THE PENALTY SINCE THE ASSESSEE MADE A CLAIM, WHICH IS NOT ACCEPTED BY THE REVENUE AND IT IS NOT THE CASE THAT THE ASSESSEE MADE A WRONG CLAI M OR CLAIMED BOGUS EXPENDITURE. HENCE, FOLLOWING THE RATIO OF HONBLE APEX COURT RENDERED IN CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. [322 ITR 158] , WE DELETE THE IMPUGNED PENALTY AND ALLOW ASSESSEES APPEAL. 7. RESULTANTLY, THE ASSESSEES APPEAL STANDS ALLOWE D IN TERMS OF OUR ABOVE ORDER. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH DECEMBER, 2017. SD/- SD/- (D.T. GARASIA) (MANOJ KUMAR AGGARW AL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 13.12.2017 SR.PS:- THIRUMALESH ITA.NO.297/MUM/2016 NAMDEV SILICATES & CHEMICALS PRIVATE LIMITED ASSESSMENT YEAR-2004-05 5 ! / COPY OF THE ORDER FORWARDED TO : 1. '$ / THE APPELLANT 2. %&'$ / THE RESPONDENT 3. , ( ) / THE CIT(A) 4. , / CIT CONCERNED 5. %(. , . , / DR, ITAT, MUMBAI 6. / / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI