The DCIT(OSD),Range-1, Ahmedabad V. Atul Limited, Ahmedabad

ITA 2970/AHD/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85729 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 19-02-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 01-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIMALENDU VERMA
• Keywords: Depreciation; Difference of opinion

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD .., , BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ I.T.A. NO.2970/AHD/2010 ( / ASSESSMENT YEAR : 2003-04) DCIT (OSD) RANGE-1 AHMEDABAD / VS. ATUL LTD. ASHOKA CHAMBERS 3 RD FLOOR, RASALA MARG ELLISBRIDGE AHMEDABAD-380 006 ./ ./ PAN/GIR NO. : AABCA 2390 M ( # / APPELLANT ) .. ( $% # / RESPONDENT ) #& / APPELLANT BY : SHRI VIMALENDU VERMA,CIT-DR $% #'& / RESPONDENT BY : SHRI S.N. SOPARKAR, AR ()'* / DATE OF HEARING 19/02/2015 +,-.'* / DATE OF PRONOUNCEMENT 26/02/2015 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-VI, AHMEDABA D (CIT(A) IN SHORT) DATED 26/08/2010 PERTAINING TO ASSESSMENT Y EAR (AY) 2003-04. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APP EAL:- ITA NO.2970/AHD /2010 THE DCIT (OSD) VS. ATUL LTD. ASST.YEAR 2003-04 - 2 - 1. THE LD.CIT(A) ERRED IN LAW AND ON FACTS IN DELETING THE PENALTY U/S.271(1)(C) ON ACCOUNT OF EXCESS CLAIM OF DEPRECI ATION OF 60,264,101/-. 2. THE LD.CIT(A) ERRED IN LAW AND ON FACTS IN DELETING THE PENALTY U/S.271(1)(C) OF THE ACT ON CONCEALED INCOME ON ACC OUNT OF DEDUCTION U/S.80IA OF 5,17,88,200/-. 3. THE LD.CIT(A) ERRED IN LAW AND ON FACTS IN DELETING THE PENALTY U/S.271(1)(C) OF THE ACT ON ACCOUNT OF EXCESS CLAIM OF DEDUCTION U/S.80IB OF 1,29,46,027/-. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFF ICER SINCE THE ASSESSEE HAS FAILED TO DISCLOSE HIS TRUE INCOME. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE AO BE RESTORED. THE APPE LLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. A COPY OF CIT(A)S ORDER WAS RECEIVED B Y ME ON 08.09.2010 . 2. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE AS SESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143( 3) OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 07/03/2006, THEREBY THE ASSESSING OFFICER (AO IN SHORT) INITIAT ED PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT. SUBS EQUENTLY, THE PENALTY WAS IMPOSED AMOUNTING TO RS.5,25,74,695/- IN RESPEC T OF DISALLOWANCE OF DEDUCTION OF EXCESS OF DEPRECIATION U/S.80IA AND DI SALLOWANCE OF DEDUCTION MADE U/S.80IB OF THE ACT. AGAINST THIS, THE ASSESSEE FILED AN APPEAL BEFORE THE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS OF ITA NO.2970/AHD /2010 THE DCIT (OSD) VS. ATUL LTD. ASST.YEAR 2003-04 - 3 - THE ASSESSEE ALLOWED THE APPEAL. NOW, THE REVENUE IS FURTHER IN APPEAL BEFORE US. 3. THE REVENUE HAS RAISED MAINLY THREE GROUNDS OF A PPEAL. FIRST GROUND RELATES TO THE DELETION OF PENALTY ON ADDIT ION MADE ON ACCOUNT OF CLAIM OF DEPRECIATION, SECOND GROUND RELATES TO DEL ETION OF PENALTY ON DEDUCTION CLAIMED U/S.80IA OF THE ACT AND THIRD GRO UND RELATES TO DELETION OF PENALTY MADE ON ACCOUNT OF DISALLOWANCE OF DEDUCTION U/S.80IB OF THE ACT. 4. AT THE OUTSET, LD.SR.COUNSEL FOR THE ASSESSEE SU BMITTED THAT SIMILAR DISALLOWANCES WERE MADE IN THE AY 2002-03 AND PENAL TY WAS ALSO IMPOSED. HE SUBMITTED THAT THE HONBLE TRIBUNAL (I TAT AHMEDABAD D BENCH) IN ITA NOS.846/AHD/2006 & 253/AHD/2008 FOR AY 2002- 03, ORDER DATED 24/07/2009, HAS DELETED THE PENALT Y. 4.1. THE LD.CIT-DR COULD NOT CONTROVERT THE SUBMISS ION OF THE LD.COUNSEL FOR THE ASSESSEE. HOWEVER, HE SUPPORTED THE PENALTY ORDER. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT IN THE AY 2002-03, THE HONBLE ITAT IN RESPECT OF THE PENALTY LEVIED ON EXCESS DEPRECIATION, DELETED THE PENALTY IN ITA ITA NO.2970/AHD /2010 THE DCIT (OSD) VS. ATUL LTD. ASST.YEAR 2003-04 - 4 - NO.846/AHD/2007 & ITA NO.253/AHD/2008 IN PARA-38 BY OBSERVING AS UNDER:- 38. WE FIND FROM THE ABOVE THAT THE CIT(A) HAS DE LETED THE PENALTY ON THE PREMISE THAT THIS DISALLOWANCE OF DEPRECIATION IS BASICALLY FOR THE REASON THAT AFTER ALLOWING DEPRECIATION IN ASSESSME NT YEAR 2001-02, THE WDV HAS REDUCED AND ACCORDINGLY THE CLAIM OF THE AS SESSEE FOR THIS YEAR WAS REDUCED. THE FINDING OF THE CIT(A) ARE TH AT THE EARLIER YEARS CLAIM OF THE ASSESSEE WAS THAT NO DEPRECIATION WAS ALLOWED ACTUALLY ON THE BASIS OF A LEGAL DECISION HENCE THE ISSUE IN TH AT YEAR WAS DEBATABLE. IN VIEW OF THIS FINDING OF THE CIT(A), WE FIND NO I NFIRMITY IN THE SAME AND ACCORDINGLY WE UPHOLD THE SAME. THIS ISSUE OF THE REVENUES APPEAL IS DISMISSED. 5.1. THE SIMILAR ISSUE WAS ALSO BEFORE THE TRIBUNAL (ITAT D BENCH AHMEDABAD) IN ASSESSEES OWN CASE IN ITA NO.3188/A HD/2010 FOR AY 2004-05 & CO NO.07/AHD/2011, ORDER DATED 19/01/2012 , AND THE COORDINATE BENCH FOLLOWING THE EARLIER DECISION IN ITA NO.951/AHD/2008 FOR AY 2002-03 DELETED THE PENALTY BY OBSERVING AS UNDER:- (EXTRACTED FROM ITA NO.3455/AHD/2010 & CO NO.07/AHD /2011) 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND H AVE PERUSED THE ORDER OF THE TRIBUNAL FOR THE EARLIER ASSESSMENT YE AR 2002-03 IN ASSESSEES OWN CASE. WE FIND THAT IN IDENTICAL FAC TS, THE PENALTY IMPOSED U/S.271(1)(C) OF THE ACT ON EXCESS DEPRECIA TION WAS CANCELLED BY THE LD.CIT(A) IN THE CASE OF THE ASSESSEE IN EAR LIER ASSESSMENT YEAR 2002-03. AGAINST THIS ORDER, THE REVENUE HAS PREFE RRED AN APPEAL BEFORE ITAT AND THE TRIBUNAL IN ITA NO.951/AHD/2008 FOR THE ASSESSMENT YEAR 2002-03 HAS CONFIRMED THE ORDER OF THE LD.CIT(A) CANCELLING THE PENALTY IMPOSED U/S.271(1)(C) OF THE ACT. WE, BEING IN AGREEMENT WITH THE DECISION OF THE TRIBUNAL ON THIS ISSUE, CONFIRM THE ORDER OF LD.CIT(A) BY FOLLOWING THE ORDER OF THE TR IBUNAL FOR THE EARLIER ASSESSMENT YEAR 2002-03 CANCELLING THE PENALTY IMPO SED U/S.271(1)(C) ITA NO.2970/AHD /2010 THE DCIT (OSD) VS. ATUL LTD. ASST.YEAR 2003-04 - 5 - OF THE ACT. ACCORDINGLY, THE GROUND NO.1 OF THE RE VENUES APPEAL IS DISMISSED. 5.2. IN RESPECT OF PENALTY LEVIED WITH REGARD TO D ISALLOWANCE OF CLAIMED DEPRECIATION OF DEDUCTION U/S.80IA OF THE A CT, THE COORDINATE BENCH IN ITA NO.951/AHD/2008 FOR AY 2002-03 (ITAT B ENCH D AHMEDABAD), THE TRIBUNAL DISMISSED THE APPEAL OF TH E REVENUE, BY OBSERVING AS UNDER:- 33. IN VIEW OF THE ABOVE FACTS, WE FIND THAT THE ASSESSEE HAS MADE A CLAIM OF DEPRECIATION U/S.80IA OF THE ACT ON THE BA SIS THAT IT HAD SET UP A NEW INDUSTRIAL UNDERTAKING AND ACCORDINGLY IS ELIGI BLE FOR DEDUCTION. THE ASSESSING OFFICER DISALLOWED THE CLAIM MADE BY THE ASSESSEE BY STATING THAT THE NEW POWER PLANT WHICH WAS THE NEW INDUSTRIAL UNDERTAKING FOR WHICH THE ASSESSEE WAS CLAIMING DED UCTION U/S.80IA OF THE ACT WAS USING THE SERVICES OF ONE OLD BOILER AN D HENCE, THE REQUIREMENTS OF THE SECTION WERE NOT BEING FULFILLE D THE ASSESSEE FILED EXPLANATION AND TOOK THE CONTENTIONS WHICH WERE TWO FOLDS IN NATURE I.E. (I) THAT THE VALUE OF THE BOILER WHICH IS THE SO-CA LLED OLD MACHINERY USED BY THE ASSESSEE IN THIS NEW INDUSTRIAL UNDERTAKING IS LESS THAN 20% OF THE OVERALL EXPENDITURE OF THE NEW MACHINERY AND ON THAT THE NEW MACHINERY AND (II) THAT THE NEW TURBINE IS BY ITSEL F A NEW INDUSTRIAL UNDERTAKING AND THE STEAM WHICH WAS TAKEN FROM THE BOILER WOULD HAVE BEEN EITHER PURCHASED FROM OUTSIDE AGENCY AS A FUEL OR LIKE IT HAS BEEN DONE IT WOULD TAKE THE SAME FROM THE IN-HOUSE BOILE R AND USED IT AS FUEL. THERE WAS NO QUESTION OF THIS BEING CONSIDERED AS A PART OF THE TURBINE AS A NEW INDUSTRIAL UNDERTAKING FOR THE PURPOSES OF GRANTING DEDUCTION UNDER SECTION 80IA. IN VIEW OF THE ABOVE EXPLANATI ON THE ASSESSEE HAS STATED IN HIS EXPLANATION THAT VERY SAME ASSESSING OFFICER HAD SCRUTINIZED THE RETURN FOR ASSESSMENT YEAR 2001-02 AND HAD MADE DISALLOWANCE OF THE ASSESSEES CLAIM AND HENCE WAS AWARE ABOUT THE LEGAL STAND OF THE ASSESSEE. THE ASSESSEE IS MEREL Y CANVASSING THE SAME STAND IN THE SUBSEQUENT ASSESSMENT YEAR I.E.ASSESSM ENT YEAR 2002-03 AND HENCE THERE IS NO QUESTION OF ANY CONCEALMENT O R FILING OF ITA NO.2970/AHD /2010 THE DCIT (OSD) VS. ATUL LTD. ASST.YEAR 2003-04 - 6 - INACCURATE PARTICULARS IN THE RETURN OF INCOME. TH E ASSESSEE ALSO PUT THE CERTIFICATE OF THE CHARTERED ACCOUNTANT AS REQU IRED U/S.80IA(7) OF THE ACT WHICH ALSO CLEARLY DEMONSTRATE THE BONA FID E OF THE ASSESSEE IN MAKING THIS CLAIM. IN VIEW OF THE ABOVE EXPLANATIO N OF THE ASSESSEE, WE FIND THAT THAT IT IS A DIFFERENCE OF OPINION ON LEG AL POINT OF VIEW AND THE ASSESSEES EXPLANATION HAS NEVER BEEN HELD TO BE FA LSE AND WITHOUT THAT THE PENALTY U/S.271(1)(C) OF THE ACT CANNOT BE LEVI ED IN THE SIMILAR CIRCUMSTANCES, (FROM UNREPORTED DECISION), THE HON BLE JURISDICTIONAL HIGH COURT IN TAX APPEAL NO.430 TO 432 OF 2006 IN T HE CASE OF JCIT VS. KIRAN SYTEX PRIVATE LTD. HELD THAT PENALTY LEVIED F OR CLAIM OF DEDUCTION U/S.80HHC OF THE ACT WHICH WAS DISALLOWED WHILE THE CLAIM OF THE ASSESSEE WAS THAT IT WAS UNDER A BONA FIDE LEGAL BE LIEF THAT IT WAS ENTITLED TO THE DEDUCTION. THE HONBLE HIGH COURT AFFIRMED THE FINDINGS OF TRIBUNAL QUASHING THE PENALTY U/S.271(1)(C) OF T HE ACT. SINCE THE FACTS BEING SIMILAR, WE RESPECTFULLY FOLLOWING THE HONBL E JURISDICTIONAL HIGH COURT DELETE THE PENALTY U/S.271(1)(C) OF THE ACT O N THIS ISSUE. 5.3. ON SIMILAR ISSUE THE COORDINATE BENCH (ITAT D BENCH AHMEDABAD) IN ITA NO.3455/AHD/2010 & CO NO.07/AHD/ 2011 FOR AY 2004-05, FOLLOWING THE EARLIER DECISION OF TRIBUNAL , DISMISSED THE REVENUES APPEAL BY OBSERVING AS UNDER:- 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT IN IDENTICAL FACTS, THE PENALTY IMPOSED U/S.271(1)(C) OF THE ACT ON CLAIM OF DEDUCTION U/S.80IA WAS CANCELLED IN THE AS SESSEES OWN CASE IN THE EARLIER ASSESSMENT YEAR 2002-03 BY THE TRIBUNAL. WE, BEING IN AGREEMENT WITH THE DECISION OF THE TRIBUNA L ON THIS ISSUE AND THE FACTS OF THIS CASE BEING IDENTICAL WITH THE FACTS OF THE CASE OF THE ASSESSEE IN THE EARLIER ASSESSMENT YEAR 2002 -03, CANCEL THE PENALTY IMPOSED FOR THE RELEVANT ASSESSMENT YEAR BY FOLLOWING THE ORDER OF THE TRIBUNAL FOR THE EARLIER ASSESSMENT YE AR 2002-03 AND ACCORDINGLY, GROUND NO.2 OF THE REVENUES APPEAL IS DISMISSED. ITA NO.2970/AHD /2010 THE DCIT (OSD) VS. ATUL LTD. ASST.YEAR 2003-04 - 7 - 5.4. WITH REGARD TO THE DELETION OF PENALTY MADE ON ACCOUNT OF DISALLOWANCE OF DEDUCTION U/S.80IB OF THE ACT, THE TRIBUNAL (ITAT D BENCH AHMEDABAD) IN ITA NO.3455/AHD/2010 & CO NO.07 /AHD/2011 FOR AY 2004-05 HELD AS UNDER:- 15. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THE ISSUE OF DEDUCTION U/S.80-IB OF THE ACT WAS HIGHLY DEBATABLE IN NATURE. AS THE TIME OF FILING THE RETURN FOR THE A SSESSMENT YEAR 2004-05, THERE WERE PRONOUNCEMENTS BY THE HONBLE C OURTS IN FAVOUR OF THE ASSESSEE. THE CIT(A) HAS DELETED THE PENALTY BY OBSERVING THAT SIMILAR ADDITION MADE IN THE EARLIER ASSESSMENT YEAR 2003-04 WAS DELETED BY ITAT VIDE ORDER DATED 2 4.07.2009 AND ALSO THAT AT THE TIME OF MAKING THE CLAIM BY TH E ASSESSEE, THERE WERE SEVERAL DECISIONS IN FAVOUR OF THE ASSESSEE. LD. CIT(A) HAS FURTHER OBSERVED THAT IN ANY CASE, THIS ISSUE WAS D EBATABLE AND ON SUCH DEBATABLE ISSUE, PENALTY U/S.271(1)(C) COULD N OT BE LEVIED. WE FIND THAT THIS ISSUE BEING DEBATABLE AND THERE B EING DECISIONS IN FAVOUR OF THE ASSESSEE AT THE TIME OF FILING OF RETURN FOR THE RELEVANT ASSESSMENT YEAR, IT COULD NOT BE SAID THAT THE CONDUCT OF THE ASSESSEE IN CLAIMING THE DEDUCTION WAS NOT BONA FIDE. IN THIS VIEW OF THE MATTER, WE HOLD THAT IT IS NOT A FIT CA SE FOR LEVY OF PENALTY U/S.271(1)(C) OF THE ACT WHICH WAS ACCORDIN GLY CANCELLED BY THE CIT(A) AND THE ORDER OF LD.CIT(A) IS CONFIRM ED. GROUND NO.3 OF THE REVENUES APPEAL IS DISMISSED. 6. FOLLOWING THE AFORESAID DECISIONS OF THE COORDIN ATE BENCH, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF T HE LD.CIT(A), SAME IS HEREBY UPHELD. MORE PARTICULARLY, THE REVENUE HAS NOT PLACED ANY CONTRARY BINDING PRECEDENT ON RECORD. THUS, ALL TH E THREE GROUNDS RAISED IN THE REVENUES APPEAL ARE REJECTED. ITA NO.2970/AHD /2010 THE DCIT (OSD) VS. ATUL LTD. ASST.YEAR 2003-04 - 8 - 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON THURSDAY, THE 26 TH DAY OF FEBRUARY, 2015 AT AHMEDABAD. SD/- SD/- ( .. ) ( ) ( N.S. SAINI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 26/ 02 /2015 2*..,(.../ T.C. NAIR, SR. PS !'#$%&' &$ / COPY OF THE ORDER FORWARDED TO : 1. # / THE APPELLANT 2. $% # / THE RESPONDENT. 3. 345 6 / CONCERNED CIT 4. 6 ( ) / THE CIT(A)-VI, AHMEDABAD 5. 7(8 $45 , *45. , 3 / DR, ITAT, AHMEDABAD 6. 8:;<) / GUARD FILE. ! / BY ORDER, %7$ //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 19.2.15 (DICTATION-PAD 6- PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER ..19.2.15 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.26.2.15 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 26.2.15 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER