Shivam Infonet Pvt.Ltd., Ahmedabad V. The Income tax Officer,Ward-8(3), Ahmedabad

ITA 3087/AHD/2011

• Counselvise Citation: 308720514 RSA 2011
• Duration Of Justice: 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 20-11-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 07-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K SINGH SR DR
• Assessee Lawyers: M K PATEL
• Keywords: Depreciation; Capital receipt

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD , .. , '# ' $ BEFORE SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTANT MEMBER ./ I.T.A. NO.3087/AHD/2011 ( & ' & ' & ' & ' / / / / ASSESSMENT YEAR : 2007-08) SHIVAM INFONET PVT.LTD. H-22, SATELLITE PARK JODHPUR CROSS ROAD AHMEDABAD & & & & / VS. THE ITO WARD-8(3) AHMEDABAD ( '# ./)* ./ PAN/GIR NO. : AAFCS 6807 B ( (+ / // / APPELLANT ) .. ( ,-(+ / RESPONDENT ) (+ . ' / APPELLANT BY : SHRI M.K.PATEL ,-(+ / . ' / RESPONDENT BY : SHRI D.K.SINGH, SR. D.R. &0 / # / / / / DATE OF HEARING : 20/11/2012 12' / # / DATE OF PRONOUNCEMENT : 23.11.12 '3/ O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN ASSESSEES APPEAL ARISING FROM THE ORDE R OF THE CIT(A)XIV-AHMEDABAD DATED 15.9.2011 AGAINST THE CO NFIRMATION OF PENALTY OF RS.1,25,000/- LEVIED U/S.271(1)(C) OF IT ACT. 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S.143(3) DATED 21.8.2009 AND THE PENALTY O RDER U/S.271(1)(C) DATED 17.3.2010 WERE THAT THE ASSESSEE-COMPANY IS I N THE BUSINESS OF EXPORT OF MEDICAL TRANSCRIPTION. IT WAS NOTED BY T HE AO THAT THE ASSESSEE ITA NO. 3087/AHD/2011 SHIVAM INFONET PVT.LTD VS. ITO ASST.YEAR 2007-08 - 2 - HAS RECEIVED A SUBSIDY OF RS.10,28,632/- FROM THE GOVERNMENT OF GUJARAT, HOWEVER THE SAME WAS NOT DEDUCTED FROM THE COST OF THE ASSETS. THE ASSESSEE HAS NOT DISPUTED THAT THE SUBSIDY IN Q UESTION WAS A CAPITAL RECEIPT AND REQUESTED THE AO TO TAKE THE APPROPRIAT E ACTION. IN THE RESULT, THE WDV WAS RECOMPUTED AND THE DIFFERENCE O F THE DEPRECIATION OF RS.3,11,361/- WAS ADDED IN THE TAXABLE INCOME OF THE ASSESSEE. ON THE SAID AMOUNT OF EXCESS CLAIM OF DEPRECIATION, TH E AO HAS INVOKED THE PROVISIONS OF SECTION 271(1)(C) OF IT ACT. AGAINS T THE LEVY OF PENALTY, THE MATTER WAS CARRIED BEFORE LD.CIT(A) WHO HAS CON FIRMED THE LEVY OF PENALTY PRIMARILY ON THE GROUND THAT THERE WAS NO H ONEST BELIEF ON THE PART OF THE ASSESSEE THAT THE SUBSIDY WAS NOT REQUI RED TO BE DEDUCTED FROM THE WDV. ACCORDING TO HIM, CLAIM OF DEPRECIATION WITHOUT REDUCING THE COST OF THE SUBSIDY WAS INCORRECT AND THERE WAS NOT BONA FIDE REASON FOR NOT REDUCING THE COST OF SUBSIDY FROM THE WDV. AGAI NST THE CONFIRMATION OF LEVY OF PENALTY, NOW THE ASSESSEE I S FURTHER IN APPEAL. 3. FROM THE SIDE OF THE ASSESSEE, LD.AR MR.M.K.PATE L APPEARED AND INFORMED THAT THERE WAS NO BENEFIT FOR CLAIMING HIG HER DEPRECIATION SINCE THE ASSESSEE IS REGISTERED WITH SOFTWARE TECHNOLOGY PARK, GANDHINAGAR AS A 100% EXPORT ORIENTED UNIT, THEREFORE THE INCOM E OF THE ASSESSEE IS FULLY EXEMPT U/S.10 OF IT ACT. EVEN AFTER THE S CRUTINY ASSESSMENT, THE TOTAL LOSS WAS ASSESSED AT RS.(-) 13,86,350/-. HE HAS ALSO ARGUED THAT IN THE LIGHT OF THE LATEST DECISION OF THE HONBLE SUP REME COURT PRONOUNCED IN THE CASE OF PRICE WATERHOUSE COOPERS PVT.LTD. CI VIL APPEAL NO.6924 2012 ARISING OUT OF SLP(C) NO.10700 OF 2009 DATED 2 5.09.2012, THE ASSESSEE SHOULD NOT BE PENALIZED FOR FURNISHING OF INACCURATE PARTICULARS. ITA NO. 3087/AHD/2011 SHIVAM INFONET PVT.LTD VS. ITO ASST.YEAR 2007-08 - 3 - 4. FROM THE SIDE OF THE REVENUE, LD.SR.DR MR.D.K.SI NGH HAS STRONGLY SUPPORTED THE LEVY OF PENALTY AND PLACED R ELIANCE ON CIT VS. ZOOM COMMUNICATION PVT.LTD. (2010) 327 ITR 510 (DEL ) AND CIT VS. ESCORTS FINANCE LTD. (2010) 328 ITR 44 (DEL). 5. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, AT THE OUTSET, WE HAVE NOTED THAT THE ASSESSEE IS A 100% EXPORT ORIEN TED UNIT, HENCE UNDISPUTEDLY THE INCOME EARNED WAS STATED TO BE EXE MPT U/S.10 OF IT ACT. WE THEREFORE APPROVE THE ARGUMENT OF LD.AR THAT THE RE WAS NO REASON TO CLAIM HIGHER RATE OF DEPRECIATION WITH THE INTENTIO N TO SAVE THE INCOME- TAX. FURTHER, IT IS ALSO AN ADMITTED FACTUAL POSIT ION FOR THE YEAR UNDER CONSIDERATION THAT THE FINALLY ASSESSED AMOUNT WAS A LOSS. IN ADDITION TO THESE TWO REASONS, WE HAVE ALSO NOTED THAT THE AMOU NT IN QUESTION WAS DULY DISCLOSED BY THE ASSESSEE AS PER THE RETURN OF INCOME ANNEXED WITH THE BALANCE-SHEET OF THE ASSESSEE. THE AO HAS NOTI CED WHILE EXAMINING THE BALANCE-SHEET THAT UNDER THE HEAD RESERVES AND SURPLUS THE IMPUGNED AMOUNT OF SUBSIDY OF RS.10,28,632/- WAS DU LY DISCLOSED. THE ASSESSEE HAS ACCEPTED THE FACTUAL POSITION AND CONS IDERING THE NATURE OF THE SUBSIDY OFFERED TO REVISE THE WDV BECAUSE THE N ATURE OF THE SUBSIDY WAS FOUND TO BE A CAPITAL RECEIPT. CONSIDERING THE SE FACTS WE ARE OF THE VIEW THAT THE QUESTION OF LEVY OF PENALTY IN THE PR ESENT APPEAL IS COVERED THE DECISION OF HON'BLE SUPREME COURT IN THE CASE O F CIT VS. RELIANCE PETROPRODUCTS (P) LTD. REPORTED AT (2010) 322 ITR 1 58 (SC), WHEREIN IT WAS HELD THAT UNLESS INFORMATION GIVEN IN THE RETUR N IS FOUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HEL D GUILTY OF FURNISHING INACCURATE PARTICULARS. THE HON'BLE APEX COURT HAS FURTHER OBSERVED THAT IN ORDER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY ITA NO. 3087/AHD/2011 SHIVAM INFONET PVT.LTD VS. ITO ASST.YEAR 2007-08 - 4 - COVERED BY THE PROVISION, THE PENALTY PROVISION CAN NOT BE INVOKED. RESPECTFULLY FOLLOWING THE AFORESAID DECISION AND C ONSIDERING THE TOTALITY OF THE FACTS OF THE CASE, THE VIEW TAKEN BY THE L EARNED CIT(APPEALS) IS HEREBY REVERSED AND PENALTY IS, ACCORDINGLY, DELET ED. 6. FROM THE SIDE OF THE REVENUE, THE DECISION CITED SUPRA HAVE ALSO BEEN EXAMINED BY US. ON CAREFUL PERUSAL, WE HAVE NOTED THAT THE PENALTY WAS CONFIRMED WHEN IT WAS FOUND THAT THE CL AIM WAS WHOLLY UNTENABLE IN LAW. THE HONBLE DELHI HIGH COURT HA S NOTED THAT THERE WAS ABSOLUTELY NO FOUNDATION ON WHICH IT COULD BE H ELD THAT THE ASSESSEE HAD ACTED IN A BONA FIDE MANNER WHILE MAKING SUCH A N UNTENABLE CLAIM. ON THE OTHER HAND, THE CLAIM OF THE ASSESSEE IN RES PECT OF THE SUBSIDY WHETHER TO BE CONSIDERED AS CAPITAL RECEIPT OR REVE NUE RECEIPT HAD BEEN A SUBJECT MATTER OF CONTROVERSY IN THE PAST. THEREFO RE, PRIMA-FACIE IT IS NOT JUSTIFIABLE TO HOLD THAT THE ASSESSEE HAS PURPOSELY TRIED TO CLAIM A WHOLLY UNTENABLE DEDUCTION OF DEPRECIATION. BECAUSE OF TH IS DISTINCTION, WE HEREBY HOLD THAT THE CASE LAWS CITED BY LD.DR ARE N OT APPLICABLE ON THE FACTS OF THIS APPEAL. IN THE RESULT, ASSESSEES GROUND IS ALLOWED. 7. AS A RESULT, ASSESSEES APPEAL STANDS ALLOWED . SD/- SD/- ( .. ) ( ) '# ( T.R. MEENA ) ( MUKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL ME MBER AHMEDABAD; DATED 23 / 11 /2012 ITA NO. 3087/AHD/2011 SHIVAM INFONET PVT.LTD VS. ITO ASST.YEAR 2007-08 - 5 - ..&, .&../ T.C. NAIR, SR. PS '3 / ,4 5'4' '3 / ,4 5'4' '3 / ,4 5'4' '3 / ,4 5'4'/ COPY OF THE ORDER FORWARDED TO : 1. (+ / THE APPELLANT 2. ,-(+ / THE RESPONDENT. 3. 6 / CONCERNED CIT 4. 6() / THE CIT(A)-XIV, AHMEDABAD 5. 49: ,& , , / LEARNED DEPARTMENTAL REPRESENTATIVE, ITAT, AHMEDABAD 6. :; <0 / GUARD FILE. '3& '3& '3& '3& / BY ORDER, -4 , //TRUE COPY// = == =/ // / ) ) ) ) ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD 1. DATE OF DIRECT DICTATION ON COMPUTER ..21.11.12 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 22.11.12 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S23/11/12 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 23/11/12 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER