ACIT CIR 6(3), MUMBAI V. METRO POLYMERS P. LTD, MUMBAI

ITA 3099/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7256 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Assessment Year: 2003-2004
• Appeal Filed On: 12-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N M BALODIA
• Assessee Lawyers: JAPEN P SHAH
• Section: 271(1)(c); 251

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, I BENCH, MUMBAI. BEFORE SHRI S.V.MEHROTRA, AM & SMT. P.MADHAVI DEVI ,JM I.T.A. NO.3099/MUM/2009 ASSESSMENT YEAR: 2003-04 THE ACIT CIRCLE 6(3), V. METRO POLYMERS P.LTD., AAYAKAR BHAVAN, M.K. ROAD, 214, UNITED IND. PREMI SES, MOGUL MUMBAI. LANE, MAHIN, MUMBAI. PA NO.AABCM 5866A (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI N.M.BALODIA RESPONDENT BY : SHRI JAPEN P.SHAH O R D E R PER S.V.MEHROTRA, AM THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAI NST THE ORDER DATED 19.3.2009 OF LD CIT (A)-VI, MUMBAI DELETING THE P ENALTY OF RS.5,12,113/- LEVIED BY THE AO U/S.271(1)(C) OF THE I.T.ACT, 1961 FOR T HE ASSESSMENT YEAR 2003-04. 2. FACTS IN BRIEF ARE THAT THE ASSESSEE COMPANY HAD FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME AT RS.33,79,668/-. THE ASSE SSEES INCOME WAS COMPUTED AT RS.73,49,590/- AFTER MAKING FOLLOWING DISALLOWAN CES:- I) PRIOR PERIOD EXPENSES OF RS.19,225/- II) EXCLUDING THE PROCEEDS FROM DEPB OF RS.15,94,73 1/- AND PREMIUM OF RS.2065/- FOR COMPUTING DEDUCTION U/S. 80-IB. III) EXCLUDING THE DEDUCTION U/S. 80-IB FROM PROFIT S OF BUSINESS FOR COMPUTING THE DEDUCTION U/S. 80 HHC. THE AO HAD LEVIED THE PENALTY OF RS.5,12,113/- U/S. 271(1)(C) IN RESPECT OF ABOVE THREE ADDITIONS. ITA NO.3099/M/2009 M/S. METRO POLYMERS P.LTD. 2 4. BEFORE LD CIT (A), IT WAS SUBMITTED THAT AS REGA RDS THE ELIGIBILITY OF DEDUCTION U/S.80-IB AND U/S. 80 HHC IN RESPECT OF O F SALE OF DEPB PROCEEDS AND PREMIUM, THE MATTER WAS CONCLUDED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF ITAT, MUMBAI BENCHES IN ASSESSEES OWN CASE FOR THE VERY YEAR UNDER REFERENCE. THEREFORE, THE ADDITION IN THIS RESPECT DOES NOT SURVIVE. FURTHER, IT WAS POINTED OUT THAT THE DEPARTMENT HAD NOT FILED A NY APPEAL TO THE HONBLE HIGH COURT AGAINST THAT ORDER. IT WAS POINTED OUT THAT I N THE CASE OF SHAH ORIGINALS, IT WAS HELD THAT DEPB PROCEEDS WERE ELIGIBLE FOR DEDU CTION U/S. 80 HHC AND 80- IB. THUS, IT WAS SUBMITTED THAT THE ASSESSEES CLA IM WAS BONAFIDE. IN REGARD TO ASSESSEES CLAIM OF DEDUCTION U/S. 80 HHC TO BE ALL OWED WITHOUT REDUCTION OF DEDUCTION U/S. 80-IB, IT WAS SUBMITTED THAT THE CLA IM OF THE ASSESSEE WAS SUPPORTED BY SERIES OF JUDICIAL PRONOUNCEMENTS INCL UDING THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF SCM CREATI ONS IN APPEAL NO.310 & 311 OF 2008. IT WAS FURTHER POINTED OUT THAT IN AS SESSEES OWN CASE FOR A.Y. 2001-02, LD CIT (A) DELETED THE PENALTY UNDER SIMI LAR FACTS WHERE COMPUTATION OF DEDUCTION U/S. 80 HHC WAS MADE WITHOUT REDUCING THE ELIGIBLE DEDUCTION U/S. 80IB, ON THE GROUND THAT IT WAS A CASE OF DIFFEREN CE OF OPINION. FURTHER, IT WAS POINTED OUT THAT BOTH THE CLAIMS U/S. 80 IB AND U/S . 80 HHC WERE QUANTIFIED AND CERTIFIED BY THE AUDITORS. LD CIT (A) RELYING ON T HE DECISION OF THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF SHIV LAL TAK V CIT, 251 ITR 373 (RAJ) HELD THAT IT CANNOT BE SAID THE ASSESSEE HAD FURNISHED I NACCURATE PARTICULARS. FURTHER, THE MERE FACT THAT THE ASSESSEES EXPLANATION WAS N OT CONSIDERED AS SATISFACTORY, IT DID NOT FOLLOW THAT THE EXPLANATIO N WAS NOT SUBSTANTIATED. 5. LD D.R. RELIED ON THE PENALTY ORDER. 6. LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE T RIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2003-04, A COPY OF WHICH HAS BEEN FILED BEFORE US, HELD THAT THE PROFITS ARISING UNDER THE DEPB SCHEME SHOULD BE CONSIDERED TO BE DERIVED FROM THE INDUSTRIAL UNDERT AKING AND THE ASSESSEE ITA NO.3099/M/2009 M/S. METRO POLYMERS P.LTD. 3 SHOULD BE ALLOWED DEDUCTION UNDER SECTION 80-IB ON SUCH PROFITS. HE, THEREFORE, SUBMITTED THAT THE QUANTUM OF PENALTY MENTIONED IN GROUNDS OF APPEAL IS NOT CORRECT. HE FURTHER POINTED OUT THAT FOR THE ASSES SMENT YEAR 2001-02, LD CIT (A) HAD DELETED THE PENALTY IN RESPECT OF ASSESSEES CL AIM U/S. 80 HHC OF DEPB BUT NO APPEAL HAD BEEN PREFERRED BY THE DEPARTMENT. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE RECORD OF THE CASE. AS IS EVIDENT FROM THE GROUNDS OF APPEAL, TH E DEPARTMENT IS PRIMARILY AGGRIEVED WITH THE ORDER OF LD CIT (A) IN DELETING THE PENALTY IN RESPECT OF ADDITION MADE ON ACCOUNT OF NON-REDUCTION OF DEDUCTION U/S. 80-IA FROM THE PROFITS OF BUSINESS FOR COMPUTING DEDUCTION U/S. 80 HHC. THER E IS NO GROUND BEFORE US IN REGARD TO PENALTY IN RESPECT OF PRIOR PERIOD EXPENS ES OF RS.19,225/- AND THE EXCLUSION OF DEPB PROCEEDS OF RS.15,94,731/- AND PREMIUM OF RS.2,065/- FOR COMPUTING DEDUCTION U/S.80IB. THEREFORE, LD COUNSE L HAS RIGHTLY POINTED OUT THAT THE AMOUNT MENTIONED IN THE GROUNDS OF APPEAL HAS T O BE SUITABLY MODIFIED. HOWEVER, THE DEPARTMENT HAD NOT FILED ANY MODIFIED GROUNDS OF APPEAL. ACCORDINGLY, THE AO IS DIRECTED TO QUANTIFY THE COR RECT AMOUNT OF PENALTY. 8. NOW COMING TO THE MERITS OF THE CASE, WE FIND TH AT THE ASSESSEES CLAIM WAS DULY SUPPORTED BY VARIOUS JUDICIAL PRONOUNCEMEN TS INCLUDING THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF SCM CR EATIONS IN APPEAL NOS.310 & 311. THERE WERE CONTRADICTING JUDICIAL DECISIONS ON THIS ISSUE AND, THEREFORE, IT CANNOT BE SAID THAT THE ASSESSEES CLAIM WAS NOT BO NAFIDE. IT WAS DEFINITELY A HIGHLY DEBATABLE ISSUE. THE HONBLE SUPREME COURT IN THE CASE OF CEMENT MARKETING CO. OF INDIA LTD V. ACIT, 124 ITR 15 (SC) HELD THAT IF THE VIEW CANVASSED ON BEHALF OF THE REVENUE WERE ACCEPTED, T HE RESULT WOULD BE THAT EVEN IF THE ASSESSEE RAISES A BONAFIDE CONTENTION THAT A PARTICULAR ITEM IS NOT LIABLE TO BE INCLUDED IN THE TAXABLE TURNOVER, HE WOULD HAVE TO SHOW IT AS FORMING PART OF THE TAXABLE TURNOVER IN HIS RETURN AND PAY TAX UPON IT ON PAIN OF BEING HELD LIABLE FOR PENALTY IN CASE HIS CONTENTION IS ULTIMATELY FO UND BY THE COURT TO BE NOT ACCEPTABLE. THAT SURELY COULD NEVER HAVE BEEN INTE NDED BY THE LEGISLATURE. ITA NO.3099/M/2009 M/S. METRO POLYMERS P.LTD. 4 FURTHER, LD CIT(A) HAS RELIED ON THE DECISION OF TH E HONBLE RAJASTHAN HIGH COURT IN THE CASE OF OF SHIV LAL TAK(SUPRA), WHEREIN ALS O, ASSESSEES EXPLANATION WAS FOUND TO BE BONAFIDE AS THE MATERIAL TO THE COMPUTA TION OF INCOME HAD BEEN GIVEN BY THE ASSESSEE AND, THEREFORE, IT WAS HELD T HAT EXPLANATION 1 TO SECTION 271(1)(C) WOULD NOT APPLY. IN THE PRESENT CASE AL SO, ALL THE RELEVANT FACTS IN REGARD TO ASSESSEES CLAIM WERE DULY DISCLOSED TO T HE DEPARTMENT. THE ASSESSEES EXPLANATION HAS NOT BEEN FOUND TO BE FAL SE. UNDER SUCH CIRCUMSTANCES, ASSESSEE COULD NOT BE SADDLED WITH P ENALTY. WE, ACCORDINGLY, UPHOLD THE ORDER OF LD CIT (A) DELETING THE PENALTY . 9. IN THE RESULT, APPEAL FILED BY THE REVENUE STAND S DISMISSED. PRONOUNCED ON 24 TH MARCH, 2010 SD/- (P.MADHAVI DEVI) (JUDICIAL MEMBER) SD/- (S.V. MEHROTRA) (ACCOUNTANTMEMBER) MUMBAI, DATED 24 TH MARCH , 2010 PARIDA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)-, MUMBAI 4. COMMISSIONER OF INCOME TAX, CITY-, MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH D, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI ITA NO.3099/M/2009 M/S. METRO POLYMERS P.LTD. 5 DATE INITIALS 1. DRAFT DICTATED ON 22.3.2010 PS 2. DRAFT PLACED BEFORE AUTHOR 22..3.2010 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER AM/JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/J M 5. APPROVED DRAFT COMES TO THE SR. PS PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER ITA NO.3099/M/2009 M/S. METRO POLYMERS P.LTD. 6