Sh. Mam Raj, Sirmour V. ITO, Nahan

ITA 315/CHANDI/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7562 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 12-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: TARUN KUSHWAHA
• Assessee Lawyers: MOHIT JHAMBA
• Keywords: Capital receipt

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH B, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NO.315/CHD/2018 (ASSESSMENT YEAR : 2006-07) SH.MAM RAJ C/O VS. THE INCOME TAX OFFICER, M/S NEEL KANTH SERVICES STATION, NAHAN, BADRINAGAR, PAONTA SAHIB, HIMACHAL PRADESH. DISTT. SIRMOUR (H.P.) PAN: ADXPR4044D (APPELLANT) (RESPONDENT) APPELLANT BY : S/SHRI ABHISHEK JHAMBA, ABHIMANYU JHAMBA & MOHIT JHAMBA RESPONDENT BY : SHRI TARUN KUSHWAHA, JCIT DATE OF HEARING : 05.06.2018 DATE OF PRONOUNCEMENT : 10.07.2018 ORDER PER SANJAY GARG, JUDICIAL MEMBER : THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGITATING THE PENALTY LEVIED BY THE ASSESSING OFFIC ER U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT TH E ACT), AND CONFIRMED BY LD. COMMISSIONER OF INCOME TAX (APPEALS), SHIMLA (HEREINAFTER REFERRED TO AS (LD. CIT (APPEALS) VIDE ORDER DATED 31.1.2018 PASSED U/S 25 0(6) OF THE ACT, IN APPEAL NO.IT/98/2016-17/SML, RELATING T O ASSESSMENT YEAR 2006-07. 2. BRIEF FACTS RELATING TO THE ISSUE, ARE THAT DURI NG THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICE D THAT UNDER THE HEAD FREIGHT OUTWARD (NET) A SUM OF RS.20,97,908/- WAS DEBITED IN THE PROFIT & LOSS ACC OUNT. HE, THEREFORE, ASKED THE ASSESSEE TO FILE DETAILS O F FREIGHT ITA NO.315/CHD/2018 AY: 2006-07 2 SUBSIDY RECEIVED/RECEIVABLE FROM GOVERNMENT. THE AS SESSEE SUBMITTED THAT HE HAD NOT RECEIVED FREIGHT SUBSIDY DURING THE FINANCIAL YEAR RELEVANT TO ASSESSMENT YEAR UNDE R CONSIDERATION AND AS SUCH THE AMOUNT OF FREIGHT SUB SIDY WAS NOT ACCOUNTED FOR. THE ASSESSING OFFICER, HOWEV ER, OBSERVED THAT THE ASSESSEE WAS MAINTAINING HIS ACCO UNT ON MERCANTILE BASIS AND THAT THE AMOUNT OF FREIGHT SUB SIDY RECEIVED BY IT SHOULD HAVE BEEN REFLECTED IN THE BA LANCE SHEET AND PROFIT & LOSS ACCOUNT. HE, THEREFORE, WOR KED OUT THE TOTAL FREIGHT SUBSIDY @ 60% OF THE TOTAL FREIGH T EXPENDITURE AT RS.20,97,908/- AND DISALLOWED AND AD DED BACK THE SAME TO THE INCOME OF THE ASSESSEE. HE ALS O INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND THE REBY LEVIED THE IMPUGNED PENALTY. 3. IN APPEAL THE LD.CIT(APPEALS) CONFIRMED THE IMPU GNED PENALTY. 4. THE ASSESSEE THUS HAS COME UP IN APPEAL BEFORE U S. AT THE OUTSET, THE LD. COUNSEL FOR ASSESSEE HAS SUBMIT TED THAT THE IMPUGNED PENALTY HAD BEEN LEVIED ON ACCOUNT OF NON- SETTING OFF THE AMOUNT RECEIVABLE AS FREIGHT SUBSID Y AS AGAINST THE EXPENDITURE CLAIMED. HE HAS FURTHER SUB MITTED THAT WHETHER THE FREIGHT SUBSIDY IS A REVENUE RECEI PT OR CAPITAL RECEIPT, IS A DEBATABLE ISSUE. HENCE, THE PENALTY U/S 271(1)(C) OF THE ACT WAS NOT ATTRACTED. HE FURT HER SUBMITTED THAT THE FREIGHT SUBSIDY IS GIVEN AS AN I NCENTIVE BY THE GOVERNMENT OF THE STATE TO UNITS ESTABLISHED IN THE ITA NO.315/CHD/2018 AY: 2006-07 3 ECONOMICALLY BACKWARD AND REMOTE AREA OF THE STATE FOR THE DEVELOPMENT OF THE AREA AND FOR GENERATION OF EMPLO YMENT. HE, IN THIS RESPECT, HAS RELIED UPON THE DECISION O F THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. CHAPHA LKAR BROTHERS PUNE & OTHERS (2017) 88 TAXMANN.COM 278 (S C). HE, THEREFORE, HAS SUBMITTED THAT IT CANNOT BE SAID THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF IN COME AND THAT WHEN THE ISSUE IS DEBATABLE THEN NO PENALT Y U/S 271(1)(C) IS ATTRACTED. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIN D THAT THIS IS NOT A FIT CASE FOR LEVY OF PENALTY U/S 271( 1)(C) OF THE ACT. THE ABOVE ISSUE RELATING TO RECEIPT OF FREIGHT SUBSIDY WHETHER IT WAS CAPITAL OR REVENUE RECEIPT IN THE CA SE OF THE ASSESSEE, IS/WAS A DEBATABLE ISSUE. EVEN THE ASSESS EE HAD NOT RECEIVED FREIGHT SUBSIDY TILL DATE. IN VIEW OF THIS , WE DO NOT THINK THAT THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT ARE ATTRACTED IN THIS CASE. WE, THEREFORE, DELETE THE P ENALTY LEVIED BY THE LOWER AUTHORITIES. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15.06.2018 SD/- SD/- (B.R.R. KUMAR) (SANJAY GARG ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 10 TH JULY, 2018 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH