Appeal details
Counselvise Citation
[2018] 119 COUNSELVISE.COM (IT) 4435 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 5 month(s) 18 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
23-10-2018
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
Not Allotted
Assessment Year
2011-2012
Appeal Filed On
05-05-2016
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI BEFORE SHRI SAKTIJIT DEY (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 3158/MUM/2016 ASSESSMENT YEAR: 2011 - 12 DCIT - 13(3)(1), ROOM NO. 229, 2 ND FLOOR, AAYAKARBHAVAN, M.K. ROAD, MUMBAI - 20. VS. M/S RUSAN PHARMA LTD. 58 - D, RUSAN HOUSE, GOVT. INDL. ESTATE, CHARKOP, KANDIVALI (W), MUMBAI - 400067 PAN NO. AABCR3179H APPELLANT RESPONDENT REVENUE BY : MR. MANISH KUMAR SINGH, DR ASSESSEE BY : MR. PRAKASH PANDIT, AR DATE OF HEARING : 10/10/2018 DATE OF PRONOUNCEMENT : 23/10/2018 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE REVENUE. THE RELEVANT ASSESSMENT YEAR IS 20 11 - 12. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 21 [IN SHORT CIT(A)], MUMBAI AND ARISES OUT OF THE PENALTY LEVIED U/S 271(1)(C) OF THE INCOME TAX ACT 1961, (THE ACT). M/S RUSAN PHARMA LTD. ITA NO. 3158/MUM/2016 2 2. THE GROUNDS OF APPEAL FILED BY THE REVENUE READ AS UNDER: 1 WHETHER ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE PENALTY ON ADDITION OF RS.1,39,87,496/ - BEING WEIGHTED DEDUCTION OF EXPENSES ON R&D. 2 WHETHER ON THE FACTS AND THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD. CIT(A) WAS RIGHT IN DELETING THE PENALTY WITHOUT APPRECIATING THE FACT THAT THE SAID PENALTY WAS LEVIED IN RESPECT OF THE DISALLOWANCE OF CLAIM OF DEDUCTION U/S 35(2AB) AFTER GIVING SUFFICIENT OPPORTUNITY TO THE ASSESSEE TO P ROVE GENUINENESS OF ITS CLAIM. 3 THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. IN A NUTSHELL, THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAD CLAIMED DEDUCTION OF RS.1,39,87,406/ - U/S 35(2AB) IN RESPECT OF EXPENDITURE INCURRED ON SCIENTIFIC RESEARCH. THE ASSESSING OFFICER (AO) OBSERVED THAT THE ASSESSEE HAD CLAIMED NET BUSINESS LOSS AND THERE WAS NO BUSINESS INCOME. THEREFORE, HE WAS OF THE VIEW THAT NO FURTHER D EDUCTION WOULD BE ALLOWABLE AS THE SAME WOULD RESULT IN CARRY FORWARD OF THE DEDUCTION BY WAY OF INCREASED LOSS, WHICH IS NOT ALLOWABLE UNDER ANY PROVISIONS OF THE ACT. THEREFORE, THE AO DISALLOWED THE CLAIM OF DEDUCTION OF RS.1,39,87,406/ - U/S 35(2AB) OF THE ACT. SUBSEQUENTLY, THE AO LEVIED A PENALTY U/S 271(1)(C) ON THE ABOVE DISALLOWANCE OF RS.1,39,87,406/ - . 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED A N APPEAL BEFORE THE LD. CIT(A) AND SUBMITTED THAT THE CLAIM OF DEDUCTION U/S 35(2B) WAS A BONAFIDE MISTAKE. THE LD. CIT(A), RELYING ON THE DECISION OF THE HONBLE SUPREME COURT IN RELIANCE PETROPRODUCTS PVT. LTD . 322 ITR M/S RUSAN PHARMA LTD. ITA NO. 3158/MUM/2016 3 158 (SC) AND PRICE WATERHOUSE COOPERS (P) LTD. V. CIT (2012) 25 TAXMANN.COM 400 (SC), DELETED THE PENALTY LEVIED BY THE AO U/ S 271(1)(C) ON THE ABOVE DISALLOWANCE OF RS.1,39,87,406/ - . 5. BEFORE US, THE LD. DR SUBMITS THAT IN QUANTUM ADDITION, THE DISALLOWANCE OF RS.1,39,87,406/ - MADE BY THE AO HAS REACHED FINALITY AND THEREFORE, THE AO HAS RIGHTLY LEVIED PENALTY U/S 271(1)(C) ON THE ABOVE DISALLOWANCE. ON THE OTHER HAND, THE LD. C OUNSEL OF THE ASSESSEE SUBMITS THAT IT WAS A BONAFIDE MISTAKE AND THEREFORE, PENALTY IS NOT LEVIABLE IN VIEW OF THE DECISIONS RELIED ON BY THE LD. CIT(A). THUS HE SUPPORTS THE ORDER OF THE LD. CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. AS RECORDED BY THE AO AT PARA 7 OF HIS ASSESSMENT ORDER DATED 31.01.2014, THE ASSESSEE HAD CLAIMED DEDUCTION OF RS.1,39,87,406/ - U/S 35(2AB) IN RESPECT OF EXPENDITURE INCU RRED ON SCIENTIFIC RESEARCH. THE AO DISALLOWED THE ABOVE CLAIM IN THE ASSESSMENT FINALIZED BY HIM ON 31.01.2014. IN RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA), THE HONBLE SUPREME COURT HAS HELD THAT A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE AND SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. FACTS BEING IDENTICAL, WE FOLLOW THE RATIO LAID DOWN IN THE ABOV E DECISION AND UPHOLD THE ORDER OF THE LD. CIT(A). M/S RUSAN PHARMA LTD. ITA NO. 3158/MUM/2016 4 7. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23/10/2018 SD/ - SD/ - ( SAKTIJIT DEY ) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 23/10/2018 RAHUL SHARMA, SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (SR. PRIVATE SECRETARY) ITAT, MUMBAI
