ASST CIT 8(1), MUMBAI V. DUFLON POLYMERS O,KTD, MUMBAI

ITA 3163/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3548 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2004-2005
• Appeal Filed On: 08-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PEEYUSH SONKAR
• Assessee Lawyers: ALOK K SAKSENA
• Keywords: Depreciation; Wrong claim; Capital expenditure

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI . . !' #$%& , !' () ! BEFORE SHRI H.L. KARWA, PRESIDENT AND SHRI N.K. BILLAIYA, AM ./I.T.A. NO. 3163/MUM/2012 ( * * * * / ASSESSMENT YEAR : 2004-05 THE ACIT-8(1), AAYAKAR BHAVAN, MUMBAI-400 020 / VS. M/S. DUFLON POLYMERS PVT. LTD., 3, NEELDHARA APARTMENTS, GROUND FLOOR, SHRADDHAND EXTN. ROAD, VILE PARLE (E), MUMBAI-400 057 )+ !' ./ ,- ./PAN/GIR NO. : AAACE 8766G ( +. /APPELLANT ) .. ( /0+. / RESPONDENT ) +. 1 ! / APPELLANT BY: SHRI PEEYUSH SONKAR /0+. 2 1 ! / RESPONDENT BY : SHRI ALOK K. SAKSENA 2 3' / DATE OF HEARING : 28.5.2013 45* 2 3' / DATE OF PRONOUNCEMENT : 28.5.2013 (!6 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE REVENUE IS PREFERRED AGAINST THE ORDER OF THE LD. CIT(A)-16, MUMBAI DT. 14.2.2012 PERTAINING TO A SSESSMENT YEAR 2004-05. 2. THE SUM AND SUBSTANCE OF THE GRIEVANCE OF THE RE VENUE IS THAT THE LD. CIT(A) ERRED IN DELETING THE PENALTY LEVIED U/S . 271(1)(C) OF THE ACT. ITA NO.3163/M/12 2 3. A PERUSAL OF THE ASSESSMENT ORDER SHOW THAT FOLL OWING DISALLOWANCES MADE BY THE AO WERE CONFIRMED BY THE LD. CIT(A) IN QUANTUM PROCEEDINGS. A) DISALLOWANCE OF INTEREST U/S. 36(1)(III) - RS. 28 ,29,866/- B) DISALLOWANCE OF EXPENSES INCURRED TOWARDS INCREASE IN SHARE CAPITAL - RS. 50,0 00/- 4. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT SO FAR AS THE ADDITION OF RS. 28,29,866/- IS CONCERNED, THE T RIBUNAL IN ITA NO. 6637/M/09 HAS DELETED THE IMPUGNED ADDITION. THEREF ORE, NO PENALTY CAN BE LEVIED SO FAR AS THIS DISALLOWANCE IS CONCERNED. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THE COPY OF THE ORDER OF THE TRIBUNAL. 5. THE LD. DEPARTMENTAL REPRESENTATIVE CONCEDED THA T THE ADDITIONS HAVE BEEN DELETED BY THE TRIBUNAL IN QUANTUM APPEAL . 6. WE HAVE CAREFULLY PERUSED THE ORDER OF THE TRIBU NAL. WE FIND THAT THE TRIBUNAL HAS DECIDED THIS ISSUE AT PARA-10 OF I TS ORDER AND HAS DELETED THE ADDITION OF RS. 28,29,866/-. TO THAT EXTENT, P ENALTY CANNOT BE LEVIED. THIS LEAVES THE DISALLOWANCE OF RS. 50,000/-. 7. DURING THE COURSE OF THE SCRUTINY ASSESSMENT, TH E AO FOUND THAT THE ASSESSEE HAS INCURRED RS. 50,000/- AS STAMP DUT Y CHARGES FOR THE INCREASE OF ITS SHARE CAPITAL. THE AO FURTHER NOTI CED THAT THE STAMPING CHARGES OF RS. 50,000/- HAS BEEN ADDED TO FACTORY B UILDING. THE ASSESSEE RELIED UPON THE DECISION OF THE HONBLE SUPREME COU RT IN THE CASE OF BROOKE BOND INDIA LTD. VS CIT 225 ITR 798 AND PUNJ AB STATE INDUSTRIAL DEVELOPMENT CORPN. LTD. VS CIT 225 ITR 792 WHEREIN THE HONBLE ITA NO.3163/M/12 3 APEX COURT HAS HELD THAT EXPENDITURE INCURRED IN RE LATION TO INCREASE IN SHARE CAPITAL IS A CAPITAL EXPENDITURE. HOWEVER, TH E SAID EXPENDITURE WAS DISALLOWED BY THE AO WHO WAS OF THE FIRM BELIEF THA T EVEN IF IT IS A CAPITAL EXPENDITURE, IT CANNOT BE INCLUDED IN THE WDV OF TH E FACTORY BUILDING. THE AO WAS OF THE OPINION THAT THE FACTORY BUILDING IS A DEPRECIABLE ASSET BY INCLUDING SUCH EXPENSES THE ASSESSEE IS TRYING T O WRONGLY CLAIM DEPRECIATION ON THE SAME. AS THIS ADDITION WAS CON FIRMED BY THE LD. CIT(A) AND THE ASSESSEE PREFERRED NOT TO AGITATE TH E MATTER BEFORE THE TRIBUNAL, THE AO WENT ON TO LEVY PENALTY ON THE IMP UGNED DISALLOWANCE. 8. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A). THE LD. CIT(A) WAS CONVINCED THAT MERE MAKING OF CLAIM WHIC H IS NOT SUSTAINABLE IN LAW BY ITSELF IS NOT AMOUNTING IN FU RNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. RELYING UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F CIT VS RELIANCE PETROPRODUCTS (P) LTD (2010) 322 ITR 158, THE LD. CIT(A) CANCEL THE PENALTY. 9. THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED TH E FINDINGS OF THE AO. 10. THE LD. COUNSEL FOR THE ASSESSEE REITERATED WHA T HAS BEEN SUBMITTED BEFORE THE LOWER AUTHORITIES. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE ORDERS OF THE LOWER AUTHORITIES. WE FIND THAT THE STAMPIN G CHARGES ON INCREASE OF SHARE CAPITAL PAID BY THE ASSESSEE HAS BEEN CAPITAL IZED BY THE ASSESSEE RELYING UPON THE DECISION OF THE HONBLE SUPREME CO URT (SUPRA). HOWEVER, MAY BE INADVERTENTLY THE ASSESSEE INCLUDED THE CAPITAL ITA NO.3163/M/12 4 EXPENDITURE IN THE WDV OF THE FACTORY BUILDING WHIC H ACCORDING TO THE AO RESULTED INTO CLAIM OF DEPRECIATION. WE DO NOT FIND ANY SUBSTANCE IN THE FINDING OF THE AO BECAUSE THE ASSESSEE WOULD NO T DERIVE ANY BENEFIT BY INCLUDING A MEAGER SUM OF RS. 50,000/- ON WHICH THE CLAIM OF DEPRECIATION WOULD HAVE BEEN ONLY RS. 5,000/- ON WH ICH THE TAX WOULD HAVE BEEN ONLY RS. 1,500/- ONLY. WE ARE NOT ABLE T O BUY THIS THEORY THAT TO SAVE A MEAGER SUM OF RS. 1,500/- THE ASSESSEE WO ULD HAVE MADE A FALSE CLAIM. THEREFORE, THE LD. CIT(A) HAS RIGHTLY DELET ED THE PENALTY RELYING UPON THE DECISION OF THE HONBLE SUPREME COURT IN T HE CASE OF RELIANCE PETROPRODUCTS (SUPRA). WE DO NOT FIND ANY REASONS TO TAMPER WITH THE ORDER OF THE LD. CIT(A). 12. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28.05.2013 . (!6 2 5* '! 7 8( 9 28.5.2013 5 2 : SD/- SD/- (H.L. KARWA ) (N.K . BILLAIYA ) /PRESIDENT !' () / ACCOUNTANT MEMBER MUMBAI; 8( DATED 28.5.2013 . . ./ RJ , SR. PS ITA NO.3163/M/12 5 (!6 (!6 (!6 (!6 2 22 2 /3# /3# /3# /3# ;!#*3 ;!#*3 ;!#*3 ;!#*3 / COPY OF THE ORDER FORWARDED TO : 1. +. / THE APPELLANT 2. /0+. / THE RESPONDENT. 3. < ( ) / THE CIT(A)- 4. < / CIT 5. #=: /3 , , / DR, ITAT, MUMBAI 6. : > / GUARD FILE. (! (! (! (!6 6 6 6 / BY ORDER, 0#3 /3 //TRUE COPY// ? ?? ? / @ @ @ @ , , , , (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI