NATIONAL STOCK EXCHANGE OF INDIA LTD, MUMBAI V. DCIT CIR 7(1), MUMBAI

ITA 3326/MUM/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71029 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 20-03-2013
• Assessment Year: 2003-2004
• Appeal Filed On: 26-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K SINGH
• Assessee Lawyers: ARVIND SONDE
• Keywords: Capital expenditure
• Section: 143(3)

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI .. , ! ' , # !, $ BEFORE SHRI R.S.SYAL, AM AND SHRI VIVEK VARMA, JM ITA NO.3326/MUM/2011 : ASST.YEAR 2003-2004 M/S.NATIONAL STOCK EXCHANGE OF INDIA LIMITED, C-1, BLOCK G, EXCHANGE PLAZA BANDRA KURLA COMPLEX, BANDRA (EAST) MUMBAI 400 051. PAN : AAACN1797L. THE DY.COMMISSIONER OF INCOME-TAX CIRCLE 7(1) MUMBAI. ( %& / // / APPELLANT) ( ( ( ( / VS. ( )*%&/ RESPONDENT) %& + ++ + , , , , / APPELLANT BY : SHRI ARVIND SONDE )*%& + , + , + , + , / RESPONDENT BY : SHRI S.K.SINGH ( + - / / / / DATE OF HEARING : 04.09.2013 ./0 + - / DATE OF PRONOUNCEMENT : 06.09.2013 !1 !1 !1 !1 / / / / O R D E R PER R.S.SYAL (AM) : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 07.01.2011 CONFIRMING THE PENALTY OF ` 53,84,009 IMPOSED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE ACT IN RELATION TO THE ASSESSMENT YEAR 2003-2004. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE CLAIMED DEDUCTION OF ` 1,28,38,181 TOWARDS `LEASE PREMIUM AMORTIZATION ON LEASEHOLD LAND BY GIVING THE FOLLOWING NOTE IN I TS COMPUTATION OF INCOME :- LEASE PREMIUM PAID IN RESPECT OF LEASEHOLD LAND ACQUIRED BY THE ASSESSEE FROM THE B.M.R.D.A. (BOMBA Y METROPOLITAN REGIONAL DEVELOPMENT AUTHORITY) IS BEI NG AMORTIZED OVER THE LEASE PERIOD OF 80 YEARS. THE CO MPANY ITA NO.3326/MUM/2011. M/S.NATIONAL STOCK EXCHANGE OF INDIA LTD. 2 HAS BEEN CLAIMING PROPORTIONATE AMORTIZATION OF LEA SE PREMIUM AS AN ALLOWABLE REVENUE DEDUCTION BUT HAS B EEN DISALLOWED BY THE INCOME TAX DEPARTMENT IN THE PAST . THE APPEALS FOR EARLIER YEARS ARE PENDING BEFORE IT AT AND/OR CIT(APPEALS). 3. THE ASSESSING OFFICER DID NOT ACCEPT THE CLAIM F OR DEDUCTION OF AMORTIZATION OF LEASE PREMIUM IN THE ASSESSMENT MAD E U/S 143(3) BY RELYING ON THE VIEW CANVASSED BY HIM FOR THE ASSESS MENT YEARS 1995- 96 ONWARDS. IT WAS HELD BY HIM IN THE ORDERS FOR TH E EARLIER YEARS THAT THE LEASE PREMIUM IS A CAPITAL EXPENDITURE AND HENC E NOT DEDUCTIBLE. RESULTANTLY, THE ADDITION WAS MADE IN THE REGULAR A SSESSMENT FOR THE YEAR IN QUESTION. CONSEQUENTLY, PENALTY WAS IMPOSED U/S 271(1)(C) ON SUCH ADDITION WHICH CAME TO BE UPHELD BY THE IMPUGN ED ORDER. THE ASSESSEE IS AGGRIEVED AGAINST SUCH SUSTENANCE OF PE NALTY. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE RELEVANT MATERIAL ON RECORD. IT IS NOTICED THAT THE PENALTY HAS BEEN IMPOSED AND UPHELD ONLY ON ACCOUNT OF DISALLOWANCE OF DEDUCTION CLAIMED BY THE ASSESSEE ON ACCOUNT OF AMORTIZATION OF LEASE PREMIU M OVER THE LEASE PERIOD OF 80 YEARS. THE ASSESSEE TOOK CONSISTENT ST AND IN CLAIMING SUCH DEDUCTION IN THE EARLIER YEARS. THE ASSESSING OFFICER DID NOT ALLOW SUCH DEDUCTIONS FROM THE ASSESSMENT YEARS 199 5-96 ONWARDS BY HOLDING THE SAME TO BE CAPITAL EXPENDITURE. QUAN TUM APPEALS FOR ASSESSMENT YEARS 1995-96 UP TO 1997-98 CAME UP FOR ADJUDICATION BEFORE THE TRIBUNAL. VIDE ORDER DATED 22.12.2008, T HE TRIBUNAL HAS UPHELD THE ADDITIONS BY HOLDING THAT NO DEDUCTION CAN BE ALLOWED AS IT IS A CAPITAL EXPENDITURE. IN DOING SO, THE TRIB UNAL RELIED ON SPECIAL ITA NO.3326/MUM/2011. M/S.NATIONAL STOCK EXCHANGE OF INDIA LTD. 3 BENCH ORDER IN THE CASE OF JCIT V. MUKUND LIMITED [(2007) 106 ITD 231 (MUM.) (SB)] IN WHICH IT HAS BEEN HELD THAT THE AMOUNT PAID AS PREMIUM ON LEASEHOLD LAND IS CAPITAL EXPENDITURE. T HIS SPECIAL BENCH WAS CONSTITUTED WITH A VIEW TO BRING CONSISTENCY IN THE VIEWS OF THE TRIBUNAL ON THIS ISSUE, WHICH PASSED ITS ORDER ON 1 5 TH FEBRUARY, 2007. THE TRIBUNAL IN THE QUANTUM APPEAL FOR THE INSTANT YEAR FOLLOWED THE VIEW TAKEN BY IT IN THE EARLIER YEARS. IT IS RELEV ANT TO ACCENTUATE THAT THE ASSESSEE FILED RETURN FOR THE INSTANT YEAR ON 2 8.11.2003 I.E. MUCH BEFORE THE PASSING OF THE ORDER BY THE SPECIAL BENC H OR BY THE TRIBUNAL IN ASSESSEES OWN CASE IN QUANTUM PROCEEDI NGS. THE VERY FACT THAT THE SPECIAL BENCH WAS CONSTITUTED FAIRLY INDICATES THAT THE QUESTION OF CLAIMING DEDUCTION TOWARDS AMORTIZATION OF LEASE PREMIUM WAS CONTROVERSIAL. THE ASSESSEE FOLLOWED A POSSIBLE VIEW PREVALENT AT THAT TIME IN CLAIMING THE DEDUCTION AN D MADE THE THINGS ABUNDANTLY CLEAR BY GIVING A NOTE TO THE COMPUTATIO N OF INCOME IN SUPPORT OF THIS DEDUCTION. THE MERE FACT THAT THE T RIBUNAL DID NOT ACCEPT THE CLAIM FOR DEDUCTION OF AMORTIZATION OF L EASE PREMIUM CANNOT PER SE LEAD TO THE IMPOSITION OR CONFIRMATION OF PENALTY U/S 271(1)(C). IT IS A SETTLED LEGAL POSITION THAT WHER E TWO LEGALLY SUSTAINABLE VIEWS ARE AVAILABLE ON A POINT AND THE ASSESSEE FOLLOWS ONE OF SUCH VIEWS IN PREFERENCE TO THE OTHER, IT CA NNOT BE A CASE OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS. THE HONBLE SUPREME COURT IN THE CASE OF CIT V. RELIANCE PETRO PRODUCTS PVT. LTD. [(2010) 322 ITR 158 (SC)] HAS HELD THAT SIMPLY FOR THE REASON THAT THE ASSESSING OFFICER DID NOT FIND THE CLAIM OF THE ASSESSEE TO BE SUSTAINABLE IN LAW UP TO A CERTAIN E XTENT, IT CAN NOT BE A ITA NO.3326/MUM/2011. M/S.NATIONAL STOCK EXCHANGE OF INDIA LTD. 4 CASE FOR PENALTY U/S.271(1)(C) MORE SO WHEN THE PAR TICULARS FURNISHED BY THE ASSESSEE WERE NOT INACCURATE. WHEN WE ADVERT TO THE FACTS OF THE INSTANT CASE IT IS NOTICED THAT THE ASSESSEE CL AIMED SUCH DEDUCTION BY MAKING AMPLY CLEAR OF SUCH DEDUCTION BY WAY OF N OTE TO THE COMPUTATION OF INCOME. THE DEDUCTION WAS CLAIMED A S THE ASSESSEE HAD CHALLENGED THE EARLIER ORDERS OF THE AO IN MAKI NG SUCH ADDITIONS, WHICH FACT WAS PARTICULARLY MADE CLEAR IN THE NOTE TO THE COMPUTATION OF INCOME. IT IS STILL FURTHER RELEVANT TO NOTE TH AT THOUGH THE DEPARTMENT WAS NOT GRANTING DEDUCTION FOR AMORTIZAT ION OF LEASE PREMIUM FROM THE ASSESSMENT YEAR 1995-96 ONWARDS, BUT THE PENALTY U/S 271(1)(C) ON THIS SCORE CAME TO BE LEVIED FOR T HE FIRST TIME. THE REVENUE CHOSE NOT TO IMPOSE PENALTY ON SUCH DISALLO WANCE IN THE EARLIER YEARS. IN VIEW OF THE FOREGOING DISCUSSION, WE ARE OF THE CONSIDERED OPINION THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN SUSTAINING THE PENALTY WHICH IS HEREBY ORDERED TO B E DELETED. 5. 2 -3 4 - 5 + 6- 78 IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED ON THIS 06 TH DAY OF SEPTEMBER, 2013. !1 + ./0 9!(3 / + : SD/- SD/- (VIVEK VARMA) (R.S.SYAL) # ! # ! # ! # ! / JUDICIAL MEMBER ! ! ! ! / ACCOUNTANT MEMBER MUMBAI ; 9!( DATED : 06 TH SEPTEMBER, 2013. DEVDAS* ITA NO.3326/MUM/2011. M/S.NATIONAL STOCK EXCHANGE OF INDIA LTD. 5 !1 + )#-;' <'0- !1 + )#-;' <'0- !1 + )#-;' <'0- !1 + )#-;' <'0-/ COPY OF THE ORDER FORWARDED TO : 1. %& / THE APPELLANT 2. )*%& / THE RESPONDENT. 3. = () / THE CIT, MUMBAI. 4. = / CIT(A) 13, MUMBAI. 5. '@: )#-#( , , / DR, ITAT, MUMBAI 6. :A B / GUARD FILE. !1( !1( !1( !1( / BY ORDER, *'- )#- //TRUE COPY// C C C C/ // /7 6 7 6 7 6 7 6 ( DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI