ITO 16(1)(2), MUMBAI V. SURYADARSHAN CHS LTD, MUMBAI

ITA 3335/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78952 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 15-05-2014
• Assessment Year: 2000-2001
• Appeal Filed On: 11-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Revenue expenditure; Capital expenditure
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUM BAI , , BEFORE SHRI SANJAY ARORA, AM AND SHRI AMIT SHUKLA, JM ./ I.T.A. NO. 3335/MUM/2012 ( / ASSESSMENT YEAR: 2000-01) ITO-16(1)(2), MATRU MANDIR, MUMBAI-400 007 / VS. SURYADARSHAN CHS LTD. 44/50, WALKESHWAR ROAD, MUMBAI-400 006 ' ./# ./PAN/GIR NO. AAAAS 5676 B ( $ / REVENUE ) : ( %& '( /ASSESSEE ) & )* / CROSS OBJECTION NO. 107/MUM/2013 (ARISING OUT OF ITA NO. 3335/MUM/2012) ( / ASSESSMENT YEAR: 2000-01) SURYADARSHAN CHS LTD. 44/50, WALKESHWAR ROAD, MUMBAI-400 006 / VS. ITO-16(1)(2), MATRU MANDIR, MUMBAI-400 007 ' ./# ./PAN/GIR NO. AAAAS 5676 B ( %& '( /ASSESSEE ) : ( $ / REVENUE ) $ + , / REVENUE BY : SHRI PITAMBAR DAS %& '( + , / ASSESSEE BY : SHRI T. K. DOCTOR %$ - + . / DATE OF HEARING : 15.05.2014 /01 + . / DATE OF PRONOUNCEMENT : 21.05.2014 2 ITA NO. 3335/MUM/2012 & CO NO. 103/MUM/2013 (A.Y. 2000-01) SURYADARSHAN CHS LTD. / O R D E R PER SANJAY ARORA, A. M.: THIS IS AN APPEAL BY THE REVENUE AND CROSS OBJECTIO N (CO FOR SHORT) BY THE ASSESSEE ARISING OUT OF THE ORDER BY THE COMMISSION ER OF INCOME TAX (APPEALS)-25, MUMBAI (CIT(A) FOR SHORT) DATED 23.02.2012, PARTL Y ALLOWING THE ASSESSEES APPEAL CONTESTING THE LEVY OF PENALTY U/S.271(1)(C) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) IN RESPECT OF ITS ASSESSMENT FOR THE A SSESSMENT YEAR (A.Y.) 2000-01 VIDE ORDER DATED 28.03.2007. 2. THE PENALTY IN THE INSTANT CASE STANDS LEVIED IN RESPECT OF AN INCOME OF RS.14,86,753/- COMPRISED IN THE TOTAL INCOME DETERM INED IN ASSESSMENT U/S.144 R.W.S 147 OF THE ACT AT RS.15,11,010/- VIDE ORDER DATED 31.12 .2003. THE SAME PERTAINS TO TWO ITEMS OF INCOME, I.E., FOR RS.14,70,000/- AND RS.16,753/- . THE PENALTY U/S.271(1)(C) HAVING BEEN CONFIRMED FOR THE LATTER AMOUNT, THE ASSESSEE APPEA LS PER ITS CO, WHILE THE REVENUE IS IN APPEAL IN RESPECT OF THAT DELETED, VIDE ITS SOLE GR OUND, WHICH READS AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES AND IN LAW, THE LD. CIT(A) ERRED IN CANCELLING THE PENALTY U/S.271(1)(C) OF THE I. T. A CT, 1961, LEVIED BY THE A.O. WITHOUT APPRECIATING THE FACT THAT THE QUANTUM OF ADDITION AMOUNTING TO RS.14,70,000/- WAS CONFIRMED BY THE CIT(A) ON ME RIT. 3. WE SHALL, AS WOULD NECESSARILY BE REQUIRED OF US , PROCEED ON AN INCOME-WISE BASIS. AS REGARDS THE INCOME OF RS.14.70 LACS, WHIC H IS IN RESPECT OF AN ADVERTISEMENT INCOME FROM HOARDING/S EARNED BY THE ASSESSEE-SOCIE TY, THE ASSESSEE ADDUCED BEFORE US THE COPY OF THE ORDER BY THE TRIBUNAL U/S.254(1) IN ITS CASE IN THE QUANTUM PROCEEDINGS (IN ITA NO.4955/MUM/2005 DATED 31.01.2014/COPY ON RECOR D), WHEREBY THE TRIBUNAL HAS SINCE DELETED THE ADDITION IN RESPECT OF THE SAID I NCOME. IN THIS VIEW OF THE MATTER, NO PENALTY QUA THE SAID AMOUNT, IT WAS SUBMITTED BY THE LD. AUTHO RIZED REPRESENTATIVE (AR), WOULD SURVIVE. THE LD. DEPARTMENTAL REPRESENTATIVE (DR), ON BEING CONFRONTED WITH THE SAME, WOULD SUBMIT THAT THE REVENUE INTENDS TO PREF ER A MISCELLANEOUS APPLICATION AGAINST THE QUANTUM ORDER BY THE TRIBUNAL (SUPRA). THIS IS AS IT HAD FAILED TO TAKE NOTE OF 3 ITA NO. 3335/MUM/2012 & CO NO. 103/MUM/2013 (A.Y. 2000-01) SURYADARSHAN CHS LTD. THE FACT THAT THE ASSESSMENT WAS IN THE INSTANT CAS E MADE U/S.144 OF THE ACT IN THE ABSENCE OF ASSESSEE FURNISHING THE NECESSARY DETAILS OF THE REPAIRS, CLAIMED TO BE INCURRED AT RS.18.80 LACS, AGAINST WHICH THE SAID INCOME WAS SE T OFF, PLEADING FOR HAVING RESULTANTLY SUFFERED A LOSS ON THE SAID ACTIVITY. SECONDLY, THE SAID EXPENDITURE WOULD, IN ANY CASE, AMOUNT TO A CAPITAL EXPENDITURE, BEING INCURRED ON STRUCTURAL REPAIRS TO THE BUILDING, SO THAT THE ASSESSEE OUGHT TO HAVE CLAIMED AND BEEN AL LOWED DEPRECIATION THEREON, AND NO MORE. AS SUCH, IT WAS PLEADED BY HIM THAT THE MATTE R BE KEPT IN ABEYANCE TILL THE TIME THE REVENUES PROPOSED MISCELLANEOUS APPLICATION STANDS DISPOSED OF BY THE TRIBUNAL. 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATE RIAL ON RECORD. THE FACT THAT THE ASSESSEE HAS INCURRED EXPENDITURE ON THE STRUCTURAL REPAIRS TO THE BUILDING IN A SUM HIGHER THAN THE IMPUGNED INCOME OF RS.14.70 LACS STANDS AD MITTED AND CONFIRMED, SO THAT THERE WAS NO CONCEALMENT OR FURNISHING INACCURATE PARTICU LARS OF INCOME; THE ASSESSEE TRANSFERRING THE NET DEBIT BALANCE, MAINTAINED UNDE R THE ACCOUNT HEAD MAJOR REPAIRS, AT RS.5,39,222/-, TO ITS INCOME AND EXPENDITURE ACCOUN T FOR THE YEAR IS NOT IN DOUBT (PB PG.56). THE SAID REPAIRS, IT STANDS EXPLAINED, STOO D UNDERTAKEN TO MEET BOTH THE IMPACT OF AS WELL TO WITHSTAND THE HEAVY CONSTRUCTION ON THE TERRACE OF THE BUILDING SET UP TO SUPPORT THE IRON STEEL SUPPORTING THE HOARDINGS. WHAT, THEN, IS THE LEVY OF PENALTY ABOUT ? THE ISSUE AS TO WHETHER THE SAID EXPENDITURE COULD BE ALLOWED , WHOLLY OR PARTLY, AGAINST THE IMPUGNED INCOME, STANDS DECIDED BY THE TRIBUNAL IN THE INSTANT CASE BY CONSIDERING THE FINDINGS BY THE FIRST APPELLATE AUTHORITY AS WELL A S THE REMAND REPORT DATED 04.04.2005 (PB PGS.9-10) CALLED FOR BY HIM FROM THE A.O. IN TH E QUANTUM PROCEEDINGS, EXPRESSING A DEFINITE VIEW THAT THE SAME COULD BE ALLOWED AS A R EVENUE EXPENDITURE. THE SAME, IN OUR VIEW, COULD AT BEST BE A SUBJECT MATTER OF APPEAL A ND NOT OF A MISCELLANEOUS APPLICATION. A PROPOSED ACTION WOULD EVEN OTHERWISE NOT CONSTRAI N US TO PROCEED WITH THE MATTER. AS REGARDS THE CONTENTION BY THE LD. DR THAT THE ASSES SEE, CLAIMING TO BE A MUTUAL CONCERN, COULD NOT HAVE POSSIBLY CLAIMED THE EXPENDITURE ON BUILDING REPAIRS AGAINST ITS ADVERTISEMENT INCOME, WE FIND NO SUCH ARGUMENT BEIN G RAISED AT ANY STAGE, AND AS NOT REPRESENTING THE REVENUES CASE EITHER IN THE QUANT UM OR THE PENALTY PROCEEDINGS. 4 ITA NO. 3335/MUM/2012 & CO NO. 103/MUM/2013 (A.Y. 2000-01) SURYADARSHAN CHS LTD. THE LD. CIT(A) HAS DELETED THE PENALTY PRIOR TO TH E DECISION IN THE QUANTUM BY THE TRIBUNAL, WITH REFERENCE TO THE DECISION BY THE APE X COURT IN CIT V. RELIANCE PETROPRODUCTS (P.) LTD . [2010] 322 ITR 158 (SC), ON THE BASIS THAT THE AS SESSEE HAS RAISED A LEGAL ISSUE, SO THAT IT IS NOT LIABLE FOR THE LEV Y OF PENALTY U/S.271(1)(C). IN OUR VIEW, THE QUESTION OF WHETHER AN EXPENDITURE IS A CAPITAL OR REVENUE EXPENDITURE IS LARGELY A QUESTION OF FACT, RATHER THAN GIVING RISE TO A LEGA L ISSUE. SO, HOWEVER, THE MATTER BEING DEBATABLE, WE ARE INCLINED TO BE IN AGREEMENT WITH THE LD. CIT(A), I.E., EVEN ON MERITS. THIS IS APART FROM THE FACT THAT NO ADDITION ON ACC OUNT OF THE SAID INCOME SURVIVING IN ASSESSMENT, THE PENALTY PROCEEDINGS FAIL AT THE THR ESHOLD, SO THAT WE SEE NO REASON NOT TO UPHOLD THE IMPUGNED ORDER DELETING THE PENALTY. WE DECIDE ACCORDINGLY. 5. COMING TO THE SECOND INCOME UNDER REFERENCE, RAI SED BY THE ASSESSEE PER ITS CO, THE SAME INVOLVES DISALLOWANCE OF DEDUCTION U/S.80P (2)(D) IN RESPECT OF BANK INTEREST EARNED ON FIXED DEPOSIT/S (RS.16,379/-) AND SAVINGS BANK DEPOSIT (RS.374/-) FROM BANK OF BARODA (BOB). PENALTY STOOD LEVIED AND CONFIRMED ON THE BASIS THAT THE SAID INCOME WAS NOT EXIGIBLE TO DEDUCTION UNDER THE SAID PROVISION, SO THAT THE ASSESSEES CLAIM WAS IN FLAGRANT VIOLATION THEREOF. DURING THE HEARING, THE LD. AR WOULD, WITH REFERENCE TO THE ASSESSEES STATEMENT OF INCOME (ANNEXURE-7) AND INC OME AND EXPENDITURE ACCOUNT (PB PG.56), EXHIBIT THAT THE DEDUCTION U/S.80P(2)(D), C LAIMED AT RS.69,039/-, WAS IN RESPECT OF BANK INTEREST FROM MAHARASHTRA STATE CO-OPERATIVE B ANK (MSC) AND NOT THAT EARNED FROM BOB. THE ASSESSEE HAD NOT PREFERRED AN APPEAL AGAIN ST THE ASSESSMENT DENYING THE DEDUCTION UNDER THE SAID SECTION IN VIEW OF THE NOM INAL AMOUNT, SO THAT THE SAME SHOULD NOT BE TAKEN AGAINST THE ASSESSEE. 6. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. THE FIGURES STATED IN THE TWO DOCUMENTS AFORE-REFERRED ARE CLEAR AND E XPLICIT, AND COULD NOT BE CONTROVERTED BY THE LD. DR DURING HEARING. WE HAVE CONSEQUENTLY NO HESITATION IN STATING THAT THE FACTS AS STATED IN RESPECT OF THIS AMOUNT/S, BOTH IN THE PENALTY ORDER AND THE IMPUGNED ORDER, ARE NOT CORRECT; THE ASSESSEE HAVING IN FACT NOT CL AIMED ANY DEDUCTION U/S.80P(2)(D) QUA 5 ITA NO. 3335/MUM/2012 & CO NO. 103/MUM/2013 (A.Y. 2000-01) SURYADARSHAN CHS LTD. INTEREST EARNED FROM BOB. WE, ACCORDINGLY, DELETE T HE PENALTY ON THIS AMOUNT. WE DECIDE ACCORDINGLY. 7. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED AND THE ASSESSEES CO IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON MAY 21, 2014 SD/- SD/- (AMIT SHUKLA) (SANJAY ARORA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER 2- MUMBAI; 3% DATED : 21.05.2014 $.%../ ROSHANI , SR. PS ! ' #$%& ' &$ / COPY OF THE ORDER FORWARDED TO : 1. '4 / THE APPELLANT 2. )*'4 / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. 7$8 9 )%:& , . :&1 , 2- / DR, ITAT, MUMBAI 6. 9 ;' < - / GUARD FILE ! ( / BY ORDER, )/(* + (DY./ASSTT. REGISTRAR) , 2- / ITAT, MUMBAI