The ACIT, Circle-8, Ahmedabad V. ZORA PHARMA LTD., Ahmedabad

ITA 3343/AHD/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 72865 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 23-12-2013
• Assessment Year: 1998-1999
• Appeal Filed On: 16-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J P JHANGID
• Assessee Lawyers: AARTI N SHAH
• Keywords: Depreciation; Speculation loss
• Section: 143(3); 115JB; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD (BEFORE SHRI MUKUL KR. SHRAWAT, J.M. & SHRI ANIL C HATURVEDI, A.M.) I.T. A. NO. 3343 /AHD/2010 (ASSESSMENT YEAR:1998-99) THE ACIT CIRCLE-8, AHMEDABAD V/S ZORA PHARMA LTD., 604, ANIKET, C.G. ROAD, NAVRANGPURA, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AAACZ1017D APPELLANT BY : SHRI J.P. JHANGID, SR. D.R . RESPONDENT BY : SMT. AARTI N. SHAH. ( )/ ORDER DATE OF HEARING : 23-12-2013 DATE OF PRONOUNCEMENT : 23 -01-2014 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF CIT(A)-XIV, AHMEDABAD DATED 20.09.2010 FOR A.Y. 1998-99. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF PH ARMACEUTICALS. IT FILED ITS RETURN OF INCOME FOR AY 1998-99 ON 30.11 .1998 DECLARING THE TOTAL LOSS OF RS 31,66,314/- THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED U/S 143(3) VID E ORDER DATED ITA NO 3343/AHD/2010 . A.Y. 1998- 99 2 29.3.2001 AND THE TOTAL INCOME WAS DETERMINED AT RS 19,94,984/- BY MAKING DISALLOWANCE OF PAYMENT FOR TECHNICAL KNOWHO W (RS 5,66,667/-) , LOSS ON SALE OF SHARES (RS 54,952/-), DEPRECIATION U/S 115JA (RS 28,56,067/-), CLAIM OF 100% DEPRECIATION (RS 10,82, 558/-) AND ADDITION U/S 68 (34,44,631/-). AGAINST THE ADDITIONS MADE BY THE AO , ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) GRANTED PA RTIAL RELIEF TO THE ASSESSEE. AGAINST THE ORDER OF CIT(A), MATTER WAS C ARRIED BEFORE ITAT WHERE CERTAIN ADDITIONS WERE DELETED BUT SUSTAINED ADDITION ON ACCOUNT OF LOSS ON SALE OF SHARES (RS 54952/-), CLAIM OF 100% DEPRECIATION (RS 10,82,558/-) AND ADDITION U/S 68 (RS 15,99,775/-) W AS SET ASIDE. ON THE AFORESAID ADDITION/SET ASIDE AGGREGATING TO RS 27,3 7,275/- AO VIDE ORDER DATED 27.1.2010 PASSED U/S 271(L)(C) LEVIED PENALTY OF RS 4,02,500/-. AGGRIEVED BY THE PENALTY ORDER PASSED BY AO, ASSESS EE CARRIED THE MATTER BEFORE CIT(A). CIT(A) VIDE ORDER DATED 20.9. 2010 DELETED THE PENALTY BY HOLDING AS UNDER:- 4. I HAVE CONSIDERED THE FACTS AND SUBMISSIONS OF T HE LD. A.R. CAREFULLY. IN THE PENALTY PROCEEDINGS T HE A.O. REJECTED THE VARIOUS ARGUMENTS OF THE APPELLAN T WHICH HAVE BEEN REPRODUCED IN THE PENALTY ORDER AND PROCEEDED TO LEVY THE PENALTY ON THE GROUND THA T THE APPELLANT HAS FURNISHED INACCURATE PARTICULARS OF INCOME TO THE EXTENT OF ADDITIONS AM OUNTING TO RS. 27,37,275/- AND IN VIEW OF SUPREME COURTS DECISION IN THE CASE OF DHARMENDRA TEXTILE PROCESSORS 306 ITR 227, THE A.O. WAS NOT REQUIRED TO PROVE ANY MENS REA BEFORE LEVY OF PENALTY. 4.1 BEFORE ME IT HAS BEEN STATED THAT IT AS REGARDS SPECULATIVE LOSS CLAIMED BY THE APPELLANT PATANKAR LEASE FINANCE LTD. WHOSE MAIN BUSINESS WAS THAT OF INVESTMENT AND TRADING IN SHARES AND SECURITIES HAD BEEN AMALGAMATED WITH THE APPELLANT COMPANY FRO M 1994-95 AND ACCORDINGLY ALL THE SHARES AND SECURITIES HELD BY THE SAID COMPANY HAD BEEN TRANSF ERRED TO THE APPELLANT COMPANY AND THEREFORE THE PROVISIONS OF SECTION 73 OF THE IT ACT WAS NOT APPL ICABLE IN THE INSTANT CASE. IT WAS FURTHER STATED T HAT THE LOSS ON SALE OF SHARES WAS DUE TO DIFFERENCE IN VALUATION OF CLOSING STOCK, LOSS ON SHARES RECEIVE D ON AMALGAMATION AND LOSS ON SHARES PURCHASED AND SOLD DURING THE YEAR BY THE APPELLANT. 4.2 AS REGARDS CLAIM OF DEPRECIATION @ 100% ON PLAN T AND MACHINERY IT IS EVIDENT FROM THE ASSESSMENT ORDER THAT THE ASSESSING OFFICER MADE THE ADDITION MERELY ON THE FACT THAT CERTIFICATE FOR 100% DEPRECIATION WAS NOT PRODUCED. THE HON'BLE TRIBUNAL IN THE CASE OF THE ASSESSEE FOR A.Y 1997-98 VIDE ITA NO 3343/AHD/2010 . A.Y. 1998- 99 3 ORDER DATED 4.1.2008 ITSELF ALLOWED DEPRECIATION TO THE ASSESSEE AT THE RATE OF 100%'ON EFFLUENT TREATMENT PLANT AND 25% ON LABORATORY EQUIPMENT. FO LLOWING THE SAID ORDER THE HON'BLE TRIBUNAL DIRECTED TO ALLOW THE DEPRECIATION ON EFFLUENT TREA TMENT PLANT AT THE RATE OF 100% WHILE ON LABORATORY EQUIPMENT TO BE ALLOWED AT THE RATE OF 2 5% FOR THE YEAR UNDER CONSIDERATION. THE AFORESAID FACTS CLEARLY SHOW THAT THE APPELLANT DIS CLOSED ALL THE RELEVANT FACTS CONCERNING THE CLAIM MADE BY IT DURING THE ASSESSMENT PROCEEDINGS. THE A .O WHILE LEVYING THE PENALTY IN RESPECT OF THESE AMOUNTS HAS NOT HELD THAT APPELLANTS EXPLANATION WI TH REFERENCE TO THESE CLAIMS WERE FALSE OR FABRICATED. 4.3 IT WAS FURTHER STATED THAT EVEN AFTER THE AFORE SAID ADDITION MADE BY THE A.O AND CONFIRMED BY THE CIT(A) AND HON'BLE TRIBUNAL, THE FINAL INCOME ASSES SED WAS AT LOSS. IT WAS ALSO CONTENDED THAT THE APPELLANT HAD FILED DETAILED EXPLANATIONS WITH NECE SSARY EVIDENCES IN RESPECT OF DISALLOWANCES MADE BY/ THE ASSESSING OFFICER WHICH WAS REJECTED WITHOU T PROPER JUSTIFICATION ON THE BASIS OF CONJECTURES AND SURMISES. REFERRING TO THE VARIOUS CASE LAWS IT WAS STATED THAT THE PENALTY U/S 271(1)(C) CAN BE IMPOSED ONLY WHEN THERE WAS A FAILURE TO DISCHARGE AN OBLIGATION AND THE RATIO OF THE SUPREME COURT DECISION IN THE CASE OF DHARMENDRA TEXTILE PROCESSO RS 306 ITR 244 DOES NOT MEAN AUTOMATIC PENALTY FOR EVERY ADDITION SUSTAINED. FINALLY IT HAS BEEN S TATED THAT THE INCOME RETURNED AS WELL AS THE INCOM E ASSESSED IS AS PER THE PROVISIONS OF BOOK PROFIT U/ S 115JB AND NOT ON THE BASIS OF INCOME UNDER NORMAL PROVISIONS OF THE ACT. THE ADDITION MADE HAS NOT DI STURBED THE CONDITIONS U/S 115JB. THEREFORE RELYING IN THE DECISION OF ITAT DELHI IN THE CASE OF JAYCO INDIA P. LTD. 152 TAXMAN 14 (MAGAZINE) IT WAS CLAIMED THAT THE PENALTY CANNOT BE LEVIED. 4.4 THE MATTER HAS BEEN CONSIDERED AND I DO NOT FIN D THIS A FIT CASE FOR LEVY OF PENALTY. THE ADDITION MADE BY THE A.O IS BASED ON THE INFORMATION CONTAIN ED IN THE PAPERS SUPPLIED WITH THE RETURN OF INCOME BY THE APPELLANT ITSELF I.E TAX AUDIT REPORT . THEREFORE, IT IS DIFFICULT TO SAY THAT THE ASSESS EE HAS PROVIDED ANY INACCURATE PARTICULARS OR CONCEALED AN Y INCOME. IT IS MORE OF A CASE OF A CLAIM WHICH HAS NOT BEEN ACCEPTED BY THE A.O. THAT BEING THE CA SE IN VIEW OF THE RECENT DECISION OF SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS P. LTD. 322 ITR 158, THE PENALTY WOULD NOT BE LEVIABLE. MOREOVER, THE FACT THAT THE APPELLANT'S INCOME HAS BEEN COMPUTED U/S 115JB AND NOT WITHSTANDING THE ADDITION MADE, THERE HAS BEEN NO DIFFERENCE IN THE ASSESSED INCOME, THE LEVY OF PENALTY U/S 271(1)(C) MAY BE DIFFICULT AS IT WILL NOT BE POSSIBLE TO IDEN TIFY THE BASIS FOR LEVY OF PENALTY I.E THE TAX SOUG HT TO BE EVADED. THEREFORE, THE DECISION OF THE DELHI ITAT I N THE CASE OF JAYCO INDUSTRIES (SUPRA) WOULD COME TO THE APPELLANT'S HELP. 5. THEREFORE CONSIDERING ALL THE FACTS AND CIRCUMST ANCES THE PENALTY OF RS. 4,02,500/- LEVIED IN THE CONTEXT IS DELETED. THE APPEAL IS ALLOWED. 4. AGGRIEVED BY THE ORDER OF CIT(A), REVENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUND. ITA NO 3343/AHD/2010 . A.Y. 1998- 99 4 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DE LETING THE PENALTY OF RS. 4,02,500/- LEVIED U/S. 271(1)(C) OF THE ACT. 5. BEFORE US, LD D.R. SUPPORTED THE ORDER OF AO. THE L D A.R. ON THE OTHER HAND REITERATED THE SUBMISSIONS BEFORE AO AND CIT(A ). HE FURTHER SUBMITTED THAT ASSESSEE HAS NEITHER CONCEALED ANY I NCOME NOR HAS FURNISHED ANY INACCURATE PARTICULARS OF INCOME. HE FURTHER SUBMITTED THAT THE FINAL INCOME ASSESSED IS LOSS AND THEREFORE NO PENALTY IS LEVIABLE. HE THUS SUPPORTED THE ORDER OF CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS AN UNDISPUTED FACT THAT DURING THE COURSE OF ASSESSMENT VARIOUS ADDITIONS WERE MADE BY AO. DURING THE APPELLATE PRO CEEDINGS BEFORE CIT(A) AND ITAT PART OF THE ADDITIONS WERE DELETED AND PART OF ADDITIONS WERE SUSTAINED/SET ASIDE TO THE FILE OF AO. CIT(A) WHILE DELETING THE PENALTY HAS GIVEN A FINDING THAT ASSESSEE HAS NOT P ROVIDED ANY INACCURATE PARTICULARS OF INCOME OR CONCEALED ANY INCOME IN VI EW OF THE FACT THAT THE ADDITIONS MADE BY THE AO WAS BASED ON THE INFORMATI ON CONTAINED IN THE INFORMATION FURNISHED BY THE ASSESSEE IN THE TAX AU DIT REPORT. HE HAS NOTED THAT EVEN AFTER THE ADDITIONS, THE INCOME HAS BEEN COMPUTED U/S 115JB AND THEREFORE THERE IS NO DIFFERENCE IN THE T AXABLE INCOME. HE ALSO PLACED RELIANCE ON THE DECISION OF APEX COURT IN TH E CASE OF RELIANCE PETROPRODUCTS P.LTD 322 ITR 158. BEFORE US, THE LD D.R. COULD NOT CONTROVERT THE FINDINGS OF CIT(A) NOR COULD BRING A NY MATERIAL TO CONTROVERT THE FINDING OF CIT(A). IN VIEW OF THE AF ORESAID FACTS, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF CIT(A) AND THUS UPHOLD THE ORDER OF CIT(A). THUS THIS GROUND OF REVENUE IS DISMISSED . ITA NO 3343/AHD/2010 . A.Y. 1998- 99 5 7. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN OPEN COURT ON 23 -01 -2014. SD/- SD/- (MUKUL KR. SHRAWAT) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITA T,AHMEDABAD