DCIT, New Delhi V. M/s. Sony India Pvt. Ltd, New Delhi

ITA 3464/DEL/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4479 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 10-04-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 31-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAUSHLENDRA TIWARI
• Assessee Lawyers: PUR USHOTTAM ANAND
• Keywords: Depreciation; Question of law; Wrong claim
• Section: 143(3); 10B

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH 'G', NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOU NTANT MEMBER I.T.A. NOS. 3504 & 3464/DEL/2013 A.YRS. 2005-06 & 2006-07 DCIT, CIRCLE-9(1), VS. M/S SONY INDIA PVT. LTD. ROOM NO. 163, A-31, MOHAN COOPERATIVE C.R. BUILDING, INDUSTRIAL ESTATE, MAIN MATHURA NEW DELHI ROAD, NEW DELHI (PAN: AABCS1571Q) (APPELLANT) (RESPONDENT) DEPARTMENT BY : SH. KAUSHLENDRA TIWARI, SR. DR. ASSESSEE BY : SH. NAGESHWAR RAO, ADV. & SH. PUR USHOTTAM ANAND, ADV. ORDER PER H.S. SIDHU, JM : THESE APPEALS BY THE REVENUE ARE DIRECTED AGAINST T HE ORDERS OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-XII, N EW DELHI DATED 11.02.2013 & 26.2.2013 PERTAINING TO ASSESSMENT YE ARS 2005-06 & 2006-07 RESPECTIVE. SINCE THE ISSUES INVOLVED IN TH ESE APPEALS ARE COMMON AND IDENTICAL, HENCE, THE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE, BY DEALING WITH ASSESSMENT YEAR 2005-06. 2 2. FIRST WE DEAL WITH ITA NO. 3504/DEL/2013 FOR AY 2005-06 WHEREIN THE FOLLOWING GROUNDS HAVE BEEN RAISED. I) THE CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS. 2,07,46,650/- U/S. 271(1)(C) OF THE INCOME TAX ACT, 1961. II) THE APPELLANT CRAVES TO AMEND MODIFY, ALTER, AD D OR FOREGO ANY GROUND OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 2.1 IN OTHER APPEAL, IDENTICAL ISSUES ARE INVOLVED AND SIMILAR GROUNDS HAVE BEEN RAISED, THE ONLY DIFFERENCE IS IN THE FIG URES INVOLVED. 3. THE BRIEF FACTS OF THE CASE ARE THAT RETURN IN THIS CASE WAS FILED AT AN INCOME OF RS. 36,16,57,100/- ON 31.10.2005. THE AS SESSMENT IN THIS CASE WAS COMPLETED U/S. 143(3) OF THE INCOME TAX AC T, 1961 (HEREINAFTER REFERRED AS THE ACT) ON 29.12.2008 AT AN INCOME OF RS. 1,00,81,35,500/- AND MINIMUM PENALTY U/S. 27(1) OF THE ACT AMOUNTING TO RS. 2,07,46,650/- WAS LEVIED IN CONNEC TION WITH THE FOLLOWING DISALLOWANCES, VIDE ORDER DATED 28.12.201 1. - DEPRECIATION AMOUNTING TO RS. 4,42,22,475/- ON T HE ASSETS OF DARUHERA UNIT CLOSED DURING THE YEAR; - DEFERRED ALLOWANCE OF 4/5 TH OF LEGAL AND OTHER EXPENSES ON RESTRUCTURING OF BUSINESS AMOUNTING TO RS. 1,37,65,600/- (TO BE ALLOWED IN EQUAL INSTALMENTS I N FOUR SUBSEQUENT ASSESSMENT YEARS); AND 3 - EXCLUSION OF MISCELLANEOUS INCOME FROM THE CLAIM OF TAX DEDUCTION UNDER SECTION 10A AND 10B AMOUNTING TO RS . 2,59,765/-. 3.1 AGAINST THE AFORESAID PENALTY ORDER, THE ASSESS EE FILED THE APPAEL BEFORE THE LD. CIT(A), WHO VIDE HER IMPUGNED ORDER DATED 11.2.2013 HAS DELETED THE MINIMUM PENALTY OF RS. 2,07,46,650/- IM POSED BY THE AO AND PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 4. AGGRIEVED WITH THE IMPUGNED ORDER OF THE LD. CI T(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 5. LD. DR RELIED UPON THE ORDER OF THE AO AND REIT ERATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL. 6. ON THE OTHER HAND, LD. A.R. OF THE ASSESSEE RELI ED UPON THE ORDER OF THE LD. CIT(A) AND STATED THAT SHE HAS PASSED A WEL L REASONED ORDER WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART. HOWEVER, HE FURTHER STATED THAT ASSESSEE MADE ADEQUATE AND ALL MANDATO RY DISCLOSURES IN FINANCIAL STATEMENTS AND TAX RETURNS AND ALLEGATION S OF CONCEALMENTS OR FILING OF INACCURATE PARTICULARS OF INCOME IS COMPL ETELY CONTRADICTORY TO THE FACTS OF THE CASE AND SETTLED PRINCIPLES OF LAW. HE FURTHER STATED THAT THE ISSUE NO. 1 RELATING TO DEPRECIATION IN RESPECT OF DARUHERA UNIT IS CONCERNED. IN THIS CASE THE HONBLE HIGH COURT HAS RULED THAT THIS ISSUE IS IN FAVOUR OF THE ASSESEE VIDE ORDER DATED 24.1.2017 PASSED IN ITA NO. 14/2012 AND ATTACHED THE COPY THEREOF WITH THE SYNO PSIS; AS REGARDS ISSUE NO. 2 RELATING TO EXCESS DEPRECIATION ON LICE NSE FEE PAID FOR 4 COMPUTER SERVICE IS CONCERNED, BY ATTACHING THE COP Y OF THE AO DATED 6.9.2016, IT WAS STATED THAT THE ORDER OF THE AO DA TED 6.9.2016 GIVING EFFECT TO TRIBUNALS ORDER ALLOWS THE ISSUE IN FAVO UR OF ASSESSEE; AND WITH REGARD TO ISSUE NO. 3 RELATING TO EXCLUSION OF MISC . INCOME FROM DEDUCTION U/S. 10A & 10B IS CONCERNED, IT WAS STATED THAT LD. CIT(A) HAS RIGHTLY CONSIDERED THAT THE ASSESSEE OBTAINED CERTIFICATES FROM CHARTERED ACCOUNTANT AND THUS ACTED ON THE BASIS OF EXPERT AD VICE/ OPINION FOR CLAIMING SUCH 10A/10B. HENCE, HE SUBMITTED THAT IT CANNOT BE SAID TO HAVE CONCEALED ANY INCOME OR PROVIDED ANY WRONG PAR TICULARS OF INCOME. IT WAS FURTHER STATED THAT DISCLOSURES AS REQUIRED AS PER LAW WERE MADE AND THERE IS NO QUESTION OF LEVYING ANY PENALTY UN DER SECTION 271(1)(C) OF THE ACT AND PLACED RELIANCE ON THE DECISION OF T HE HONBLE SUPREME COURT OF INDIA IN THE CASE OF CIT VS. RELIANCE PETR OPRODCUTS P LTD. (2010) 322 ITR 158. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS. WITH REGARD TO GROUND NO. 1 RELATING TO DEPRECIATION AMO UNTING TO RS. 4,42,22,475/- ON THE ASSETS OF DARUHERA UNIT CL OSED DURING THE YEAR IS CONCERNED, WE FIND THAT THE ASSESSEE HAD MADE ADE QUATE DISCLOSURE IN THE AUDITED FINANCIAL STATEMENTS, TAX AUDIT REPORT FILED ALONG WITH THE RETURN OF INCOME. DURING THE COURSE OF ASSESSMENT P ROCEEDINGS, THE ASSESSEE HAD PROVIDED THE NECESSARY EXPLANATIONS AN D MADE DUE SUBMISSIONS, WHICH WERE SUPPORTED BY SUFFICIENT DOC UMENTATION AND GUIDED BY JUDICIAL DECISIONS. HENCE NO CASE OF CONC EALMENT OR FILING OF INACCURATE PARTICULARS OF INCOME. IN THIS REGARD, I T WAS STATED THAT MERE 5 NON-ACCEPTANCE OF THE GROUNDS OF THE ASSESSEE DURIN G THE ASSESSMENT OR THE ASSESSEE PROCEEDINGS SHOULD NOT ATTRACT PENALTY UNDER SECTION 27L(L)(C) OF THE ACT. WE NOTE THAT SECTION HAS BE EN INSERTED TO PREVENT ASSESSEES FROM EVADING TAXES BY MEANS OF FALSE AND BOGUS CLAIMS. THE UNDER MENTIONED CASES ELUCIDATE THE PRINCIPLE THAT A MERE NON ACCEPTANCE OF A CLAIM AND ADDITION ON THAT ACCOUNT DO NOT ENTI TLE THE REVENUE TO IMPOSE PENALTY UNDER SECTION 271 OF THE ACT. FURTHE R, THE ASSESSING OFFICER HAD NOT QUESTIONED THE GENUINENESS OF THE E XPENDITURE AND THEREFORE MERE DISALLOWANCE IN THE ASSESSMENT ORDER CANNOT PER-SE BECOME A BASIS FOR LEVY OF PENALTY AS LEVIED IN THI S CASE. RELIANCE IN THIS REGARD IS PLACED ON THE FOLLOWING: RELIANCE PETROPRODUCTS PRIVATE LIMITED (322 ITR 158) (SC), DELHI CLOTH & GENERAL MILLS CO. LTD. VS. CIT 198 6 (157 ITR 822) (DELHI HC) DC IT VS. INDIAHIT COM (P) LTD (2006) 105 TTJ 50 1 (DEL ITAT) COMMISSIONER OF INCOME-TAX VS. AJAIB SINGH AND C O [2002] 253 ITR 0630-[PUNJAB AND HARYANA HIGH COURT] CIT VS. SHREE BALA FINVEST PVT LTD [2009] 2009-T 10L-705-HC- AHMJT. THAT THERE IS NO CLOSURE OF BUSINESS OF THE ASSESSE E AS AFFIRMED BY THE HONBLE DELHI HIGH COURT AND CONSEQUENTLY THE B LOCK OF THE ASSETS CONTINUE TO EXIST, THERE IS ABSOLUTELY NO INFIRMITY IN ASSESSEES TREATMENT 6 OF REDUCING THE SALES CONSIDERATION IN RELATION TO ASSETS OF THE DARUHERAS UNIT FROM THE RESPECTIVE BLOCK OF ASSETS AND CLAIMI NG DEPRECIATION ON THE ADJUSTED BLOCK OF ASSETS. KEEPING IN VIEW OF THE AB OVE STATED FACTS AND VARIOUS PRONOUNCEMENTS QUOTED ABOVE, WE ARE OF THE VIEW THIS IS NOT A CASE WHERE THERE IS NO CLOSURE OF BUSINESS OF THE A SSESSEE SAME HAS BEEN AFFIRMED BY THE HONBLE DELHI HIGH COURT AND CONSEQ UENTLY THE BLOCK OF THE ASSETS CONTINUE TO EXIST, THERE IS ABSOLUTELY N O INFIRMITY IN ASSESSEES TREATMENT OF REDUCING THE SALES CONSIDERATION IN RE LATION TO ASSETS OF THE DARUHERAS UNIT FROM THE RESPECTIVE BLOCK OF ASSETS AND CLAIMING DEPRECIATION ON THE ADJUSTED BLOCK OF ASSETS. HENCE , THERE IS NO CASE OF PENALTY, THEREFORE, LD. CIT(A) HAS RIGHTLY DELETED THE SAME, WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE UP HOLD THE SAME AND REJECT THE GROUND NO. 1 RAISED BY THE REVENUE. 7.1 WITH REGARD TO GROUND NO. 2 RELATING TO DEFERRE D ALLOWANCE OF 4/5 TH OF LEGAL AND OTHER EXPENSES ON RESTRUCTURING OF BUS INESS AMOUNTING TO RS. 1,37,65,600/- (TO BE ALLOWED IN EQUAL INSTALMEN TS IN FOUR SUBSEQUENT ASSESSMENT YEARS) IS CONCERNED, WE FIND THAT THE QU ESTION OF LAW HAS BEEN ADMITTED BY THE HONBLE DELHI HIGH COURT WHICH DEMONSTRATE CLEARLY THAT THE COURT IS SATISFIED THAT THE ISSUE INVOLVED IS A SUBSTANTIAL QUESTION OF LAW AND A LEGAL SCRUTINY OF THE ISSUE IS ESSENTI AL. ADMISSION OF SUBSTANTIAL QUESTION OF LAW BY HIGH COURT SHOWS THA T THE CLAIM OF THE ASSESSEE WAS DEBATABLE AND ALSO LENDS CREDENCE TO T HE BONAFIDE OF THE CLAIM. WE ARE OF THE CONSIDERED VIEW THAT IT IS SETTLED LAW THAT NO PENALTY IS LEVIABLE IN CASES WHERE A QUESTION OF LA W IS ADMITTED IN THE 7 HONBLE HIGH COURT. ADMISSION OF QUESTION OF LAW BY THE HONBLE HIGH COURT ON THIS ISSUE ITSELF SHOWS THAT THE CLAIM OF THE ASSESSEE WAS LEGITIMATE AND DEBATABLE. HENCE, NO PENALTY UNDER S ECTION 271(1)(C) IS LEVIABLE WHERE THE ISSUE IS DEBATABLE AND A QUESTIO N OF LAW IS ADMITTED BY THE HIGH COURT, HENCE, WE ARE OF THE VIEW THAT LD. CIT(A) HAS RIGHTLY DELETED THE PENALTY ON THIS ISSUE, WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE SAME AND REJECT T HE GROUND NO. 2. AFORESAID OUR VIEW IS FORTIFIED BY THE DECISION OF THE HONBLE DELHI HIGH COURT IN CASE OF CIT II VS LIQUID INVESTMENTS AND T RADING LTD (ITA 240/2009). 7.2 WITH REGARD TO GROUND NO. 3 RELATING TO EXCLUSI ON OF MISCELLANEOUS INCOME FROM THE CLAIM OF TAX DEDUCTION UNDER SECTIO N 10A AND 10B AMOUNTING TO RS. 2,59,765/- IS CONCERNED, WE FIND THE ASSESSING OFFICER WHILE EXCLUDING THE MISCELLANEOUS INCOME FROM THE P ROFIT OF 10A AND 10B UNITS HAD CONSIDERED THE MISCELLANEOUS INCOME OF TH E ASSESSEE AS A WHOLE INSTEAD OF THE MISCELLANEOUS INCOME OF THE 10A AND 10B UNIT AND EXAMINING THE NATURE THEREOF, THEREFORE RESULTING I N AN AD-HOC DISALLOWANCE WHICH CANNOT BE A BASIS FOR LEVY OF PE NALTY. THE ASSESSEE HAD OBTAINED CERTIFICATES FROM A CHARTERED ACCOUNTA NT IN FORMS 56F AND 56G AND HAD THUS ACTED ON THE BASIS OF AN EXPERT AD VICE/OPINION FOR CLAIMING 10A/10B DEDUCTIONS. THAT THE ASSESSEE HAD MADE ADEQUATE DISCLOSURE IN THE AUDITED FINANCIAL STATEMENTS, THE NOTES TO THE COMPUTATION OF INCOME FILED ALONG WITH THE RETURN O F INCOME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEEE HA D PROVIDED THE NECESSARY EXPLANATIONS AND MADE DUE SUBMISSIONS DAT ED 05 DECEMBER 2008, WHICH WERE SUPPORTED BY SUFFICIENT DOCUMENTAT ION AND GUIDED BY JUDICIAL DECISIONS. KEEPING IN VIEW OF THE DETAIL D ISCUSSION AS ABOVE, WE ARE OF THE VIEW THAT THERE IS NO CASE OF PENALTY. H ENCE THE MINIMUM 8 PENALTY IMPOSED BY THE ASSESSING OFFICER WAS RIGHT LY CANCELLED, WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE SAME AND REJECT THE GROUND NO. 3. 8. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES AND THE PRECEDENT RELIED UPON, WE ARE OF THE CONSIDERED VIEW THAT THE MINIMUM PENALTY OF RS. 2,07,46,650/- WAS RIGHTLY DELETED, WHICH DOES N OT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE SAME AND REJECT ALL THE GROUNDS RAISED BY THE REVENUE. 9. IN THE RESULT, BOTH THE APPEALS FILED BY THE RE VENUE STAND DISMISSED. ORDER PRONOUNCED ON 28/09/2017. SD/- SD/- (PRASHANT MAHARISHI) (H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 28/09/2017 'SRBHATNAGAR' COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES