L & T FINANCE LTD, MUMBAI V. ASST CIT CIR 2(2), MUMBAI

ITA 3606/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3529 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2002-2003
• Appeal Filed On: 21-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A RAMACHANDRAN
• Assessee Lawyers: HEENA SHETH
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO. 3606 /MUM/2014 ( / ASSESSMENT YEAR : 2002-03) L & T FINANCE LIMITED TAXATION DEPARTMENT L & T HOUSE, N M MARG BALLARD ESTATE, MUMBAI-400 001 / V. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 2(2) , ROOM NO. 545, 5 TH FLOOR, AAYAKAR BHAWAN, M K MARG, MUMBAI-400020 ./ PAN : AAACL8668G ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY MS. HEENA SHETH REVENUE BY : SHRI A RAMACHANDRAN / DATE OF HEARING : 14-06-2016 / DATE OF PRONOUNCEMENT : 17-08-2016 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER THIS APPEAL, FILED BY THE ASSESSEE COMPANY, BEING I TA NO. 3606/MUM/2014, IS DIRECTED AGAINST APPELLATE ORDER DATED 05 TH FEBRUARY, 2014 PASSED BY LEARNED COMMISSIONER OF INCOME TAX ( APPEALS)- 5, MUMBAI (HEREINAFTER CALLED THE CIT(A)), FOR THE ASSESSME NT YEAR 2002-03, THE APPELLATE PROCEEDINGS BEFORE THE LEARNED CIT(A) ARI SING FROM THE PENALTY ORDER DATED 30 TH MARCH 2012 PASSED BY THE LEARNED ASSESSING OFFIC ER (HEREINAFTER CALLED THE AO) U/S 271(1)(C) OF THE INCOME TAX AC T,1961 (HEREINAFTER CALLED THE ACT). ITA 3606/MUM/2014 2 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE I N THE MEMO OF APPEAL FILED WITH THE INCOME TAX APPELLATE TRIBUNAL, MUMBA I (HEREINAFTER CALLED THE TRIBUNAL) READS AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) ERRED IN UPHOLDING THE PENALTY UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT,1961 RELATING TO THE DISALLOWANCE OF D EPRECIATION IN RESPECT OF ASSETS GIVEN UNDER FINANCE LEASE BY TREATIN G THE LEASE TRANSACTION AS FINANCE TRANSACTION. 2. WITHOUT PREJUDICE TO GROUND NO. 1 ABOVE, ON THE FA CTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT (A) ERRED IN LEVYING PENALTY ON THE GROSS DISALLOWANCE OF DEPRECI ATION INSTEAD OF THE NET DISALLOWANCE ( I.E. DEPRECIATION LESS CAPITAL RECO VERY) DISREGARDING THE DEDUCTION OF CAPITAL RECOVERY ALLOWED BY THE ASSES SING OFFICER IN ITS ORDER UNDER SECTION 143(3) OF THE INCOME-TAX ACT,196 1.. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS MENT IN THIS INSTANT CASE WAS FRAMED BY THE AO U/S 143(3) OF THE ACT VIDE ORD ERS DATED 20.01.2005 WHEREBY THE CLAM OF ASSESSEE OF DEPRECIATION ON ASS ETS ON SALE AND LEASE BACK BASIS WAS DISALLOWED. IT WAS OBSERVED BY THE AO THAT THE ASSESSEE HAS CLAIMED DEPRECIATION OF RS. 30,29,07,166/- WHICH IN CLUDED DEPRECIATION OF RS.28,76,04,152/- ON ASSETS PERTAINING TO VARIOUS L EASE TRANSACTIONS ENTERED INTO BY THE ASSESSEE DURING THE PREVIOUS YEAR AS WE LL EARLIER YEARS. IN RESPECT OF THE ASSETS GIVEN ON LEASE IN EARLIER YEARS, THE DEPRECIATION OF RS.19,10,02,606/- WAS CLAIMED DURING THE YEAR. IT W AS OBSERVED THAT EXCEPT FOR THE ASSESSMENT YEAR 1997-98 , THE LEASE TRANSAC TION OF THE ASSESSEE HAD BEEN HELD TO BE FINANCIAL TRANSACTION IN THE ASSESS MENT YEAR 1995-96 TO 2000-01 AND DEPRECIATION ON THE LEASED ASSET HAD BE EN DISALLOWED IN THE HANDS OF THE ASSESSEE. IN THE ASSESSMENT YEAR 1997- 98 , DEPRECIATION WITH RESPECT TO SOME OF THE ASSETS WAS ALLOWED FOLLOWING DIRECTIONS OF THE LEARNED CIT(A). THE CLAIM OF THE DEPRECIATION OF THE ASSESS EE TO THE TUNE OF RS. 17,63,00,871/- WAS DISALLOWED WITH RESPECT TO DEPRE CIATION ON THE ASSETS GIVEN ON LEASE IN EARLIER YEARS FOLLOWING THE REVEN UE STAND WITH RESPECT TO ITA 3606/MUM/2014 3 SUCH ASSETS IN THE QUANTUM ASSESSMENT PROCEEDINGS. SIMILARLY , CLAIM OF DEPRECIATION FOR LEASED ASSET OF RS.9,66,01,546/- W ITH RESPECT TO ASSETS GIVEN ON LEASE DURING THE YEAR ALSO STOOD DISALLOWED IN Q UANTUM ASSESSMENT PROCEEDINGS VIDE ASSESSMENT ORDER DATED 20.01.2005 PASSED BY THE AO U/S 143(3) OF THE ACT. THE LEARNED CIT(A) CONFIRMED THE QUANTUM DISALLOWANCE VIDE APPELLATE ORDERS DATED 07-04-2010 WHEREBY APPE AL OF THE ASSESSEE WAS DISMISSED IN QUANTUM PROCEEDINGS.THE PENALTY PROCEE DINGS WERE INITIATED U/S 271(1)(C) OF THE ACT AGAINST THE ASSESSEE FOR F URNISHING INACCURATE PARTICULARS OF THE INCOME. THE AO ISSUED NOTICES U/ S 274 R.W.S. 271(1)(C) OF THE ACT SHOW CAUSING THAT WHY PENALTY SHOULD NOT BE LEVIED AGAINST THE ASSESSEE FOR FURNISHING OF INACCURATE PARTICULARS O F INCOME , WHEREIN THE ASSESSEE REPLIED THAT THE ASSESSEE HAS FILED AN APP EAL WITH THE TRIBUNAL IN QUANTUM ASSESSMENT AND THE PENALTY PROCEEDINGS BE K EPT IN ABEYANCE. THE AO LEVIED PENALTY OF RS.2,15,25,626/- BEING COMPUTE D @100% ON TAX SOUGHT TO BE EVADED VIDE PENALTY ORDER DATED 30 TH MARCH 2012 PASSED U/S 271(1)(C) OF THE ACT WHICH WAS CONFIRMED BY THE LEARNED CIT(A) V IDE APPELLATE ORDERS DATED 05.02.2014 . THE LEARNED CIT(A) OBSERVED THAT THE A O HAS COMPUTED PENALTY U/S 271(1)(C) OF THE ACT ON THE AMOUNT OF RS.6,15,0 1,776/- WITH RESPECT TO WHICH THE ASSESSEE FURNISHED THE INACCURATE PARTICU LARS OF INCOME, WHILE THE ASSESSEE INFACT FURNISHED INACCURATE PARTICULARS OF INCOME OF RS.27,29,02,417/- WHICH OUGHT TO HAVE BEEN CONSIDER ED BY THE AO FOR LEVYING OF PENALTY U/S. 271(1)(C) OF THE ACT AND THUS, THE LEARNED CIT(A) DIRECTED AO TO VERIFY THE COMPUTATION AND RE-COMPUTE AMOUNT OF PEN ALTY ON THE SAID AMOUNT, VIDE APPELLATE ORDERS DATED 05.02.2014 PASS ED BY THE LEARNED CIT(A). 4. AGGRIEVED BY THE APPELLATE ORDERS DATED 05.02.20 14 PASSED BY THE LEARNED CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUN AL. 5. AT THE OUTSET , LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO. 6993/MUM/2011 VID E ORDERS DATED 05-05- ITA 3606/MUM/2014 4 2015 FOR IMPUGNED ASSESSMENT YEAR 2002-03 UNDER APP EAL HAS DECIDED THE ISSUE IN ASSESSEES FAVOUR IN QUANTUM WHEREBY THE T RIBUNAL HAS HELD THAT THE ASSESSEE IS ENTITLED TO CLAIM DEPRECIATION IN RESPE CT OF THE ASSETS GIVEN UNDER SALE AND LEASE BACK BASIS AND HENCE SINCE QUANTUM IS DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE, THE PENALTY ORD ER WILL NOT SURVIVE. IT WAS SUBMITTED THAT TRIBUNAL HAS IN ITA NO. 6991-6994/MU M/2011 VIDE COMMON ORDERS DATED 05.05.2015 IN ASSESSEES OWN CASE HAS ALLOWED THE CLAIM OF THE ASSESSEE FOR DEPRECIATION ON ASSETS GIVEN ON SALE AND LEASE BACK BASIS FOR THE ASSESSMENT YEAR 2000-01 TO 2003-04. IT WAS ALS O SUBMITTED THAT THE TRIBUNAL IN MA.NO.420 TO 422/MUM/2013 VIDE COMMON O RDER DATED 30.04.2014 AND MA.NO. 423 & 424 /MUM/2013 VIDE COMM ON ORDERS DATED 11.07.2014 IN ASSESSEES OWN CASE HAS ALLOWED THE C LAIM OF THE ASSESSEE FOR DEPRECIATION ON ASSETS GIVEN ON SALE AND LEASE BAC K BASIS FOR THE ASSESSMENT YEAR 1995-96 TO 1999-00 FOLLOWING THE JUDGMENT OF H ONBLE SUPREME COURT IN THE CASE OF ICDS LIMITED V. CIT 350 ITR 527(SC). IT WAS ALSO SUBMITTED THAT THE TRIBUNAL HAS VIDE COMMON ORDER DATED 19/03/2015 IN ITA NO. 5283- 5285/MUM/2012 FOR ASSESSMENT YEARS 1995-96 TO 1997- 98 IN ASSESSEES OWN CASE DELETED THE PENALTY LEVIED U/S 271(1)(C) OF TH E ACT BY THE REVENUE ON DISALLOWANCE THE CLAIM OF DEPRECIATION ON ASSETS GI VEN ON SALE AND LEASE BACK BASIS. ALL THE AFORE-STATED ORDERS OF THE TRIBUNA L WERE SUBMITTED BY LEARNED COUNSEL AND ARE PLACED IN FILE. ON THE OTHER HAND , LEARNED DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PER USED THE MATERIAL ON RECORD. WE HAVE OBSERVED THAT THE QUANTUM ADDITIONS MADE BY THE REVENUE VIDE ASSESSMENT FRAMED U/S 143(3) OF THE ACT HAS BE EN DELETED BY THE TRIBUNAL IN THE ASSESSEES OWN CASE IN ITA NO.6993/ MUM/2012 VIDE ORDERS DATED 05-05-2015 FOR THE INSTANT ASSESSMENT YEAR 20 02-03 UNDER APPEAL BY HOLDING THAT THE ASSESSEE IS ENTITLED TO CLAIM DEP RECIATION IN RESPECT OF ASSETS GIVEN UNDER SALE AND LEASE BACK BASIS THE AO WAS DIRECTED TO WITHDRAW THE ITA 3606/MUM/2014 5 CORRESPONDING BENEFIT GIVEN TO THE ASSESSEE BY EXCL UDING THE VALUE OF CAPITAL COMPONENT OF THE LEASE RENT FROM THE INCOME OF THE ASSESSEE. THE TRIBUNAL HAS IN THE ASSESSEES OWN CASE HAS ALSO ALLOWED THE ASSESSEES CLAIM OF DEPRECIATION IN RESPECT OF ASSETS GIVEN UNDER SALE AND LEASE BACK BASIS FOR THE ASSESSMENT YEARS 1995-96 TO 1999-00 IN MA NO. 4 20 TO 422/MUM/2013 VIDE ORDERS DATED 30.04.2014 AND ALSO IN M.A. NO. 4 23 & 424/MUM/2013 VIDE COMMON ORDERS DATED 11.07.2014 FOLLOWING THE J UDGMENT OF HONBLE SUPREME COURT IN THE CASE OF ICDS LIMITED V. CIT 35 0 ITR 527(SC) AND THE AO WAS DIRECTED TO WITHDRAW THE CORRESPONDING BENEF IT GIVEN TO THE ASSESSEE BY EXCLUDING THE VALUE OF CAPITAL COMPONENT OF THE LEASE RENT FROM THE INCOME OF THE ASSESSEE. THE TRIBUNAL HAS ALSO ALLOWED THE AFORE-STATED RELIEF FOR ASSESSMENT YEAR 2000-01 TO 2003-04 VIDE COMMON ORDE RS DATED 05-05-2015 IN ASSESSEES OWN CASE IN ITA NO. 6991-6994/MUM/201 1 . THE TRIBUNAL HAS ALSO DELETED THE PENALTY LEVIED BY THE AO AND AS SU STAINED BY LEARNED CIT(A) ON THE DISALLOWANCE OF THE ASSESSEES CLAIM OF DEPR ECIATION IN RESPECT OF ASSETS GIVEN UNDER SALE AND LEASE BACK BASIS FOR THE AS SESSMENT YEARS 1995-96 TO 1999-00 VIDE COMMON ORDERS DATED 19/03/2015 IN ITA NO. 5283- 5285/MUM/2012 IN ASSESSEES OWN CASE. ALL THE AFORE -STATED ORDERS OF THE TRIBUNAL ARE PLACED IN FILE. UNDER THE ABOVE CIRCUM STANCES, WE ARE OF THE CONSIDERED VIEW THAT THE PENALTY LEVIED BY THE AO A ND AS CONFIRMED/SUSTAINED BY THE LEARNED CIT(A) ON THE DISALLOWANCE OF THE AS SESSEES CLAIM OF DEPRECIATION IN RESPECT OF ASSETS GIVEN UNDER SALE AND LEASE BACK BASIS FOR THE INSTANT ASSESSMENT YEAR 2002-03 CANNOT SURVIVE AS QUANTUM ADDITIONS ITSELF HAD ALREADY BEEN DELETED BY THE TRIBUNAL AS SET OUT ABOVE AND HENCE WE ORDER DELETION OF PENALTY LEVIED U/S 271(1)(C) OF T HE ACT BY THE AO AND AS CONFIRMED/SUSTAINED BY THE LEARNED CIT(A). WE ORDER ACCORDINGLY. ITA 3606/MUM/2014 6 7. IN THE RESULT, ASSESSEES APPEAL IN ITA NO 3606 /MUM/2014 FOR THE ASSESSMENT YEAR 2002-03 IS ALLOWED AS INDICATED ABO VE. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH AUGUST , 2016. # $% &' 17-08-2016 ( ) SD/- SD/- (MAHAVIR SINGH ) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 17-08-2016 [ .9../ R.K. R.K. R.K. R.K. , EX. SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. : / CIT- CONCERNED, MUMBAI 5. =>( 99?@ , ?@ , $ / DR, ITAT, MUMBAI A BENCH 6. (BC D / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI