The ACIT, Circle-8, Ahmedabad V. Torrent Pvt. Ltd., Ahmedabad

ITA 3619/AHD/2008

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 1655 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 16-03-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 03-11-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S PANWAR
• Assessee Lawyers: S N SOPARKAR
• Keywords: Revenue expenditure; Capital expenditure
• Section: 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, A BENCH (BEFORE S/SHRI G.D. AGARWAL, VICE-PRESIDENT AND T.K. SHARMA, JUDICIAL MEMBER) ITA NO.3619/AHD/2008 WITH CO NO.318/AHD/2008 [ASSTT. YEAR : 2003-2004] ACIT, CIR.8 AHMEDABAD. VS. TORRENT PVT. LTD. TORRENT HOUSE ASHRAM ROAD, AHMEDABAD. PAN : AAACT 5459 R (APPELLANT) (RESPONDENT) REVENUE BY : SHRI S.S.PANWAR ASSESSEE BY : SHRI S.N. SOPARKAR O R D E R PER G.D. AGARWAL, VICE-PRESIDENT: THIS IS REVENUES APPEAL AND THE ASSESSEES CO AGAINST THE ORDER OF THE COMM ISSIONER OF INCOME TAX(APPEALS)-XIV, AHMEDABAD DATED 27.11.2006. 2. THE ONLY GROUND RAISED IN THIS APPEAL BY THE REV ENUE IS AGAINST THE CANCELLATION OF PENALTY OF RS.10,78,860/- UNDER SEC TION 271(1)(C) OF THE ACT. 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL PLACED BEFORE. THE ASSESSING OFFICER LEVIED PENALTY UNDER SECTION 271(1)(C) IN RESPECT OF THE FOLLOWING DISALLOWANCES: I) DISALLOWANCE OF PROFESSIONAL FEES HELD TO BE CAPITA L EXPENDITURE OF RS.13,12,500/- II) DISALLOWANCE OF STAMP EXPENSES HELD TO BE CAPITAL EXPENDITURE OF RS.16,23,175/-; ITA NO.3619/AHD/2008 WITH CO NO.318/AHD/2008 -2- THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) DE LETED THE PENALTY WITH THE FOLLOWING FINDINGS: 6. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AS WELL AS THE SUBMISSIONS AS ADVANCED BY THE A.R. OF THE APPELLANT. I AGREE WITH THE CONTENTION OF THE A.R. THAT THE DISALLOWANCE MADE IN RESPECT O F THE TWO EXPENSES CLAIMED AS REVENUE EXPENDITURE HAS NOT AFFECTED ITS INCOME AND ITS TAX LIABILITY FOR THE Y EAR UNDER CONSIDERATION, AS THE TAX LIABILITY HAS BEEN CALCULATED ON THE BASIS OF BOOK PROFIT U/S. 115JB O F THE ACT. MERE REJECTION OF THE APPELLANT'S CLAIM CANNOT BE EQUATED WITH CONCEALMENT. IN THE INSTANT CASE, OUT OF TWO POSSIBLE INTERPRETATIONS ON THE ALLOWABILITY OF EXPENSES, A DIFFERENT VIEW HAS BEEN TAKEN BY THE A.O. FROM THAT OF THE APPELLANT. I DO NOT FIND ANY CONSCIOUS/DELIBERATE ATTEMPT TO CONCEAL AN Y INCOME ON THE PART OF THE APPELLANT. I ALSO FIND TH AT HON. MADRAS HIGH COURT HAS HELD IN THE CASE OF CAPL IN POINT LABORATORIES LTD., 293 ITR 524, THAT BY REJECTION OF ASSESSEE'S CLAIM BY RELYING ON DIFFERE NT INTERPRETATION, IT COULD NOT BE SAID THAT PARTICULA RS OF INCOME HAD BEEN CONCEALED. THE DECISION OF DELHI I SIGH COURT IN CIT VS. EICHER GOODEARTH LTD., REPORT ED IN 170 TAXMAN 27 (DEL) WHEREIN IT WAS HELD THAT THE RE IS NO JUSTIFICATION TO LEVY PENALTY WHEN THE A.O. HAD NOT FOUND PARTICULARS FURNISHED BY THE ASSESSEE TO BE FALSE AND HAD ALSO NOT UNEARTHED ANY MATERIAL FACTS OR PARTICULARS WHICH ASSESSEE HAD NOT DISCLOSED IS SQUARELY APPLICABLE TO THE FACTS OF THE CASE OF THE APPELLANT, AS THE PARTICULARS FURNISHED BY THE APPE LLANT HAVE NOT BEEN FOUND TO BE FALSE BY THE A.O. 7. CONSIDERING THE ABOVE FACTS OF THE CASE AND THE DETAILED SUBMISSION ALONG WITH THE JUDGEMENTS AS RE LIED UPON BY THE A.R. OF THE APPELLANT. I AM OF THE OPIN ION THAT THE PENALTY FOR CONCEALMENT CANNOT BE LEVIED I N THE CASE OF THE APPELLANT, MERELY ON THE BASIS OF ADDITIONS MADE, WHICH HAVE BEEN CONFIRMED BY THE CI T (APPEALS) AS FULL FACTS HAVE BEEN DISCLOSED BY THE APPELLANT IN RESPECT OF BOTH THE CLAIMS OF EXPENSES AND FURTHER THERE IS NO MALA FIDE INTENTION ON THE PART OF THE APPELLANT TO CLAIM BOTH THE EXPENSES AS REVENUE EXPENDITURE AS ITS TAX LIABILITY IS NOT AFFECTED BY THE DISALLOWANCES , ITS INCOME HAVING B EEN ASSESSED ON BOOK PROFIT U/S. 115JB. IN VIEW OF THE ABOVE, I DIRECT THE A.O. TO DELETE THE PENALTY LEVI ED IN THIS CASE TO THE TUNE OF RS.10,78,860/-. ITA NO.3619/AHD/2008 WITH CO NO.318/AHD/2008 -3- 5. THE REVENUE AGGRIEVED WITH THE ORDER OF THE LEAR NED COMMISSIONER OF INCOME TAX (APPEALS) IS IN APPEAL B EFORE US. FROM THE PERUSAL OF THE ASSESSMENT ORDER, WE FIND THAT THE A SSESSING OFFICER MADE THE ABOVE TWO DISALLOWANCES WHILE COMPUTING THE INC OME OF THE ASSESSEE UNDER THE NORMAL PROVISION OF INCOME TAX ACT. HOWE VER, ULTIMATELY, THE INCOME UNDER THE NORMAL PROVISION OF THE ACT WAS DE TERMINED AT NIL. THEREAFTER, THE ASSESSING OFFICER WORKED OUT BOOK P ROFIT UNDER SECTION 115JB WHICH WAS DETERMINED AT RS.16,01,06,069/-. H E THEREFORE LEVIED THE TAX ON THE BOOK PROFIT AT THE RATE OF 7.5% THER EON. THUS, FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, THE TAX HAS BE EN LEVIED UPON THE ASSESSEE UNDER SECTION 115JB. THAT WHILE COMPUTING THE BOOK PROFIT UNDER SECTION 115JB, NO DISALLOWANCE OUT OF PROFESS IONAL FEES AS WELL AS FOR STAMP EXPENSES HAS BEEN MADE BY THE ASSESSING O FFICER. CONSIDERING ALL THESE FACTS, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) CANCELLED THE PENALTY BECAUSE, THIS DISALLOWANCE WH ILE COMPUTING THE NORMAL INCOME HAS NOT AT ALL AFFECTED THE LEVY OF T AX IN THE YEAR UNDER CONSIDERATION. WE THEREFORE DO NOT FIND ANY INFIRM ITY IN THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). MORE OVER, THE HONBLE APEX COURT IN THE CASE OF CIT VS. RELIANCE PETROPRO DUCTS PVT. LTD., 322 ITR 158 (SC) HAS HELD THAT BY NO STRETCH OF IMAGINA TION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. AS PER THEIR LORDSHIPS TO ATTRACT THE PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRECT, NOT ACC ORDING TO THE TRUTH OR ERRONEOUS. IN THE CASE OF THE ASSESSEE ADMITTEDLY THE ASSESSEE HAS NOT SUPPLIED ANY DETAILS WHICH ARE FOUND TO BE INACCURA TE, INCORRECT OR ERRONEOUS. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY MERIT IN THE REVENUES APPEAL, THE SAME IS DISMISSED. ITA NO.3619/AHD/2008 WITH CO NO.318/AHD/2008 -4- CO NO.318/AHD/2008 6. THE CROSS-OBJECTION FILED BY THE ASSESSEE IS ONL Y IN SUPPORT OF THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS), THE SAME BEING INFRUCTUOUS IS REJECTED. 7. IN RESULT, REVENUES APPEAL AND ASSESSEES CO AR E DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 31 ST MARCH, 2011 SD/- SD/- (T.K. SHARMA) JUDICIAL MEMBER (G.D. AGARWAL) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 31-03-2011 C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD