ACIT, New Delhi V. M/s Century Communication Ltd., New Delhi

ITA 3764/DEL/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65533 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 23-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRITHI LAL
• Keywords: Depreciation
• Section: 115JB; 11

Judgement Text

ITA NO. 3764/DEL/2012 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B, NEW DELHI BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 3764/DEL/2012 A.Y. : 2003-04 ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-13, ROOM NO. 332, ARA CENTRE, JHANDEWALAN EXTN., NEW DELHI VS. M/S CENTURY COMMUNICATION LTD., M-14-A, LAJPAT NAGAR-II, NEW DELHI 110 024 (PAN/GIR NO. : AABCC5986H) (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSESSEE BY : SH. C.S. ANAND, ADV. DEPARTMENT BY : SH. PRITHI LAL, SR. D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-VI, NEW DEL HI DATED 12.3.2012 PERTAINING TO ASSESSMENT YEAR 2003-04. 2. THE GROUNDS RAISED READ AS UNDER:- 1. THE ORDER OF THE LD. COMMISSIONER OF INCOME TA X (A) IS NOT CORRECT IN LAW AND FACTS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED IN DELETING THE PENALTY OF ` 19,43,746/- IMPOS ED BY THE ASSESSING OFFICER U/S. 271(1)(C) OF I.T. A CT, ITA NO. 3764/DEL/2012 2 1961 WITHOUT APPRECIATING THE FACT THAT THE ASSESS EE HAS FURNISHED INACCURATE PARTICULARS OF INCOME. 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND ANY / ALL THE GROUNDS OF APPEAL BEFORE OR DURING THE COUR SE OF HEARING OF THE APPEAL. 3. IN THIS CASE THE ASSESSEE IS A COMPANY ENGAGED I N THE BUSINESS OF VIDEO-TAPE RECORDING. ASSESSEE COMPANY FILED I TS RETURN OF INCOME ON 02.12.2003 DECLARING LOSS OF ` 5,46,42,454/- AN D BOOK PROFIT AT ` 3,11,39,782/- U/S. 115JB OF THE I.T. ACT. DURING THE COURSE OF ASSESSMENT ASSESSING OFFICER MADE DISALLOWANCE ON ACCOUNT OF THE FOLLOWING :- I) DEPRECIATION OF ELECTRICAL EQUIPMENT ` 5,33,200/ - II) PROVISION FOR TAXATION OF ` 25,22,000/- III) ADHOC DISALLOWANCE OUT OF BUSINESS PROMOTION EX PENSES OF ` 20 LACS IV) DISALLOWANCE ON PRELIMINARY EXPENSES OF ` 2,55,9 06/- ASSESSING OFFICER ALSO LEVIED PENALTY U/S. 271(1 )(C) OF THE ACT. 4. ASSESSEE APPEALED BEFORE THE LD. COMMISSIONER OF INCOME TAX (A) ON THIS ACCOUNT. LD. COMMISSIONER OF INCOME TAX (A) NOTED THAT ASSESSEE HAS DETERMINED THE TAX PAYABLE BY THE ASSES SEE COMPANY ON THE BOOK PROFIT OF ` 3,11,39,782/- U/S. 115JB OF T HE I.T. ACT. LD. COMMISSIONER OF INCOME TAX (A) OBSERVED THAT PENALTY CANNOT BE IMPOSED IN THIS CASE AS THERE IS NO TAX WHICH WAS SO UGHT TO BE EVADED. LD. COMMISSIONER OF INCOME TAX (A) REFERRED TO THE DE CISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF N ALWA SONS INVESTMENT ITA NO. 3764/DEL/2012 3 LIMITED 327 ITR 543 FOR THE PROPOSITION THAT PENALTY U/S. 271(1)(C) CANNOT BE LEVIED WHEN INCOME IS ASSESSED UNDER MAT. 5. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. LD COUNSEL OF THE ASSESSEE SUBMITTED THAT THIS ISSUE IS SQUARELY COVERED IN FA VOUR OF THE ASSESSEE BY THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF C.I.T. VS. NALWA SONS INVESTMENT LIMITED (SUPRA). LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND, RELIED UPON THE ORDER OF THE ASSESSING OFFICER. 7. UPON CAREFUL CONSIDERATION, WE FIND THAT THE ISS UE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F THE HONBLE JURISDICTIONAL HIGH COURT CITED ABOVE. IN THIS CAS E IT WAS HELD THAT UNDER THE SCHEME OF THE INCOME TAX ACT, 1961, THE TOTAL INCOME OF THE ASSESSEE IS FIRST COMPUTED UNDER THE NORMAL PR OVISIONS OF THE ACT AND THE TAX PAYABLE ON SUCH PROFITS IS COMPARED WITH THE PRESCRIBED PERCENTAGE OF THE BOOK PROFITS COMPUTED UNDER SECTI ON 115JB OF THE ACT. THE HIGHER OF THE TWO AMOUNTS IS REGARDED AS T OTAL INCOME AND TAX IS PAYABLE WITH REFERENCE TO SUCH TOTAL INCOME. IF THE TAX PAYABLE UNDER THE NORMAL PROVISIONS IS HIGHER, SUCH AMOUNT I S THE TOTAL INCOME OF THE ASSESSEE, OTHERWISE, THE BOOK PROFIT S ARE DEEMED AS THE TOTAL INCOME OF THE ASSESSEE IN TERMS OF SECTION 11 5JB OF THE ACT. WHERE THE TOTAL INCOME COMPUTED IN ACCORDANCE WITH T HE NORMAL PROCEDURE IS LESS THAN THE INCOME DETERMINED BY THE LEGAL FICTION, NAMELY, THE BOOK PROFITS UNDER SECTION 115JB OF THE ACT AND NOT UNDER THE NORMAL PROVISIONS, THE TAX IS PAID ON THE INCOME ASSESSED UNDER SECTION 115JB OF THE ACT. CONCEALMENT OF INCOME WOUL D HAVE NO ROLE ITA NO. 3764/DEL/2012 4 TO PLAY AND WOULD NOT LEAD TO TAX EVASION. THERE FORE, PENALTY CANNOT BE IMPOSED ON THE BASIS OF DISALLOWANCE OR ADDITIONS MADE UNDER THE REGULAR PROVISIONS. 8. RESPECTFULLY FOLLOWING THE PRECEDENT AS ABOVE, W E UPHOLD THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (A) AND H OLD THAT PENALTY IS NOT LEVIABLE IN THIS CASE. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE S TANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26/9/2012. SD/- SD/- [ [[ [JOGINDER SINGH JOGINDER SINGH JOGINDER SINGH JOGINDER SINGH] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 26/9/2012 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES