DCIT 7(2), MUMBAI V. SKY LITE ELECTRO FIXTURES P.LTD, MUMBAI

ITA 3867/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2926 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2007-2008
• Appeal Filed On: 29-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Depreciation; Wrong claim
• Section: 50C; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI E BENCH, MUMBAI BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER. ITA. NO. 3867/MUM/2014 (ASSESSMENT YEAR:2007-08) DY. COMMISSIONER OF INCOME TAX-7(2), ROOM NO.624, M. K. ROAD, MUMBAI 400 020 APPELLANT VS. M/S. SKY LITE ELECTRO FIXTURES PVT. LTD., A-4, VIMAL UDYOG BHAVAN, 2 ND FLOOR, 119-TAILKALWADI, MAHIM (W), MUMBAI 400016 RESPONDENT PAN: AABCS0054Q /BY APPELLANT : SHRI VACHASPATI TRIPATHI, D.R. /BY RESPONDENT : NONE /DATE OF HEARING : 06.06.2016 /DATE OF PRONOUNCEMENT : 24.06.2016 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY REVENUE AGAINST THE O RDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-13, MUMBAI, DA TED ITA NO.3867/MUM/14 A.Y. 07-08 [DCIT VS. M/S. SKY LI TE ELECTRO FIXTURES PVT. LTD.] PAGE 2 07.03.2013 FOR A.Y. 2007-08 ON THE ISSUE OF PENALTY U/S. 271(1)(C) OF THE ACT. 2. IN THIS CASE, ASSESSING OFFICER LEVIED PENALTY U /S. 271(1)(C) OF THE ACT OF RS.14,61,155/-, WHICH WAS DELETED BY CIT(A) AS PER DISCUSSED IN HIS ORDER. 2.1 SAME HAS BEEN OPPOSED ON BEHALF OF REVENUE INTE R ALIA SUBMITTING THAT CIT(A) ERRED IN DELETING THE PENALT Y LEVIED BY ASSESSING OFFICER U/S. 271(1)(C) OF THE ACT WITHOUT APPRECIATING THE FACT THAT ASSESSEE HAS CLAIMED HIGHER VALUE OF COST (WDV) OF ASSET SOLD AND THEREBY HAD SUPPRESSED ITS CAPITA L GAIN AND THUS FURNISHED THE INACCURATE PARTICULARS OF INCOME . ACCORDINGLY, LD. DEPARTMENTAL REPRESENTATIVE SUBMIT TED THAT THE ORDER OF CIT(A) BE SET ASIDE AND THAT OF ORDER OF ASSESSING OFFICER BE RESTORED. 2.2 ON THE OTHER HAND, NONE APPEARED ON BEHALF OF A SSESSEE. THEREFORE, WE PROCEED TO DECIDE THE CASE EX PARTE ON THE BASIS OF SUBMISSION OF LD. DEPARTMENTAL REPRESENTATIVE AND M ATERIAL AVAILABLE ON RECORD. 2.3 AFTER GOING THROUGH THE SUBMISSION OF LD. DEPAR TMENTAL REPRESENTATIVE AND PERUSED THE MATERIAL ON RECORD, WE FIND THAT BASICALLY FOUNDATION OF PENALTY IS WRONG CLAIM OF CAPITAL GAIN. THE STAND OF ASSESSEE HAS BEEN THAT WHILE MA KING A CLAIM, ASSESSEE COMMITTED A MISTAKE INADVERTENTLY W HILE FILING THE RETURN OF INCOME. AS STATED ABOVE, WDV OF FACT ORY BUILDING WAS CLAIMED TO BE WRONGLY TAKEN AT RS.3,22,897/- AG AINST ITA NO.3867/MUM/14 A.Y. 07-08 [DCIT VS. M/S. SKY LI TE ELECTRO FIXTURES PVT. LTD.] PAGE 3 RS.25,25,514/-, AS A RESULT THEREOF CAPITAL GAIN WA S ALSO WORKED OUT WRONGLY. THIS CAME TO THE NOTICE WHILE MAKING SUBMISSION BEFORE THE ASSESSING OFFICER AND THE TAX THEREON HAS BEEN PAID. 2.4 THE SECOND ISSUE WAS ON ACCOUNT OF ADOPTION OF FULL VALUE OF CONSIDERATION U/S.50C OF THE ACT. IN FACT, ASSE SSEE HAS SHOWN RELEVANT FACTS WITH REGARD TO THIS ISSUE ARE AS UNDER: SHORT TERM CAPITAL GAIN : THE ASSESSEE HAS SHOWN SHORT TERM CAPITAL GAIN OF RS.64,74,486/- ON SALE OF FACTORY BUILDING. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO FURNISH THE WORKING OF THE SAME. THE ASSE SSEE VIDE LETTER DT. 04.11.2009 HAS SUBMITTED AS UNDER: 'WHILE FILING I.T. RETURN ONLINE IN OCTOBER 2007, T HERE WAS AN ADVERTENT CLERICAL ERROR. THE WDV OF FACTORY BUI LDING WAS WRONGLY TAKEN AS RS. 25,25,514/-. THE SHORT TER M CAPITAL GAIN WAS CALCULATED BY DEDUCTING RS. 25,25, 514/- FROM THE SALE CONSIDERATION OF RS. 90,00,000/- THE RESULTANT CAPITAL GAIN WAS THEN ADJUSTED AGAINST BU SINESS LOSS OF THAT YEAR AND BROUGHT FORWARD LOSS OF EARLI ER YEARS. THE NET RESULT WAS RS. 12, 85,473/- SINCE THE TAX L IABILITY ON THIS AMOUNT WAS LESS THAN 10% OF THE BOOK PROFIT S, PROVISIONS OF SECTION 115JB WERE APPLIED AND TAX LI ABILITY OF RS.4,98,540/- WAS WORKED OUT. ACCORDINGLY THE ASSESSEE HAS PAID RS. 5,00,000/- AND FILED THE I.T. RETURN. FROM THE DERAILS SUBMITTED IT IS NOTICED THAT AS PE R THE INCOME TAX ACT, 1961 THE WDV AS ON 31.03.2006 OF TH E SAID BLOCK OF ASSETS IS RS. 3,22,897/-, WHILE THE A SSESSEE HAS WRONGLY TAKEN THE SAME AT RS. 25,25,514/-. ALSO , ON PERUSAL OF THE AGREEMENT, IT IS NOTICED THAT THE MA RKET ITA NO.3867/MUM/14 A.Y. 07-08 [DCIT VS. M/S. SKY LI TE ELECTRO FIXTURES PVT. LTD.] PAGE 4 VALUE OF THE FACTORY BUILDING IS RS. 1,08,73,500/- AGAINST THE AGREEMENT VALUE OF RS. 90,00,000/-. HENCE, THE ASSESSEE VIDE THIS OFFICE LETTER DT. 24. 11.2009 WAS ASKED TO SHOW CAUSE AS TO WHY THE CLAIM OF WDV OF RS. 25,25,514/- AS PER RETURN OF INCOME SHOULD NOT BE DISALLOWED AND TAKEN AS RS. 3, 22,897/- AND ALSO WH Y THE VALUE OF CONSIDERATION SHOULD NOT BE TAKEN AT RS. 1 ,08, 73,500/- INSTEAD OF RS. 90,00,000/- U/S.50C OF THE I.T. ACT, FOR COMPUTING INCOME FROM CAPITAL GAINS. HOWEVER, TILL DATE, THE ASSESSEE HAS SUBMITTED ITS EXPLANATION IN THIS REGARD. IN VIEW OF THE ABOVE, INCOME FROM SHORT TERM CAPITA L GAINS IS WORKED OUT AS UNDER:- SATE CONSIDERATION AS PER SECTION 50C OF THE INCOME TAX ACT 1961 1, 08,73,500 LESS: W.D.V OF THE BLOCK OF ASSETS AS ON 31.03.2006 3, 22,897 ------------------- BALANCE (S.T.C.G.) 1, 05, 50,603 THE DIFFERENCE IN INCOME I.E. RS.85,91,248/- LESS RS.12,85,473/- I.E. RS.73,05,775/- WAS TAKEN BY ASS ESSING OFFICER AS INCOME SOUGHT TO BE EVADED FOR WORKING O UT MINIMUM PENALTY LEVIABLE AT RS.14,61,155/-. THE ST AND OF ASSESSEE HAS BEEN THAT ISSUE OF APPLICABILITY OF SE CTION50 VIS-- VIS 50C WAS DECIDED HOLDING THAT WHERE ASSESSEE HAD CLAIMED DEPRECIATION IN RESPECT OF ITS OFFICE PREMISES AND THEREFORE SECTION 50 WAS APPLICABLE AND THUS ASSESSING OFFICE R WAS NOT JUSTIFIED IN ADOPTING STAMP DUTY VALUATION IN PLACE OF AMOUNT SHOWN IN SALE DEED. THERE IS ALSO A VIEW ON THE PO INT THAT ACCORDING TO WHICH THE PROVISIONS OF SECTION 50C AR E APPLICABLE ITA NO.3867/MUM/14 A.Y. 07-08 [DCIT VS. M/S. SKY LI TE ELECTRO FIXTURES PVT. LTD.] PAGE 5 TO THE SHORT TERM CAPITAL GAIN CALCULATED ON SALE O F DEPRECIABLE ASSETS U/S.50C OF THE ACT. AS REGARDS THE CLAIM RE GARDING BROUGHT FORWARD BUSINESS LOSSES WHETHER THEY CAN BE SET OFF AGAINST INCOME IN THE NATURE OF CAPITAL GAIN COMPUT ED U/S.50 OF THE ACT, ASSESSEE HAS PLACED RELIANCE ON CERTAIN CASE LAWS TO SHOW THE SITUATION IN HIS FAVOUR. IN FACTS AND CIR CUMSTANCES, CIT(A) OBSERVED THAT THOUGH INCOME WAS REFLECTED AT A LESSER FIGURE IN THE RETURN OF INCOME FILED, SAME HAPPENED DUE TO INADVERTENT MISTAKE AND UNDERSTANDING OF THE PROVIS IONS AND ALSO DIVERGENT VIEW ON THE ISSUE HAS BEEN TAKEN. T HE STAND OF ASSESSEE HAS BEEN THAT PENALTY WILL NOT APPLY MEREL Y IF AN INCORRECT/INADMISSIBLE CLAIM HAS BEEN MADE IN THE R ETURN WHEN ALL MATERIAL FACTS HAVE BEEN DISCLOSED IN THE RETURN OF INCOME. IT IS NOT IN DISPUTE THAT ASSESSEE HAD NOT PLACED ANY MATERIAL FACT AND IT WAS ONLY A QUESTION OF INTERPR ETATION MADE BY THEM DIFFERENTLY WHICH LED TO HIGHER CLAIM OF DE PRECIATION. THERE IS NOTHING ON RECORD THAT ASSESSEES CLAIM WA S NOT BONAFIDE. EVEN THOUGH, SAME WAS NOT DIFFERENT INTE RPRETATION OF PROVISIONS OR BY ADOPTING THE OPPOSITE VIEW TAKE N BY VARIOUS AUTHORITIES, IN SUCH A SITUATION, ASSESSEE CANNOT B E HELD GUILTY FOR FURNISHING INACCURATE PARTICULARS OR CONCEALING THE INCOME. THUS ON BOTH THE ACCOUNTS I.E. ADDITION MADE ON ACC OUNT OF APPLICATION OF PROVISIONS OF SECTION 50C OF THE ACT AS WELL AS APPLICATION OF SECTION 72 OF THE ACT, EVEN THOUGH I NCOME HAS BEEN ASSESSED AT HIGHER FIGURE, SAME DOES NOT AMOUN T TO FURNISHING OF ANY INACCURATE PARTICULARS OR CONCEAL MENT OF INCOME ON THE PART OF ASSESSEE. ACCORDINGLY PENALTY HAS RIGHTLY ITA NO.3867/MUM/14 A.Y. 07-08 [DCIT VS. M/S. SKY LI TE ELECTRO FIXTURES PVT. LTD.] PAGE 6 BEEN DELETED BY CIT(A). THIS REASONED FINDING OF C IT(A) NEEDS NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 3. AS A RESULT, APPEAL FILED BY REVENUE IS DISMISSE D. PRONOUNCED IN THE OPEN COURT ON THIS THE 24 TH DAY OF JUNE, 2016. SD/- SD/- ( RAJESH KUMAR ) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBE R MUMBAI: DATED 24/06/2016 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. / ASSESSEE 3. %&%'( ) / CONCERNED CIT 4. )- / CIT (A) 5.-./00'(, '( , %& / DR, ITAT, MUMBAI 6./4567 / GUARD FILE. BY ORDER / , / % , '( , %&