DCIT 24(3), MUMBAI V. RASHMI WRITING INSTRUMENTS, MUMBAI

ITA 3944/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8923 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 06-08-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 13-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A PANT
• Keywords: Tax effect
• Section: 80IB

Judgement Text

PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D, MUMBAI BEFORE SHRI G. E. VEERABHADRAPPA, HON'BLE PRESIDENT , & SHRI VIVEK VARMA, JUDICIAL MEMBER I.T.AS. NO. 3944 & 3945/MUM/2011 ASSESSMENT YEARS : 2006-07 & 2007-08 DCIT-24(3), ROOM NO.701, C-11, 7 TH FLOOR, B. K. C., BANDRA (E), MUMBAI-400 051 VS. M/S. RASHMI WRITING INSTRUMENTS 23, PIRAMAL ESTATE NO.4, S. V. ROAD, GOREGAON (W), MUMBAI-400 062 PAN NO: AADFR 7772 F (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R. A. PANT RESPONDENT BY : SHRI SATISH R. MODY DATE OF HEARING: 06.08.2012 DATE OF PRONOUNCEMENT: 05.09.2012 O R D E R PER VIVEK VARMA, J.M. : THE DEPARTMENT HAS FILED TWO APPEALS AGAINST THE C OMMON ORDER, PASSED BY THE CIT(A)-34, DATED 04.03.2011, COVERING ASSESS MENT YEARS 2006-07 AND 2007-08 WHEREIN THE CIT(A) HAS DELETED THE PENALTIE S UNDER SECTION 271(1)(C), LEVIED BY THE A.O. AT RS. 3,91,616 AND RS. 4,25,407, RESPECTIVELY FOR THE IMPUGNED YEARS. 2. THE FACTS OF THE CASE, EMERGING FROM THE ORDER O F THE A.O. IS THAT THE ASSESSEE MADE A CLAIM OF DEDUCTION U/S 80IB AGAINST DUTY DRAWBACK/EXPORT INCENTIVE AS THESE DO NOT DERIVE FROM THE BUSINESS OF THE INDUSTRIAL M/S. RASHMI WRITING INSTRUMENTS I.T.A. NOS. 3944 & 3945/MUM/2011 PAGE 2 OF 5 UNDERTAKING, RELYING ON THE DECISIONS OF LIBERTY IN DIA VS CIT REPORTED IN 317 ITR 218 (SC), STERLING FOODS, REPORTED IN 234 ITR 579 ( SC) AND PANDIAN CHEMICALS, REPORTED IN 262 ITR 378 (SC) AND APPLYING THE RATIO , AS DECIDED BY THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF LIBERTY INDIA . THE A.O., THUS HELD THAT THE ASSESSEE HAS WRONGLY CLAIMED THE DEDUCTION. THE A.O . IN CONSEQUENCE TO HIS OBSERVATIONS, LEVIED PENALTIES, EQUAL TO 100% OF TH E TAX EFFECT IN BOTH THE IMPUGNED YEARS, AT RS . 3,91,616 AND RS . 4,25,407, RESPECTIVELY. 3. THE ASSESSEE TOOK THE ISSUE BEFORE THE CIT(A), W HO, AFTER DISCUSSING THE FACTS OF THE CASE AND TAKING INTO ACCOUNT THE WRITT EN SUBMISSIONS, OBSERVED AS UNDER :- I HAVE GONE THROUGH THE CONTENTS OF THE IMPUGNED P ENALTY ORDERS, STATEMENT OF FACTS GROUNDS OF APPEAR AS WELL AS ARGUMENTS & S UBMISSIONS OF THE APPELLANT ALONG WITH THE MATERIAL AVAILABLE ON RECORD. I FIN D FORCE IN THE ARGUMENTS & SUBMISSIONS OF THE LD. AUTHORISED REPRESENTATIVE TH AT THE PROVISIONS OF SECTION 271(1)(C) ARE NOT ATTRACTED IN THE INSTANT CASE AS AT THE TIME OF CLAIMING DEDUCTION U/S 80(IB), THERE WERE CONFLICTING VIEWS AND DECISIONS OF VARIOUS HIGH COURTS ON THIS ISSUE SUCH AS IN THE CASE OF CIT VS. ELTECK SGS P. LTD. 169 TAXMANN 283 (DEL.), THE DECISION WAS IN FAVOUR OF T HE APPELLANT WHEREAS NO DECISION WAS GIVEN BY HON'BLE BOMBAY HIGH COURT DEN YING THE DEDUCTION U/S 80(IB) ON THE IMPUGNED ISSUE. IT IS ONLY THE DECIS ION OF HON'BLE SUPREME COURT IN THE CASE OF LIBERTY INDIA V. CIT 317 ITR 218 (SC ) THAT SETTLED THE LAW ON THIS ISSUE ULTIMATELY ON 31.08.2009 THAT RECEIPT OF DUTY DRAWBACK CANNOT BE SAID TO HAVE BEEN DERIVED FROM THE EXPORTS. IN SUCH A SITU ATION, PRIOR TO THE PERIOD WHEN SUPREME COURT DECISION IN LIBERTY INDIA CAME T HE ACTION OF APPELLANT HAS TO BE TREATED AS BONA FIDE FOR THE PURPOSES OF PENA LTY U/S. 271(1)(C). THE APPELLANTS RELIANCE ON THE DECISION OF HON'BLE SUP REME COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LTD. 189 TAXMANN 322 (S C) IS ALSO PROPER TO SUGGEST THAT MERE DISALLOWANCE OF A CLAIM WOULD NOT ENTAIL THE ATTRACTION OF PENAL PROVISIONS OF SEC 271(1)(C). HENCE, IN VIEW OF THE ABOVE DISCUSSION, THE IMPUGNED PENALTIES ARE DELETED IN THE FACTS AND CIR CUMSTANCES OF THE INSTANT CASES. 4. AGAINST THESE OBSERVATIONS, THE DEPARTMENT IS IN APPEAL BEFORE THE ITAT. M/S. RASHMI WRITING INSTRUMENTS I.T.A. NOS. 3944 & 3945/MUM/2011 PAGE 3 OF 5 5. BEFORE US, THE DR RELIED ON THE ORDER OF THE A.O . AND PLEADED THAT THE PENALTY WAS RIGHTLY LEVIED BY THE A.O. 6. ON THE OTHER HAND, THE AR PLEADED THAT THE CIT(A ) WAS CORRECT IN DELETING THE PENALTY. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND WE HAVE PERUSED THE ORDERS OF THE REVENUE AUTHORITIES. FROM THE FACTS EMERGING FR OM THE ORDERS, WE DO NOT FIND THAT THE ASSESSEE HAD CONCEALED ANY PRIMARY FACT. ACTUALLY, IT WAS ONLY ON THE BASIS OF THE ENTIRE FACTS AVAILABLE , THE A.O. HAS BEEN ABLE TO REACH A CONCLUSION THAT THE ASSESSEE WAS NOT ELIGIBLE TO DE DUCTION U/S 80IB ON THE EXPORT ENTITLEMENTS, WHEREBY, HE APPLIED THE CASE O F LIBERTY INDIA AND DISALLOWED THE CLAIM. 8. THE ISSUE BEFORE US IS WHETHER THE PENALTY IS EX IGIBLE IN A CIRCUMSTANCE, WHERE THERE IS A DISALLOWANCE OF CLAIM, AS CONCLUDE D BY THE A.O. THE ISSUE HAD BEEN DEALT WITH BY THE HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LTD. V/S CIT REPORTED IN 322 ITR 159 (SC), THAT MERE DISALLOWANCE OF A CLAIM WOULD NOT ENTITLE THE ATTRA CTION OF PENAL PROVISIONS. 9. IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES OF T HE CASE, WE DO NOT INTEND TO DISTURB THE FINDS OF THE CIT(A). WE, THEREFORE, REJECT THE APPEALS OF THE DEPARTMENT, FILED IN ASSESSMENT YEARS 2006-07 AND 2 007-08. M/S. RASHMI WRITING INSTRUMENTS I.T.A. NOS. 3944 & 3945/MUM/2011 PAGE 4 OF 5 10. IN THE RESULT, THE APPEALS FILED BY THE DEPARTM ENT AGAINST THE DELETION OF THE PENALTIES UNDER SECTION 271(1)(C) IN ASSESSMENT YEARS 2006-07 AND 2007-08 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 0 5/09/2012. SD/- SD/- (G. E. VEERABHADRAPPA) (VIVEK VARMA) PRESIDENT JUDICIAL MEMBER MUMBAI: 05/09/2012 ROSHANI COPY TO- 1) APPELLANT 2) RESPONDENT 3) CITA MUMBAI. 4) CIT CITY MUMBAI 5) DR BENCH MUMBAI TRUE COPY BY ORDER DY/ ASST.REGISTRAR,ITAT MUMBAI.