GULSHAN POLYOLS LTD., NEW DELHI V. ACIT, CIRCLE- 10(2), NEW DELHI

ITA 4107/DEL/2017

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 7599 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 20-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MITHUN SHETE
• Section: 27; 6; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “C” DELHI BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI YOGESH KUMAR US, JUDICIAL MEMBER I.T.A. No.4107/DEL/2017 Assessment Year 2011-12 Gulshan Polyols Ltd., G-81, Preet Vihar, New Delhi. vs. ACIT, Circle-10(2), New Delhi. TAN/PAN: AABCG3954F (Appellant) (Respondent) Appellant by: None Respondent by: Shri Mithun Shete, Sr.D.R. Date of hearing: 17 03 2022 Date of pronouncement: 14 06 2022 O R D E R PER PRADIP KUMAR KEDIA, A.M.: Th e cap t io n ed ap peal h as b een fi led b y th e assess ee ag ain st th e o rd er o f th e C o mmiss io n er o f In co me Tax (Ap p eals)-XXXV, New Delh i (‘CIT(A)’ in sho rt) d ated 25 .0 5 .2 01 7 p assed b y the Assessin g Officer u n d er Sectio n 2 7 1 (1 )(c) o f th e Inco me Tax Act, 1 9 61 (th e Act) co n cern in g AY 2 0 11 -12 . 2 . Th e g ro u nd s o f ap p eal ra ised b y th e assesse e read s as u n d er: “ 1 . T h a t t h e H o n ’ b l e CI T (A p p e a l s ) i s w r o n g a n d u n j ust i f i e d b o t h i n l a w a n d f a c t s i n i m p o s i n g p e n a l t y o n a d d i t io n o f R s. 1 , 4 4 , 7 9 4 / - o n a c c o u n t o f C h a ri t y a n d D o n a t i o n a nd R s. 6 5 , 7 8 2 / - o n a c c o u n t o f d i sa l l o wa n c e o f p a rt d e d uc t i o n 8 0 - I C. ” 3 . Th e assessee- co mp an y filed i ts re tu rn o f in co me d ec l arin g I.T.A. No.4107/Del/2017 2 to ta l in co me a t Rs. 1 1 ,9 8 ,36 ,5 5 5 /-. In th e co u rse o f ass es smen t , th e Assessin g Officer in ter a l ia d isa llo wed ‘rep air an d ma in ten an ce ex p en ses’ at Rs.1 , 4 4 ,7 94 /- o n acco u n t o f ch ari ty and d o n atio n an d Rs.6 5 ,7 8 2 /- o n acco u n t o f p art d ed u ctio n in Sec t io n 8 0 IC and imp o sed p en alty t h ereo n wh ich was co n firmed in th e first ap p ea l. Th e assesse e h as ch all en g ed th e i mp o sitio n o f p en alt y o n su ch ad d itio n s/d is al lo wan ces. 4 . With th e assis tan c e o f th e ld . co u n sel fo r th e asses see , we fin d th at th e d i sa llo wan ce o f Rs .1 , 4 4 ,7 94 /- was carr ied o u t o n acco u n t o f ch ar ity an d d o n atio n o n th e g ro un d th at sa me h as n o t b een in cu rred fo r ch aritab le p u rp o ses. On p eru sal of a ssess men t o rd er, it is n o tice d th at n o satisfac tio n h as b een fo rmed in th e co u rse o f assessmen t fo r co mmit t in g an y d efau lt co ntemp l at ed u n d er Sectio n 2 7 1(1 )(c) in resp ect o f su ch ad d it io n. Th u s, th e imp o si t io n o f p en alty o n su ch ad d itio n cla imed in th e b o o k s o f acco u n t is n o t ju s ti fied a t th e first in stan c e. Th e ac t io n o f th e CIT(A) is a cco rd in g ly rev ersed . 5 . Th e assess ee h as i n ter a l ia c lai med d ed u ctio n u n d er Sect io n 8 0 IC on certain “o th er in co me” wh ic h in ter a lia in clu d ed p ro fit o n sale o f asse t. Th e Assessin g Offic er d isal lo wed th e cla i m o f d ed u ctio n u nd er Sect io n 8 0 IC termi n g it to b e in cide n tal in co me an d th u s can n o t b e said to b e ‘d eriv ed fro m’ man u fac tu re or p ro du ce o f an y artic le o r th in g . Fo r h o ld in g so , the Assessin g Officer rel ied u po n th e jud g men t ren d ered by the Hon’b le Su p reme Co u rt in th e case o f CIT vs. S terl in g Fo o d s, 237 ITR 57 9 (S C ) wh erein th e Co u rt o b serv ed that th e in d u stria l u n dertak in g its el f h ad to b e th e so u rce o f p ro fit an d th e b u siness of in d u stria l u n d ertak in g h ad to d irectly y ield t h at p ro fit . Th e actio n o f th e Assessin g Offi cer is clear ly g ov ern ed b y th e in terpretat io n I.T.A. No.4107/Del/2017 3 ren d ered b y th e Ho n ’b le Su p reme Co u rt o n ex p ressio n ‘d eriv ed fro m’ an d is b ased o n th e stan ce th at wh ile th e in co me s o reflec ted in th e b o ok s may b e attrib u tab le to th e b u sin ess u nd ertak in g b ut can n o t b e eq u ate d with th e ex p ressio n ‘d eriv ed fro m’ th e man u fa ctu rin g act i v ity . Th u s, th e d ed u ctio n red u ced on acco u n t o f in terp reta t iv e p ro cess can n o t p er se b e eq u ated with fu rn ish in g o f in accu rat e p arti c u lars o f in co me. In th e ab sen ce o f an y cu lp ab il ity , th e imp o sitio n o f p en al ty o win g to d enial o f d ed u ctio n o n su ch in terp retat io n o n n icety o f law d o es no t warran t imp o si t io n o f o nero u s p en alty u nd er Sectio n 2 7 1 (1 )(c). Th e p en alty imp o sed is th u s can ce l led . 5 . In th e resu l t, th e a p p eal o f th e asses s ee is a l lo wed . Order pronounced in the open Court on 14/06/2022. Sd/- Sd/- [YOGESH KUMAR US] [PRADIP KUMAR KEDIA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 14/06/2022 Prabhat