The ACIT, Circle-2, JAMNAGAR V. Saurashtra Cement Ltd., PORBANDAR

ITA 425/RJT/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1317 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 07-04-2016
• Assessment Year: 2002-2003
• Appeal Filed On: 02-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Question of law; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH , RAJKOT BEFORE: S H RI ANIL CHATURVEDI , ACCOUNTANT MEMBER AND SHR I S. S. GODARA , JUDICIAL MEMBER [CONDUCTED THROUGH E - COURT AT AHMEDABAD] THE ACIT, CIRCLE - 2 , JAMNAGAR (APPELLANT) VS SAURASHTRA CEMENT LTD . NR. RAILWAY STATI O N, RANAVAV, PORBANDAR PAN: AAHCS5211J (RESPONDENT) REVENUE BY : S H RI PRASOON KABRA , D . R. ASSESSEE BY: NONE DATE OF HEARING : 07 - 04 - 2 016 DATE OF PRONOUNCEMENT : 29 - 04 - 2 016 / ORDER P ER : S. S. GODARA , JUDICIAL MEMBER : - THE REVENUE S APPEAL FOR A.Y. 2002 - 03 , AR ISES FROM ORDER OF THE CIT(A), JAMNAGAR DATED 04 - 04 - 2014 IN APPEAL NO. CIT(A) / JAM/97/13 - 14/68 , IN PROCEEDINGS UNDER SECTION 271(1 ) (C) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . I T A NO . 425 / RJT /20 14 A SSESSMENT YEAR 200 2 - 03 I.T.A NO. 425 /RJT /20 1 4 A.Y. 2002 - 03 PAGE NO ACIT VS. SAURASHTRA CEMENT LTD 2 2. THE REVENUE S SOLITARY GRIEVANCE SEEKS TO REVIVE THE IMPUGNED SECTION 271(1)(C) PENALTY OF RS. 65,21,566/ - IMPOSED BY THE ASSESSING OFFICER IN ORDER DATED 27 - 06 - 2013 AND DELETED IN THE LOWER APPELLATE PROCEEDINGS. 3. A PERUSAL OF THE CASE FILE REVEALS THAT THIS CASE H AS A LONG HISTORY OF LITIGATION UPTO THE TRIBUNAL. THIS ASSESSEE - A PUBLIC LIMITED COMPANY MANUFACTURES CEMENT AND CLINKER. IT FILED ITS RETURN ON 30 - 10 - 2002 DECLARING LOSS OF RS. 2,99,18,245/ - . IT FURTHER RAISED PROJECT EXPENDITURE CLAIM OF RS. 1,82,67, 690/ - IN THE DOCUMENTS ENCLOSED WITH THE RETURN. THERE IS NO DISPUTE THAT THE IMPUGNED PENALTY PERTAINS TO THIS ISSUE ONLY. THE ASSESSING OFFICER FRAMED A REGULAR ASSESSMENT ON 31 - 03 - 2005 DISALLOWING THE SAME AS PER HIS ORDERS IN PRECEDING ASSESSMENT YEA R HOLDING IT CAPITAL EXPENDITURE INSTEAD OF THAT COMING UNDER REVENUE NATURE. HE INITIATED THE IMPUGNED PENALTY PROCEEDINGS ALLEGING FURNISHING OF WRONG PARTICULARS OF INCOME. THE ASSESSEE PREFERRED APPEAL. THE CIT(A) IN HIS LOWER APPELLATE ORDER DATED 29 - 11 - 2005 AFFIRMED THE ASSESSING OFFICER S FINDINGS. THE MATTER CAME TO THE TRIBUNAL IN ASSESSEE S APPEAL ITA 19/RJT/ 2006. A CO - ORDINATE BENCH DELETED THE ABOVE STATED DISALLOW ANCE IN ORDER DATED 23 - 12 - 2008. THIS MADE THE REVENUE TO FILE MA NO. 623/RJT/ 2009 ON THE VERY ISSUE. LD. CO - ORDINATE BENCH VIDE ORDER DATED 30 - 12 - 2009 ACCEPTED ITS RECALL PRAYER AND RESTORED THE ISSUE BACK TO THE ASSESSING OFFICER AS IN ASSESSMENT YEAR 1996 - 97. I.T.A NO. 425 /RJT /20 1 4 A.Y. 2002 - 03 PAGE NO ACIT VS. SAURASHTRA CEMENT LTD 3 4. THE ASSESSING OFFICER TOOK UP CONSEQUENTIAL ASSESSMENT. HE AGAIN REITERATED HIS EARLIER OPINION TO HOLD ASSESSEE S PROJECT EXPENSES IN QUESTION AS CAPITAL EXPENDITURE IN TUNE WITH THE DISALLOWANCE MADE IN PRECEDING ASSESSMENT YEAR. THE C IT(A) ONCE AGAIN DECLINED ASSESSEE S APPEAL. A CO - ORDINATE BENCH OF THE TRIBUNAL I N ASSESSEE S APPEAL ITA 340/RJT/2012 DECIDED ON 14 - 12 - 2012 TOOK NOTE OF ASSESSEE S SUBMISSION/DECLARATION FILED U/S. 158A(1) OF THE ACT INTER ALIA POINTING OUT THAT HON BLE JURISDICTIONAL HIGH COURT HAD ADMITTED ITS SUBSTANTIAL QUESTION OF LAW ON THE VERY ISSUE IN ASSESSMENT YEAR 1994 - 95 IN ITS OWN CASE. THIS MADE THE LD. CO - ORDINATE BENCH TO DISMISS THE APPEAL SUBJECT TO ITS DIRECTIONS GIVEN TO THE ASSESSING OFFICER THAT HE WOULD AMEND HIS ORDER AS PER HON BLE JURISDICTIONAL HIGH COURT S DECISION. 5. IT TRANSPIRES FROM THE PENALTY ORDER TH AT THERE IS NO MENTION OF HON B LE JURISDICTIONAL HIGH COURT JUDGMENT IN THE ABOVE STATED ASSESSMENT YEAR 1994 - 95. NOR IS ANY OBSERVATION BY THE LOWER AUTHORITIES AS TO WHETHER TH E SAME HAS ATTAINED FINALITY OR NOT. THE ASSESSING OFFICER TOOK UP THE IMPUGNED PENALTY PROCEEDINGS. THE ASSESSEE HIGHLIGHTED ABOVE STATED FACTUAL BACKDROP TO STATE THAT THE IMPUGNED PENALTY PROCEEDINGS ARE TIME BARRED U/S. 275 OF THE ACT SINCE THE ORIGINAL QUANTUM ORDER NO MORE EXISTED. THE AS SESSIN G OFFICER WAS OF THE VIEW THAT THE ORIGINAL PENALTY NOTICE WAS VERY MUCH IN OPERATION WHICH COULD BE FURTHER PROCEEDED SUBJECT TO HIGHER AUTHORITIES DIRECTIONS. HE TREATED ASSESSEE S EXPENDITURE CLAIM AS I.T.A NO. 425 /RJT /20 1 4 A.Y. 2002 - 03 PAGE NO ACIT VS. SAURASHTRA CEMENT LTD 4 INSTANCE OF CONCEALMENT OF INCOME TO IMPOSE I MPUGNED PENALTY OF R S. 65,21,566/ - . 6. THE ASSESSEE PREFERRED APPEAL. THE CIT(A) DELETES THE PENALTY IN QUESTION BY ACCEPTING BOTH OF ITS CONTENTIONS. HE HOLDS THAT THE ABOVE STATED DE - NOVO ASSESSMENT WOULD IMPLY THAT THE ORIGINAL PENALTY PROCEEDINGS D ID NOT REMAIN ALIVE AS PER THE QUANTUM APPELLATE ORDER AND TRIBUNAL S PROCEEDINGS (SUPRA). HE FURTHER CONCLUDES ON MERITS THAT THE TRIBUNAL IN ASSESSMENT YEAR 1983 - 84 , THE VERY PROJECT EXPENDITURE CLAIM IN ASSESSEE S FAVOUR AND THE DEPARTMENT DID NOT RAIS E ANY ISSUE OF THE SAME. HE IS OF THE OPINION THAT THE INSTANT ISSUE ON MERITS I.E. WHETHER TH E IMPUGNED EXPENDITURE IS OF CAPITAL OR REVENUE IN NATURE IS HIGHLY DEBATABLE ONE. THE ASSESSEE HAS ACCORDINGLY SUCCEEDED IN THE LOWER APPELLATE PROCEEDINGS . T HIS LEAVES THE REVENUE AGGRIEVED. 7. WE HAVE HEARD THE REVENUE AND GONE THROUGH ASSESSEE S WRITTEN SUBMISSION. RELEVANT FACTS NARRATED IN THE PRECEDING PARAGRAPHS ARE NOT REPEATED FOR THE SAKE OF BREVITY . IT HAS COME ON RECORD THAT THE ASSESSEE HAS RAIS ED ITS CLAIM THE IM PUGNED PROJECT EXPENDITURE OF RS . 1,82,67,690/ - IN RESPECT OF ITS MODERNIZATION PROJECT AT THE VERY FIRST INSTANCE IN QUANTUM PROCEEDINGS BY PLACING ON RECORD ALL THE RELEVANT MATERIALS. THE REVENUE IS FAIR ENOUGH IN NOT DISPUTE THIS FA CTUAL POSITION . WE FURTHER OBSERVE THAT IT IS NOT A CASE OF CONCEALMENT SINCE ALL THE DOCUMENTS FORM PART OF THE CASE FILE BUT AN ISSUE OF HEAD OF THE EXPENDITURE I.E. WHETHER CAPITAL OR I.T.A NO. 425 /RJT /20 1 4 A.Y. 2002 - 03 PAGE NO ACIT VS. SAURASHTRA CEMENT LTD 5 REVENUE IN NATURE. THE REVENUE FAILS TO REBUT OUR OBSERVATION HEREI NABOVE THAT THE ASSESSING OFFICER HAS NOT YET FRAMED FINAL CONSEQUENTIAL ASSESSMENT AS PER HON BLE HIGH COURT DECISION (SUPRA). WE ARE OF THE OPINION THAT EVEN THE QUANTUM ISSUE IS YET TO ATTAIN FINALITY. WE ACCORDINGLY REJECT REVENUE S ARGUMENTS ON MERI TS SEEKING TO REVIVE THE IMPUGNED PENALTY BY QUOTING HON BLE APEX COURT DECISION IN CIT VS. RELIANCE PETRO - PRODUCTS 322 ITR 158 (SC) HOLDING THAT EACH AND EVERY DISALLOWANCE MADE IN QUANTUM DOES NOT NECESSARY RESULTS IN AUTOMATIC IMPOSITION OF PENALTY SINC E THESE TWO ARE PARALLEL PROCEEDINGS. ITS SUBMISSION ON THE LEGAL ISSUE AS TO WHETHER THE IMPUGNED PENALTY PROCEEDINGS ARE TIME BARRED HAS ACCORDINGLY BEEN RENDERED INFRUCTUOUS. 8. THIS REVENUE S APPEAL IS DISMISSED. ORDER PR ONOUNCED I N THE OPEN C OUR T ON 29 - 04 - 201 6 SD/ - SD/ - (ANIL CHATURVEDI ) ( S. S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 29 /04 /2016 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. I.T.A NO. 425 /RJT /20 1 4 A.Y. 2002 - 03 PAGE NO ACIT VS. SAURASHTRA CEMENT LTD 6 BY ORDER, ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, RAJKOT