THE DCIT 8(2), MUMBAI V. M/S. PFIZER LTD, MUMBAI

ITA 4301/MUM/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1214 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 21-12-2009
• Assessment Year: 2001-2002
• Appeal Filed On: 06-06-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEVADASAN
• Keywords: Depreciation
• Section: 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C,MUMBAI BEFPRE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER I.T.A.NO.4301/MUM/07) (A.Y. 2001-02) DY.COMMR. OF INCOME-TAX-8()2), R.NO.216-A, AAYKAR BHAVAN, M.K. RD., MUMBAI-400 020. VS. M/S. PFIZER LTD., 5, PATEL ESTATE, OFF S.V.RD., JOGESHWARI (W), MUMBAI-400 102. PAN: AAACP3334M APPELLANT RESPONDENT APPELLANT BY SHRI DEVADASAN. RESPONDENT BY NONE. O R D E R PER D. MANMOHAN, VICE PRESIDENT: THE ONLY GROUND RAISED IN THE APPEAL FILED BY THE REVENUE READS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN CANCELLING THE PENALTY LEVIED U /S. 271(1)(C) OF RS.19,69,876/-. 2. WE HAVE HEARD THE LD. D.R. IN THIS REGARD AND CA REFULLY PERUSED THE RECORD. FACTS NECESSARY FOR THE DISPOSAL OF THE APPEAL ARE STATED IN BRIEF. THE ASSESSEE COMPANY WAS ENGAGED IN THE BUSINESS OF MANUFACTURE OF PHARMACEUTICALS, CHEMICALS AND ANIMAL HEALTH PRODUCTS. IN RESPECT O F THE PREVIOUS YEAR RELEVANT TO ASSTT. YEAR 2001-02, IT DECLARED A TAXABLE INCOM E OF RS.69,13,39,630/-, WHEREAS THE ASSESSMENT WAS COMPLETED BY THE ASSESSI NG OFFICER BY DETERMINING THE INCOME AT RS.7,25,546,050/-. CONSEQUENT TO AD DITIONS/DISALLOWANCES MADE IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER INIT IATED PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT. BROADLY, THE ISSUES WHIC H WERE SUBJECT MATTER OF IT 4301/M/07 PFIZER LTD. 2 DISPUTE, ARE WITH REGARD TO THE CLAIM OF DEPRECIATI ON/DEDUCTION OF ESIC PAYMENTS AND LEAVE ENCASHMENT AS WELL AS 80HHC BENEFIT. THE CASE OF THE ASSESSEE WAS THAT THE AFORESAID CLAIMS WERE BONA FIDE CLAIMS AND THERE IS NO MENS REA IN RAISING SUCH CLAIMS. MERELY BECAUSE THE CLAIMS WERE DISALLOWED, PENALTY IS NOT LEVIABLE. THE ASSESSING OFFICER REJECTED THE CONTEN TION OF THE ASSESSEE AND PROCEEDED TO LEVY PENALTY OF RS.19,69,876/- U/S.271 (1)(C) OF THE ACT. 3. AGGRIEVED, THE ASSESSEE CONTENDED BEFORE THE LD. CIT(A) THAT WITH REGARD TO ESIC PAYMENTS, LEAVE ENCASHMENT AND DEDUCTION U/ S.80HHC, THERE WERE DIVERGENT VIEWS OF VARIOUS FORUMS. IN SPECIFIC, THE LD. COUNSEL INVITED THE ATTENTION OF THE CIT(A) TO THE DECISION OF THE ITAT IN THE ASSESSEES OWN CASE FOR THE ASSTT. YEAR 1998-99 WHEREIN THE CLAIM OF DEDUCT ION U/S.80HHC WITH REFERENCE TO INSURANCE CLAIM HAS BEEN DECIDED IN FAVOUR OF TH E ASSESSEE. IT WAS THUS CONTENDED THAT WHERE TWO VIEWS ARE POSSIBLE OR WHER E THE DISALLOWANCES AND ADDITIONS HAVE BEEN MADE ONLY BY REJECTING THE BONA FIDE CLAIMS OF THE ASSESSEE, NO PENALTY CAN BE IMPOSED. 4. SIMILARLY, WITH REGARD TO REJECTION OF THE CLAIM OF DEPRECIATION IN RESPECT OF ITS ANKLESHWAR PLANT, IT WAS CONTENDED THAT IT WAS PART OF THE BLOCK ASSETS AND DEPRECIATION WAS ALLOWED IN THE EARLIER YEAR, IN WH ICH EVENT MERELY BECAUSE THE PARTICULAR ASSET WAS NOT UTILIZED FOR THE PURPOSES OF BUSINESS, DEPRECIATION CANNOT BE DENIED. HERE ALSO, IT WAS CLAIMED THAT THERE IS CLEAVAGE OF JUDICIAL OPINION ON THIS ISSUE AND WHEN THERE ARE DIVERGENT VIEWS POSSI BLE, MERELY ON ACCOUNT OF DISALLOWANCE OF THE CLAIM OF THE ASSESSEE, IT SHOU LD NOT LEAD TO LEVY OF PENALTY. 5. RELIANCE WAS PLACED UPON SEVERAL DECISIONS OF I TAT IN SUPPORT OF ITS CONTENTION THAT WHEREVER ISSUES ARE DEBATABLE, THE QUESTION OF IMPOSITION OF PENALTY DOES NOT ARISE. IT 4301/M/07 PFIZER LTD. 3 6. HAVING CONSIDERED THE ISSUE IN GREAT DETAIL, THE LD. CIT(A) CANCELLED THE PENALTY BY OBSERVING THAT IT WAS NOT A CASE OF FILI NG OF INACCURATE PARTICULARS OF INCOME BUT IT WAS A MERE CASE OF DISALLOWANCE OF BO NA FIDE CLAIMS OF THE ASSESSEE ON WHICH PENALTY SHOULD NOT BE LEVIED. 7. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 8. DURING THE COURSE OF HEARING, THE LD. D.R. WAS N OT ABLE TO POINT OUT THAT THE CLAIMS MADE BY THE ASSESSEE IN THE RETURN OF IN COME WERE NOT BONA FIDE OR THEY WERE FALSE, BEING CONTRARY TO THE PLAIN LANGUA GE OF THE PROVISIONS OF THE ACT. SUCH BEING THE CASE, WE DO NOT FIND ANY INFIRMITY I N THE ORDER PASSED BY THE LD. CIT(A). AS PRONOUNCED IN THE OPEN COURT, WE AFFIRM THE ORDER OF THE CIT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 12TH D AY OF JULY, 2010. SD/- SD/- (RAJENDRA SINGH) ACCOUNTANT MEMBER (D. MANMOHAN) VICE PRESIDENT MUMBAI:12TH JULY, 2010. NG: COPY TO : 1. DEPARTMENT. 2.ASSESSEE. 3 CIT(A)-VIII,MUMBAI. 4 CIT,MC-VIII,MUMBAI. 5.DR,C BENCH,MUMBAI. 6. MASTER FILE. (TRUE COPY) BY ORDER, ASST.REGISTRAR, ITAT, MUMBAI. IT 4301/M/07 PFIZER LTD. 4 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 12-7-10 SR.PS/ 2 DRAFT PLACED BEFORE AUTHOR 12-7-10 SR.PS/ 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/ 6. KEPT FOR PRONOUNCEMENT ON SR.PS/ 7. FILE SENT TO THE BENCH CLERK SR.PS/ 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER