ITO 4(3)(1), MUMBAI V. PREMSHREE GEMS P. LTD, MUMBAI

ITA 4331/MUM/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8174 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 25-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PREMANAND J
• Assessee Lawyers: RASHMIKANT C MOD I
• Keywords: Depreciation; Bonafide belief; Corroborative evidences

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI . . , , , BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMB ER . / ITA NO. 4331 / MUM./ 2012 ( / ASSESSMENT YEAR : 20 07 08 ) INCOME TAX OFFICER WARD 9(2)(3), AAYAKAR BHAVAN 101, M.K. ROAD, MUMBAI 400 020 .. / APPELLANT V/S M/S. M.J. LAB PVT. LTD. 7A, 702, ALICIA NAGA R LOKHANDWALA COMPLEX KANDIVALI (EAST), MUMBAI 400 101 .... / RESPONDENT . / PERMANENT ACCOUNT NUMBER AAACM5735F / ASSESSEE BY : SHRI RASHMIKANT C. MODI / REVENU E BY : SHRI PREMANAND J. / DATE OF HEARING 11 .0 9 .2014 / DATE OF ORDER 19.09.2014 / ORDER , / PER AMIT SHUKLA , J.M. THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVENUE C HALLENGING THE IMPUGNED ORDER DATED 20 TH MARCH 2013 , PASSED BY THE LEARNED COMMISSIONER (APPEALS) XX , MUMBAI, FOR THE ASSESSMENT YEAR 20 06 07 , IN THE MATTER OF PENALTY OF ` 9,23,538, UNDER SECTION 271(1)(C), DELETED BY THE LEARNED COMMISSIONER (APPEALS). 2. FACTS IN BRIEF : THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CONDUCTING S A MPLE TEST AND PHARMA LABORATORIES. THE ASSESSEE HAS M/S. M.J. LAB PVT. LTD. 2 CLAIMED DEPRECIATION @ 70% ON CERTAIN PLANT S AND MACHINERY AND ELECTRICAL INSTALLATION. IN RESPONSE TO THE SHOW CAUSE NOTICE, TO S UPPORT ITS CLAIM WITH SUPPORTING EVIDENCE, THE ASSESSEE SUBMITTED A STATEMENT SHOWING THE ADDITIONS MADE TO THE FIXED ASSETS DURING THE YEAR ALONG WITH THE COPY OF INVOICES. THE LIST OF SUCH ITEMS HAVE BEEN GIVEN AT PARA 4.1 OF THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3). HOWEVER, THE ASSESSING OFFICER NOTED THAT THESE FIXED ASSETS ARE EQUIPMENTS AND ARE NOT SPECIALISED ENERGY SAVING DEVICES AS ENVISAGED UNDER APPENDIX I. ACCORDINGLY, HE HELD THAT THE ASSESSEE IS ENTITLED TO DEPRECIATION @ NORMAL RATE OF 15%. ACCORDINGLY, EXCESS CLAIM OF DEPRECIATION OF ` 27,43,726, WAS DISALLOWED. IN THE FIRST APPEAL, THE LEARNED COMMISSIONER (APPEALS) TOO DISMISSED THE ASSESSEES APPEAL. THE PENALTY HAS BEEN LEVIED ON SUCH A DISALLOWANCE. 3. BEFORE THE LEARNED COMMISSIO NER (APPEALS), IN THE PENALTY PROCEEDINGS, THE ASSESSEE SUBMITTED THAT THE ASSESSEE COMPANY IS IN THE BUSINESS OF HIGH - TECH TESTING FOR WHICH THE LAB IS EQUIPPED WITH ULTRA MODERN AND LATEST ELECTRONIC DEVICES. DURING THE YEAR, THE ASSESSEE HAD PURCHASED E NERGY SAVING DEVICES RELATING TO ITS ELECTRONIC AND COMPUTER SYSTEM WHICH WOULD RESULT INTO SAVING IN ENERGY CONSUMPTION AND IT WAS ON THIS BACKGROUND THE ASSESSEE HAD CLAIMED DEPRECIATION @ 80%. IN SUPPORT OF HIS CONTENTION, THE ASSESSEE RELIED UPON THE F OLLOWING CASE LAWS: 1. CIT V/S HARSHVARDHAN CHEMICALS & MINERALS PVT. LTD, [2003] 259 ITR 212 (RAJ.) 2. INDERSONS LEATHER PVT. LTD., [2010] 328 ITR 167 (P&H) 3. CIT V/S RELIANCE PETROPRODUCTS PVT. LTD., [2010] 322 ITR 158 (SC) 4. THE LEARNED COMMISSIONER (APPEA LS) DELETED THE PENALTY AFTER OBSERVING AND HOLDING AS UNDER: 3. I HAVE CONSIDERED THE FINDING OF THE ASSESSING OFFICER AND RIVAL SUBMISSION OF THE APPELLANT, CAREFULLY. I FIND THAT THE LD. M/S. M.J. LAB PVT. LTD. 3 ASSESSING OFFICER HAS WRONGLY LEVIED PENALTY OF RS .9,23,538/ - . IT IS EVIDENT FROM THE RECORD THAT APPELLANT HAS NOT CONCEALED ANY PARTICULARS OF INCOME OR NOR HAS CONCEALED ANY INCOME RATHER ITS CASE OF MERELY DISALLOWING A CERTAIN CLAIM. ACCORDING TO THE APPELLANT IT HAS PURCHASED ENERGY SAVING DEVICE HENCE IT IS ENT ITLED FOR DEPRECIATION @80% WHEREAS ACCORDING TO THE ASSESSING OFFICER APPELLANT COULD NOT PROVE AS TO HOW ITEMS ADDED UNDER THE CATEGORY 'INSTRUMENTATION AND MONITORING SYSTEM FOR MONITORING ENERGY FLOW' IS AN ENERGY SAVING DEVICE ELIGIBLE FOR DEPRECIATIO N @ 80%. THUS, THERE IS TWO VIEWS POSSIBLE OVER SUCH ISSUE. ONE VIEW HAS BEEN CONFIRMED BY THE CIT(A) WHICH IS IN THE FAVOUR OF THE ASSESSING OFFICER, NEVERTHELESS THAT DOES NOT ENTITLED ASSESSING OFFICER TO LEVY PENALTY FOR CONCEALMENT OF INCOME OR FURNIS HING OF INACCURATE PARTICULARS OF INCOME. IN PLETHORA OF JUDGMENTS, HON'BLE COURTS HAVE HELD THAT IF A CLAIM OF DEDUCTION IS RATHER DEBATABLE OR CONTROVERSIAL OR EVEN ARGUABLE, IT CANNOT BE SAID THAT MERELY BY CLAIM D EDUCTI O N, APPELLA NT CONCEALED ANY PA R T ICULARS OF INCOME. IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. (2010) 322 ITR 158 (SC), IT HAS BEEN HELD THAT MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW COULD NOT BY ITSELF TENTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCO ME. THUS, IN VIEW OF THE ABOVE DISCUSSION I AM OF THE CONSIDERED OPINION THAT THERE IS NO FURNISHING OF INACCURATE PARTICULARS OF INCOME, HENCE, APPELLANT IS NOT LIABLE FOR PENALTY U/S. 271 (1)( C) OF THE I. T. ACT. THEREFORE, LEVY OF PENALTY OF RS . 9,23,538/ - IS DIRECTED TO BE DELETED. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY RELYING UPON THE ORDER OF THE ASSESSING OFFICER, SUBMITTED THAT THE ASSESSEE COULD NOT GIVE ANY PROPER EXPLANATION BEFORE THE ASSESSING OFFICER . FURTHER, THE NATURE OF PLANTS W ERE AS SUCH THAT THEY QUALIFIED FOR NORMAL DEPRECIATION RATE . THUS, WHEN NO EXPLANATION HAS BEEN OFFERED BY THE ASSESSEE THEN, PENALTY UNDER SECTION 271(1)(C) HAS RIGHTLY BEEN LEVIED. THE LEARNED COUNSEL ON THE OTHER HAND STRONGLY RELIED UPON THE ORDER OF THE LEARNED COMMISSIONER (APPEALS). 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE IMPUGNED ORDER. THE ASSESSEE HAS CLAIMED DEPRECIATION AT A HIGHER RATE IN CERTAIN PLANT S AND MACHINERY AND ELECTRICAL INSTALLATION ON THE GROUND THAT THESE MACHINERIES HAVE BEEN USED FOR THE PURPOSE OF ITS PHARMA INDUSTRY AND LAB FOR SAMPLE TEST, WHICH WERE IN THE FORM OF ENERGY SAVING DEVICE RELATING TO ELECTRONIC AND COMPUTER AIDED SYSTEM. THE M/S. M.J. LAB PVT. LTD. 4 ASSESSING OFFICER HAS NOT BROUGHT OUT ON RECORD AS TO HOW THE MACHINERY AND EQUIPMENTS DO NOT QUALIFY FOR HIGHER DEPRECIATION. EVEN OTHERWISE ALSO, IF A CLAIM ON HIGHER DEPRECIATION HAS BEEN MADE ON SOME BONAFIDE BELIEF WHICH HAS NOT BEEN FOUND TO BE FALSE, THEN IT CANNOT BE HELD THAT PENALTY UNDER SECTION 271(1)(C) FOR FURNISHIN G OF INACCURATE PARTICULARS CAN BE LEVIED. UNDER THESE FACTS AND CIRCUMSTANCES, WE DO NOT FIND ANY REASON TO DEVIATE FROM THE FINDINGS AND CONCLUSION DRAWN BY THE LEARNED COMMISSIONER (APPEALS). ACCORDINGLY, THE GROUNDS RAISED BY THE DEPARTMENT STAND DISMI SSED. 7. 7. IN THE RESULT, REVENUES APPEAL IS DISMISSED. 19 TH SEPTEMBER 2014 ORDER PRONOUNCED IN THE OPEN COURT O N 19 TH SEPTEMBER 2014 SD/ - . . R.C. SHARMA ACCOUNTANT MEMBER S D/ - AMIT SHUKLA JUDICIAL MEMBER MUMBAI, DATED : 19 TH SEPTEMBER 2014 / COPY OF THE ORDER FORWARDED TO : (1) / THE ASSESSEE ; (2) / THE REVENUE; (3) ( ) / THE CIT(A ) ; (4) / TH E CIT, MUMBAI CITY CONCERNED ; (5) , , / THE DR, ITAT, MUMBAI ; (6) / GUARD FILE . / TRUE COPY / BY ORDER . / PRADEEP J. CHOWDHURY / SR. P RIVATE SECRETARY / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI