Asstt. Commissioner of Income Tax-6, Kanpur V. M/s. Shri Puran Multimedia Ltd., Kanpur

ITA 452/LKW/2012

• Counselvise Citation: 45223714 RSA 2012
• Duration Of Justice: 2 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 25-08-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 14-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O N PATHAK
• Assessee Lawyers: P K KAPOOR

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.452/LKW/2012 ASSESSMENT YEAR:2007 - 08 A.C.I.T. - 6, KANPUR. VS. M/S SHRI PURAN MULTIMEDIA LTD., 02, SARVODAYA NAGAR, JAGRAN BUILDING, KANPUR. PAN:AABCS9219B (APPELLANT) (RESPONDENT) APPELLANT BY SHRI O. N. PATHAK, D. R. RESPONDENT BY SHRI P. K. KAPOOR, C.A. DATE OF HEARING 25/08/2014 DATE OF PRONOUNCEMENT 1 8 /09/2014 O R D E R PER A. K. GARODIA, A.M. THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDER PASSED BY LEARNED CIT(A) - I, KANPUR, DATED 02/05/2012 FOR THE ASSESSMENT YEAR 2007 - 2008. 2. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 1. THAT THE LD. CIT(A) - II, KANPUR HAS ERRED IN LAW AND FACTS IN HOLDING THAT THE SAID AMOUNT WAS DISCLOSED BY THE ASSESSEE BEFORE A.O. AS THE TDS DEDUCTED FROM THE INTEREST INCOME HAD BEEN CLAIMED IN THE RETURN OF INCOME THE HON'BLE SUPREME COURT IN THE CASE OF TUTICORIN ALKALI CHEMICALS & FERTILIZERS LTD. VS COMMISSIONER OF INCOME TAX (227 ITR 172) HAS CONFIRMED THAT INTEREST INCOME BEFORE THE COMMENCEMENT OF BUSINESS CANNOT BE CAPITALIZED, BUT IS A 'INCOME FROM OTHER SOURCES.' THE BALANCE SHEETS OF ASSESSEE ARE AUDITED A ND THE INCORRECT TREATMENT OF A ITEM ON WHICH LAW ARE WELL SETTLED, CANNOT BE SAID TO A BONA - FIDE MISTAKE BUT IT IS A CASE OF INTENTIONALLY FURNISHING THE INACCURATE PARTICULARS OF INCOME BEFORE REVENUE AND IS WELL COVERED FOR PENALTY U/S 271(1)(C) OF THE I.T. ACT, 1961. 2 2. THAT THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX(A) - I KANPUR BEING ERRONEOUS IN LAW AND ON FACTS DESERVES TO BE VACATED AND THE ORDER OF THE ASSESSING OFFICER BE RESTORED. 3. LEARNED D.R. OF THE REVENUE SUPPORTED THE PENALTY ORDER WHEREAS LEARNED A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT(A). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THE ISSUE IN DISPUTE WAS DECIDED BY LEARNED CIT(A) AS PER PARAS 4 AND 4.1 OF HIS ORDER, WHICH ARE REPRODUCED BELOW FOR T HE SAKE OF READY REFERENCE: 4. DISCUSSION & DECISION THE IMPUGNED PENALTY HAS BEEN LEVIED ON THE INTEREST RECEIPTS OF RS.19,24,180/ - WHICH WAS HELD BY THE A.O. TO BE 'INCOME FROM OTHER SOURCES' WHEREAS THE ASSESSEE HAD DEDUCTED THE SAME FROM THE PRE COMMENCEMENT EXPENSES INCURRED BY THE ASSESSEE DURING THE YEAR. IT IS NOT BE CASE OF THE REVENUE THAT THE SAID INCOME HAD BEEN HIDDEN FROM THE DEPARTMENT SINCE THE TDS THEREUPON (OF RS.4,31,786/ - ) HAD BEEN CLAIMED IN THE RETURN OF INCOME. WHILE TREATING TH E SAID RECEIPTS AS 'INCOME FROM OTHER SOURCES', THE ASSESSING OFFICER HAS RELIED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF TUTICORIN ALKALI. HOWEVER, SUCH TREATMENT OF INTEREST RECEIPTS DURING PRE - COMMENCEMENT PERIOD IS NOT FREE FROM DOU BT IN VIEW OF THE SUBSEQUENT DECISIONS OF THE HON'B L E SUPREME COURT IN THE FOLLOWING CASES - BOKARO STEEL LTD . (236 ITR 315) AND KAMA L COOPERATIVE SUGAR LTD (243 ITR 2). 4.1 IN VIEW OF THESE DECISIONS, IT CANNOT BE HELD THAT THE TREATING OF INTEREST RECEIP TS AS REDUCTION TO THE EXPENSES INCURRED DURING THE PRE - COMMENCEMENT PERIOD WAS COMPLETELY WRONG OR WHOLLY UNSUSTAINABLE IN LAW. ACCORDINGLY, I HOLD THAT THERE WAS NEITHER ANY CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME IN THIS REGARD. TH E INSTANT CASE ALSO DOES NOT FALL WITHIN THE PARAMETERS OF EXPLANATION - L OF SECTION 271(1)(C) SINCE THE EXPLANATION GIVEN BY THE ASSESSEE IN THIS REGARD IS REASONABLE AS IT IS SUPPORTED BY THE PRONOUNCEMENTS OF THE HON'B L E APEX COURT, WHICH PROVES THE BONA - FIDE OF THE ASSESSEE. IN ANY CASE, IT IS A TRITE LAW NOW THAT AS LONG AS ALL THE PARTICULARS ARE DISCLOSED, NO PENALTY FOR CONCEALMENT CAN BE LEVIED FOR MAKING A LEGAL CLAIM WHICH DOES NOT FIND FAVOURS WITH THE A.O. ACCORDINGLY, THE PENALTY LEVIED IS DEL ETED. 3 4.1 FROM THE ABOVE TWO PARAS FROM THE ORDER OF CIT(A), WE FIND THAT ALTHOUGH AS PER THE JUDGMENT OF HON'BLE SUPREME COURT RENDERED IN THE CASE OF TUTICORIN ALKALI CHEMICALS AND FERTILIZERS LTD. VS COMMISSIONER OF INCOME - TAX [1997] 227 ITR 172 (SC) , INTEREST INCOME ON SHORT TERM INVESTMENT ON FUNDS BORROWED FOR SETTING UP FACTORY DURING CONSTRUCTION PERIOD HAS TO BE ASSESSED AS INCOME FROM OTHER SOURCES BUT AS PER A SUBSEQUENT JUDGMENT OF HON'BLE APEX COURT RENDERED IN THE CASE OF COMMISSIONER OF INCOME - TAX VS BOKARO STEEL LTD. [1999] 236 ITR 315 (SC) , IT WAS HELD THAT SUCH INTEREST RECEIPT HAS TO BE REDUCED FROM THE COST OF THE PROJECT IN SUCH CASES WHERE SUCH INTEREST RECEIPT IS IN THE COURSE OF SETTING UP OF THE PROJECT ITSELF. CONSIDERING T HIS JUDGMENT OF HON'BLE APEX COURT AND THE FACTS OF THE PRESENT CASE, WE ARE OF THE CONSIDERED OPINION THAT IN THE FACTS OF THE PRESENT CASE, ALTHOUGH ADDITION HAS BEEN CONFIRMED BUT PENALTY IN SUCH FACTS IS NOT JUSTIFIED. THEREFORE, WE DECLINE TO INTERFE RE IN THE ORDER OF CIT(A). 5. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 8 /09/2014. *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR