MILLENIUM TELECOM LTD, MUMBAI V. ITO., WARD-5(2)(3), MUMBAI

ITA 4536/MUM/2011

• Counselvise Citation: 453619914 RSA 2011
• Duration Of Justice: 2 year(s) 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 22-11-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 06-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'B' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO. 4536/MUM/2011 (ASSESSMENT YEAR: 2003-04) M/S. MILLENIUM TELECOM LTD. INCOME TAX OFFICER 5(20 (3) TELEPHONE HOUSE, 15 TH FLOOR MUMBAI PRABHADEVI, V.S. MARG VS. DADAR (W), MUMBAI 400028 PAN - AADCM3056D APPELLANT RESPONDENT APPELLANT BY: SHRI VED JAIN RESPONDENT BY: SHRI RAVI PRAKASH DATE OF HEARING: 19.11.2013 DATE OF PRONOUNCEMENT: 04.12.2013 O R D E R PER D. MANMOHAN, V.P. THIS APPEAL BY THE ASSESSEE COMPANY IS DIRECTED AGA INST THE ORDER DATED 25.03.2011 PASSED BY THE CIT(A) - 9, MUMBAI A ND IT PERTAINS TO A.Y. 2003-04. 2. PENALTY LEVIED BY THE AO UNDER SECTION 271(1)(C) OF THE ACT HAVING BEEN AFFIRMED BY THE LEARNED CIT(A), ASSESSEE IS IN APPE AL BEFORE US. 3. FOR THE ASSESSMENT YEAR UNDER CONSIDERATION THE ASS ESSEE, WHICH IS ENGAGED IN THE BUSINESS OF E-TENDERING SERVICE, CYB ER CAF AND TELEPHONE AND INTERNET SERVICES, FILED RETURN OF INCOME DECLA RING TOTAL INCOME OF ` 4,38,820/-. THOUGH THE ASSESSMENT WAS COMPLETED UND ER SECTION 143(3) IT WAS SUBSEQUENTLY NOTICED THAT THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 80IA OF THE ACT INCORRECTLY; THE COMMISSION ER OF INCOME TAX, IN EXERCISE OF POWERS VESTED UNDER SECTION 263 OF THE ACT, DIRECTED THE AO TO REFRAME THE ASSESSMENT. THEREUPON THE AO ASKED THE ASSESSEE TO FURNISH EVIDENCE TO ESTABLISH THAT THE CONDITIONS LAID DOWN IN SECTION 80IA OF THE ACT HAVE BEEN COMPLIED WITH. THE ASSESSEE FURNISHED NEC ESSARY DETAILS TO ITA NO. 4537/MUM/2011 M/S. MILLENIUM TELECOM LTD. 2 SUBMIT THAT THE COMPANY IS ELIGIBLE FOR DEDUCTION U NDER SECTION 80IA. HOWEVER, THE AO WAS OF THE VIEW THAT THE ASSESSEE W AS ONLY MARKETING INTERNET SERVICES AND, FOR PROVIDING E-TENDERING SE RVICES THROUGH ITS WEBSITE, IT WAS USING THE INTERNET INFRASTRUCTURE OF MTNL AN D THUS THE ASSESSEE CANNOT BE SAID TO BE PROVIDING ANY INFRASTRUCTURAL FACILITY IN ORDER TO CLAIM DEDUCTION UNDER SECTION 80IA OF THE ACT. CONSEQUENT TO THE DISALLOWANCE OF THE CLAIM UNDER SECTION 80IA, PENALTY OF ` 40,55,448/- WAS LEVIED AND THE SAME WAS AFFIRMED BY THE CIT(A). 4. AT THE TIME OF HEARING THE LEARNED COUNSEL FOR THE ASSESSEE PLACED BEFORE US A COPY OF THE ORDER PASSED BY THE ITAT B BENCH, MUMBAI IN ASSESSEES OWN CASE FOR A.Y. 2003-04 (ITA NO. 5949/ MUM/2008 DATED 18.09.2013) TO SUBMIT THAT THE BASIS UPON WHICH PEN ALTY WAS LEVIED NO LONGER SUBSISTS IN THE LIGHT OF THE FACT THAT THE T RIBUNAL SET ASIDE THE ISSUE FOR RECONSIDERATION; SINCE THE ASSESSEE IS FREE TO RECONSIDER THE MATTER ACCORDING TO THE LAW, ONLY UPON REPEATING THE DISAL LOWANCE OF DEDUCTION UNDER SECTION 80IA, THE AO HAS TO RECONSIDER THE IS SUE OF LEVY OF PENALTY AND TILL SUCH TIME THERE IS NO BASIS FOR LEVY OF PENALT Y AND HENCE IT WAS SUBMITTED THAT THE IMPUGNED PENALTY ORDER PASSED BY THE AO DESERVES TO BE SET ASIDE. 5. ON THE OTHER HAND, THE LEARNED D.R. SUBMITTED THAT THE MATTER WAS SET ASIDE ONLY ON THE LIMITED GROUND THAT THE AO AS WELL AS THE CIT(A) HAVE NOT GIVEN PROPER OPPORTUNITY TO THE ASSESSEE OF BEI NG HEARD BUT THE TRIBUNAL HAS NOT MADE ANY COMMENT WITH REGARD TO THE ELIGIBI LITY OR NON-ELIGIBILITY TO CLAIM DEDUCTION UNDER SECTION 80IA OF THE ACT AND H ENCE THE PENALTY LEVIED DESERVES TO BE SET ASIDE FOR RECONSIDERATION UPON G IVING EFFECT TO THE ORDER PASSED BY THE ITAT DATED 18.09.2013. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. AS THE THINGS STANDS TODAY THE ORDER, WHICH IS THE BASIS FOR LEVY OF PENALTY, WAS SET ASIDE BY THE TRIBUNAL AND HENCE PE NALTY LEVIED CONSEQUENT THERETO HAS NO LEGS TO STAND. HOWEVER, THE AO IS FR EE TO CONSIDER THE ISSUE OF LEVY OF PENALTY AFTER PASSING A CONSEQUENTIAL ORDER , IF HE IS OF THE OPINION THAT IT IS A FIT CASE FOR LEVY OF PENALTY. WITH THE SE OBSERVATIONS WE SET ASIDE ITA NO. 4537/MUM/2011 M/S. MILLENIUM TELECOM LTD. 3 THE ORDER OF THE CIT(A) AS WELL AS THE AO AND CANCE L THE PENALTY. THE AO IS AT LIBERTY TO CONSIDER THE QUESTION OF LEVY OF PENA LTY AFRESH AFTER GIVING EFFECT TO THE ORDER PASSED BY THE ITAT IN THE QUANTUM PROC EEDINGS. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH DECEMBER, 2013. SD/- SD/- (RAJENDRA) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATED: 4 TH DECEMBER, 2013 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 9, MUMBAI 4. THE CIT 5, MUMBAI CITY 5. THE DR, B BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.