ACIT 9(3), MUMBAI V. TIZARA POLY P. LTD, MUMBAI

ITA 4574/MUM/2010

• Counselvise Citation: 457419914 RSA 2010
• Duration Of Justice: 1 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2004-2005
• Appeal Filed On: 02-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T T JACOB
• Keywords: Business income; Depreciation; Tax effect; Bonafide mistake
• Section: 43B; 115JB; 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'F' BENCH, MUMBAI BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. 4574/MUM/2010 (ASSESSMENT YEAR: 2004-05) ACIT, CIRCLE - 9(3) M/S. TIZARA POLYTECH P. LTD. 2ND FLOOR, ROOM NO. 229 BUSINESS PARK, 6TH FLOOR AAYAKAR BHAVAN, M.K. ROAD VS. CHINCHOLI NAKA, S.V. ROAD MUMBAI 400020 MALAD (W), MUMBAI 400064 PAN - AAACT 8231 H APPELLANT RESPONDENT APPELLANT BY: SHRI T.T. JACOB RESPONDENT BY: SHRI HARIDAS BHAT O R D E R PER B. RAMAKOTAIAH, A.M. THIS APPEAL BY THE REVENUE IS AGAINST CANCELLATION OF PENALTY OF ` 2,90,820/- LEVIED UNDER SECTION 271(1)(C) BY THE CI T(A) XX, MUMBAI VIDE HIS ORDER DATED 19.03.2010 WHEREIN IT WAS HELD THAT ASSESSEE HAD MADE A BONAFIDE MISTAKE IN MAKING THE CLAIMS OF DEDUCTION WHICH WERE CONSIDERED FOR LEVY OF PENALTY. REVENUE IS AGGRIEVED. 2. DURING THE COURSE OF ARGUMENT IT WAS SUBMITTED THAT THE CIT(A) HAS NOT CONSIDERED THE ISSUE ON MERITS AND THE REASONS HOW THE BONAFIDE MISTAKE COULD OCCUR WHILE FILING THE RETURN WAS NOT EXPLAINED. THEREFORE CANCELLATION OF PENALTY WAS NOT CORRECT. 3. THE LEARNED COUNSEL IN REPLY SUBMITTED THAT THE DIS ALLOWANCES MADE ARE ROUTINE IN NATURE AND THE A.O. ALLOWED HIGHER 8 0IB DEDUCTION AS THE AMOUNTS SO DISALLOWED WERE ADDED IN THE COMPUTATION OF BUSINESS INCOME AS THAT INCOME WAS ELIGIBLE FOR DEDUCTION AT 100% U NDER SECTION 80IB. IT WAS SUBMITTED THAT ASSESSEE CLAIMED DEDUCTION OF ` 1,86,99,518/- UNDER SECTION 80IB AND CONSEQUENT TO THE ADDITIONS MADE, WHICH EN HANCED THE INCOME, A.O. ALLOWED DEDUCTION UNDER SECTION 80IB AT ` 1,94,60,752/-. IT WAS FURTHER SUBMITTED THAT ASSESSEE RETURNED INCOME OF ` 59,23,810/- AFTER CLAIMING DEDUCTION UNDER SECTION 80IB AND ALSO OFFERING BOOK PROFITS UNDER SECTION ITA NO. 4574/MUM/2010 M/S. TIZARA PLOYTECH P. LTD. 2 115JB WHEREAS THE A.O. DETERMINED THE TOTAL INCOME AT ` 60,26,220/-. THERE HAS BEEN NO CHANGE IN 115J INCOME OF ` 2.51 CRORES OFFERED. IT WAS SUBMITTED THERE IS NO TAX EFFECT AS NO WAS INCOME SOUGHT TO B E EVADED. IT WAS SUBMITTED THAT THERE IS NO SCOPE FOR LEVY OF PENALT Y AND FURTHER THE REVENUE SHOULD NOT BE IN APPEAL AS THE TAX EFFECT IS LESS T HAN ` 2,00,000/- AS PER BOARDS DIRECTIONS. 4. WE HAVE CONSIDERED THE ISSUE. AS SEEN FROM THE ASSE SSMENT ORDER ASSESSEE DISALLOWED DEPRECIATION ON LEASED PREMISES AND INCOME TAX INTEREST PAID ALONG WITH CERTAIN DISALLOWANCES UNDER SECTION 43B R.W.S. 36(1)(VA). THESE AMOUNTS WERE ADDED TO THE BUSINESS INCOME ON WHICH HIGHER 80IB DEDUCTION WAS GRANTED. THEREFORE THE DIFFERENCE BET WEEN THE RETURN INCOME BY THE ASSESSEE AND THE ULTIMATE ASSESSED INCOME WA S HARDLY VARIED BY 1.03 LAKHS. NOT ONLY THAT, THE ASSESSEE OFFERED BOOK PRO FIT AT ` 2,48 CRORES AND THE A.O. ACCEPTED THE PROFIT AT ` 2.51 CRORES AND THE TAX CALCULATIONS WERE ALSO MADE ON BOOK PROFIT UNDER SECTION 115JB. IN VIEW OF THIS THE DISALLOWANCES MADE IN THE ASSESSMENT CANNOT BE TREATED AS CONCEAL ED INCOME OR FURNISHING INACCURATE PARTICULARS. THESE ARE BONAFI DE CLAIMS OF DEDUCTION AND THE CIT(A) ACCEPTED THE SAME AS BONAFIDE EXPLAN ATION. THEREFORE PROVISIONS OF SECTION 271(1)(C) DOES NOT ATTRACT. E VEN OTHERWISE THE TAX EFFECT ON THE TOTAL INCOME AND RETURNED INCOME BEING LESS THAN ` 2,00,000/-, TAX SOUGHT TO BE EVADED IS STILL MUCH LESS. EVEN ON TAX EFFECT IN THIS CASE, THIS APPEAL IS NOT MAINTAINABLE. THEREFORE BOTH ON MERIT S AS WELL AS ON TECHNICAL REASONS, THERE IS NO MERIT IN THE REVENUES APPEAL. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH JULY 2011. SD/- SD/- (N.V. VASUDEVAN) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 15 TH JULY 2011 ITA NO. 4574/MUM/2010 M/S. TIZARA PLOYTECH P. LTD. 3 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) XX, MUMBAI 4. THE CIT IX, MUMBAI CITY 5. THE DR, F BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.