DCIT, New Delhi V. M/s. Terraforce Securities Pvt. Ltd., New Delhi

ITA 5129/DEL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3994 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC 2
• Next Hearing Date: 21-10-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 13-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Wrong claim
• Section: 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: D NEW DELHI BEFORE SHRI G.D. AGRAWAL, HONBLE PRESIDEN T & SHRI K.N. CHARY, JUDICIAL MEMBER ITA NO.-5129/DEL/2015 ( ASSESSMENT YEAR: 2011-12) DCIT CIRCLE 25(1) C.R. BLDG., I.P. ESTATE, NEW DELHI. VS TERRAFORCE SECURITIES PVT. LTD. E-5/1, THIRD FLOOR, MALVIYA NAGAR, NEW DELHI. AACCT9172B ASSESSEE BY NONE REVENUE BY SH. ARUN KUMAR YADAV, SR. DR ORDER PER SHRI K.N. CHARY, JUDICIAL MEMBER THIS IS AN APPEAL BY THE REVENUE CHALLENGING THE OR DER DATED 30.03.2015 IN APPEAL NO. 262/14-15 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-9, NEW DELHI (HEREINAFTER FOR SHORT CALLED AS THE LD. CIT (A)) ON THE FOLLOWING GROUNDS: DATE OF HEARING 18.09.2017 DATE OF PRONOUNCEMENT 09.10.2017 2 ITA NO. 5129/DEL/2015 1. THE LD.CIT (A) HAS ERRED IN DELETING PENALTY OF RS . 28,97,945/- LEVIED BY THE AO U/S 271 (1)(C) OF THE I.T. ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME. 2. THE APPELLANT CRAVES, LEAVE FOR RESERVING THE RIGHT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUNDS OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF APPEAL. 2. RELEVANT FACTS ARE THAT ON 30.09.2011 THE ASSESS EE FILED THE RETURN OF INCOME FOR THE AY 2011-12 DECLARING A TOTAL LOSS OF RS. 1,10,08,853/- AND DURING THE SCRUTINY ASSESS MENT AO DISALLOWED A SUM OF RS. 96,66,674/- WHICH COMPRISES OF INTEREST PAID ON LOAN TO A TUNE OF RS. 92,92,091/-, INTEREST PAID ON DELAYED PAYMENT OF SERVICE TAX TO A TUNE OF RS. 2,82,212/- AND 86,371/- RESPECTIVELY. ACCORDING TO THE AO THE LOAN WAS TAKEN IN THE PREVIOUS YEAR FOR PURCHAS E OF CAPITAL ASSETS AND SINCE THE ASSESSEE COMPANY HAS NOT UNDER TAKEN ANY BUSINESS ACTIVITY DURING THE PREVIOUS YEAR RELE VANT TO THE AY 2011-12, INTEREST PAID WAS ATTRIBUTABLE TO CAPIT AL ASSETS AND ON THAT PREMISE DISALLOWED THE INTEREST EXPENSE . AO INITIATED PROCEEDINGS U/S 271(1)(C) OF THE ACT AND CONCLUDED THEM WITH LEVYING OF PENALTY OF RS. 28,97,945/-. I N APPEAL LD. CIT (A) HELD THAT THE CLAIM PREFERRED BY THE ASSESS EE WAS A BONA FIDE ONE AND THERE WAS NO CONCEALMENT OF INCOM E OR 3 ITA NO. 5129/DEL/2015 FURNISHING OF INACCURATE PARTICULARS. HE, THEREFOR E, DELETED THE ADDITION, HENCE, THIS APPEAL. 3. IT IS THE ARGUMENT OF THE LD. DR THAT HAVING RAI SED THE FUNDS FOR PURCHASE OF CAPITAL ASSETS, ONLY WITH A V IEW TO AVOID THE TAX, THE ASSESSEE PREFERRED A CLAIM U/S 37 OF T HE ACT WHICH IS QUITE IMPERMISSIBLE AND THEY FAILED TO SUB STANTIATE THE CLAIM, AS SUCH, THERE ARE NO BONA FIDES IN FAVO UR OF THE ASSESSEE. ACCORDING TO HIM, AO PROPERLY LEVIED THE PENALTY, BUT WITHOUT CONSIDERING THE FACTS IN THEIR PROPER P ERSPECTIVE THE LD. CIT (A) DELETED THE SAME. PER CONTRA, IT I S THE SUBMISSION OF THE LD. AR THAT THOUGH THE PRODUCTION WAS STOPPED DURING THE RELEVANT YEAR AND NO BUSINESS WA S CONDUCTED, STILL THE INTEREST PAID SUBSEQUENT TO TH E COMMENCEMENT OF BUSINESS IS REVENUE IN NATURE, BUT MERELY BECAUSE THE EXPENSE WAS DISALLOWED PENALTY PROCEEDI NGS WILL NOT AUTOMATICALLY BE INVOKED. ACCORDING TO HIM THE RE IS NO CONCEALMENT OF INCOME NOR FURNISHING OF INACCURATE PARTICULARS, AS SUCH, LD. AR SUBMITTED THAT THE LD. CIT (A) IS RIGHT IN DELETING THE SAME. 4 ITA NO. 5129/DEL/2015 4. WE HAVE PERUSED THE RECORD IN THE LIGHT OF THE A RGUMENTS ADVANCED ON EITHER SIDE. THERE IS NO DISPUTE OF TH E FACTS STATED ON BEHALF OF THE ASSESSEE THAT THE DETAILS R ELATING TO THE INTEREST PAID IS SHOWN IN THE PROFIT AND LOSS ACCOU NT, SCHEDULE XI FORMING PART OF THE ANNUAL ACCOUNTS GIV ING DETAILS OF INTEREST AND FINANCE CHARGES ARE SHOWN IN THE CO MPUTATION OF INCOME FOR THE YEAR UNDER CONSIDERATION. THEREF ORE, ON THE FACTS OF THE CASE, IT CANNOT BE INFERRED THAT THE A SSESSEE COMPANY HAD INTENTIONALLY CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME TO AVOID TAX AS ALL THE FACTS HAVE BEEN ON RECORD BY W AY OF E-FILING OF RETURN. ALL INTEREST AND FINANCIAL CHARGES, AND COMPUTATION OF INCOME FOR THE YEAR UNDER CONSIDERATION, WAS PLA CED BEFORE THE AO. WHEN ALL THESE DETAILS ARE VERY MUCH AVAIL ABLE ON RECORD MERELY BECAUSE IT IS OPINED BY THE AO THAT D URING THE YEAR NO BUSINESS ACTIVITY WAS CONDUCTED BY THE ASSE SSEE, THE EXPENSE OF INTEREST WOULD BE CAPITAL IN NATURE, IT CANNOT BE SAID THAT THERE IS EITHER CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS THEREOF. 5 ITA NO. 5129/DEL/2015 5. LD. CIT (A) PLACED RELIANCE ON THE DECISIONS OF THE HONBLE APEX COURT IN SIR SHADI LAL SUGAR & GENERAL MILLS LTD. (1987) 168 ITR 705, CIT VS. RELIANCE PETRO PRO DUCTS (P) LTD. (2010) 322 ITR 158 (SC) AND THE DECISION OF TH E HONBLE JURISDICTIONAL HIGH COURT IN DEVSONS P. LTD. VS. CI T (2011) 329 ITR 483 (DELHI) AND KARAN RAGHAV EXPORTS (P) LT D. VS. CIT (2012) 349 ITR 112 (DELHI) TO REACH THE CONCLUSION ON FACTS THAT MERELY A WRONG CLAIM OF DEDUCTION DOES NOT AMO UNT TO FURNISH OF INACCURATE PARTICULARS. HAVING REGARD T O THE TOTALITY OF THE CIRCUMSTANCES IN THIS MATTER, THE L D. CIT (A) REACHED THE CONCLUSION THAT ITS A CASE WHERE THE A SSESSEE MADE A BONA FIDE CLAIM WHICH WAS NOT FOUND ACCEPTAB LE TO THE AO BUT WHEN THERE IS FULL AND TRUE DISCLOSURE OF AL L MATERIAL FACTS IN THE RETURN OF INCOME IT CANNOT BE SAID THA T THERE IS NEITHER CONCEALMENT OF INCOME NOR FURNISHING OF INA CCURATE PARTICULARS. WE AGREE WITH THE FINDINGS REACHED BY THE LD. CIT (A) AND FIND THE APPEAL OF THE REVENUE AS DEVOID OF MERITS, HENCE, WE DISMISS THE GROUNDS OF APPEAL. 6 ITA NO. 5129/DEL/2015 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 09.10.2017 SD/- SD/- (G.D. AGRAWAL) (K.N. CHARY) PRESIDENT JUDICIAL MEMBER DATED: 09.10.2017 *KAVITA ARORA COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI