The Dy. Commissioner of Income-tax, Srinagar V. M/s. Jammu & Kashmir Cements Limited, Srinagar

ITA 515/ASR/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5605 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 27-04-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 11-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ABDUL RASHID DULLO
• Keywords: Business income; Capital receipt; Condonation of delay
• Section: 43B; 115JB; 80IB; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH. T.S. KAPOOR, ACCOUNTANT MEMBER AND SH.N.K.CHOUDHRY, JUDICIAL MEMBER I.T.A NO.515/(ASR)/2014 ASSESSMENT YEAR: 2010-11 PAN: AAACJ6799A DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE SRINAGAR, KASHMIR. VS. M/S JAMMU & KASHMIR CEMENTS LIMITED, NAWAL SUBH BUILDING ZERO BRIDGE, SRINAGAR. (APPELLANT) (RESPONDENT) CROSS OBJECTION NO. 04/(ASR)/2015 ARISING OUT OF ITA NO.515/(ASR)/2014 ASSESSMENT YEA R: 2010-11 M/S JAMMU & KASHMIR CEMENTS LIMITED, NAWAL SUBH BUILDING ZERO BRIDGE, SRINAGAR. VS. COMMISSIONER OF INCOME TAX, CIRCLE, CIRCLE, SRINAGAR, JAMMU & KASHMIR. (CROSS OBJECTORS) (RESPONDENT) I.T.A NO.286/(ASR)/2016 ASSESSMENT YEAR: 2010-11 PAN: AAACJ6799A ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-3, SRINAGAR. VS. M/S JAMMU & KASHMIR CEMENT LIMITED, NAWAL SUBH COMPLEX, ZERO BRIDGE, SRINAGAR. (APPELLANT) (RESPONDENT) CROSS OBJECTION NO. 13/(ASR)/2016 ARISING OUT OF ITA NO.286/(ASR)/2016 ASSESSMENT YEA R: 2010-11 ITA NO. 515(ASR)/2014 & 286/(ASR)/2016 C.O NO.04(ASR)/2015 & 13/(ASR)/2016 ASSESSMENT YEAR: 2011-2012 2 M/S JAMMU & KASHMIR CEMENTS LIMITED, NAWAL SUBH BUILDING ZERO BRIDGE, SRINAGAR. VS. COMMISSIONER OF INCOME TAX, CIRCLE, CIRCLE, SRINAGAR, JAMMU & KASHMIR. (CROSS OBJECTORS) (RESPONDENT) APPELLANT BY: SH. RAHUL DHAWAN RESPONDENT BY: SH. ABDUL RASHID DULLO, (C A) DATE OF HEARING: 27.04.2017 DATE OF PRONOUNCEMENT:18.05.2017 ORDER PER T. S. KAPOOR (AM): THESE ARE TWO APPEALS FILED BY REVENUE AGAINST THE ORDER OF LD. CIT(A) JAMMU, DATED 27.05.2014 AND DATED 22.01.2016 RESPECTIVELY FOR ASST. YEAR 2010-11. THE GROUNDS OF APPEAL TAKEN BY REVENUE ARE REPRODUCED BELOW: IN ITA NO. 515/(ASR)/2014 2.1 THE WORTHY ASSESSING OFFICER HAS ERRED IN BRIN GING TO TAX CERTAIN INCOMES LIKE INTEREST ON FDR/MARGIN MONEY, INSURANCE CLAIM, OTHER INCOME ETC. TOTALING RS.3,55,40,053/00 AFTER HAVING EXEMPTED THEM AS PROFITS OF THE COMPANY U/S 80IB OF THE INCOME TAX ACT, 1961. THE RATIONALE BEHIND THE DECISION OF THE HON'BLE SUPREME COURT OF INDIA IN M/S STERLING FOODS V/S CI T IS NOT APPLICABLE TO THE CASE ON VARIOUS GROUNDS. 2.2 THE WORTHY ASSESSING OFFICER HAS ERRED IN BR INGING TO TAX EXCISE DUTY REFUND OF RS. 1,67,23,019/00 WHICH THE ASSESSEE HAD NEITHER RECEIVED NOR ANY RIGHT TO RECEIVE HAD BEEN CREATED IN FAVOUR OF THE ASSESSEE BEFORE THE CLOSE OF THE PREVIOUS YE AR. ANY ITEM OF REVENUE WHICH ENTAILS UNCERTAINTY AS TO COLLECTION CANNOT BE RECOGNIZED AS REVENUE OF THE PREVIOUS YEAR IT RELAT ES TO UNDER THE RELEVANT ACCOUNTING STANDARD ISSUED BY THE ICAI. ITA NO. 515(ASR)/2014 & 286/(ASR)/2016 C.O NO.04(ASR)/2015 & 13/(ASR)/2016 ASSESSMENT YEAR: 2011-2012 3 2.3 EVEN IF THE COLLECTION OF EXCISE DUTY REFUND WA S NOT SURROUNDED BY THE UNCERTAINTY AS TO ITS COLLECTION, THE SAME IS ALLOWED TO BE NETTED AGAINST THE EXCISE DUTY PAID U NDER THE RELEVANT ACCOUNTING STANDARD ISSUED BY THE ICAI, IN WHICH CA SE THE PROFITS (EXEMPTED) WILL SHOOT UPTO RS. 2,17,91,876/74 WITH NO TAX LIABILITY OF THE ASSESSEE. IN ITA NO. 286/(ASR)/2016 1. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. CIT(A) WAS RIGHT IN DELETING THE PENALTY WHICH WAS IMPOSED ON ACCOUN T OF FURNISHING OF INACCURATE PARTICULAR OF INCOME. 2. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. CIT(A) WAS RIGHT IN DELETING THE PENALTY IN VIEW OF CBDT CIRCULAR NO . 25/2015 WHEN THE SAID CIRCULAR IS BASED TAX CALCULATED ON THE NO RMAL INCOME AFTER GIVING APPEAL EFFECT ON QUANTUM OF ADDITION ULTIMAT ELY CONFIRMED. 2. THE ASSESSEE HAS ALSO FILED CROSS OBJECTIONS AGA INST THE APPEALS FILED BY THE REVENUE. THE GROUNDS OF CROSS OBJECTIO NS TAKEN BY ASSESSEE ARE REPRODUCED BELOW: C. O. NO. 04/(ASR)/2015, ARISING OUT OF ITA NO. 515 /(ASR)/2014 1. ON THE FACTS AND CIRCUMSTANCES, THE LD. CIT(A 0 WAS VERY MUCH RIGHT IN GRANTING A RELIEF OF RS. 3,04,71,195/00, S INCE THE AMOUNT REPRESENTED TRADING LOSS OF THE ASSESSING COMPANY A ND HAD TO BE ADJUSTED AGAINST THE INDIRECT INCOME OF INTEREST ET C. AMOUNTING TO RS. 3,55,40,053/00 NOT ELIGIBLE FOR EXEMPTION U/S 8 0IB OF THE INCOME TAX ACT, 1961. 2. ON THE FACTS AND CIRCUMSTANCES, THE LD. CIT(A) HAS ERRED IN BRINGING THE EXCISE DUTY REFUND OF RS. 1,67,23,019/ 00 TO TAX ON ACCRUAL BASIS SINCE: A. THE RIGHT TO RECEIVE THE REFUND OF EXCISE DUTY HAD NOT CRYSTALLIZED IN FAVOUR IF THE ASSESSEE DURING THE F INANCIAL YEAR RELEVANT TO ASSESSMENT YEAR 2010-11 OR UPTO THE DAT E OF FILING OF THE RETURN OF INCOME OF THE ASSESSMENT YEAR 2010-11. B. UNDER ACCOUNTING STANDARD 9 ON REVENUE RECOGNI TION ISSUED BY ICAI, THE REVENUE CANNOT BE RECOGNIZED IF THERE IS ANY UNCERTAINTY ASSOCIATED WITH THE COLLECTABILITY OF THE INCOME EV EN UNDER MERCANTILE SYSTEM OF ACCOUNTING. ITA NO. 515(ASR)/2014 & 286/(ASR)/2016 C.O NO.04(ASR)/2015 & 13/(ASR)/2016 ASSESSMENT YEAR: 2011-2012 4 C. THAT THE EXPENDITURE ON ACCOUNT OF TAXES, DUTIE S, CESS AND THE LIKE ARE TO BE ALLOWED AS DEDUCTION ON CASH BASIS U NDER SECTION 43B OF THE INCOME TAX ACT, 1961 EVEN IF THE ASSESSEE FO LLOWED MERCANTILE SYSTEM OF ACCOUNTING AND THEREFORE, THE INCOME ON ACCOUNT OF ANY TAX, DUTY OR CESS MUST ALSO BE ACCOU NTED FOR AS INCOME ON CASH (REALIZATION) BASIS. C.O. NO. 13/(ASR)/2016, ARISING OUT OF ITA NO. 286/ (ASR)/2016 1. ON THE FACTS AND CIRCUMSTANCES, THE LD. CIT(A) WAS VERY MUCH RIGHT IN UPHOLDING THAT WHERE THE MINIMUM ALTERNATE TAX P AID BY THE ASSESSEE EXCEEDS THE ASSESSED TAX, THE TAX SOUGHT TO BE EVADED IS NIL AND ACCORDINGLY, PENALTY UNDER SECTION 271(1 )(C) OF THE INCOME TAX ACT, 1961 COULD NOT BE IMPOSED FOR CONCEALMENT OF INCOME. 2. ON THE FACTS AND CIRCUMSTANCES, THE LD. CIT(A) HAS CORRECTLY INTERPRETED THE CBDT CIRCULAR NO. 25/2015 (F. NO. 279/MISC./140/2015/ITJ) DATED 31/12/2015 AND APPLIE D TO THE CASE RESULTING IN DELETION OF THE PENALTY. 3. THESE APPEALS AND CROSS OBJECTIONS WERE HEARD TO GETHER AND THEREFORE, FOR THE SAKE OF CONVENIENCE A COMMON AND CONSOLIDATED ORDER IS BEING PASSED. 4. AT THE OUTSET, THE LD. AR INVITED OUR ATTENTION TO THE FACT THAT THERE WAS A DELAY IN FILING OF CROSS OBJECTIONS IN CO NO. 04/(ASR)/2015 AND ALSO INVITED OUR ATTENTION TO APPLICATION FOR CONDO NATION OF DELAY AND IT WAS SUBMITTED THAT THE CROSS OBJECTIONS COULD NOT B E FILED WITHIN TIME DUE TO FLOODS IN SRINAGAR AND IT WAS PRAYED THAT TH E DELAY IN FILING OF CROSS OBJECTIONS MAY BE CONDONED. THE LD. DR HAD NO OBJECTION IN THE CONDONATION OF DELAY IN CROSS OBJECTIONS AND, THERE FORE, THE DELAY WAS CONDONED. EXPLAINING THE FACTS OF THE CASE, THE LD. DR SUBMITTED THAT ASSESSEE HAD CREDITED IN ITS PROFIT AND LOSS ACCOUN T CERTAIN INDIRECT INCOMES WHICH THE ASSESSING OFFICER HAD RIGHTLY EXC LUDED FOR THE PURPOSE ITA NO. 515(ASR)/2014 & 286/(ASR)/2016 C.O NO.04(ASR)/2015 & 13/(ASR)/2016 ASSESSMENT YEAR: 2011-2012 5 OF CALCULATION OF DEDUCTION U/S 80IB AND LD. CIT(A) HAS ALLOWED THE SAME BY SETTING OFF OF SUCH INCOME AGAINST THE BUSINESS INCOME. THE LD. DR, HEAVILY PLACED RELIANCE ON THE ORDER OF ASSESSING OFFICER. 5. AS REGARDS OF APPEAL IN ITA NO. 286/(ASR)/2016, THE LD. DR SUBMITTED THAT LD. CIT(A) HAS WRONGLY ALLOWED RELIE F TO THE ASSESSEE ON ACCOUNT OF DELETION OF PENALTY U/S 271(1) (C) OF TH E ACT, WHICH THE ASSESSING OFFICER HAD IMPOSED CORRECTLY. 6. THE LD. AR, ON THE OTHER HAND SUBMITTED THAT THE LD. CIT(A) HAS CORRECTLY ADJUSTED THE INDIRECT INCOME AGAINST THE OPERATIONAL INCOME AS IN ANY CASE ANY TOTAL INCOME HAS TO BE ASSESSED AFT ER CLUBBING ALL THE HEADS OF INCOME. WITHOUT PREJUDICE IT WAS SUBMITTED THAT THE INDIRECT INCOME WAS ELIGIBLE FOR DEDUCTION AS U/S 80IB OF TH E ACT, AS THE INCOME WAS DERIVED FROM OPERATIONS AS THE INCOME INCLUDED INTEREST ON FIXED DEPOSITS AND INTEREST ON MARGIN MONEY, INSURANCE CL AIM, AND OTHER INCOME. AS REGARDS INTEREST ON FIXED DEPOSITS THE L D. AR SUBMITTED THAT THE ASSESSEE HAD HUGE SURPLUS WHICH WAS DEPLOYED IN THE FORM OF FIXED DEPOSITS AND INTEREST INCOME IN A BUSINESS IS ALWAY S TAKEN AS BUSINESS INCOME. SIMILARLY MARGIN MONEY WAS PAID IN THE INTE REST OF BUSINESS AND, THEREFORE, THE INCOME FROM MARGIN MONEY WAS AL SO RELATABLE AND DERIVED FROM BUSINESS. AS REGARDS INSURANCE CLAIM, THE LD. AR SUBMITTED THAT THE ASSESSEE HAD RECEIVED VARIOUS INSURANCE CL AIMS ARISING FROM ITA NO. 515(ASR)/2014 & 286/(ASR)/2016 C.O NO.04(ASR)/2015 & 13/(ASR)/2016 ASSESSMENT YEAR: 2011-2012 6 VARIOUS LOSSES INCURRED DURING THE OPERATIONS LIKE BREAKDOWNS, ACCIDENTS, DAMAGES OR OTHER LOSS AND WHICH REPRESEN TED INCOME FROM OPERATIONS. AS REGARDS OTHER INCOME, THE LD. AR SUB MITTED THAT THIS REPRESENTED AMOUNTS RECEIVED FROM SALE OF SCRAP, SA LE OF TENDER DOCUMENTS ETC. AND THEREFORE, THESE WERE ALSO DERIV ED FROM THE BUSINESS. AS REGARDS THE DENIAL OF SUBSIDY AS CAPITAL RECEIPT , THE LD. AR SUBMITTED THAT GROUNDS IN CROSS OBJECTIONS AT 2 A B & C ARE N OT PRESSED HOWEVER, THE ASSESSEE WOULD LIKE TO SUPPORT THE APPEAL UNDER RULE 27 OF ITAT RULES AND SUBMITTED THAT THE EXCISE DUTY REFUND THOUGH WA S NOT RECEIVED AND THEREFORE WAS NOT TAXABLE AND YET EVEN IF THE EXCIS E DUTY IS CONSIDERED ON ACCRUAL BASIS THE SAME WAS ELIGIBLE FOR DEDUCTION U /S 80IB OF THE ACT. WITHOUT PREJUDICE THE LD. AR SUBMITTED THAT ISSUE O F SUBSIDY ON EXCISE DUTY HAS NOW BEEN SETTLED BY HON'BLE SUPREME COURT IN THE CASE OF M/S BALAJI ALLOYS LTD. AND THEREFORE, THE ASSESSEE MAY BE ALLOWED RELIEF ON THIS ACCOUNT ITSELF. 7. AS REGARDS DELETION OF PENALTY, THE LD. AR SUBMI TTED THAT AS THE MINIMUM ALTERNATE TAX PAID BY THE ASSESSEE EXCEEDED REGULAR TAX AND THEREFORE TAX INTENDED TO BE AVOIDED WAS NIL AND TH EREFORE, THE PENALTY WAS NOT IMPOSABLE. 8. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH OUGH THE MATERIAL PLACED ON RECORD. WE FIRST TAKE APPEAL IN ITA NO. 5 15. THE FIRST GROUND TAKEN BY REVENUE IS WITH RESPECT TO SETTING OFF OF INDIRECT INCOME AGAINST ITA NO. 515(ASR)/2014 & 286/(ASR)/2016 C.O NO.04(ASR)/2015 & 13/(ASR)/2016 ASSESSMENT YEAR: 2011-2012 7 THE OPERATIONAL INCOME. THE LD. CIT (A) HAS DISCUSS ED THIS ISSUE AT PAGE 4 OF HIS ORDER WHEREIN HE HAS HELD THAT IF OTHER IN COME OF RS. 3,55,40,053/- IS NOT CONSIDERED AS DERIVED FROM IND USTRIAL UNDERTAKING, THE INDUSTRIAL UNDERTAKING WOULD INCUR A LOSS OF RS . 3,04,71,195/- AND SUCH LOSS HAS TO BE ADJUSTED AGAINST THE OTHER INCO ME WHICH WAS IN THE NATURE OF INTEREST INCOME, INSURANCE CLAIM ETC. WE FIND THAT THIS FINDING OF LD. CIT(A) IS CORRECT AND IS IN ACCORDANCE WITH THE LAW AS SECTION 71 OF THE INCOME TAX ACT ALLOWS SET OFF OF LOSS FROM ONE HEAD AGAINST INCOME FROM ANOTHER HEAD. FOR THE SAKE OF CONVENIENCE THE PROVISIONS OF SECTION 71 ARE REPRODUCED. 71. (1) WHERE IN RESPECT OF ANY ASSESSMENT YEAR THE NET RESULT OF THE COMPUTATION UNDER ANY HEAD OF INCOME, OTHER THA N CAPITAL GAINS, IS A LOSS AND THE ASSESSEE HAS NO INCOME UN DER THE HEAD CAPITAL GAINS, HE SHALL, SUBJECT TO THE PROVISION S OF THIS CHAPTER, BE ENTITLED TO HAVE THE AMOUNT OF SUCH LOSS SET OFF AGAINST HIS INCOME, IF ANY, ASSESSABLE FOR THAT ASSESSMENT YEAR UNDER ANY OTHER HEAD. IN VIEW OF THE ABOVE PROVISIONS OF SECTION 71 WE D O NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT(A), THEREFORE, GR OUND NO. 1 OF REVENUE APPEAL IS DISMISSED. 9. AS REGARDS GROUNDS NO. 2 & 3 WE FIND THAT THESE GROUNDS ARE MISPLACED AS THE LD. CIT(A) HAS NOT ALLOWED CLAIM O F ASSESSEE U/S 80IB OF THE ACT AS IS APPARENT FROM HIS FINDINGS NOTED A T PAGE 4 OF THIS ORDER AND THEREFORE THESE GROUNDS OF APPEAL ARE DISMISSED . 10. IN NUTSHELL, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ITA NO. 515(ASR)/2014 & 286/(ASR)/2016 C.O NO.04(ASR)/2015 & 13/(ASR)/2016 ASSESSMENT YEAR: 2011-2012 8 11. AS REGARDS THE GROUNDS OF CROSS OBJECTIONS, WE FIND THAT FIRST GROUND OF CROSS OBJECTION IS ONLY SUPPORTING OF LD. CIT(A)S ORDER AND SECOND GROUND HAS BEEN WITHDRAWN AND THEREFORE THES E TWO GROUNDS ARE DISMISSED. THE ASSESSEE HAS ALSO TAKEN A LEGAL GROU ND OF APPEAL WHEREIN IT HAS ARGUED THAT ISSUE OF SUBSIDY ON ACCOUNT OF E XCISE DUTY REFUND IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE O RDER OF SUPREME COURT IN THE CASE OF BALAJI ALLOYS LTD. WE FIND THAT THE CONTENTION OF THE LD. AR IS CORRECT AS HON'BLE SUPREME COURT IN THE CASE OF BALAJI ALLOYS LTD. HAS CONFIRMED THE ORDER OF HON'BLE JAMMU & KASHMIR HIGH COURT IN THE CASE OF BALAJI ALLOYS LTD. AND WHEREIN IT HAS BEEN HELD THAT THE RECEIPT OF SUBSIDY ON ACCOUNT OF EXCISE DUTY REFUND IS A CAPIT AL RECEIPT. THE FINDINGS OF THE HONBLE JAMMU & KASHMIR HIGH COURT IN THE CASE OF BALAJI ALLOYS LTD. ARE REPRODUCED BELOW: HELD, ALLOWING THE APPEALS, THAT THE FACT THAT INC ENTIVES WOULD BECOME AVAILABLE TO INDUSTRIAL UNITS ENTITLED THERETO, FROM THE DATE OF COMMENCEMENT OF COMMERCIAL PRODUCTION, AND THAT THESE WERE NOT REQUIRED FOR CR EATION OF NEW ASSETS COULD NOT BE VIEWED IN ISOLATION TO TREAT THE INCENTIVES AS P RODUCTION INCENTIVES. SUCH INCENTIVES DESIGNED TO ACHIEVE A PUBLIC PURPOSE COU LD NOT BE CONSTRUED AS PRODUCTION OR OPERATIONAL INCENTIVES FOR THE BENEFI T OF THE ASSESSEE ALONE. FURTHER, THE INCENTIVES WERE PROVIDED WITH THE OBJE CT OF CREATING AVENUES FOR PERPETUAL EMPLOYMENT TO ERADICATE THE SOCIAL PROBLE M OF UNEMPLOYMENT IN THE STATE BY ACCELERATED INDUSTRIAL DEVELOPMENT. THUS, THE FINDING OF THE TRIBUNAL THAT THE EXCISE DUTY REFUND, INTEREST SUBSIDY AND I NSURANCE SUBSIDY WERE PRODUCTION INCENTIVES, AND HENCE REVENUE RECEIPT CO ULD NOT BE SUSTAINED. 11. IN VIEW OF THE ABOVE THE ADDITIONAL GROUND OF A PPEAL IS ALLOWED. 12. IN NUTSHELL, THE CROSS OBJECTIONS FILED BY ASSE SSEE ARE PARTLY ALLOWED. ITA NO. 515(ASR)/2014 & 286/(ASR)/2016 C.O NO.04(ASR)/2015 & 13/(ASR)/2016 ASSESSMENT YEAR: 2011-2012 9 13. NOW COMING TO THE PENALTY APPEAL, WE FIND THAT LD. CIT(A) HAS DELETED THE PENALTY RELYING ON THE DECISION OF DELH I HIGH COURT IN THE CASE OF NALWA SONS INVESTMENT LTD. ITA NO. 1420, AN D FURTHERMORE, LD. CIT(A) HAS RELIED ON CBDT CIRCULAR NO. 25/2015 OF 2 014 WHEREIN THE DEPARTMENT HAS ISSUED DIRECTIONS TO THE AUTHORITIES DIRECTING THEM NOT TO FILE APPEAL WHERE THE INCOME TAX PAYABLE ON THE TOT AL INCOME AS COMPUTED UNDER THE NORMAL PROVISION OF THE ACT IS L ESS THAN THE TAX PAYABLE ON THE BOOK PROFITS U/S 115JB OF THE ACT. F OR THE SAKE OF CONVENIENCE THE FINDINGS OF THE HON'BLE CIT(A) REPR ODUCED BELOW: THIS POSITION HAS NOW BEEN ACCEPTED AND RECOGNIZED BY THE CBDT IN THE CASES PRIOR TO 01/04/2016 VIDE CIRCULAR NO. 25/2015 DATED 31/12/2015 (COPY ENCLOSED) AND THE BOARD HAS TREATE D IT A SETTLED POSITION THAT WHEN THE ASSESSED TAX UNDER NORMAL PR OVISIONS IS LESS THAN THE TAX PAYABLE UNDER DEEMING PROVISIONS OF 11 5JB OR 115JC, THEN PENALTY U/S 271(1) OF THE INCOME TAX ACT, 19 61 IS NOT ATTRACTED WITH REFERENCE TO THE ADDITIONS OR DISALL OWANCES MADE UNDER NORMAL PROVISIONS. IN THE LIGHT OF THE ABOVE REFERRED CIRCULAR OF THE BOARD, THE PENALTY ORDER MADE BY THE WORTHY ASSESSING OFFICER HAS BEEN REDUCED TO A NULLITY AND ACCORDINGLY IS LIABLE TO BE QUASHED. DETERMINATION: I HAVE CONSIDERED THE FACTS OF THE C ASE, PENALTY ORDER U/S 271(1) ( C) OF THE INCOME TAX ACT AND THE SUBMI SSION MADE BY THE APPELLANT STATED AS ABOVE. THE APPELLANT HAS CI TED THE DELHI HIGH COURT DECISION IN NALWA SONS INVESTMENT LTD. I TA NO. 1420, 2010, WHEREIN HON'BLE HIGH COURT HAS HELD THAT WHEN THE TAX PAYABLE ON INCOME COMPUTED UNDER NORMAL PROVISIONS IS LESS THAN THE TAX PAYABLE U/S 115JB OF THE ACT THEN PENALTY U NDER SECTION 271(1) (C) OF THE ACT COULD NOT BE IMPOSED WITH REF ERENCE TO ADDITIONS/DISALLOWANCE MADE UNDER NORMAL PROVISIONS . RECENTLY, THE CBDT VIDE ITS CIRCULAR NO. 25/2015 DATED 31.12. 2015 HAS FURTHER CLARIFIED THE POSITION. THE CIRCULAR READS AS UNDER: THE CBDT HAS ISSUED CIRCULAR NO. 25/2015 DATED 31. 12.2015 POINTING OUT THAT PURSUANT TO THE JUDGMENT OF THE D ELHI HIGH IN NALWA SONS INVESTMENT LTD. 327 ITR 543 (DELHI) AND THE SUBSTITUTION OF EXPLANATION 4 OF SECTION 271 OF THE ACT WITH PROSPECTIVE EFFECT, IT IS NOW A SETTLED POSITION TH AT PRIOR TO ITA NO. 515(ASR)/2014 & 286/(ASR)/2016 C.O NO.04(ASR)/2015 & 13/(ASR)/2016 ASSESSMENT YEAR: 2011-2012 10 1/4/2016, WHERE THE INCOME TAX PAYABLE ON THE TOTAL INCOME AS COMPUTED UNDER THE NORMAL PROVISIONS OF THE ACT IS LESS THAN THE TAX PAYABLE ON THE BOOKS PROFITS U/S 115JB OF THE ACT, THEN PENALTY UNDER 271(1) (C ) OF THE ACT IS NOT ATTRACTED WITH REFERENCE TO ADDITIONS/DISALLOWANCES MADE UNDER NORMAL PROVISION S. THE CBDT HAS CLARIFIED THAT IN CASES PRIOR TO 1.4.2016, IF A NY ADJUSTMENT IS MADE IN THE INCOME COMPUTED FOR THE PURPOSE OF MAT, THEN THE LEVY OF PENALTY U/S 271 (1) ( C) OF THE ACT, WILL DEPEND ON THE NATURE OF ADJUSTMENT. THE ABOVE SETTLED POSITION IS TO BE FOL LOWED IN RESPECT OF SECTION 115JC OF THE ACT ALSO. THE CBDT HAS ACCORDI NGLY DIRECTED THAT NO APPEALS MAY HENCEFORTH BE FILED ON THIS GRO UND AND APPEALS FILED, IF ANY, ON THIS ISSUE BEFORE COURTS/TRIBUNAL S MAY BE WITHDRAWN/NOT PRESSED UPON. NOW, THE FACT IS THAT THE COMPANY HAD CLAIMED DEDUC TION U/S 80IB IN THE RETURN OF INCOME AND THEREFORE NO TAX WAS PA YABLE UNDER NORMAL PROVISIONS OF THE ACT. HOWEVER, THE ASSESSEE COMPANY PAID MINIMUM ALTERNATE TAX (MAT) AMOUNTING TO RS. 82,74, 824/- ON BOOK PROFITS OF RS. 4,86,89,760/- U/S. 115JB OF THE ACT AS EVIDENCED BY THE ENCLOSED RETURN ACKNOWLEDGEMENT AND THE RELEVAN T PARTS AND SCHEDULES OF THE RETURNS OF INCOME FOR THE RELEVANT ASSESSMENT YEAR 2010-11. THE ASSESSING OFFICER, ON THE OTHER HAND H AS IMPOSED PENALTY OF RS. 74,07,058/- U/S 271(1) OF THE INCO ME TAX ACT WHICH IS LOWER THAN THE TAX PAID UNDER MAT AND THUS , FOLLOWING THE CBDT CIRCULAR (SUPRA) NO PENALTY CAN BE IMPOSED UND ER SECTION 271 (1) OF THE INCOME TAX ACT, 1961. ACCORDINGLY, PEN ALTY IMPOSED U/S. 271(1) ( C) OF THE INCOME TAX ACT, IS DELETED. 14. IN VIEW OF THE ABOVE CIRCULAR WE DO NOT FIND AN Y INFIRMITY IN THE ORDER OF CIT(A) AND THEREFORE, THE APPEAL FILED BY REVENUE IS DISMISSED. THE CROSS OBJECTIONS FILED BY ASSESSEE ONLY SUPPORT S THE ORDER OF CIT(A) AND SINCE WE HAVE ALREADY DISMISSED THE APPEAL OF R EVENUE, THE CROSS OBJECTIONS FILED BY ASSESSEE HAS BECOME INFRUCTUOUS AND THEREFORE, DISMISSED. IN VIEW OF THE ABOVE, THE APPEAL IN ITA NO. 286 AN D CROSS OBJECTIONS IN C. O. NO. 13 ARE DISMISSED. ITA NO. 515(ASR)/2014 & 286/(ASR)/2016 C.O NO.04(ASR)/2015 & 13/(ASR)/2016 ASSESSMENT YEAR: 2011-2012 11 IN NUTSHELL, THE APPEALS IN ITA NO. 515 AND ITA NO . 286 ARE DISMISSED WHEREAS THE CROSS OBJECTIONS IN C.O. NO. 04 ARE PARTLY ALLOWED AND CROSS OBJECTIONS IN C. O. NO. 13 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18.05.2017. SD/- SD/- (N.K. CHOUDHRY) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED:18.05.2017. /GP/SR. PS . COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER