THE DCIT 10(2), Mumbai V. M/S. WNS GLOBAL SERVICES PVT. LTD, MUMBAI

ITA 5254/MUM/2008

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62299 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2012
• Appeal Filed By: Department
• Bench Allotted: G
• Next Hearing Date: 23-02-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 18-08-2008
• Court: TRIBUNAL
• Department Lawyers: A K NAYAK
• Keywords: Depreciation; Difference of opinion

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G BEFORE SHRI D. MANMOHAN (VP) & SHRI N.K. BILLAIYA ( AM) I.T.A.NO. 5254/MUM/2008 (ASSESSMENT YEAR : 2001-02) I.T.A.NO. 5255/MUM/2008 (ASSESSMENT YEAR : 2002-03) THE DCIT 10(2) ROOM NO. 432, 4 TH FLOOR AAYAKAR BHAVAN M.K. ROAD NEW MARINE LINES MUMBAI-400 020. VS. M/S. WNS GLOBAL SERVICES PVT. LTD. GODREJ SOAPS IND. ESTATE PHIROJSHANAGAR VIKHROLI MUMBAI-400 079. APPELLANT RESPONDENT PAN/GIR NO. : AAACW2598L ASSESSEE BY : SHRI NIRAJ D. SHETH DEPARTMENT BY : SHRI A.K. NAYAK DATE OF HEARING : 16.4.2012 DATE OF PRONOUNCEMENT : 16.4.2012 ORDER PER D.MANMOHAN (VP) :- THESE TWO APPEALS BY THE REVENUE PERTAIN TO A.YS. 2001-02 AND 2002-03. 2. PENALTY LEVIED BY THE ASSESSING OFFICER U/S. 271 (1)(C) OF THE ACT HAVING BEEN CANCELLED BY THE LEARNED CIT(A), REVENU E IS IN APPEAL BEFORE US. 3. AT THE OUTSET, IT MAY BE NOTICED THAT THE ASSESS EE CLAIMED TO CARRY ON THE BUSINESS AND ACCORDINGLY CLAIMED DEPRECIATIO N ON COMPUTERS. IN THE QUANTUM PROCEEDINGS, INCOME EARNED BY THE ASSES SEE BY SUBLETTING THE PREMISES WAS CONSIDERED AS INCOME FROM OTHER S OURCES AND DEPRECIATION CLAIMED ON THE COMPUTERS WAS NOT ALLOW ED AS DEDUCTION. CONSEQUENTLY, PROCEEDINGS WERE INITIATED U/S. 271(1 )(C) OF THE ACT. THE ASSESSING OFFICER OBSERVED THAT THE TRANSACTION IS WITHIN THE KNOWLEDGE OF THE ASSESSEE-COMPANY I.E. THE ENTIRE PREMISES WA S TAKEN ON LEASE FROM M/S. WNS GLOBAL SERVICES PVT. LTD. 2 SOFTEL WAS NOT REQUIRED FOR ASSESSEES OWN BUSINESS AND THEREFORE IT SUBLET A PART OF PREMISES WHICH WAS NOT PUT TO USE BY THE ASSESSEE FOR BUSINESS PURPOSES WHICH IMPLIES THAT THE ASSESSEE-C OMPANY EXERCISED ITS RIGHT TO SUBLET WHICH GAVE RISE TO RECEIPT OF I NCOME IN THE FORM OF RENT AND HENCE IT CANNOT BE ACCEPTED THAT THE ASSESSEE H AD EXPLOITED THE COMMERCIAL ASSETS FOR THE PURPOSE OF BUSINESS. PENA LTY WAS IMPOSED @ 100% OF THE TAX SOUGHT TO BE EVADED IN RESPECT OF A SSESSMENT YEAR UNDER CONSIDERATION. 4. ON AN APPEAL FILED BY THE ASSESSEE, LEARNED CIT( A) CANCELLED THE PENALTY BY OBSERVING THAT THE ASSESSEE DISCLOSED TH E INCOME BY FURNISHING FULL PARTICULARS IN THE FORM OF GIVING N OTE IN THE RETURN OF INCOME. THEREFORE IT CANNOT BE CONSIDERED AS CONCEA LMENT OF PARTICULARS OF INCOME. MOREOVER, THE ASSESSEE HAS NOT CLAIMED D EDUCTION U/S. 10A/10B OF THE ACT FOR THIS AMOUNT. THE DISALLOWANC E IS ONLY ON ACCOUNT OF DIFFERENCE OF OPINION BETWEEN THE ASSESSEE AND T HE INCOME TAX DEPARTMENT ON THE LEGAL INTERPRETATION OF THE PROVI SIONS ON WHICH PENALTY SHOULD NOT BE LEVIED U/S. 271(1)(C) OF THE ACT. 5. AGGRIEVED, REVENUE CONTENDED BEFORE US THAT LEAR NED CIT(A) DELETED THE PENALTY WITHOUT APPRECIATING THAT THE A SSESSEE HAS FAILED TO SUBSTANTIATE ITS EXPLANATION. 6. AT THE TIME OF HEARING, LEARNED COUNSEL APPEARIN G ON BEHALF OF THE ASSESSEE PLACED BEFORE US A COPY OF THE ORDER OF TH E ITAT G BENCH, MUMBAI IN THE QUANTUM PROCEEDINGS (ITA NOS.795/MUM/ 2006, 796/MUM/2006 & 3791/MUM/2007 DATED 18 TH MARCH 2011) WHEREIN THE TRIBUNAL CONSIDERED THE ISSUE IN GREAT DETAIL ( PARAGRAPH 21-23 OF ITS ORDER) AND OBSERVED THAT THE TERMS OF AGREEMENT PRO VED THAT HARDWARE AND NETWORKING EQUIPMENT WERE ALSO PROVIDED TO CTS BY THE ASSESSEE WHICH IS IN THE FORM OF EXPLOITING ITS BUSINESS ASS ETS TO EARN INCOME, IN WHICH EVENT THE ASSESSEE WOULD BE ENTITLED DEPRECI ATION ON THE VARIOUS ASSETS LEASED. IT IS NOT IN DISPUTE THAT THE PENAL TY WAS LEVIED MAINLY ON ACCOUNT OF THE FACT THAT THE DEPRECIATION CLAIMED B Y THE ASSESSEE WAS NOT M/S. WNS GLOBAL SERVICES PVT. LTD. 3 ALLOWABLE. HOWEVER, IN THE LIGHT OF THE DECISION OF THE APPELLATE TRIBUNAL (CITED SUPRA) THE VERY BASIS ON WHICH PENALTY WAS L EVIED NO LONGER SUBSIST. 7. LEARNED DEPARTMENTAL REPRESENTATIVE MERELY RELIE D UPON THE ORDER OF THE ASSESSING OFFICER. 8. HAVING REGARD TO THE SUBMISSIONS OF THE PARTIES AND CONSISTENT WITH THE VIEW TAKEN BY THE ITAT IN THE QUANTUM PROC EEDINGS, WE HOLD THAT IT IS NOT A FIT CASE FOR LEVY OF PENALTY. SINC E, LEARNED CIT(A) CANCELLED THE PENALTY ON THE GROUND THAT IT IS NOT A CASE OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME, IN THE LIGHT OF THE DECISION OF ITAT, WE DO NOT FIND ANY REASONS TO INT ERFERE WITH THE ORDERS PASSED BY LEARNED CIT(A). AS PRONOUNCED IN THE OPEN COURT, APPEALS FILED BY THE REVENUE ARE DISMISSED. SD/- (N.K. BILLAIYA) ACCOUNTANT MEMBER SD/- (D. MANMOHAN) VICE-PRESIDENT DATED : 16 TH APRIL, 2012. COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)-CONCERNED. 4. THE CIT, CONCERNED. 5. THE DR CONCERNED, MUMBAI 6. GUARD FILE BY ORDER TRUE COPY ASSTT. REGISTRAR, ITAT, MUMBAI PS