ACIT, New Delhi V. M/s. Samtel Display Systems Ltd., New Delhi

ITA 5292/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 98186 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 22-12-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 24-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIMA BARNWAL
• Assessee Lawyers: D C GARG
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G , NEW DELHI BEFORE SH. N. K. SAINI, AM AND SH. VIJAY PAL RAO , JM ITA NO. 5292/DEL/2013 : ASSTT. YEAR : 200 7 - 08 ACIT, CIRCLE - 7(1), NEW DELHI VS M/S SAMTEL DISPLAY SYSTEMS LTD. 6 TH FLOOR, TDI CENTRE, DISTT. CENTRE, JASOLA, NEW DELHI (APPELLANT) (RESPONDENT) PAN NO . AA ACS0390N ASSESSEE BY : SH. D. C. GARG, CA REVENUE BY : SMT. ANIMA BARNWAL, SR. DR DATE OF HEARING : 22 .12 .2015 DATE OF PRONOUNCEMENT : 22 .12 .2015 ORDER PER N. K. SAINI, AM : THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE ORDER DATED 25.07.2013 OF LD. CIT(A) - X , NEW DELHI . 2. THE ONLY GRIEVANCE OF THE DEPA RTMENT IN THIS APPEAL RELATES TO THE DELETION OF PENALTY OF RS.67,26,720/ - LEVIED BY THE AO U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 3 . FACTS OF THE CASE IN BRIEF ARE THAT THE AO MADE AN ADDITION OF RS.2,00,20,000/ - ON ACCOUNT OF EXPENSES ON SHARE WARRANT FORFEITURE , IN THE ASSESSMENT ORDER U/S 143(3) OF THE ACT. THE AO OBSERVED THAT THE ASSESSEE ITA NO . 5292 /DEL /201 3 SAMTEL DISPLAY SYSTEMS LTD. 2 HAD INVESTED IN FULLY TRANSFERABLE WARRANTS OF ITS ASSOCIATE COMPANY M/S SAMTEL COLORS LTD. AND HAD NOT INVESTED IN ANY OTH ER SCRIPTS WARRANTS OR EQUITIES OF ANY OTHER COMPANY DURING THE PERIOD. HE FURTHER OBSERVED THAT THE CLAIM OF EXPENDITURE AS BEING WHOLLY AND EXCLUSIVELY FOR THE BUSINESS OF THE ASSESSEE COMPANY COULD NOT BE ACCEPTED SINCE IT WAS STAND ALONE INVESTMENT AND COULD ONLY BE ALLOWED UNDER THE HEAD OF CAPITAL GAINS. THE AO ALSO CAME TO THE CONCLUSION THAT THERE WERE INACCURATE PARTICULARS FILED BY THE ASSESSEE AND SINCE THE ADDITION HAD B EEN CONFIRMED BY THE LD. CIT(A), I T WAS A FIT CASE FOR LEVYING THE PENALTY U /S 271(1)(C) OF THE ACT. ACCORDINGLY, THE AO LEVIED THE PENALTY OF RS. 67,26,720 / - . 4. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED THAT THE QUANTUM ADDITION HAS BEEN DELETED BY THE ITAT IN ITA NO. 4133/DEL/2010 VIDE ORD ER DATED 28.06.2012 AND IT WAS HELD THAT THE LOSS SUFFERED BY THE ASSESSEE WAS NOT A BUSINESS LOSS BUT A LOSS UNDER THE HEAD CAPITAL GAINS. THEREFORE, THERE WAS NO CASE FOR IMPOSING THE PENALTY U/S 271(1)(C) OF THE ACT. THE RELIANCE WAS PLACED ON THE FOLLO WING CASE LAWS: CIT VS VAMCHAMPIGONS & AGRO PROUDCE (2006) 200 CTR 259 (DEL) CIT VS KRISHNA MARUTI LTD. (2011) 330 ITR 547 (DEL) CIT VS RELIANCE PETROPRODUCTS P. LTD. 322 ITR 158 (SC) 5. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OB SERVED THAT THE CLAIM OF RS.2,00,20,000/ - WAS ALLOWED BY THE THEN LD. ITA NO . 5292 /DEL /201 3 SAMTEL DISPLAY SYSTEMS LTD. 3 CIT(A) TO BE CONSIDERED AS A CAPITAL LOSS AND THE SAID VIEW WAS UPHELD BY THE ITAT, THEREFORE, THERE WAS NO FURNISHING OF INACCURATE PARTICULARS. THE LD. CIT(A) ACCORDINGLY DELETED THE P ENALTY LEVIED BY THE AO. 6. NOW THE DEPARTMENT IS IN APPEAL. THE LD. DR SUPPORTED THE ORDER OF THE AO BUT COULD NOT CONTROVERT THIS VITAL FACT THAT THE ADDITION ON THE BASIS OF WHICH PENALTY U/S 271(1)(C) OF THE ACT WAS LEVIED BY THE AO HAS BEEN DELETED B Y THE ITAT. 7. IN HIS RIVAL SUBMISSIONS THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSION MADE BEFORE THE AUTHORITIES BELOW AND STRONGLY SUPPORTED THE IMPUGNED ORDER PASSED BY THE LD. CIT(A). 8. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PAR TIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT IS NOTICED THAT THE LOSS OF RS.2,00,20,000/ - WAS CLAIMED BY THE ASSESSEE AS BUSINESS LOSS BUT THE AO TREATED THE SAME AS A LOSS TO BE ADJUSTED AGAINST THE CAPITAL GAINS. WHEN THE ASSESSEE PREFERRED AN APPEAL TO THE LD. CIT(A) THE CLAIM OF THE ASSESSEE WAS ALLOWED BY REVERSING THE VIEW TAKEN BY THE AO IN APPEAL NO. 68/2009 - 10 ORDER DATED 02.06.2010. AGAINST THE SAID ORDER OF THE LD. CIT(A) THE DEPARTMENT PREFERRED A N APPEAL TO THE ITAT IN ITA NO. 4133/DEL/2010 FOR THE ASSESSMENT YEAR 2007 - 08 WHER EIN VIDE ORDER DATED 28.06.2012, T HE ORDER OF THE LD. CIT(A) WAS UPHELD BY FOLLOWING THE JUDGMENT OF THE HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS CHAND RATAN BAGRI WHER EIN IT WAS HELD THAT FORFEITURE OF CONVERTIBLE WARRANTS RESULTS IN EXTINGUISHMENT OF RIGHT OF THE ASSESSEE TO OBTAIN A SHARE ITA NO . 5292 /DEL /201 3 SAMTEL DISPLAY SYSTEMS LTD. 4 IN THE COMPANY AND RESULTS IN LOSS UNDER HEAD CAPITAL GAINS . THEREFORE, IN THE PRESENT CASE, FROM THE ABOVE NARRATED FACT S, IT IS CLEAR THAT VERY BASIS FOR LEVYING THE PENALTY U/S 271(1)(C) OF THE ACT, IS NOT IN EXISTENCE. ON A SIMILAR ISSUE THE HON BLE SUPREME COURT IN THE CASE OF CIT VS K.C BUILDERS 265 ITR 562 HELD AS UNDER: WHERE THE ADDITIONS MADE IN THE ASSESSMENT ORDER ON T HE BASIS OF WHICH PENALTY FOR CONCEALMENT IS LEVIED, ARE DELETED, THERE REMAINS NO BASIS AT ALL FOR LEVYING PENALTY FOR CONCEALMENT AND, THEREFORE, IN SUCH A CASE NO PENALTY CAN SURVIVE AND THE PENALTY IS LIABLE TO BE CANCELLED. 9 . IN THE PRESENT CASE A LSO SINCE THE ADDITION ON THE BASIS OF WHICH THE PENALTY WAS LEVIED IS NO MORE IN EXISTENCE, THEREFORE, THE PENALTY LEVIED BY THE AO U/S 271(1)(C) OF THE ACT WAS RIGHTLY DELETED BY THE LD. CIT(A). IN THAT VIEW OF THE MATTER, WE DO NOT SEE ANY MERIT IN THIS APPEAL OF THE DEPARTMENT. 1 0 . IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS DISMISSED . ( ORDER PRON OUNCED IN THE C OURT ON 22 /12 /2015 ) SD/ - SD/ - (VIJAY PAL RAO ) (N. K. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 22 /12 /2015 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR