DCIT CEN CIR 36, MUMBAI V. ACKRUTI CITY LTD, MUMBAI

ITA 5357/MUM/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3742 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 24-02-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 24-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S KEMWAL
• Keywords: Depreciation; Search and seizure; Bonafide belief; Difference of opinion
• Section: 143(3); 153A; 80IB; 132

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI , , BEFORE SHRI AMIT SHUKLA , JM AND SHRI RAJESH KUMAR , AM ./ I.T.A. NO. 53 55 TO 53 59 /MUM / 201 2 ( / ASSESSMENT YEAR S : 20 0 1 - 02 TO 200 5 - 06 ) DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 36, ROOM NO. 11 ,A A YAKAR BHAVAN, M.K.ROAD, MUMBAI - 400020 / VS. M/S ACKRUTI CITY LTD., 6 TH FLOOR, AKRUTI TRADE CENTRE, ROAD NO.7, MAROL, MIDC, ANDHERI (E), MUMBAI - 400093 ( / APPELLANT ) .. ( / RESPONDENT ) ./ I.T.A. NO. 4346 /MUM / 201 3 ( / ASSESSMENT YEAR : 2007 - 08 ) ASSTT.COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 36, MUMBAI. / VS. M/S ACKRUTI CITY LTD., MUMBAI . ./ PAN : AAACA6101D ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI S S KEMWAL / RESPONDENT BY : SHRI ANUJ K ISNADWALA / DATE OF HEARING : 2 4 . 2 .2016 / DATE OF PRONOUNCEMENT : 15. 3. 2016 / O R D E R PER RAJESH KUMAR , AM : ALL THESE APPEALS ARE DIRECTED AGAINST THE COMMON ORDER DATED 11.6.2012 PASSED BY THE LD.CIT(A) - 41, MUMBAI AND THEY RELATE TO THE ASSESSMENT YEAR S 2001 - 02 TO 2006 - 07. SINCE THE ISSUE INVOLVED IN ALL THESE APPEALS ARE COMMON, THEREFORE, THESE APPEALS WERE CLUBBED TOGETHER , HEARD TOGETHER AND ARE BEING DECIDED BY THI S CONSOLIDATED ORDER, FOR THE SAKE OF CONVENIENCE. ITA NO. 53 55 / MUM/20 1 2 AND OTHER F IVE APPEALS. 2 2. THE FACTS IN DISPUTE INVOLVED IN ALL THESE APPEALS ARE SAME EXCEPT FIGURES. THEREFORE, WE ARE TAKING UP THE ITA NO 5355/MUM/2012 ASSESSMENT YEAR 2001 - 02 FIRST FOR ADJUDICATION . THE ASSESSEE HAS TAKEN FOLLOWINGS GROUNDS OF APPEAL: - 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) WAS CORRECT IN DELETING PENALTY OF RS.28,92,183/ - LEVIED U / S 271(1)(C) ON ACCOUNT OF ALLOCATION OF COMMON EXPENSES TOWARDS PROJECTS ELIGIBL E FOR DEDUCTION U / S 80IB(10) OF THE IT ACT, 1961 WITHOUT APPRECIATING THE FACT THAT EXPENSES OF ELIGIBLE PROJECT HA V E BEEN BOOKED INTO NON ELIGIBLE PROJECTS RESULTING IN REDUCTION OF TAXABLE INCOME. 2. WH ETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) WAS CORRECT IN DELETING PENALTY OF RS 1,39,6571 / - LEVIED U / S 271(1)(C) ON ACCOUNT OF DISALLOWANCE OF REDUCTION OF 10% CLAIMED ON STOCK - IN - TRADE WITHOUT APPRECIATING THE FACT THAT ASSESSEE HAS WITHOUT ANY REASON REDUCED THE VALU E OF INVENTORIES BY 10 % EVERY YEAR AND THEREBY REDUCING TAXABLE INCOME . 3. FACTS IN BRIEF ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 31.10.2001 DECLARING TOTAL INCOME AT RS.1,49,46,426/ - . THE ASSESSEE IS ENGAGED IN THE BUSINESS OF REAL ESTATE DEVELOPMENT AND SLUM REHABILITATION. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND STATUTORY NOTICES UNDER SECTION 143(2) R.W.S 153A WERE ISSUED AND SERVED UPON THE ASSESSEE. THE ASSESSMENT WAS COMPLETED VIDE ORDER DATED 27.2.2004 U/S 143(3) OF THE ACT AT RS.2,44,58,100/ - . A SEARCH AND SEIZURE OPERATION WAS CONDUCTED UNDER SECTION 132 IN THE PREMISES OF AKRUTI GROUP OF CASES, INCLUDING THE ASSESSEE ON 10.8.2006 AND THE ASSESSMENT WAS COMPLETED U/S 143(3)(153A ON 30.12.2008 AT A TOTAL INCOME OF RS.1,90,05,793/ - . DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 80IB(10) OF THE INCOME TAX ACT, 1961 TO THE TUNE OF RS.3,91,88,997/ - . DURING THE COURSE OF SEARCH, IT WAS FOUND THAT THE ASSESSEE HAD CLAIMED DEDUC TION U /S ONLY BEING QUALIF IED FOR CLAIMING THE SAID DEDUCTION . THE AO ASKED THE ASSESSEE TO ITA NO. 53 55 / MUM/20 1 2 AND OTHER F IVE APPEALS. 3 EXPLAIN THE BASIS OF COMMON EXPENSES WERE ALLOCATED TO THE VARIOUS PROJECTS COVERED UNDER SECTION 80IB(10). DURING THE ASSESSMENT AS MADE US/ 143(3) R.W.S. 153A OF THE ACT VARIOUS ADDITIONS WERE MADE AND THE MATTER WAS APPEALED BEFORE THE CIT(A) WHO DELETED THE ADDITIONS MADE EXCEPT TWO ADDITIONS FIRST OF RS. 73,12,726/ - FOR EXPENSES ALLOCATED TO PROJECTS FOR WHICH THE DEDUCTION U/S 80IB(10) WAS MADE AND SECOND D OF RS. 3,53,115/ - BEING REDUCTION CLAIMED @ 10% OF STOCK IN TRADE. IN RESPONSE T O THE QUERY RAISED BY THE AO , THE ASSESSEE SUBMITTED THAT THE TOTAL EXPENSES DEBITED TO TH E PROFIT AND LOSS ACCOUNT FROM THE ASSESSMENT YEAR 2001 - 02 TO 2007 - 08 WERE RS. 34,16,95,092/ - WHICH WAS ACTUALLY FOUND TO BE ALLOCABLE TO THE CONSTRUCTION PROJECTS AND IT WAS FURTHER STATED THAT OUT OF THESE ALLOCABLE EXPENSES THE AMOUNT TO THE EXTENT OF RS.10,34,31,192/ - WERE RELATED TO THE PROJECT COVERED UNDER SECTION 80IB(10) . THE AO ACCORDINGLY, REJECTED THE CLAIM OF THE ASSESSEE U/S 80IB(10) IN ALL THE ASSESSMENT YEARS AND ALSO INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)( C ) OF THE ACT. THE SECOND ADDITION INVOLVED ON WHICH THE PENALTY WAS LEVIED BY T HE AO WAS DE DUCTION OF 10% OF THE STOCK - IN - TRADE. THE AO ASKED THE ASSESSEE TO EXPLAIN THE PROVISIONS MADE WHILE REDUCING ITS VALUE OF STOCK - IN - TRADE AND FURTHER ASKED THE ASSESSEE TO EXPLAIN THAT SINCE THE VALUE OF REAL ESTATE HAD APPRECIATED MANIFOLD WHAT WAS TH E LOGIC OF WRITING OFF 10% OF STOCK IN - TRADE I.E BUILDING. THE ASSESSEE SUBMITTED BEFORE THE AO THAT LAND AND BUILDING CONSTITUTED STOCK - IN - TRADE IN THE BUSINESS OF THE ASSESSEE AS IT WAS ENGAGED IN THE BUSINESS OF REAL ESTATE DEVELOPMENT AND SLUM REHABILI TATION AND THEREFORE, 10% OF THE CLOSING STOCK IS IN ACCORDANCE WITH ACCOUNTING STANDARED - 2 AS NOTIFIED BY THE INSTITUTE OF CHARTERED ACCOUNTANT . THE AO REJECTED THE CONTENTION OF THE ASSESSEE AND INITIATED PENALTY PROCEEDINGS. ACCORDINGLY, THE AO IMPOSE D THE PENALTY OF RS.30,31,840/ - BEING 100% OF THE TAX SOUGHT TO BE EVADED UNDER SECTION 271(1)( C) OF THE ACT FOR BOTH THE ADDITIONS FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND SUPPRESSING THE ITA NO. 53 55 / MUM/20 1 2 AND OTHER F IVE APPEALS. 4 INCOME BY REJECTING THE SUBMISSIONS OF THE ASSESS EE AND HOLDING THAT THE ASSESSEE HAD TRIED TO MANIPULATE PROFITS BY MANEOVERING THE EXPENSES IN SUCH A MANNER SO THAT NON - TAXABLE INCOME U/S 80IB (10) WOULD GO UP AND THE TAXABLE INCOME FROM NON 80IB(10) CAME DOWN AND THUS MANIPULATED THE BOOKS OF ACCO UNT TO AVOID TAX LIABILITY. SIMILARLY, THE AO HELD THAT THE REDUCTION OF 10% IN STOCK - IN - TRADE WHICH WAS ALLEGED TO BE WITH A VIEW TO COMPLY WITH THE CORRECT ACCOUNTING AND TAXATION PRINCIPLES WAS BASELESS . THE ASSESSEE PREFERRED THE APPEAL BEFORE T HE LD. CIT(A), WHO DELETED THE PENALTY BY HOLDING AS UNDER : 5. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT, ORDER OF THE AO AND FACTS OF THE CASE CAREFULLY. IT IS NOTICED THAT IN THE QUANTUM APPEAL, THE APPELLANT HAD CLAIMED DEDUCTION U/S 80IB (10) AND 80IA(4) OF THE IT ACT. DURING THE ASSESSMENT PROCEEDINGS, T HE DIS ALLOWANCE WAS MADE ON ACCOUNT OF ALLOCATION OF COMMON EXPENSES TO TOW ARDS 80IB(10) PROJECTS AND DISALLOWANCE WAS MADE A CCORDINGLY . THE LD. CIT(A) HAS DECIDED THIS ISSUE BY ACCEPTIN G THE STAND OF THE ASSESSEE THAT ONLY 80.92% OF THE COMMON EXPENSES WERE ALLOWABLE TO 80 IB( 10 ) PROJECTS AND HE ALLOWED RELIEF TO THE EXTENT OF RS.46 LAKHS OF FURTHER ADDITION MADE IN THE HANDS OF THE ASSESSEE. THIS ORDER OF THE CIT(A) WAS ACCEPTED BY THE A SSESSEE AND THE DEPARTMENT. ON THE SECOND ISSUE IN WHICH THE ASSESSEE HAS CLAIMED A REDUCTION IN VALUE OF STOCK - IN - TRADE @ 10% OF THE COST OF THE STOCK - IN - TRADE. THE DISALLOWANCE WAS MADE BY THE A O AFTER DISCUSSING THE ISSUE IN THE ASSESSMENT ORDER AND INI TIATED PENALTY PROCEEDINGS. DURING THE PENALTY PROCEEDINGS AGAIN AN OPPORTUNITY WAS GIVEN TO THE ASSESSEE TO EXPLAIN THE SAME. THE ASSESSEE HAS SUBMITTED THAT EVEN IF THE VALUE OF THE STOCK IS NOT SUBJECTED TO AMORTIZATION, THE SAME WOULD ONLY RESULT IN IN CREASE IN PROFIT FOR THE YEAR IN WHICH THE INVENTORY IS SOLD WHICH WOULD ONLY INCREASE DEDUCTION U / S. 80IA( 4) AND MAKING IT TAX NEUTRAL. BUT THE AO HAS NOT ACCEPTED THE ARGUMENTS OF THE APPELLANT AND LEVIED PENALTY U / S. 271(1)(C) OF THE I T. ACT ON THE BAS IS OF REASONS GIVEN ABOVE. DURING THE APPELLATE PROCEEDINGS, THE AR OF THE APPELLANT HAS SUBMITTED THAT THE ASSESSEE HAS CLAIMED EXPENSES AND DESPITE RELATING TO ALLOCATION OF COMMON EXPENSES TOWARDS 80IB(10) PROJECTS WAS ACCEPTED ON THE BASIS OF THE C I T(A ) BY THE DEPARTMENT AND THE ASSESSEE. SIMILARLY, ON THE SECOND ISSUE OF DISALLOWANCE OF REDUCTION OF 10% CLAIMED IN STOCK - IN - TRADE, THE ASSESSEE HAS MADE CLAIM AND IT HAS INCREASED DEDUCTION U / S. ITA NO. 53 55 / MUM/20 1 2 AND OTHER F IVE APPEALS. 5 80IA(4) AND NOT AFFECTING THE TAX LIABILITY. THE AR OF THE A PPELLANT HAS RELIED ON VARIOUS DECISIONS ON THIS ISSUE THAT THE DISALLOWANCE MADE AND CONFIRMED IN APPEAL DOES NOT MEAN THAT THE ASSESSEE HAS CONCEALED INCOME AND SUBMITTED INACCURATE PARTICULARS OF INCOME. ESPECIALLY THE AR OF THE APPELLANT HAS RELIED ON THE DECISION OF SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS (SUPRA) WHERE IT IS HELD THAT THE WORD INACCURATE PARTICULARS MEAN THAT THE DETAILS SUPPLIED IN THE RETURN OR NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TRUTH OR ERRONEOU S. IT WAS HELD THAT A MERE MAKING OF THE CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. T HE HON'BLE HIGH COURT IN CIT V. INDIAN METALS & FERRO ALLOYS LTD. HAS HELD THAT 'THE WORD 'CONCEAL' IS DERIVED FROM THE LATIN WORD 'CONCOLARE' WHICH IMPLIES 'TO HIDE'. WEBSTER'S NEW INTERNATIONAL DICTIONARY EQUATES ITS MEANING TO 'HIDE OR WITHDRAW FROM OBSERVATION; TO COVER OR KEEP FROM SIGHT; TO PREVENT THE DISCOVER OF; TO WI T HHOLD KNOWLEDGE OF'. THE OFFENCE OF CONCEALMENT IS THUS A DIRECT ATTEMPT TO HIDE AN ITEM OF INCOME OR A PORTION THEREOF FROM THE KNOWLEDGE OF INCOME - TAX AUTHORITIES'. THE HO N 'BLE PUNE TRIBUNAL HAS HELD IN KANBAY SOFT WARE INDIA PVT. LTD. THAT THE EXPRESS ION 'CONCEALMENT OF INCOME' HAS NOT BEEN DE FINED IN THE ACT, BU T THE NATURAL MEANINGS OF THE EXPRESSION 'CONCEALMENT' ARE TO KEEP FROM BEING SEEN, FOUND, OBSERVED, OR DISCOVERED'. IT WOU L D THEREFORE FO LLOW THAT THE EXPRESSION CONCEALMENT OF INCOME, IN ITS NATURAL SENSE AND GRAMMATICAL MEANING, IMPLIES AN INCOME IS BEING HIDDEN, CAMOUFLAGED OR COVERED UP SO AS CANNOT BE SEEN, FOUND, OBSERVED OR DISCOVERED. THE EXPRESSION 'INACCURATE' REFERS TO 'NOT IN CONFORMITY WITH THE FACT OR TRUTH' AND THAT IS THE MEANIN G WHICH, IN OUR CONSIDERED VIEW, IS RELEVANT IN THE CONTEXT OF 'FURNISHING OF INACCURATE PARTICULARS' .... THE DETAILS OR - INFORMATION ABOUT INCOME DEAL WITH THE FACTUAL DETAILS OF INCOME AND THIS CANNOT BE EXTENDED TO AREAS WHICH ARE SUBJECTIVE SUCH AS TH E STATUS OF TAXABILITY OF AN INCOME, ADMISSIBILITY OF A DEDUCTION AND INTERPRETATION OF LAW .... THE ADMISSION OR REJECTION OF A CLAIM IS A SUBJECTIVE EXERCISE AND WHETHER A CLAIM IS ACCEPTED OR REJECTED HAS NOTHING TO DO WITH FURNISHING OF INACCURATE PART ICULARS OF INCOME IN OUR CONSIDERED VIEW, RAI SING A LEGAL CLAIM, EVEN IF IT IS ULTIMATELY FOUND TO BE LEGALLY UNACCEPTABLE, CANNOT AMOUNT OF (SIC) FURNISHING OF INACCURATE PARTICULARS OF INCOME'. IN THE PRESENT CASE, THE ASSESSEE HAS CLAIMED EXPENSES WHICH WERE RE - ALLOCATED AS PER - DECISION OF CIT ( A) WHICH WAS ACCEPTED BY THE ASSESSEE AND THE DEPARTMENT. THUS, THE APPELLANT HAS MADE ITA NO. 53 55 / MUM/20 1 2 AND OTHER F IVE APPEALS. 6 CLAIM WHICH WAS MODIFIED IN APPEAL MEANS THAT IT WAS A DEBATABLE ISSUE. BY MAKING CLAIM OF EXPENSES IN THE RETURN, ASSESSEE HAS NOT CONCEALED ANY FACTS NOR SUBMITTED INACCURATE PARTICULARS OF INCOME. SIMILARLY IN SECOND GROUND, THE ASSESSEE HAS CLAIMED REDUCTION OF 10% IN VALUE OF STOCK - IN - TRADE. THE APPELLANT HAS CLAIMED 10% OF THE COST OF THE SUPER STRUCTURE AS DIMINUTION IN TH E VALUE OF THE SUPER STRUCTURE DUE TO PASSAGE OF TIME AS PER ACCOUNTING STANDARD 2 'VALUATION OF INVENTORY' ISSUED BY ICAI. IT WAS DISALLOWED BY THE AO AND CONFIRMED IN APPEAL. NOW QUESTION ARISES WHETHER THE ASSESSEE' HAS CONCEALED THE FACTS OR SUBMITTED INACCURATE PARTICULARS OF INCOME? THE ANSWER IS GIVEN BY HON'BLE SUPREME COURT IN CASE OF RELIANCE PETRO PRODUCTS BY HOLDING THAT MERELY THE CLAIM MADE BY THE ASSESSEE WHICH IS NOT ACCEPTED BY THE AO IS NOT A CASE OF CONCEALMENT AND SUBMITTING OF INACCURAT E PARTICULARS OF INCOME AS PER THE PROVISIONS OF SECTION 271(1)(C). IN VIEW OF THESE FACTS, IT IS HELD THAT IT WAS NOT A CASE OF CONCEALMENT OF INCOME OR SUBMITTING OF INACCURATE PARTICULARS AS PER THE DECISIONS OF THE HONBLE SUPREME COURT AND OTHER COUR TS CITED ABOVE, KEEPING IN VIEW THE TOTALITY OF THE FACTS AND CIRCUMSTANCES, IT IS HELD THAT THE PENALTY LEVIED BY THE AO IS NOT SUSTAINABLE, HENCE, DELETED. GROUND OF APPEAL IS ALLOWED. 4 . THE LD. DR RELIED ON THE ORDER OF AO HEAVILY AND SUBMITTED THA T THE ASSESSEE HAD MANIPULATED ITS ACCOUNT BY APPORTIONING LESS EXPENSES TO THE PROJECT S WHICH WERE COVERED BY THE PROVISIONS OF SECTION 80IB(10) AND ALLOCATING MORE EXPENSES TOWARDS THOSE PROJECTS WHICH WERE NOT COVERED BY THE SAID PROVISIONS . THE A SSESSEE HAD BEEN MANIPULATING ITS ACCOUNTS THEREBY SUPPRESSING THE TAXABLE INCOME FROM NON 80IB(10) PROJECTS AN D INFL ATING THE INCOME OF TH O SE PROJECTS TO WHICH THE PROVISIONS OF SECTION 80IB(10) WERE APPLICABLE AND ACCORDINGLY , THE CLAIMED DEDUCTION . THE LD. DR FURTHER SUBMI TT ED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE, IN REPLY TO THE QUERY RAISED BY THE AO SUBMI TT ED THE DETAILS OF EXPENSES OF RS.10,34,31,192/ - WHICH WERE TO BE ALLOCABLE TO VARIOUS PROJECTS COVERED BY THE P ROVISION S OF SECTION 80I B (10) FROM THE AY - 2001 - 02 TO 2007 - 08 OUT OF TOTAL EXPENSES DEBITED AND CHARGED TO THE PROFIT A ND LOSS ACCOUNT DURING ALL THESE YEARS OF RS.3,41,69,510/ - . SIMILARLY THE ASSESSEE ITA NO. 53 55 / MUM/20 1 2 AND OTHER F IVE APPEALS. 7 REDUCED ITS STOCK - IN - TRADE (BUILDING) AT THE RATE OF 10% ON THE GROUND THAT THE VALUE OF THE BUILDING DEPRECIATED BY WEAR AND TEAR WHICH IS A GENERAL PHENOMENA UNDER BONAFIDE BELIEF WHEREAS THE AO OBSERVED THAT SUCH DEDUCTION WAS CLAIMED WITH MALAFIDE INTENTION TO REDUCED THE INCOME AS REAL EST ATE THE P RICES OF LAND AND BUILDING WERE SPIRI L ING WITH THE PASSAGE OF TIME . IN VIEW OF THESE FACTS, THE LD. DR FINALLY SUBMITTED THAT THE PENALTY WAS RIGHTLY IMPOSED ON THE ASSESSEE FOR FURNISHING INACCURATE PARTICULARS OF INCOME BY WAY OF SUPPRESSING THE TAXABLE PROFIT AND INFLATING THE TAX FREE PROFIT U/S 80IB (10) . 5 . THE LD. AR VEHEMENTLY SUBMITTED BEFORE US THAT FULL AND TRU E DISCLOSURE WAS MADE IN THE BOOKS OF ACCOUNT AND ALSO IN THE ANNUAL AUDITED E THE LD. AR FURTHER SUBMITTED THAT THE COMMON EXPENSES WERE NOT ALLOCATED ON THE BASIS OF VIEW TAKEN BY THE TRIBUNAL FOR THE ASSESSMENT YEAR 1999 - 2000 IN THE ASSESSEES OWN CASE, WHEREIN IT HAS BEEN HELD THAT COMMON EXPENSES WERE NOT REQUIRED TO BE ALLOCATED TO ANY PROJECT. THE LD. AR SUBMITTED THAT THIS STA ND HAD BEEN ACCEPTED BY T HE DEPARTMENT IN THE ORIGINAL ASSESSMENT MADE U/S 143(3) FOR THE ASSESSMENT YEARS 2002 - 03, 2003 - 04 AND 2004 - 05. THE LD. AR SUBMITTED THAT THE COMMON EXPENSES REPRESENTED THE COST NOT IDENTIFIABLE TO ANY SPECIFIC PROJECT WHICH COMPR ISES OF GENERAL ADMINISTRATIVE EXPENSES, INTEREST EXPENDITURES AND DEPRECIATION ETC AND WERE CLAIMED ACCORDINGLY. THE LD. AR FURTHER REFERRED TO THE PRINCIPLE LAID DOWN IN ACCOUNTING STANDARD - 7 BY SUBMITTING THAT THE ASSESSEE HAD NOT ALLOCATED ANY O F SUCH EXPENSES TO ANY PROJECTS SINCE FINANCIAL YEAR 1998 - 99. THE ASSESSEE HAD DURING THE YEAR COMPLETED CERTAIN PROJECTS AT SAIWADI AND MIDC AND THE PROFITS EARNED ON THE THESE WERE CLAIMED AS DEDUCTION US 80IB (10). THESE PROJECTS WERE UNDER CONSTRUC TION SINCE LAST TWO TO THREE YEARS AND COMMON EXPENSE WERE NEVE R ALLOCATED TO THESE PROJECTS AND CONSEQUENTLY NEVER CHARGED TO THE PROFIT AND LOSS ACCOUNT OF THE RESPECTIVE YEAR. FURTHER IN RESPECT OF CLAIM OF THE ASSESSEE BEING 10 % OF THE SUPER ITA NO. 53 55 / MUM/20 1 2 AND OTHER F IVE APPEALS. 8 STRUCTU RE DUE TO WEAR AND TEAR, THE ASSESSEE SUBMITTED THAT STOCK - IN - TRADE WAS VALUED AS PER ACCOUNTING STANDARD - 2 ISSUED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA WHICH DEALS WITH VALUATION OF INVENTORY AT COST OR MARKET PRICE WHICHEVER IS LOWER AND A CCORDINGLY, THE ASSESSEE FOLLOWED IT STOCK - IN - TRADE AT COST LESS 10%. THIS HAD APPENDED BECAUSE T HE ASSESSEE LEASED OUT VARIOUS BUILDING IN PHASE - I, II, III AND MIDC, ANCHERI (E) WHICH W ERE HELD AS STOCK - IN - TRADE AND NOT SOLD IMMEDIATELY. SINCE THERE WAS CONSIDERABLE TIME GAP IN THE COMPLETION AND SELLING THESE BUILDINGS, THE ASSESSEE VALUED THESE BUILDING AT COST LESS 10 % ON ACCOUNT OF WE AR AND TEAR . THE LD. AR SUBMITTED THAT ALL THESE FACTS WERE ADEQUATELY SUFFICIENTLY DISCLOSED IN THE RETURN OF INCOM E AND AUDITED ACCOUNTS. THE ASSESSEE IN SUPPORT OF HIS CONTENTIONS RELIED ON THE DECISION S OF THE HONBLE APEX COURT IN THE CASE OF CIT VS . RELIANCE PETROPRODUCTS ( SUPREME COURT ). (2010) 322 ITR 158 ( SC ) AND THE DECISION IN THE CASE OF COMMISSIONER OF INCO ME - TAX V S INDIAN METALS AND FERRO ALLOYS( 1995) 211 ITR 35 ORISSA. FINALLY, THE LD.AR SUBMITTED THAT SINCE ALL THE FACTS RELATING TO NON - ALLOCATION OF EXPENSES WERE DULY STATED AND DISCLOSED AND WERE INCONFORMITY WITH THE S T AND OF THE ASSESSEE ACCEPTED BY THE REVENUE AND ALSO AS PER THE VARIOUS A CCOUNTING STANDARD S. I N RESPECT OF REDUCTION IN STOCK IN TRADE TO THE EXTENT OF 10% WAS REVENUE NEUTRAL AS ULTIMATELY UPON SELLING THE STOCK IN TRADE THE TRUE PROFITS WOULD BE ACCOUNTED AUTOMATICALLY WHICH PROVE D THE GENUINE NESS OF ASSESSEE S CLAIM AND THUS NO PENAL ACTION U/S 271(1)( C ) WAS CALLED FOR. THE LD. AR, THEREFORE, PRAYED THAT THE ORDER OF LD. CIT(A) BE CONFIRMED . 6 . WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORDS AVA ILABLE BEFORE US. WE FIND THAT THE ASSESSEE WAS FOLLOWING THE SYSTEM OF ACCOUNTING OF NOT ALLOCATING THE COMMON EXPENSES INCLUDING GENERAL ADMINISTRATIVE EXPENSES, INTEREST EXPENDITURES AND DEPRECIATION ETC TO THE SPECIFIC PROJECTS. WE FURTHER FIND THAT THE ASSESSEE WAS CHARGING EXPENSES TO THE PROFIT AND LOSS ACCOUNT EVERY YEAR WHICH WAS ACCEPTED BY ITA NO. 53 55 / MUM/20 1 2 AND OTHER F IVE APPEALS. 9 THE DEPARTMENT IN THE ASSESSMENT YEARS 2002 - 03, 2003 - 04 AND 2004 - 05. DURING THE COURSE OF SCRUTINY PROCEEDINGS, THE AO CALLED FOR THE DETAILS OF VARIOUS ALLOCABLE EXPENSES WHICH WERE FILED BY THE ASSESSEE FROM ASSESSMENT YEAR 2001 - 02 TO 2007 - 08 AMOUNTING TO RS.10,34,31,192 / - THE DETAILS WHEREOF AS GIVEN BY THE ASSESSEE ARE AS UNDER: - AY TOTAL ALLOCABLE EXPENSES ALLOCABLE TO 80IB(10) PROJECTS A B 2001 - 02 13,829,000 7,312,726 2002 - 03 23,853,235 9,131,987 2003 - 04 38,110,760 11,207,676 2004 - 05 53,094,827 15,139,246 2005 - 06 73,991,537 19,508,393 2006 - 07 61,046,157 26,585,183 2007 - 08 77,769,576 14,535,981 TOTAL 341,695,092 103,431,192 THE A O ON THE BASIS OF THE ABOVE BREAKUP RECOMPUTED THE DEDUCTION U/S 80IB(10) IN ALL THE ASSESSMENT YEA RS FROM ASSESSMENT YEAR 2001 - 02 TO 2007 - 08 AND ACCORDING IMPOSED THE PENALTY U/S 271(1)(C) OF THE ACT . THE SECOND ISSUE ON WHICH THE PENALTY WAS IMPOSED WAS ON ACCOUNT OF REDUCTION IN THE VALUE OF STOCK - IN - TRADE TO THE TUNE OF 10% ON THE GROUND THAT THE BUILDING CONSTRUCTED WERE HELD AS STOCK - IN - TRADE AND WERE LEASED OUT DURING THE YEAR. SINCE THE TIME GAP BETWEEN COMPLETION OF CONSTRUCTION AND SELLIN G WAS HUGE THEREFORE IN ORDER TO ACCOUNT FOR NORMAL WE AR AND TEAR IN THE VALUE OF BUILDING THE ASSESSEE REDUCED OF 10% OF THE STOCK VALUE WHICH WAS CLAIMED TO BE ACCORDING TO AS - 2 ISSUED BY ICAI . THE AO IMPOSED THE PENALTY OF RS.30,31,840/ - ON THE GROUN D THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME BY NOT ALLOCATING THE EXPENSES OF RS. 73,12,726/ - TO POCKET 7 PROJECT AND FOR CLAIMING 10% REDUCTION IN STOCK IN TRADE. NOW, THE ISSUE BEFORE US IS WHETHER THE PENALTY WAS IMPOSABLE UNDER THE ABOVE CIRCUMSTANCES, OR IS IT A FIT CASE OF DIFFERENCE OF OPINION AND GENUINE CLAIM ON THE PART OF THE ASSESSEE. THE LD. CIT(A) HAD DEALT WITH ITA NO. 53 55 / MUM/20 1 2 AND OTHER F IVE APPEALS. 10 THIS ISSUE IN GREAT DETAIL AND RIGHTLY DELETED THE PENALTY BY ACCEPTING THE CONTENTION OF THE ASSESSEE WHO RELYING ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS . RELIANCE PETROPRODUCTS ( S UPRA) . WE ALSO FIND THAT THE LD. CIT(A) FURTHER FOUND THAT THE REDUCTION IN TH E VALUE OF STOCK - IN - TRADE WAS TAX NEUTRAL AS ULTIMATELY IN THE YEAR OF SA LE OF SAID STOCK IN TRADE, THE HIGHER PROFIT WOULD BE AUTOMATICALLY ACCOUNTED FOR AND WOULD BE ACCRUING TO THE ASSESSEE BY CLAIMING LOWER VALUE OF STOCK IN TRADE. IN THE CASE OF RELIANCE PETRO PRODUCTS (SUPRA) , IT HAS BEEN HELD THAT MERE MAKING THE CLAIM WHICH IS NOT SUSTAINABLE IN LAW, ITSELF WOULD NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME, THEREFORE, FOLLOWING THE RATIO LAID DOWN BY THE HONBLE APEX COURT IN THE CASE OF RELIANCE PETRO PRODUCTS (SUPRA) WE UPHOLD THE ORDER OF CIT(A) DELETING THE PENALTY LEVIED BY THE AO BY DISMISSING THE APPEAL OF THE REVENUE . THE AO IS DIRECTED ACCORDINGLY. I.T.A. NO.5356 TO 5360 /MUM / 2012 ( AY S : 2002 - 03 TO 200 5 - 06 ) 7 . WE HAVE ALREADY DECIDED A SIMILAR ISSUE UNDER IDENTICAL FACTS IN ITA NO 5355/MUM/2012 ASSESSMENT YEAR 2001 - 02 AND THEREFORE OUR DECISIONS IN ITA NO 5355 / MUM/2012 AY 2001 - 02 WOULD MUTATIS MUTANDIS APPLY TO THESE APPEALS AS WELL AND ACCORDINGLY THE ORDER OF CIT(A) IS CONFIRMED AND UPHELD . 8 . IN RESULT THE APPEAL S OF THE REVEN UE ARE DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 15TH MAR, 2016 . SD SD ( /AMIT SHUKLA) ( /RAJESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 15 /0 3 /2016 . . ./ SRL , SR. PS ITA NO. 53 55 / MUM/20 1 2 AND OTHER F IVE APPEALS. 11 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, TRUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI ITA NO. 53 55 / MUM/20 1 2 AND OTHER F IVE APPEALS. 12 , IN THE INCOM E TAX APPELLATE TRIBUNAL A BENCH, MUMBAI , , BEFORE SHRI AMIT SHUKLA, JM AND SHRI RAJESH KUMAR , AM ./ I.T.A. NO. 5355 TO 5359 /MUM / 201 2 ( / AS SESSMENT YEAR S : 20 01 - 02 TO 2005 - 06 ) DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 36, ROOM NO. 11 ,A A YAKAR BHAVAN, M.K.ROAD, MUMBAI - 400020 / VS. M/S ACKRUTI CITY LTD., 6 TH FLOOR, AKRUTI TRADE CENTRE, ROAD NO.7, MAROL, MIDC, ANDHERI (E), MUMBAI - 4000 93 ( / APPELLANT ) .. ( / RESPONDENT ) ./ I.T.A. NO. 4346 /MUM / 201 3 ( / ASSESSMENT YEAR : 2007 - 08 ) ASSTT.COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 36, MUMBAI. / VS. M/S ACKRUTI CITY LTD., MUMBAI . ./ PAN : AAACA6101D ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI S S KEMWAL / RESPONDENT BY : SHRI ANUJ KISNADWALA CORRIGENDUM THE TRIBUNAL HAS PASSED ORDE R IN THESE APPEALS ON 15.3.2016 AND IN THE SAID ORDER FOLLOWING MISTAKES HAVE BEEN CREPT: I ) IN THE FIRST PARA ON PAGE NO.1, IN THE THIRD LINE THE ASSESSMENT YEARS INADVERTENTLY HAVE BEEN MENTIONED AS 2001 - 02 TO 2006 - 07; II ) AT PAGE 10, IN PARA 7 ITA NO.535 6 TO 5360/MUM/2012 HAVE BEEN MENTIONED; III ) AYS 2002 - 03 TO 2005 - 06 HAVE BEEN MENTIONED ITA NO. 53 55 / MUM/20 1 2 AND OTHER F IVE APPEALS. 13 THE ABOVE MISTAKES HAVE BEEN RECTIFIED AND THE SAME MAY BE READ AS UNDER: I) IN THE FIRST PARA ON PAGE NO.1, IN THE THIRD LINE THE ASSESSMENT YEARS INADVERTENTLY HAVE BEE N MENTIONED AS 2001 - 02 TO 2005 - 06 AND 2007 - 08 II) AT PAGE 10, IN PARA 7 ITA NO. 5356 TO 5359/MUM/2012 AND 4346/MUM/2012; III) AYS 2002 - 03 TO 2005 - 06 AND 2007 - 08. SD SD ( /AMIT SHUKLA) ( /RAJESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 06 / 4 /2016 . . ./ SR L , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, IT AT, MUMBAI 6. / GUARD FILE . / BY ORDER, TRUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI