ACIT, CENTRAL CIRCLE- 17, NEW DELHI V. SPECTRUM COAL & POWER LTD., NEW DELHI

ITA 5405/DEL/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 1219 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 10 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2002-2003
• Appeal Filed On: 23-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P RAKASH DUBEY SENIOR
• Keywords: Business income; Depreciation; Unabsorbed depreciation; Set aside
• Section: 271(1)(c); 115JB; 40(a)(ia); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G : NEW DELHI) BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER (THROUGH VIDEO CONFERENCE) ITA NO.5405/DEL./2017 (ASSESSMENT YEAR : 2002-03) ACIT, VS. M/S. SPECTRUM COAL & POWER LTD., CENTRAL CIRCLE 17, 18, RAO TULA RAM MARG, NEW DELHI. VASANT ENCLAVE, NEW DELHI 110 015. (PAN : AADCS9860J) (APPELLANT) (RESPONDENT) ASSESSEE BY : MS. ANANYA KAPOOR, ADVOCATE REVENUE BY : SHRI PRAKASH DUBEY, SENIOR DR DATE OF HEARING : 24.06.2021 DATE OF ORDER : 09.07.2021 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, ACIT, CENTRAL CIRCLE 17, NEW DELHI (HERE INAFTER REFERRED TO AS THE REVENUE) BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 05.04.2017 PASSE D BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-2, MUMBAI AFFI RMING THE PENALTY ORDER DATED 31.08.2009 PASSED UNDER SECTION 271(1)(C) OF ITA NO.5405/DEL./2017 2 THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT) QUA THE ASSESSMENT YEAR 2002-03 ON THE GROUNDS INTER ALIA THAT :- 1. THE LD. COMMISSIONER OF INCOME TAX (APPEAL) HAS ERRED IN LAW IN ALLOWING THE APPEAL OF THE ASSE SSEE WITHOUT TRULY APPRECIATING THE FACTUAL MATRIX OF TH E CASE. 2. THE LD. COMMISSIONER OF INCOME TAX (APPEAL) HAS ERRED IN LAW AND ON THE FACTS IN DELETING THE PENALTY OF RS.57,~POSED BY THE AO ON ACCOUNT OF FURNISHING INACCURATE PARTICULARS BY THE ASSESSEE COMPANY OF ITS INCOME WHEN IT IS NOT COVERED BY THE INSTRUCTION NO.5/2015 WHICH WAS APPLICABLE FOR A.Y. 2000-01 & 2001-02. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : ON THE BASIS OF ASSESSMEN T FRAMED UNDER SECTION 143 (3) READ WITH SECTION 147 OF THE ACT AT THE LOSS OF RS.3,30,96,030/-, PENALTY PROCEEDINGS HAVE BEEN INI TIATED BY THE AO UNDER SECTION 271(1)(C) READ WITH SECTION 275(1A ) OF THE ACT FOR CLAIMING A DEPRECIATION TO THE TUNE OF RS.1,61, 10,501/- ON THE GROUND THAT THE ASSESSEE HAS FURNISHED INACCURATE P ARTICULARS OF INCOME TO THE EXTENT OF RS.1,61,10,501/-. DECLININ G THE CONTENTIONS RAISED BY THE ASSESSEE, AO LEVIED PENAL TY TO THE TUNE OF RS.57,51,449/- U/S 271(1)(C) OF THE ACT @ 100% OF T HE TAX SOUGHT TO BE EVADED. ITA NO.5405/DEL./2017 3 3. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT ( A) BY WAY OF FILING THE APPEAL WHO HAS DELETED THE PENALTY AFTER ALLOWING THE APPEAL. FEELING AGGRIEVED BY THE ORDER PASSED BY TH E LD. CIT (A), THE REVENUE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. IT IS THE CASE OF THE AO THAT AS AGAINST ALLOWAB LE DEPRECIATION ADMISSIBLE TO THE ASSESSEE TO THE TUNE OF RS.7,14,2 4,272/-, ASSESSEE CLAIMED EXCESS DEPRECIATION OF RS.8,75,34,773/- I.E . EXCESS DEPRECIATION OF RS.1,61,10,501/-. HOWEVER, ON THE OTHER HAND, IT IS THE CASE OF THE ASSESSEE COMPANY THAT IT HAS CLAIME D DEPRECIATION AS PER THE ACT TO THE TUNE OF RS.6,35,84,390/- AFTER M AKING ADJUSTMENT OF GROSS TOTAL INCOME ARRIVED AT RS.11,09,985/-. I T IS ALSO A FACT ON RECORD THAT AS PER ORIGINAL COMPUTATION OF INCOME, ASSESSEE HAS COMPUTED RS.11,09,985/- UNDER THE NORMAL PROVISIONS OF THE ACT AND CLAIMED DEPRECIATION OF RS.6,35,84,390/- ON THE BROUGHT FORWARD UNABSORBED DEPRECIATION OF RS.10,56,06,113/ - WHEREAS THE AO ALLOWED DEPRECIATION AS PER THE ACT AT RS.7,14,2 4,272/- AND CARRY FORWARD LOSSES ARRIVED AT RS.35780180/- AS CA RRY FORWARD ITA NO.5405/DEL./2017 4 DEPRECIATION REDUCED BY THE AO HAS AUTOMATICALLY IN CREASED TO RS.3,30,96,030/-. 6. IN THE BACKDROP OF THE AFORESAID FACTS AND CIRCU MSTANCES OF THE CASE, ORDER PASSED BY THE LOWER AUTHORITIES AND ARGUMENTS ADDRESSED BY THE AUTHORIZED REPRESENTATIVES OF BOTH THE PARTIES, THE SOLE QUESTION ARISES FOR DETERMINATION IN THIS CASE IS:- AS TO WHETHER THE ASSESSEE HAS CONCEALED PARTICULA RS OF INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF INCOME D URING ASSESSMENT PROCEEDINGS? 7. LD. CIT (A) DELETED THE PENALTY LEVIED BY THE AO BY RETURNING FOLLOWING FINDINGS :- THE AO HAS LEVIED A PENALTY OF RS.57,51,449/- ON T HE EXCESS DEPRECIATION CARRIED FORWARD OF RS.1,61,10,501/- ST ATING REASON THAT CORRECT DEPRECIATION HAS TO BE ALLOWED UPTO RS.7,14 ,24,272/- AS AGAINST CARRY FORWARD DEPRECIATION CLAIMED BY THE A PPELLANT AT RS. 8,75,34,773/- AND FINALLY ARRIVED AT EXCESS DEPRECI ATION OF RS. 1,61,10,501/-. AGAINST THIS THE AR OF THE APPELLANT BROUGHT TO MY NOTICE THAT PAGE 60 OF PAPER BOOK WHICH IS COMPUTAT ION OF TOTAL INCOME FOR THE YEAR ENDED 31.03.2002. THE APPELLANT COMPANY CLAIMED DEPRECIATION AS PER INCOME TAX AT RS.6,35,8 4,390/- AFTER MAKING ADJUSTMENT ON GROSS TOTAL INCOME ARRIVED AT RS. 11,09,985 WHICH IS AS UNDER: AMOUNT (RS.) PROFIT AS PER PROFIT & LOSS ACCOUNT 3,72,19,789 ADD: BOOK DEPRECIATION CONSIDERED SEPARATELY 13,18,66,096 DISALLOWANCE AS PER TAX AUDIT REPORT CLAUSE NO. 21(I)(B) 1,35,128 DEFERRED REVENUE EXPENSES CONSIDERED SEPARATELY 13,78,468 PRELIMINARY EXPENSES WRITTEN OFF 6,63,608 13,40,43,300 LESS: DEPRECIATION AS PER INCOME TAX ACT 6,35,84,390 DISALLOWANCE U/S. 40(A)(IA) IN PREVIOUS YEAR NOW ALLOWED 9,62,601 INTEREST ON BANK DEPOSITS CONSIDERED SEPARATELY 11,09,985 6,35,84,390 ITA NO.5405/DEL./2017 5 INCOME FROM BUSINESS 10,56,06 ,113 INCOME FROM OTHER SOURCES INTEREST ON BANK DEPOSITS CONSIDERED SEPARATELY 11,09,985 LESS: BROUGHT FORWARD UNABSORBED DEPRECIATION (10,56,06,113) GROSS TOTAL INCOME 11,09,985 WHEREAS THE LD. AO HAS ALLOWED THE CORRECT DEPRECIA TION AT RS.7,14,24,272/- IN THE ASSESSMENT ORDER PAGE 5 OF THE ASSESSMENT ORDER AS UNDER: 'BUSINESS INCOME GROSS TOTAL INCOME BEFORE DEPRECIATION 17,03 ,00,488 LESS: CORRECT ALLOWABLE DEPRECIATION 7,14,24,272 LESS: CORRECT SET OFF OF LOSSES ALLOWABLE AY 2000-01 4,24,43,864 AY 2001-02 2,33,36,322 6,57,80,186 TAXABLE INCOME 3,30,96,030 ACCORDINGLY THE AR PLEADS THAT EXCESS DEPRECIATION ALLOWED BY THE AO RESULTED IN REDUCTION OF CARRY FORWARD LO SSES WHICH FURTHER LEAD TO TAXABLE INCOME ARRIVED BY THE AO AT RS. 3,30,96,030/- AS AGAINST INCOME OFFERED BY THE APPELLANT COMPANY AT RS.11,09,985/- THE AR HAS BROUGHT TO MY NOTICE THAT WHILE FILING R ETURN OF INCOME AS COMPUTATION OF TOTAL INCOME, THE FOLLOWIN G IS THE INCOME ARRIVED U/S. 115JB. WORKING OF MAT U/S. 115JB NET PROFIT AS PER P & L A/C. 3,72,19,789 ADD: PROVISIONS FOR LEAVE ENCASHMENT 95,128 ADD: PROVISIONS FOR GRATUITY 40,000 BOOK PROFIT U/S. 115JB 3,73,54,917 ========= TAX PAYABLE 28,01,619 ADD: SURCHARGE 56,032 TOTAL TAX PAYABLE 28,57,651 THE AR PLEADS THAT THE WHILE FILING OF RETURN, APPE LLANT HAS NOT FILED AN INACCURATE PARTICULARS NOR ANY WRONG C LAIM, ONLY THE LD. AO MADE SOME ADJUSTMENT WHICH IS ALSO DEPRECIATION ALLOWED IN THE ASSESSMENT ORDER, THE DEPRECIATION ALLOWED BY AO IS OF RS.7,14,24,272/- WHEREAS DEPRECIATION CLAIMED BY TH E APPELLANT IS OF RS.6,35,84,390/- AS PER COMPUTATION OF INCOME AND T HEREFORE IT IS NOT CONCEALMENT AND PENALTY SHOULD BE DELETED. I HAVE ARGUMENT TO BE VERIFIED BY THE AR AND ALSO A GAIN COMPUTATION STATEMENT AO OF THE AO IN THE ORIGINAL COMPUTATION OF INCOME APPELLANT COMPANY HAS ARRIVED RS.11,09,985/ - UNDER NORMAL PROVISION OF INCOME TAX. THE APPELLANT COMPANY HAS ARRIVED RS. 11,09,985/- UNDER NORMAL PROVISION OF INCOME TAX BY CLAIMING DEPRECIATION OF RS.6,35,84,390/- ON THE BROUGHT FOR WARD UNABSORBED DEPRECIATION OF RS.10,56,06,113/ - WHEREAS THE LD. AO HAS ALLOWED ITA NO.5405/DEL./2017 6 DEPRECIATION AS PER INCOME TAX ACT AT RS.7,14,24,27 2/- AND CARRY FORWARD LOSSES ARRIVED BY MADE RS.35,78,0180 AS CAR RY FORWARD DEPRECIATION HAS BEEN REDUCED BY LEARNED AO THE INC OME HAS AUTOMATICALLY INCREASED TO RS.33096030/- THE ADJUST MENT OF CARRY FORWARD DEPRECIATION UNDER DISPUTE BY THE APPELLANT WHICH IS PENDING BEFORE HON'BLE ITAT. PRIMA FACIE I AM OF TH E OPINION THE APPELLANT COMPANY FURNISHED ALL INFORMATION BEFORE THE AO ONLY THE AO HAS REWORKED THE CARRY FORWARD DEPRECIATION BY A LLOWING MORE DEPRECIATION THAN CLAIMED BY THE APPELLANT COMPANY AND THEREFORE QUESTION OF CONCEALMENT MAY NOT ARISE IN THIS CASE. AND I HAVE ALSO GONE THROUGH THE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF CIT VS. FIRST DATA INDIA LTD., ITA NO. 2085 OF 2013 DTD. 18.01.2016- WHEREIN IT IS HELD THAT: 'WHERE ASSESSEE HAD ONLY CLAIMED EXPENDITURE WHICH WAS DISALLOWED BY AO AND DUE TO WHICH CARRY FORWARD LOS S AROSE. IT COULD NOT BE SAID THAT ASSESSEE HAD FURNISHED INACC URATE PARTICULARS OF INCOME BY SHOWING CARRIED FORWARD LOSS AS ONCE A LOSS WAS SHOWN IN E-RETURN, THE SOFTWARE SUO-MOTO REFLECTS THE RET URNED LOSS AS CARRIED FORWARD LOSS. FURTHER THE FACT THAT THE ASS ESSEE HAD NOT CLAIMED CARRY FORWARD LOSS IN SUBSEQUENT YEAR WAS E VIDENT OF THE FACT THAT THERE WAS NO INTENT ON PART OF ASSESSEE T O FURNISH INACCURATE PARTICULARS. CONSIDERING THE ABOVE FACT ON RECORD, THE APPELLANT COMPANY HAS FURNISHED INFORMATION BEFORE THE AO, HOWEVER, T HE AO SUO MOTO MADE SOME OBJECTION FOR THE DEPRECIATION AND CARRY FORWARD DEPRECIATION AND ALSO RESPECTFULLY FOLLOWING THE HO N'BLE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF C IT VS FIRST DATA INDIA LTD., I AM OF THE CONSIDERED OPINION THIS IS NOT FIT CASE OF PENALTY U/S. 271(I)(C) OF THE ACT, THEREFORE, THE A O IS DIRECTED TO DELETE THE PENALTY. HENCE THIS APPEAL IS ALLOWED 8. WE HAVE PERUSED THE ORDER PASSED BY THE LD. CIT (A) AND WE ARE OF THE CONSIDERED VIEW THAT THE LD. CIT (A) ARR IVED AT THE FINDINGS THAT IT IS NOT A CASE OF FURNISHING OF INA CCURATE PARTICULARS OF INCOME AS ALLEGED BY AO RATHER ASSESSEE COMPANY HAS FURNISHED ALL INFORMATION BEFORE THE AO. PERUSAL OF THE ASSE SSMENT ORDER SHOWS THAT AT THE TIME OF RECOMPUTING CARRY FORWARD DEPRECIATION, AO REACHED THE CONCLUSION THAT THE ASSESSEE HAS CLA IMED EXCESS DEPRECIATION WHICH AMOUNTS TO FURNISHING OF INACCUR ATE PARTICULARS ITA NO.5405/DEL./2017 7 OF INCOME, WHEREAS IT IS NOT THE CASE WHEN THE WORK ING MADE AND EXAMINED BY THE LD. CIT (A) IN PARA 4 OF THE IMPUGN ED ORDER. IT IS THE CASE OF SOME ADJUSTMENT MADE BY THE AO FOR EXAM INING THE ISSUE OF DEPRECIATION WHEREAS EXACT DEPRECIATION CL AIMED BY THE ASSESSEE OF RS.6,35,84,390/- AND NOT THE DEPRECIATI ON OF RS.7,14,24,272/- AS MADE BY THE AO. 9. WHEN THE ASSESSEE COMPANY HAD FURNISHED ALL THE NECESSARY FACTS WITH COMPLETE WORKING OF THE COMPUTATION OF I NCOME UNDER THE NORMAL PROVISIONS OF THE ACT AS WELL AS UNDER M AT U/S 115JB OF THE ACT, THERE IS NO QUESTION OF FURNISHING INAC CURATE PARTICULARS OF INCOME. 10. COORDINATE BENCH OF THE TRIBUNAL IN ITA NO.1295 & 1296/DEL/2012 VIDE ORDER DATED 03.08.2017 PASSED IN ASSESSEES OWN CASE FOR AY 2000-01 & 2001-02 RESPECTIVELY HAS ALREADY DECIDED THE ISSUE AS TO THE CLAIM OF DEPRECIATION O F THE ASSESSEE WITHOUT DEDUCTING THE AMOUNT OF CONDITIONAL GRANT R ECEIVED BY THE ASSESSEE FROM THE ACTUAL COST FROM THE WDV OF THE P LANT AND MACHINERY IN FAVOUR OF THE ASSESSEE. 11. SO, IN VIEW OF THE MATTER, WE ARE OF THE CONSID ERED VIEW THAT IT IS MERELY A CASE OF DIFFERENCE ARISING OUT OF TH E REWORKING OF THE CARRY FORWARD DEPRECIATION BY THE AO BY ALLOWING MO RE DEPRECIATION THAN CLAIMED BY THE ASSESSEE COMPANY A ND NOT A CASE ITA NO.5405/DEL./2017 8 OF CONCEALING OF INCOME OR FURNISHING OF INACCURATE OF PARTICULARS OF INCOME. CONSEQUENTLY, FINDING NO ILLEGALITY OR PERVERSITY IN THE IMPUGNED ORDER PASSED BY THE LD. CIT (A) WHO HAS RI GHTLY DELETED THE PENALTY LEVIED BY THE AO, THE APPEAL FILED BY T HE REVENUE IS HEREBY DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 9 TH DAY OF JULY , 2021. SD/- SD/- (N.K. BILLAIYA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 9 TH DAY OF JULY, 2021 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A), GHAZIABAD. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.