THE GREAT EASTERN SHIPPING COMPANY LTD, MUMBAI V. DCIT CIR 5(3), MUMBAI

ITA 5476/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3915 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 01-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H M WANARE
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE HONBLE S/SHRI JOGINDER SINGH (JM), AND RAJESH KUMAR, ( AM ) ./ I.T.A. NO . 5476/ MUM/20 15 ( / ASSESSMENT YEAR : 2006 - 0 7 ) THE GREAT EASTERN SHIPPING COMPANY LTD., C/O KALYANIWALLA AND MISTRY, ARMY AND NAVI BUILDING, 148 M G ROAD, FORT, MUMBAI - 400001 / VS. THE DY.COMMISSIONER OF INCOME TAX CIRCLE 5(3), ROOM NO. 573,5 TH FLOOR, AYAKAR BHAVAN,M.K.ROAD, MUMBAI - 400 020 ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN/GIR NO. : AAACT1565C / APPELLANT BY: SHRI JITENDRA JAIN / RESPONDENT BY SHRI H M WANARE / D ATE OF HEARING : 21.7 .201 6 / DATE OF PRONOUNCEMENT : 08. 08 .2016 / O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AND IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) - 10, MUMBAI DT 25.8.2015 PERTAINING TO A.Y. 2006 - 07. 2. ONLY ISSUE RAISED IN ALL THE GROUNDS OF APPEAL IS AGAINST THE CONFIRMATION OF PENALTY OF RS.58,132/ - BY THE LD.CIT(A) AS AGAINST RS.1,74,396/ - LEVIED BY THE AO U/S 271(1)( C ) OF THE INCOME TAX A CT, 1961. 3 . FACTS OF THE CASE ARE THAT THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT BY AN ORDER DATED 31.12.2008 BY MAKING VARIOUS ADDITIONS INCLUDING THE ADDITION OF RS.1,89,975/ - BEING THE DISALLOWANCE OF BROKERAGE ITA NO 5476 / M/1 5 2 AND TRANSFER FEE ON SALE OF R ESIDENTIAL FLAT WHICH WAS CONFIRMED IN THE QUANTUM APPEAL BY THE LD.CIT(A) AND ULTIMATELY THE AO IMPOSED PENALTY ON THE SAID AMOUNT OF DISALLOWANCE TO THE TUNE OF RS.1,74,396/ - BEING 3 0 0% OF THE TAX SOUGHT TO BE EVADED. IN APPEAL, THE LD.CIT(A) PAR TLY ALLOWED THE APPEAL OF THE ASSESSEE BY HOLDING THAT THE QUANTUM ON WHICH THE PENALTY WAS IMPOSED WAS CONFIRMED BY FAA AS WELL AS BY THE ITAT BY UPHOLDING T HE ACTION OF THE AO AND THE FIRST APPELLATE AUTHORITY BY INVOCATION OF PROVISIONS OF SECTION 271( 1)( C) OF THE ACT AND BY RELYING ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF ZOOM COMMUNICATIONS P LTD (2010) 191 TAXMANN 179 AND DISTINGUISH ING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCT P LTD REPORT ED IN (2010) 189 TAXMANN 322 (SC) REDUCED THE PENALTY TO 100% OF THE TAX SOUGHT TO BE EVADED I.E. RS.58,132/ - . THE ASSESSEE STILL AGGRIEVED BY THE ORDER OF LD.CIT(A) , FILED APPEAL BEFORE THIS TRIBUNAL . 4 . THE LD. AR VEHEMENTLY BROUGHT TO OUR NOTICE THE OBSERVATIONS OF T HE LD. CIT(A) THAT THE ADDITION WAS UPHELD BY THE ITAT WAS FACTUALLY INCORRECT AS QUANTUM WAS NOT CONFIRMED BY THE ITAT BUT THE GROUND AS TAKEN UP AS REGA R D TO RS.189,975/ - WAS NOT PRESSED. IN ORDER TO CORROBORATE THE AFFIRMATION MADE BY T HE LD.AR, HE PLACED BEFORE US A COPY OF THE ORDER PASSED BY THE ITAT IN QUANTUM APPEAL IN ITA NO.4507/MUM/2011 (AY - 2006 - 07) DATED 14.9.2012. THE LD. AR ALSO INVITED OUR ATTENTION TO PAGE 13 OF THE SAID JUDGMENT, WHEREIN IT HAS CLEARLY BEEN STATED THAT GRO UND NO.1 AS REGARD ITA NO 5476 / M/1 5 3 CONTRIBUTION TOWARDS THE MAJOR REPAIR FUNDS AGGREGATING TO RS.1,89,975/ - WAS NOT PRESSED AND DISMISSED AS NOT PRESSED. THE LD. AR ALSO SUBMITTED BEFORE US THAT THE CONTRIBUTION TOWARDS REPAIRS FUNDS WAS ALLOWABLE EXPENSES AND THE ACTI ON OF THE AO AND TH E LD.CIT(A) WAS W RONG AND AGAINST THE SPIRIT OF LAW AND THEREFORE , THE PENALTY SHOULD NOT BE IMPOSED ON THE SAID CLAIM OF THE ASSESSEE AS IT WAS WHOLLY AND EXCLUSIVELY INCURRED IN CONNECTION WITH TRANSFER /SALE OF RESIDENTIAL FLAT AND W ITHOUT THE PAYMENT OF SUCH THE SALE COULD NOT HAVE BEEN HAPPENED. IN DEFENCE OF HIS ARGUMENT, THE LD. AR STRONGLY PLACED RELIANCE ON THE DECISION OF THE CO - ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF CIT V/S MADHUR I TECHCHANDANEY REPORTED IN 93 ITD 65 (MUM) . THE LD. AR PRAYED THAT THE PENALTY HAS BEEN LEVIED BY INVOKING T HE PROVISIONS OF SECTION 271(1)(C) IN WRONG MANNER AS THE BONAFIDE CLAIM OF THE ASSESSEE WAS REJECTED AND FINALLY , IN VIEW OF THE DECISION REFERRED TO ABOVE, THE LD. AR PRAYED THAT TH E PENALTY BE DELETED BY ALLOWING THE APPEAL OF THE ASSESSEE . 5. ON THE CONTRARY, THE LD. DR STRONGLY OPPOSED THE PLEA PUTFORTH BY THE LD.AR AND RELIED ON THE DECISIONS O F LOWER AUTHORITIES. 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE PARTIES, PERUSED THE MATERIAL PLACED BEFORE US INCLUDING THE ORDERS OF AUTHORITIES BELOW AND CASE LAWS RELIED UPON BY THE PARTIES . IT IS CLEAR FROM THE FACTS AVAILABLE BEFORE US THAT THE CONTRIBUTION TO THE REPAIR FUND OF THE SOCIETY WAS MADE BY THE ASSESSEE IN WHICH HE OWNED THE FLAT AND THE FLAT WAS SOLD AND WITHOUT SUCH ITA NO 5476 / M/1 5 4 PAYMENT, THE TRANSFER OF SAID FLAT COULD NOT HAVE BEEN MATERIALIZED. THEREFORE, THE EXPENDITURE INCURRED FOR THE TRANSFER/ SALE OF FLAT WAS WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF SALE OF FLAT . THEREFORE, THIS EXPENDITURE IS ALLOWABLE. WE FURTHER OBSERVE THE DECISION OF THE LD.CIT(A) IS WRONG AND AGAINST THE FACTS ON RECORD THAT BOTH THE AUTHORITIES HAVE SUSTAINED THE ADDITION IN QUANTUM APPEAL, WHEREAS THE FACT S ARE DIFFERENT. THE LD.CIT(A) CONFIRMED THE ADDITION WHEREAS THE GROUND TAKEN UP FOR CHALLENGING BEFORE THE TRIBUNAL THE SAID ADDITION WAS NOT PRESSED BEFORE THE TRIBUNAL WHICH W A S DULY STATED BY THE TRIBUNAL IN PARA 13 OF THE JUDGMENT. MOREOVER, IN THE CASE OF MADHUR I TECHCHAND ANEY (SUPRA) IT HAS BEEN HELD THAT IF ANY AMOUNT PAID FOR REPAIRS FUNDS CONTRIBUTION MADE TO THE REPAIR FUND IS ALLOWABLE EXPENSES AS IT WAS INCURRED BY THE ASSESSEE WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER AND THE AMOUNT SHOULD BE DEDUCTED WHILE COMPUTING T HE INCOME FROM CAPITAL GAINS IN ACCORDANCE WITH SECTION 48(1) OF THE ACT. WE THEREFORE ARE OF T HE OPINION THAT THE FACTS OF T HE ASSESSEES CASE A R E FULLY COVERED IN FAVOUR OF T HE ASSES S EE BY THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF RELIANCE PETRO PRODUCE P LTD (SUPRA) AS A BONAFIDE AND LEGITIMATE CLAIM MADE BY THE ASSESSEE WAS REJECTED BY THE REVENUE. MOREOVER, THE ISSUE OF ALLOWABILITY OF CONTRIBUTION TO REPAIRS FUND WAS SETTLED BY THE DECISION OF THE CO - ORDINATE BENCH OF THE TRIBUNAL. WE, THEREFORE, FOLLOWING THE RATIO LAID DOWN IN THE ABOVE DECISION S SET ASIDE TH E ORDER OF THE LD. CIT(A) AND DIRECT THE AO TO DELETE THE PENALTY. ITA NO 5476 / M/1 5 5 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 08TH AUG , 2016 . 8TH 2016 SD SD (JOGINDER SINGH ) ( RAJESH KUMAR ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 8TH AUG , 2016 . . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. 6. , , / DR, ITAT, MUMBAI CONCERNED / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI