SURAKSHA REALTORS, MUMBAI V. DCIT CEN CIR 36, MUMBAI

ITA 55/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1221 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 17-02-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 06-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHEN
• Keywords: Business income; Bonafide belief; Wrong claim
• Section: 143(3); 6

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI R.C. SHARMA , AM AND SHRI RAVISH SOOD, JM ./ I.T.A. NO. 55 / MUM/ 2016 ( / ASSESSMENT YEAR: 2008 - 09 ) M/S SURAKSHA REALTORS 3 NARAYAN BLDG. 23 L.N. RD. DADAR EAST MUMBAI 400014 DCIT CENTRAL CIRCLE - 36, MUMBAI ./ ./ PAN/GIR NO. AA UFS 1534 P (APPELLANT) : ( RESPONDENT) / APPELLANT BY : SHRI. ANUJ KISNADWALA / RESPONDENT BY : SHRI. M.C. OMI NINGSHEN / DATE OF HEARING : 17 /0 2 /2017 / DATE OF PRONOUNCEMENT : 12 /04 /2017 / O R D E R PER RAVISH SOOD, JUDICIAL MEMBER THE PRESENT APPEAL IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) - 53, MUMBAI, DATED 30.09.2015 , WHICH IN ITSELF ARISES FROM THE ORDER PASSED BY THE A.O UNDER SECTION 271(1)(C) OF THE INCOME - TAX ACT, 1961 (FOR SHORT ACT), DATED 22.03.2013 . THE ASSESSEE ASSAILING THE ORDER OF THE CIT(A) WHO HAD CONFIRMED THE PENALTY IMPOSED BY THE A.O UND ER SECTION 271(1)(C), HAD THEREIN RAISED THE FOLLOWING GROUNDS OF APPEAL BEFORE US: - P AGE | 2 BEING AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 53, MUMBAI, THIS APPEAL PETITION IS SUBMITTED ON THE FOLLOWING GROUND S: - 1. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ACTION OF THE LD. A.O IN LEVYING PENALTY OF RS.1,07,594/ - BEING MINIMUM PENALTY AT THE RATE 100% OF TAX BY HOLDING THAT THE LD. A.O WAS JUSTIFIED IN HOLDING THAT THE APPEL LANT HAD FURNISHED INACCURATE PARTICULARS OF ITS INCOME BY WAY OF MAKING AN UNTENABLE CLAIM FOR DEDUCTION U/S. 80 - IB(10) IN RESPECT OF INTEREST ON FIXED DEPOSIT/SB ACCOUNT AMOUNTING TO RS.3,48,202/ - . THE LEVY OF PENALTY, CONSIDERING THE CLAIM OF THE APPELL ANT AS NOT A BONAFIDE CLAIM, IS BAD IN LAW AND NEEDS TO BE CANCELLED. 2 THE APPELLANT CRAVES LEAVE TO ADD, TO AMEND, ALTER/DELETE AND/OR MODIFY THE ABOVE GROUNDS OF APPEAL ON OR BEFORE THE FINAL HEARING. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE FIRM WHICH IS ENGAGED IN THE BUSINESS OF REAL ESTATE DEVELOPMENT HAD E - FILED ITS RETURN OF INCOME ON 30.09.2008 DECLAR ING NIL INCOME AFTER CLAIMING DEDUCTION UNDER SECTION 80IB(10) OF THE ACT . THE ASSESSMENT IN THE CASE OF THE ASSESSEE WAS FRAMED UNDER SECTION 143(3) BY THE A.O VIDE HIS ORDER DATED 14.12.2010 , WHEREIN THE LATTER OBSERVING THAT THE ASSESSEE HAD CLAIMED DEDUCTION UNDER SECTION 80IB(10) AMOUNTING TO RS.54,72,24,920/ - , WHICH INCLUDED I NCOME FROM OTHER S OURCES OF RS.3,48,202/ - , THEREIN BEING OF THE VIEW THAT THE AFORESAID DEDUCTION WAS NOT AVAILABLE IN RESPECT OF I NCOME FROM OTHER SOURCES , THUS INTER ALIA MADE AN ADDITION OF RS.3,48,202/ - AND ASSESSED ITS INCOME AT RS.21,69,326/ - . THE A.O DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS HOLDING A CONVICTION THAT THE ASSESSEE HAD RAISED A FALSE CLAIM BY CLAIMING DEDUCTION UNDER SEC. 80IB(10) IN RESPECT OF ITS INCOME FROM OTHER SOURCES, P AGE | 3 THEREFORE ALLEGING FURNISHING OF INACCURATE PARTICULAR S OF INCOME IN RESPECT OF THE DEDUCTI ON CLAIMED BY THE ASSESSEE UNDER SECTION 80IB(10) ON THE AFORESAID AMOUNT OF RS.3,48,202/ - (SUPRA) THEREIN INITIATED PENALTY PROCEEDINGS UNDER SEC. 271(1)(C). 3. THE A.O . ISSUED A NOTICE UNDER SECTION 274 R.W.S. 271(1)(C) OF THE ACT, THEREIN CALL ING UPON THE ASSESSEE TO SHOW CAUSE AS TO WHY PENALTY UNDER SECTION 271(1)(C) IN RESPECT OF THE WRONG CLAIM OF DEDUCTION UNDER SECTION 80IB(10) MAY NOT BE IMPOSED ON IT. THE ASSESSEE SUBMITTED BEFORE THE A.O THAT AS IT WAS IN RECEIPT OF INTEREST INCOME ON THE AMOUNTS WHICH WERE PARKED AS FIXED DEPOSIT S, WHICH HAD TO BE KEPT AS MARGIN MONEY FOR FACILITA T ING OBTAINING OF VARIOUS PERMISSIONS REQUIRED FOR SMOOTH RUNNING OF THE PROJECT, HAD THUS REMAINING UNDER A BONAFIDE BELIEF THAT THE INTEREST INCOME OF R S.3,48,202/ - GENERATED ON SUCH FIX ED DEPOSITS HAD A CLEAR NEXUS WITH THE BUSINESS OF THE ASSESSEE, THEREIN TREATED THE SAME AS PART OF ITS BUSINESS INCOME AND CLAIMED DEDUCTION UNDER SECTION 80IB(10) IN RESPECT OF THE SAID AMOUNT. THE A.O HOWEVER NOT BEIN G SATISFIED WITH THE EXPLANATION OF THE ASSESSEE AND HOLDING A CONVICTION THAT THE LATTER HAD RAISED A CLAIM WHICH WAS NOT ACCEPTABLE IN THE EYES OF LAW , THEREIN IMPOSED A PENALTY OF RS.1,07,594/ - IN THE HANDS OF THE ASSESSEE UNDER SECTION 271(1)(C) OF THE ACT. 4. THE ASSESSEE BEING AGGRIEVED WITH THE PENALTY IMPOSED BY THE A.O THEREIN CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). THAT DURING THE COURSE OF THE APPELLATE PROCEEDINGS THE ASSESSEE SUBMITTED BEFORE THE CIT(A) THAT THE CLAIM OF DEDUCTION UNDER SEC. 80IB(10) WAS PROMPTED BY A BONAFIDE BELIEF THAT THE SAID AMOUNT QUALIFIED FOR CLAIM OF DEDUCTION UNDER THE AFORESAID STATUTORY PROVISION. THE ASSESSEE TAKING SUPPORT OF A HOST OF JUDICIAL PRONOUNCEMENT S THEREIN SUBMITTED BEFORE THE CIT(A) THAT AS THE COMPLETE DETAILS PERTAINING TO THE PROCESS OF COMPUTING AND RAISING OF THE CONSEQUENTIAL CLAIM OF DEDUCTION UNDER SECTION 80IB(10) WAS FURNISHED BY THE ASSESSEE IN ITS COMPUTATION OF P AGE | 4 INCOME, AS WELL AS THE AUDIT REPORT FILED ALONG WITH ITS RETU RN OF INCOME, THEREFORE THE SAME TO THE MOST BEING IN THE NATURE OF A MISCONCEIVED CLAIM RAISED ON THE BASIS OF FACTS WHICH WERE FULLY DISCLOSED IN THE RETURN OF INCOME, THUS DID NOT CALL FOR IMPOSITION OF PENALTY UNDER SEC. 271(1)(C) IN THE HANDS OF THE A SSESSEE . THE ASSESSEE FURTHER IN ORDER TO DRIVE HOME HIS AFORESAID CONTENTION THAT THE CLAIM UNDER SECTION 80IB(10) IN RESPECT OF THE INTEREST INCOME ON THE MARGIN MONEY PARKED WITH THE BANKS BY WAY OF FIXED DEPOSITS WAS RAISED REMAINING UNDER THE BONAFIDE BELIEF THAT AS THE SAME HAD A N INEXTRICABLE NEXUS WITH THE BUSINESS OF THE ASSESSEE, THEREIN SUBMITTED THAT PURSUANT TO THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF LIBERTY INDIA VS. CIT 317 ITR 218 (SC) , WHEREIN THE HONBLE APEX COURT HAD INT ERPRETED THE SCOPE AND GAMUT OF THE TERM DERIVED FROM , AND HAD THUS ONCE AND FOR ALL PUT TO REST THE DIVERGENT AND CONFLICTING VIEWS AS REGARDS THE SAME, THE ASSESSEE THEREIN YIELDING TO THE SAID INTERPRETATION OF THE HONBLE SUPREME COURT HAD THUS ITSE LF CONCEDED THE SAID POINT IN THE COURSE OF ITS QUANTUM APPEAL BEFORE THE TRIBUNAL . THE CIT(A) HOWEVER NOT BEING PERSUADED TO SUBSCRIBE TO THE CONTENTION OF THE ASSESSEE , THEREIN UPHELD THE ORDER OF THE A.O IMPOSING P ENALTY UNDER SECTION 271(1)(C). 5. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) SUSTAINING THE PENALTY IMPOSED BY THE A.O UNDER SECTION 271(1)(C) , HAD THUS CARRIED THE MATTER IN APPEAL BEFORE US. THAT DURING THE COURSE OF HEARING OF THE APPEAL IT WAS VEHEMENTLY SUBMITTED BY THE LD. AUTHORIZED REPRESENTATIVE (FOR SHORT A.R ) THAT IN THE BACKDROP OF THE FACT THAT THE ASSESSEE REMAINING UNDER A BONAFIDE BELIEF THAT INTEREST ON MARGIN MONEY MAINTAINED BY WAY OF FIXED DEPOSITS AS A REQUISITE CONDITION FOR SATISFYING THE VARIOUS PERM ISSIONS NEEDED FOR SMOOTH RUNNING OF THE PROJECT , WAS INEXTRICABLY INTERLINKED AND RATHER INTERWOVEN WITH THE BUSINESS OF THE ASSESSEE, WAS THUS ELIGIBLE FOR CLAIM OF D EDUCTION UNDER SECTION 80IB(10), HAD THUS BEING PROMPTED BY SUCH BELIEF HAD INCLUDED THE P AGE | 5 SAME IN ITS BUSINESS INCOME WHILE COMPUTING THE DEDUCTION UNDER SEC. 80IB(10) . IT WAS SUBMITTED BY THE LD. A.R. THAT THE AFORESAID CLAIM WAS SUPPORTED ON THE BASIS OF THE A UDITORS REPORT GIVEN BY A C HARTERED ACCOUNTANT , AND THE COMPLETE DETAILS AS REG ARDS THE COMPUT ATION OF THE SAID DEDUCTION , THEREIN REVEAL ING INCLUSION OF THE AFORESAID INCOME FROM OTHER SOURCES OF RS.3,48,202/ - WHILE COMPUTING THE DEDUCTION UNDER SEC. 80IB(10) WERE AVAILABLE BEFORE THE A.O. IT WAS SUBMITTED BY THE LD. A.R THAT MAKING OF A CLAIM BY THE ASSESSEE ON THE BASIS OF COMPLETE FACTS DISCLOSED IN THE RETURN OF INCOME, WHICH HOWEVER IS DISLODGED BY THE A.O BY ADOPTING A DIFFERENT INTERPRE TA TION OF THE SCOPE OF THE STATUTORY PROVISION U NDER WHICH THE DEDUCTION HAD BEEN RAISED , WOULD NOT AUTOMATICALLY LEAD TO LEVY OF PENALTY UNDER SECTION 271(1)(C) IN THE HANDS OF THE ASSESSEE. IT WAS THUS SUBMITTED BY THE LD. A.R THAT IN THE BACKDROP OF THE FACTS INVOLVED IN THE CASE, THE PENALTY IMPOSED UNDER SECTION 271(1)(C) WAS LIABLE TO BE VACATED. PER CONTRA, THE. LD. D.R THEREIN SUBMITTED THAT AS THE ASSESSEE BY WRONGLY INCLUDING THE INCOME FROM OTHER SOURCES OF RS. 3,48 ,202/ - (SUPRA) IN ITS BUSINESS INCOME HAD RAISED A FALSE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) IN RESPECT OF THE SAID AMOUNT , THEREFORE, THE PENALTY HAD RIGHTLY BEEN IMPOSED BY THE A.O AND SUSTAINED BY THE CIT(A) . IT WAS SUBMITTED BY THE LD. D.R THAT THE APPEAL OF THE ASSESSEE WAS DEVOID OF ANY MERIT AND WAS LIABLE TO BE DISMISSED. 6. WE HAVE HEARD THE AUTHORIZED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE ORDER S OF THE LOWER AUTHORITIES AND THE MATERIAL MADE AVAILABLE BEFORE US. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FACTS OF THE CASE AND FIND THAT THE ASSESSEE WHILE RAISING THE CLAIM UND ER SECTION 80 IB(10) OF THE ACT, REMAINING UNDER A BONAFIDE BELIEF THAT AS THE INTEREST INCOME ON THE MARGIN MONEY PARKED BY WAY OF FIX ED DEPOSIT S WITH THE BANKS WAS INEXTRICABLY INTERLINKED AND RATHER INTERWOVEN WITH T HE BUSINESS OF THE ASSESSEE, HAD THEREIN INCLUDED THE SAME AS PART OF ITS BUSINESS INCOME AND CLAIMED DEDUCTION UNDER P AGE | 6 SECTION 80IB(10) ON THE SAME . WE FIND THAT THERE IS NO DISPUTE ON THE FACT THAT THE AFORESAID INTEREST INCOME OF RS.3,48,202/ - HAD BE EN INCLUDED BY THE ASSESSEE IN ITS BUSINESS INCOME FOR COMPUTING THE D EDUCTION UNDER SECTION 80IB(10) , AND THE SAID PROCESS OF COMPUTATION WAS FULLY DISCLOSED BY THE ASSESSEE IN THE C OMPUTATION OF INCOME FILED ALONG WITH ITS RETURN OF INCOME, AS WELL A S THE A UDIT REPORT, WHICH FORM ED PART OF THE LATTERS RETURN OF INCOME. WE THUS ARE OF THE CONSIDERED VIEW THAT NOW WHEN THE COMPLETE FACTS AND DETAILS AS REGARDS INCLUSION OF THE INTEREST INCOME OF RS.3,48,202/ - IN THE BUSINESS INCOME OF THE ASSESSEE F OR CLAIM OF DEDUCTION UNDER SECTION 80IB(10) WAS DULY DISCLOSED BY THE ASSESSEE IN ITS RETURN OF INCOME , AND THUS WAS VERY MUCH BEFORE THE A.O, THEREFORE IN THE BACKDROP OF THE AFORESAID FACTUAL MATRIX IT CAN SAFELY BE CONCLUDED THAT THE ASSESSEE ON THE BASIS OF THE FACTS AS THEY SO REMAINED , BEING OF THE VIEW THAT THE INTEREST ON THE MARGIN MONEY PARKED WITH THE BANKS WAS ELIGIBLE FOR CLAIM OF DEDUCTION UNDER SECTION 80IB(10), THUS BEING PROMPTED BY HIS SAID CONVICTION HAD THEREIN INCLUDED THE SAME IN THE BUSINESS INCOME AND CLAIMED THE CONSEQUENTIAL DEDUCTION UNDER SEC. 80IB(10) WITH RESPECT TO THE SAID AMOUNT. WE FURTHER FIND SUBSTANTIAL FORCE IN THE CONTENTION OF THE ASSESSEE THAT AFTER THE TERM DE RIVED FROM USED IN SECTION 80 - IB(10) WAS STRICTLY CONSTRUED AND GIVEN A NARROW CO NNOTATION AS AGAINST THE WORD ATTRIBUTABLE TO BY THE HONBLE SUPREME COURT IN THE CASE OF LIBERTY INDIA VS. CIT (2009) 317 ITR 218 (SC), THE ASSESSEE YIELDED TO THE SAME AN D IN ITS QUANTUM APPEAL BEFORE THE T RIBUNAL BROUGHT HIS INTERPRETATION OF THE SAID TERM IN ACCORD WITH THE JUDGMENT OF THE HONBLE APEX COURT . WE THUS IN THE TOTALITY OF THE FACTS INVOLVED IN THE CASE OF THE PRESENT ASSESSEE, ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE REMAINING UNDER A BONAFIDE BEL IEF AS REGARDS ITS ELIGIBILITY TOWARDS CLAIM OF DEDUCTION UNDER SECTION 80IB(10) AS REGARDS THE INTEREST INCOME PERTAINING TO THE MARGIN MONEY LYING WITH THE BANKS AS FIXED DEPOSITS IN THE NORMAL COURSE OF ITS BUSINESS, HAD THUS INCLUDED THE SAME WHILE COMPUTING ITS CLAIM FOR DEDUCTION UNDER SECTION 80 IB(10). WE FURTHER FIND THAT P AGE | 7 AS THE COMPLETE FACTS AND DETAILS THEREIN REVEALING THE INCLUSION OF THE AFORESAID INTEREST INCOME IN THE COURSE OF COMPUTING THE AFORESAID DEDUCTION UNDER SECTION 80 IB(10) WAS DULY FURNISHED BY THE ASSESSEE ALONG WITH ITS R ETURN OF INCOME, WHICH DETAILS WERE AT NO STAGE FOUND TO BE INACCURATE . WE THUS IN THE BACKDROP OF THE AFORESAID FACTS ARE OF THE CONSIDERED VIEW THAT ON ACCOUNT OF THE BONAFIDE CLAIM OF DEDUCTION RAISED BY THE ASSESSEE ON THE BASIS OF FULLY DISCLOSED FACTS IN THE RETURN OF INCOME, PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS LIABLE TO BE IMPOSED IN THE HANDS OF THE ASSESSEE . THAT OUR AFORESAID VIEW IS FORTIFIED BY THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCT (P) LTD. (2010) 322 ITR 758 (SC), WHEREIN THE HONBLE APE X COURT HAD HELD AS UNDER: - WE HAVE ALREADY SEEN THE MEANING OF THE WORD PARTICULARS IN THE EARLIER PART OF THIS JUDGMENT. READING THE WORDS IN CONJUNCTION, THEY MUST MEAN THE DETAILS SUPPLIED IN THE RETURN, WHICH ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT AC CORDING TO TRUTH OR ERRONEOUS. WE MUST HASTEN TO ADD HERE THA T IN THIS CASE, THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN WERE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE. SUCH NOT BEING THE CASE, THERE WOULD BE NO QUESTION OF INVITING THE PENALTY UNDER S. 271(1)(C) OF THE ACT. 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. SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO THE INACCURATE PARTICULARS. WE THUS BEING OF THE CO NSIDERED VIEW THAT THE CLAIM OF THE DEDUCTION UNDER SECTION 80IB(10) RAISED BY THE ASSESSEE IN RESPECT OF THE INTEREST ON MARGIN MONEY PARKED IN THE FORM OF FIXED DEPOSITS WITH BANK, REMAINING UNDER A BONAFIDE BELIE F THAT THE SAME BEING INEXTRICABLY INTERLINKED AND INTERWOVEN WITH THE BUSINESS OF THE ASSESSEE, IS A CLAIM RAISED BY THE ASSESSEE ON ACCOUNT OF A MISTAKEN INTERPRETATION OF A STATUTORY PROVISION ON ITS PART , WHICH ON THE SAID P AGE | 8 COUNT WOULD NOT INVITE PENALTY UNDER SECTION 271(1)(C) IN THE HANDS OF THE ASSESSEE . WE THUS SET ASIDE THE ORDER OF THE CIT(A) AND QUASH THE PENALTY OF RS.1,07,594/ - IMPOSED BY THE A.O UNDER SECTION 271(1)(C) IN THE HANDS OF THE ASSESSEE . 7. RESULTANTLY , THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 /04/2017 SD/ - SD/ - ( R.C. SHARMA ) (RAVISH SOOD) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 12 .04 .2017 PS ROHIT KUMAR / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / D.R, ITAT, MUMBAI 6. / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI