Add.lCIT, Special Range-5, New Delhi V. JC Decaux Advertising (India) Pvt. Ltd., New Delhi

ITA 5522/DEL/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 0919 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 10 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 30-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIMA
• Keywords: Depreciation; Maximum Marginal Rate; Revised return; Revenue expenditure; Capital expenditure
• Section: 271(1)(c); 143(3); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIB UNAL DELHI BENCH C: NEW DELHI (THROUGH VIDEO CONFERENCING) BEFORE, SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO.5522/DEL/2017 (ASSESSMENT YEAR 2012-13) ADD. CIT, SPECIAL RANGE-5, NEW DELHI VS. M/S J C DECAUX ADVERTISING INDIA (P) LTD. 231, OKHLA INDUSTRIAL ESTATE, PHASE-III, NEW DELHI-110 020 PAN AABCJ 6312Q (APPELLANT) (RESPONDENT) APPELLANT BY MS. ANIMA, SR. DR RESPONDENT BY SH. K.M. GUPTA, ADV. DATE OF HEARING 12.07.2021 DATE OF PRONOUNCEMENT 12.07.2021 ORDER PER SUDHANSHU SRIVASTAVA, JM: THIS APPEAL IS PREFERRED BY THE DEPARTMENT AGAINST ORDER DATED 20.06.2017 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-36, NEW DELHI {CIT(A)} FOR ASSESSMENT YEAR 2012-13. THE SOLE ISSUE UNDER CHALLENGE IS DELETION OF PENAL TY OF 2 ITA NO.5522/DEL/2017 ADDL.CIT VS. JC DE CAUX ADVERTISING (INDIA) PVT. LTD. RS.87,94,892/- IMPOSED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED THE ACT). 2.0 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SEE IS ENGAGED IN THE BUSINESS OF OUT-OF-HOME ADVERTISEM ENT CONSISTING OF STREET FURNITURE (SUCH AS ADVERTISING ON BUS SHE LTERS, PUBLIC UTILITIES, LOTS, CYCLE STANDS, AUTO STANDS ETC.) BI LLBOARDS AND TRANSPORTATION (SUCH AS ADVERTISING IN AIRPORTS, RA ILWAY STATIONS, METROS, BUS STANDS, VEHICLES ETC.). THE ASSESSEE CO MPANY HAD CAPITALIZED EXPENDITURE INCURRED ON BUS QUEUE SHELT ERS (BQS) IN ITS BOOKS OF ACCOUNTS AND HAD CLAIMED DEPRECIATION THER EON. HOWEVER, FOR INCOME TAX PURPOSES SUCH EXPENDITURE WAS CLAIME D AS REVENUE EXPENDITURE U/S 37 OF THE INCOME TAX ACT, 1961 IN T HE RETURN OF INCOME. THE ASSESSING OFFICER COMPLETED THE ASSESSM ENT AFTER MAKING DISALLOWANCE ON ACCOUNT OF EXPENDITURE ON CON STRUCTION OF BQS AS CAPITAL EXPENDITURE. IN ASSESSMENT YEARS 200 7-08 AND 2008-09 ALSO THE ASSESSING OFFICER HAD MADE SIMILAR ADDITIONS ON ACCOUNT OF SUCH EXPENDITURE OF CONSTRUCTION OF BQS WHICH WAS CONFIRMED BY THE LD. CIT(A). ALTHOUGH THE ASSESSEE COMPANY HAD FILED APPEALS AGAINST SUCH ADDITIONS BEFORE THIS TR IBUNAL (ITAT), THE 3 ITA NO.5522/DEL/2017 ADDL.CIT VS. JC DE CAUX ADVERTISING (INDIA) PVT. LTD. COMPANY CHOSE NOT TO PRESS THE GROUNDS BEFORE THE I TAT. SUBSEQUENTLY, THE ASSESSING OFFICER IMPOSED PENALTY U/S 271(1)(C) OF THE ACT ON SUCH QUANTUM ADDITION. THE ASSESSEE C HALLENGED THE IMPOSITION OF PENALTY BEFORE THE LD. CIT(A) IN ASSE SSMENT YEARS 2007-08 AND 2008-09 AND THE LD. CIT(A) DELETED THE PENALTIES IMPOSED. IT IS FURTHER SEEN THAT THE DEPARTMENTS A PPEALS BEFORE THE ITAT AGAINST THE ORDER OF THE LD. CIT(A) DELETING T HE PENALTY IN ASSESSMENT YEAR 2007-08 AND 2008-09 IN ITA NOS. 527 5/DEL/2016 AND ITA NO.5276/DEL/2016 RESPECTIVELY VIDE ORDER DA TED 14.01.2020 WERE DISMISSED BY THE CO-ORDINATE BENCH OF THIS TRIBUNAL BY UPHOLDING THE ORDER OF THE LD. CIT(A). THE LD. AUTHORIZED REPRESENTATIVE (AR) WHILE REFERRING TO TH E SAID ORDER OF THE TRIBUNAL HAS PLACED RELIANCE ON THE SAME AND HA S SUBMITTED THAT ON IDENTICAL FACTS, THE PENALTY IN THE IMPUGNE D YEAR HAS BEEN DELETED BY THE LD. CIT(A). PER CONTRA, THE LD. SR. DEPARTMENTAL REPRESENTATIVE (DR) HAS FAIRLY ACCEPTED THAT THE IS SUE WAS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBU NAL. 4 ITA NO.5522/DEL/2017 ADDL.CIT VS. JC DE CAUX ADVERTISING (INDIA) PVT. LTD. 3.0 HAVING HEARD BOTH THE PARTIES AND AFTER HAVING GONE THROUGH THE ORDER OF THE TRIBUNAL, IF WE NOTE THAT I DENTICAL ISSUE HAD ARISEN BEFORE THIS TRIBUNAL IN ASSESSMENT YEAR 2007-08 AND 2008-09 IN ASSESSEES OWN CASE IN ITA NO.5275/DEL/20 16 AND 5376/DEL/2014 RESPECTIVELY AND THE DEPARTMENTS APP EALS AGAINST THE DELETION OF THE PENALTY IMPOSED IN THESE TWO YEA RS TO ASSESSMENT YEARS WERE DISMISSED BY THIS TRIBUNAL VID E ORDER DATED 14.01.2020. THE RELEVANT FACTS AND THE OBSERVATIONS OF THE CO- ORDINATE BENCH OF THE TRIBUNAL ARE CONTAINED IN PAR AGRAPHS 3,4,5,6 AND 7 OF THE SAID ORDER AND THE SAME ARE BEING REPR ODUCED HEREIN UNDER FOR A READY REFERENCE: 3. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PROV IDING OUT- OF-HOME ADVERTISING SOLUTIONS AND SPECIALIZES IN S TREET FURNITURE AND BILL BOARDS AT PUBLIC PLACE, SUCH AS AIRPORTS, RAILWAY STATIONS, BUS STANDS, METROS, PUBLIC UTILITIES ETC. FOR THE A.Y. 2007-08, THE ASSESSEE FILED THE RETURN OF INCOME ON 14.11.2007 DECLARING TOTAL INCOME OF RS.8,88,191/-. THE ASSESS EE FILED REVISED RETURN ON 31.03.2009 DECLARING LOSS OF RS.21,45,65,137/- AFTER CLAIMING AN EXPENDITURE OF RS. 18,36,62,148/- SPENT ON ACCOUNT OF CONSTRUCTION OF BUS- QUEUE- SHELTERS (BQS) AS REVENUE EXPENDITURE U/S 37 OF THE ACT. IN SO 5 ITA NO.5522/DEL/2017 ADDL.CIT VS. JC DE CAUX ADVERTISING (INDIA) PVT. LTD. FAR AS THE A.Y. 2008-09 WAS CONCERNED, THE ASSESSEE FILED RETURN OF INCOME ON 30.09.2008 DECLARING TOTAL INCO ME OF RS.6,26,438/- AND CURRENT YEAR BUSINESS LOSSES OF R S. 15,53,72,072/-. THE ASSESSEE FILED REVISED RETURN O N 21.09.2009 DECLARING LOSS OF RS. 16,31,76,231/- AFT ER CLAIMING AN EXPENDITURE OF RS. 17,95,36,978/- SPENT ON ACCOU NT OF CONSTRUCTION OF BUS-QUEUE-SHELTER AS REVENUE EXPEND ITURE U/S 37 OF THE ACT. ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT FOR A.Y. 2007-08 DETERMINING AN INCOME OF RS.8,88,1 91/- ON 21.12.2009 AS AGAINST THE RETURNED LOSS OF RS.21,46 ,55,082/- AFTER MAKING A DISALLOWANCE OF RS. 3,17,91,180/- ON ACCOUNT OF PRE-COMMENCEMENT EXPENDITURE AND DISALLOWING THE EXPENDITURE INCURRED ON CONSTRUCTION OF BQS FOR AND ON BEHALF OF NDMC OF RS. 18,36,62,148/- AS CAPITAL EXPENDITURE A S WELL AS PRE-COMMENCEMENT EXPENDITURE. ASSESSMENT FOR A.Y. 2 008-09 WAS COMPLETED VIDE ORDER DATED 27.12.2010 AFTER MAK ING DISALLOWANCE OF THE EXPENDITURE INCURRED ON CONSTRU CTION OF BQS FOR AND ON BEHALF OF NDMC AND MMRDA OF RS. 17,95,36 ,978/- AS CAPITAL EXPENDITURE. THE LOSS WAS RECOMPUTED FOR A.Y. 2008- 09 AT RS.7,04,15,666/- AS AGAINST DECLARED LOSS OF RS. 16,31,76,231/-. FOLLOWING THE COMPLETION OF THE ASS ESSMENTS AND THE ORDERS OF THE CIT(A) & ITAT, THE ASSESSING OFFICER PROCEEDED TO LEVY THE PENALTIES U/S 271(L)(C) OF TH E ACT, 1961. THE ASSESSING OFFICER OBSERVED THAT THE ACT OF THE ASSESSEE WAS A DELIBERATE ACT TO FURNISH INACCURATE PARTICUL ARS OF INCOME 6 ITA NO.5522/DEL/2017 ADDL.CIT VS. JC DE CAUX ADVERTISING (INDIA) PVT. LTD. WHICH LEVY TO REBATE THE INCOME, THEREFORE, THE ASS ESSING OFFICER LEVIED PENALTY U/S 271(L)(C) OF THE ACT. 4. BEING AGGRIEVED BY THE PENALTY ORDER, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A). THE CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE IN BOTH THE ASSESSMENT YEAR. 5. THE LD. DR SUBMITTED THAT THE LD. CIT (A) ERRED IN DELETING THE PENALTY OF RS. 6,18,20,680/-, IMPOSED U/S 271(1) (C) OF THE INCOME TAX ACT,1961 AND NOT APPRECIATING THAT THE EXPENDITURE INCURRED ON CONSTRUCTION OF BUS QUEUE S HELTER IS ACTUALLY CAPITAL IN NATURE AND PENALTY LEVIED U/S 2 71(1 )(C) WAS LEVIED ON THE SAME AND IS WARRANTED. THE LD. DR FUR THER SUBMITTED THAT THE ASSESSEE TOO DID NOT PRESS THE G ROUND BEFORE THE TRIBUNAL IN QUANTUM WHICH TANTAMOUNT TO CONCEAL MENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME U/S 271(L)(C) OF THE INCOME TAX ACT, 1961. 6. THE LD. AR RELIED UPON THE ORDER OF THE C IT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUS ED ALL THE RELEVANT MATERIALS AVAILABLE ON RECORD. THE CIT(A) HAS GIVEN A REASONED AND DETAILED ORDER AS TO WHY THE PENALTY C ANNOT BE LEVIED U/S 27L(L)(C) AS THERE IS A DEFERENCE OF OPI NION ON THE ISSUE OF EXPENDITURE INCURRED ON BQS WHETHER IT IS CAPITA L OR REVENUE. THERE IS NO CASE OF THE REVENUE THAT THE ASSESSEE F ILED INACCURATE PARTICULARS OF INCOME OR CONCEALED THE I NCOME, AS ALL 7 ITA NO.5522/DEL/2017 ADDL.CIT VS. JC DE CAUX ADVERTISING (INDIA) PVT. LTD. THE DETAILS IN THE ORIGINAL RETURN AS WELL AS IN TH E REVISED RETURN WAS PLACED BEFORE THE ASSESSING OFFICER. MERELY CHA NGING THE STAND AS TO HOW THE TRADE INCOME/EXPENDITURE AS TO BE TAKEN AS CAPITAL OR REVENUE, DOES NOT AMOUNT TO FURNISHING O F INACCURATE OF PARTICULARS OR CONCEALMENT OF INCOME. THEREFORE, THE CIT(A) WAS RIGHT IN DELETING THE PENALTY. THERE IS NO NEED TO INTERFERE WITH THE FINDINGS OF THE CIT(A). THE FACTS ARE IDEN TICAL IN A.Y. 2008-09 AS WELL. THEREFORE, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. 3.1 IN THE PRESENT YEAR UNDER APPEAL, THE LD. SR. DR HAS FAIRLY ACCEPTED THAT THE FACTS IN ASSESSMENT YEARS 2007-08 AND 2008-09 WERE IDENTICAL. ACCORDINGLY, WE UPHOLD THE ORDER OF T HE LD. CIT(A) AND DISMISS THE APPEAL OF THE DEPARTMENT. 4.0 IN THE FINAL RESULT, THE APPEAL OF T HE DEPARTMENT STANDS DISMISSED. ABOVE DECISION WAS ANNOUNCED ON CONCLUSION OF VIRTUAL HEARING ON 12 TH JULY, 2021. [ SD/- SD/- (PRASHANT MAHARISHI) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 12/07/2021 PK/PS 8 ITA NO.5522/DEL/2017 ADDL.CIT VS. JC DE CAUX ADVERTISING (INDIA) PVT. LTD. COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI