DCIT 10(2), MUMBAI V. GODREJ AGROVET LTD, MUMBAI

ITA 5669/MUM/2011

• Counselvise Citation: 566919914 RSA 2011
• Duration Of Justice: 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2003-2004
• Appeal Filed On: 08-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K NAYAK
• Assessee Lawyers: AKRAMKHANPIYSH JAIN
• Keywords: Revenue expenditure

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL G BENC H MUMBAI . . , ! , . ' BEFORE SHRI G E VEERABHADRAPPA , PRESIDENT & SHRI VIJAY PAL RAO, JM ./ I.T.A. NO. 5669/MUM/2011 ( #$ #$ #$ #$ % % % % / ASSESSMENT YEAR: 2003-04) THE DY COMMR OF INCOME TAX 10(2), MUMBAI GODREJ AGROVET LTD PIROJSHANAGAR EASTERN EXPRESS HIGHWAY VIKHROLI(E) MUMBAI 79 ( &' / APPELLANT ) $ $ $ $ / VS. ( ()&' / RESPONDENT ) *& '+ ./ , ./ PAN.GIR NO. AAACG0617Q &' - ' / APPELLANT BY SH A K NAYAK ()&' . - ' / RESPONDENT BY : SH AKRAMKHAN/PIYSH JAIN $ . /+ / DATE OF HEARING 28 TH JUNE 2012 01% . /+ / DATE OF PRONOUNCEMENT : 4 TH , JULY 2012 2'3 / O R D E R PER : ! , . . / VIJAY PAL RAO, JM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 16/05/2011 OF THE COMMISSIONER OF INCOME TAX(APPEALS) ARISING FR OM PENALTY ORDER PASSED UNDER SECTION 271 (1) (C) OF THE I T ACT FOR THE ASSESSME NT YEAR 200304. THE REVENUE HAS RAISED THE ONLY EFFECTIVE GROUND I N THIS APPEAL IS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN CANCELL ING PENALTY OF ` 4,50,920/- LEVIED U/S 271(1)( C) OF THE I T ACT ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE TO DISCHARGE ITS ONUS ABOUT THE ALL OWABILITY, GENUINENESS AND JUSTIFICATION OF ITS CLAIM MADE AND/OR EXPENSES DEBI TED IN THE RETURN OF INCOME. GODREJ AGROVET LTD 5669/MUM/2011 2 3 DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE INCURRED ADVERTISEMENT EXPENSES OF ` 24,54,000/-. IN ITS BOOKS OF ACCOUNTS, THE ASSESSE E DEFERRED THE SAID EXPENDITURE OVER A PERIOD OF 2 YEARS AND ACCORDINGL Y, THE ASSESSEE DEBITED ONLY HALF OF THE EXPENDITURE TO THE TUNE OF ` . 12,27,000/- TO ITS PROFIT AND LOSS ACCOUNT FOR THE YEAR UNDER CONSIDERATION AND THEREFORE, THE BAL ANCE HALF WAS DEFERRED TO THE NEXT FINANCIAL YEAR. HOWEVER, IN THE RETURN OF INC OME, THE ASSESSEE CLAIMED THE ENTIRE EXPENDITURE ON ACCOUNT OF ADVERTISEMENT AS A LLOWABLE DURING THE YEAR. 3.1 THE ASSESSING OFFICER DISALLOWED THE EXPENDITUR E OF ` . 12,27,000/- AS IT WAS DEFERRED IN THE BOOKS OF ACCOUNT TO THE NEXT FINANC IAL YEAR AND THUS, ONLY ` . 12,54,000/-WAS ALLOWED FOR THE YEAR UNDER CONSIDE RATION. THE BALANCE EXPENDITURE HAS BEEN ALLOWED AS A DEDUCTION IN THE SUBSEQUENT YEAR I.E. ASSESSMENT YEAR 200405. 3.2 THE ASSESSEE CARRIED THE MATTER OF DISALLOWANCE OF INTER-ALIA ADVERTISEMENT EXPENDITURE TO THIS TRIBUNAL. SINCE THE BALANCE A MOUNT OF EXPENDITURE WAS ALLOWED IN THE ASSESSMENT YEAR 2004-05, THIS TRIBUNAL, VID E COMPOSITE ORDER DATED 10/ 9/2009 FOR BOTH THE ASSESSMENT YEARS 2003-04 & 200405 DIS MISSED THE GROUNDS RAISED AGAINST THE DISALLOWANCE OF THE ADVERTISEMENT EXPEN SES AS THE ASSESSEE DID NOT PRESS THE SAME. IN THE MEANTIME, THE ASSESSING OFF ICER INITIATED THE PENALTY PROCEEDINGS UNDER SECTION 271 (1) (C) OF THE INCOME TAX ACT AND LEVIED A PENALTY OF ` . 4,50,920/- AGAINST THE DISALLOWANCE OF ADVERTISEM ENT EXPENSES OF ` . 12, 27, 000/- VIDE ORDER DATED 28/04/2010. 3.3 ON APPEAL, THE COMMISSIONER OF INCOME TAX(APPEA LS) HAS CANCELLED THE PENALTY ON THE GROUND THAT THE EXPLANATION FURNISHE D BY THE ASSESSEE WAS BONAFIDE AND THEREFORE, THE CLAIM OF THE ASSESSEE WAS BONAFI DE AND GENUINE ONE. THE GODREJ AGROVET LTD 5669/MUM/2011 3 COMMISSIONER OF INCOME TAX(APPEALS) HAS RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN CASE OF CIT VS RELIANCE PETROPROD UCTS REPORTED IN 322 ITR 158. 4 BEFORE US, THE LD DR HAS SUBMITTED THAT THE ASSES SEE DEFERRED THE ADVERTISEMENT EXPENSES OVER A PERIOD OF 2 YEARS WHE REAS CLAIMED THE FULL EXPENDITURE FOR THE YEAR UNDER CONSIDERATION IN THE RETURN OF INCOME. HAD THE ASSESSING OFFICER NOT DETECTED THE EXCESS CLAIM OF THE ASSESSEE, THE SAME WOULD HAVE BEEN ALLOWED. THE LD DR HAS FURTHER SUBMITTED THAT WHEN THE DISALLOWANCE HAS BEEN ACCEPTED BY THE ASSESSEE IN THE QUANTUM APPEAL BEFORE THIS TRIBUNAL, THEN THE PENALTY IS JUSTIFIED. HE HAS RELIED UPON THE O RDER OF THE ASSESSING OFFICER PASSED UNDER SECTION 271 (1) (C) OF THE I T ACT. 4.1 ON THE OTHER HAND, THE LD AR OF THE ASSESSEE HA S SUBMITTED THAT THE ASSESSEE DID NOT PRESS THIS ISSUE BEFORE THIS TRIBUNAL BECAU SE BOTH THE APPEALS WERE HEARD TOGETHER AND DECIDED BY COMPOSITE ORDER AND THEREFO RE, WHEN THE CLAIM OF THE ASSESSEE WAS ALLOWED FOR THE ASSESSMENT YEAR 2004-0 5, IT IS REVENUE NEUTRAL FOR BOTH THE PARTIES. THE LD AR OF THE ASSESSEE HAS FURTHER SUBMITTED THAT THE ASSESSEE HAS EXPLAINED AND DISCLOSED ALL THE NECESSARY PARTICULA RS WITH REGARD TO THIS ISSUE. HE HAS REFERRED THE COMPUTATION OF INCOME AND NOTE NUMBER 4 FILED ALONG WITH THE RETURN OF INCOME AND SUBMITTED THAT THE ASSESSEE HAS MADE IT CLEAR UNDER THE NOTE THAT THE ADVERTISEMENT EXPENDITURE OF ` . 12,27,000/- WHICH HAS BEEN TREATED AS DEFERRED REVENUE EXPENDITURE IN THE BOOKS OF ACCOUNT HAS BEE N CLAIMED AS DEDUCTION IN THE IN THE ABOVE STATEMENT BEING A REVENUE EXPENDITURE INCURRED DURING THE YEAR. THUS, THE LD AR OF THE ASSESSEE HAS SUBMITTED THAT WHEN T HE ASSESSEE HAS FURNISHED ALL THE NECESSARY DETAILS AND FACTS REGARDING THIS ISSUE, T HAN THE DISALLOWANCE OF THE CLAIM OF THE ASSESSEE WOULD NOT AUTOMATICALLY ATTRACT LE VY OF PENALTY UNDER SECTION 271 GODREJ AGROVET LTD 5669/MUM/2011 4 (1) (C) OF THE I T ACT. HE HAS SUPPORTED THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS) . 5 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THERE IS NO DISPUTE ON THE FACT THAT THE AS SESSEE INCURRED ADVERTISEMENT EXPENSES OF ` . 24,54,000/- DURING THE YEAR UNDER CONSIDERATION. THOUGH, THE ASSESSEE IN THE BOOKS OF ACCOUNTS DEBITED ONLY 50% OF THE EX PENDITURE IN THE PROFIT AND LOSS ACCOUNT AND BALANCE 50% WAS DEFERRED FOR THE NEXT Y EAR; HOWEVER, IN THE COMPUTATION OF INCOME FILED ALONG WITH THE RETURN O F INCOME, THE ASSESSEE CLAIMED ENTIRE ADVERTISEMENT EXPENSES AS REVENUE EXPENDITUR E. IT IS EVIDENT FROM THE COMPUTATION OF INCOME THAT THE ASSESSEE HAS MADE TH E DISCLOSURE OF THIS FACT THAT IN THE BOOKS OF ACCOUNT THE ASSESSEE HAS TREATED 50% O F THE EXPENDITURE AS DEFERRED REVENUE EXPENDITURE; WHEREAS THE ENTIRE EXPENDITURE HAS BEEN CLAIMED AS DEDUCTION IN THE STATEMENT OF COMPUTATION OF INCOME . 5.1 THUS, THE ASSESSEE HAS DISCLOSED AND EXPLAINED ALL THE RELEVANT DETAILS AND FACTS NECESSARY FOR ADJUDICATION OF THE ISSUE AND I T CANNOT BE SAID THAT ANY MATERIAL FACT WITH REGARD TO THIS ISSUE HAS BEEN CONCEALED B Y THE ASSESSEE. FURTHER THE CLAIM OF THE ASSESSEE IS NOT A BOGUS OR ABSOLUTELY ILLEGA L BECAUSE THERE IS NO DISPUTE ON THE FACT THAT THE ENTIRE EXPENDITURE HAS BEEN INCURRED DURING THE YEAR UNDER CONSIDERATION. ONCE THE ASSESSEE HAS EXPLAINED THA T IN THE BOOKS OF ACCOUNT 50% OF THE EXPENDITURE HAS BEEN TREATED AS DEFERRED REV ENUE EXPENDITURE FOR THE NEXT YEAR; WHEREAS IN THE STATEMENT OF INCOME, THE ENTI RE EXPENDITURE HAS BEEN CLAIMED AS REVENUE EXPENDITURE AND THE SAID EXPLANATION HAS BEEN FURNISHED ALONG WITH THE RETURN OF INCOME, THAN THE DISALLOWANCE OF CLAIM OF THE ASSESSEE AS IT WAS NOT ACCEPTABLE TO THE ASSESSING OFFICER WOULD NOT IPSO FACTO LEAD TO THE CONCLUSION GODREJ AGROVET LTD 5669/MUM/2011 5 THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICUL ARS OF INCOME OR CONCEALED THE PARTICULARS OF INCOME. 5.2 IN VIEW OF THE ABOVE DISCUSSION AND IN THE FACT S AND CIRCUMSTANCES OF THE CASE, WHEN THE ASSESSEE HAS DISCLOSED THE PRIMARY F ACTS AND THE GENUINENESS OF THE EXPENDITURE IS NOT IN DISPUTE, THEN MERE DISALLOWAN CE OF CLAIM OF EXPENDITURE WOULD NOT LEAD TO ATTRACT PENALTY PROVISIONS U/S 271(1 ) C) OF THE ACT. ACCORDINGLY, WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE ORDER OF CO MMISSIONER OF INCOME TAX(APPEALS) IN CANCELLING THE PENALTY LEVIED UNDER SECTION 271 (1) (C) OF THE I T ACT. 8 IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMI SSED. 4 /5 * . 6 +4 . / 78 ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH JULY 2012 . 2'3 . 1% +' 6 92$5 4 TH JULY 2012 1 . : SD/- SD/- ( . . , / G.E. VEERABHADRAPPA ) ( ! / VIJAY PAL RAO ) / PRESIDENT # 2* / JUDICIAL MEMBER MUMBAI; 92$ DATED 4/7/2012 RAJ* COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBA