ACIT, New Delhi V. M/s. Gail (India) Ltd., New Delhi

ITA 5859/DEL/2011

• Counselvise Citation: 585920114 RSA 2011
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 01-03-2012
• Assessment Year: 1999-2000
• Appeal Filed On: 29-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RIS GILL
• Assessee Lawyers: AMIT SACHDEVA S O OO
• Keywords: Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH C BENCH C BENCH C BENCH C : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND SHRI SHRI SHRI SHRI RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV, JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER ITA NO. ITA NO. ITA NO. ITA NO.5859/DEL/2011 5859/DEL/2011 5859/DEL/2011 5859/DEL/2011 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 1999 1999 1999 1999- -- -2000 2000 2000 2000 ASSISTANT ASSISTANT ASSISTANT ASSISTANT COMMISSIONER OF COMMISSIONER OF COMMISSIONER OF COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -12(1), 12(1), 12(1), 12(1), NEW NEW NEW NEW DELHI. DELHI. DELHI. DELHI. VS. VS. VS. VS. M/S GAIL (INDIA) LIMITED, M/S GAIL (INDIA) LIMITED, M/S GAIL (INDIA) LIMITED, M/S GAIL (INDIA) LIMITED, 16, BHIKAJI CAMA PLACE, 16, BHIKAJI CAMA PLACE, 16, BHIKAJI CAMA PLACE, 16, BHIKAJI CAMA PLACE, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 066. 110 066. 110 066. 110 066. PAN : AAACG1209J. PAN : AAACG1209J. PAN : AAACG1209J. PAN : AAACG1209J. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R.I.S.GILL, CIT-DR. RESPONDENT BY : SHRI AJAY VOHRA AND SHRI AMIT SACHDEVA, ADVOCATES. O OO ORDER RDER RDER RDER PER G. PER G. PER G. PER G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VP VPVP VP : : : : THIS APPEAL BY THE REVENUE IS FILED AGAINST THE OR DER OF LEARNED CIT(A)-VII, NEW DELHI DATED 19 TH OCTOBER, 2011 FOR THE AY 1999-2000 DELETING THE PENALTY OF ` 12,88,531/- IMPOSED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961 . 2. THE ONLY GROUND RAISED BY THE ASSESSEE IN THIS A PPEAL READS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN CANCELLING THE PENALTY OF RS.12,88,531/- LEVIED UPON THE ASSESSEE COMPANY U/S 271(1)(C) OF THE INCOME TAX ACT, 1961. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILE D ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 29.12.19 99 DECLARING A TOTAL INCOME OF ` 384,41,23,010/-. THEREAFTER, THE ASSESSEE FILED A ITA-5859/DEL/2011 2 REVISED RETURN ON 31.3.2000 DECLARING TOTAL INCOME OF ` 327,50,56,970/- AND A SECOND REVISED RETURN ON 30.3.2001 DECLARING TOTAL INCOME OF ` 305,62,80,567/-. THE ASSESSMENT UNDER SECTION 143( 3) WAS COMPLETED BY THE ASSESSING OFFICER AT A TOTAL INCOM E OF ` 545,87,46,203/- AND, HE MADE AN ADDITION OF 36,81,5 75/- ON ACCOUNT OF AMORTIZATION OF LAND EXPENSES. HE ALSO IMPOSED A PENALTY UNDER SECTION 271(1)(C) TO THE TUNE OF ` 12,88,551/- WHICH WAS CONFIRMED IN THE PENALTY PROCEEDINGS. 4. AGGRIEVED BY THE SAME, THE ASSESSEE PREFERRED FI RST APPEAL BEFORE THE LEARNED CIT(A) WHO REMANDED THE ISSUE OF DISALLOWANCE AMORTIZATION OF LAND EXPENSES TO THE ASSESSING OFFI CER FOR VERIFICATION VIDE ITS ORDER DATED 30.12.2002 WITH THE FOLLOWING OBSERVATION:- 6.2 ON GOING THROUGH THE DECISION CITED BY THE APP ELLANT OF THE KARNATAKA HIGH COURT AND RESPECTFULLY FOLLOW ING THE SAME, I HOLD THAT THE PREMIUM PAID BY THE APPELLANT ON ALL SUCH LEASE AGREEMENTS AS ARE SIMILAR TO THE AGREEME NT ENTERED INTO WITH MIDC FOR LAND AT USAR, CONSTITUTE S REVENUE EXPENSES. IN VIEW OF THE SUPREME COURT DEC ISION IN THE CASE OF MADRAS INDUSTRIAL INVESTMENT CORPORA TION LIMITED 225-ITR-802, HOWEVER, THE TOTAL AMOUNT OF LEASE PREMIUM PAID IN RESPECT OF SUCH AGREEMENT SHOULD BE AMORTIZED OVER THE PERIOD OF LEASE, AND ONLY THE AM OUNT PERTAINING TO THE RELEVANT PREVIOUS YEAR SHOULD BE ALLOWED AS A DEDUCTION. THE AO IS, THEREFORE, DIRECTED TO VERIFY ALL THE LEASE AGREEMENTS IN RESPECT OF WHICH THE AMORTI ZATION IS CLAIMED AND ALLOW THE PRO-RATA LEASE PREMIUM IN RESPECT OF SUCH AGREEMENTS AS ARE SIMILAR TO THE ABOVE MENT IONED AGREEMENT WITH MIDC IN RESPECT OF THE LAND AT USAR. SUCH AGREEMENTS WOULD BE THOSE UNDER WHICH NO ANNUAL LEA SE RENTAL, OR A NOMINAL LEASE RENTAL OF RE1/- PER MONTH/ANNUM, IS PAYABLE, AND A PREMIUM IS PAID ON ENTERING INTO THE AGREEMENT WHICH CAN BE TAKEN TO B E ADVANCE RENT PAID, AS FOUND BY THE KARNATAKA HIGH C OURT IN THE ABOVE MENTIONED DECISION. HOWEVER, IN CASE OF AN AGREEMENT IN WHICH AN ANNUAL PAYMENT OF RENT, OTHER THAN A NOMINAL RENT, IS REQUIRED, THE AMOUNT OF LEASE PR EMIUM CANNOT BE SAID TO BE A PAYMENT OF RENT IN ADVANCE A ND IN SUCH CASES THE PREMIUM WILL BE IN THE NATURE OF CAP ITAL ITA-5859/DEL/2011 3 EXPENDITURE INCURRED FOR OBTAINING LEASE HOLD RIGHT S AND NO AMORTIZATION WILL BE ALLOWABLE. 5. THE LEARNED DR SUPPORTED THE ORDER OF THE ASSESS ING OFFICER AND SUBMITTED THAT THE PENALTY UNDER SECTION 271(1)(C) HAS BEEN RIGHTLY LEVIED BY HIM FOR FILING INACCURATE PARTICULARS OF INCOME. THE ASSESSEE HAS NOT BEEN ABLE TO SUPPORT ITS CASE AS TO WHY THE COST OF LAND AMORTIZED SHOULD NOT BE DISALLOWED AS DONE IN THE P AST. HE, THEREFORE, CONTENDED THAT THE PENALTY UNDER SECTION 271(1)(C) HAS BEEN RIGHTLY LEVIED FOR FILING INACCURATE PARTICULARS OF INCOME. 6. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTH ER HAND, SUBMITTED THAT THE ASSESSING OFFICER HAS NOT GIVEN ANY REASON OR JUSTIFICATION AS TO HOW ASSESSEE FURNISHED INACCURA TE PARTICULARS OF HIS INCOME. ALL THE RELEVANT DETAILS WERE FILED ALONGW ITH THE RETURN OF INCOME. HE SUBMITTED THAT IN FIRST APPELLATE PROCE EDINGS, THE LEARNED CIT(A) REMANDED THE ISSUE OF DISALLOWANCE AMORTIZAT ION OF LAND EXPENSES TO THE ASSESSING OFFICER FOR VERIFICATION VIDE ITS ORDER DATED 30.12.2002. AGAINST THIS ORDER OF CIT(A), THE REVE NUE HAS NOT PREFERRED ANY APPEAL BEFORE THE TRIBUNAL. THEREFOR E, THE SAID ORDER OF CIT(A) HAS BECOME FINAL. THE LEARNED COUNSEL FURTH ER PLACED RELIANCE ON THE DECISION OF HON'BLE SUPREME COURT IN THE CAS E OF CIT VS. RELIANCE PETROPRODUCTS PVT.LTD. 322 ITR 158. 7. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND PERUSED THE RELEVANT MATERIAL ON RECORD. IN TH IS CASE, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER HAS ALRE ADY BEEN SET ASIDE BY THE LEARNED CIT(A) AND MATTER HAS BEEN RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER. THEREFORE, AT PRESENT, WHEN THE ADDITION ITSELF HAS BEEN SET ASIDE, THERE CANNOT BE ANY CASE FOR LE VY OF PENALTY FOR CONCEALMENT OF INCOME. EVEN OTHERWISE, ON MERITS A LSO, THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F HONBLE APEX ITA-5859/DEL/2011 4 COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT.LTD. (SUPRA) WHEREIN THEIR LORDSHIPS HELD AS UNDER:- WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIE D BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C). A MERE TAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NO T AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INC OME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANN OT AMOUNT TO FURNISHING INACCURATE PARTICULARS. 8. THE RATIO OF THE ABOVE DECISION WOULD BE SQUAREL Y APPLICABLE TO THE FACTS OF THE CASE UNDER APPEAL BECAUSE THERE IS NO CASE OF THE REVENUE THAT THE ASSESSEE FURNISHED ANY INCORRECT O R ERRONEOUS FACTS BEFORE THE ASSESSING OFFICER. THE ASSESSEE CLAIMED THE AMORTIZATION OF THE PREMIUM PAID FOR TAKING THE LAND ON LEASE. SUC H CLAIM OF THE ASSESSEE WAS DISALLOWED BY THE ASSESSING OFFICER. AS PER THE ABOVE DECISION OF THE HONBLE APEX COURT, MERELY BECAUSE THE CLAIM OF THE ASSESSEE HAS BEEN DISALLOWED, IT WOULD NOT AMOUNT T O CONCEALMENT OF INCOME. IN VIEW OF THE ABOVE FACTUAL AND LEGAL POS ITION, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF LE ARNED CIT(A). THE SAME IS SUSTAINED AND REVENUES APPEAL IS DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 16 TH MARCH, 2012. SD/- SD/- ( (( (RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV) )) ) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 16.03.2012 VK. ITA-5859/DEL/2011 5 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR