DCIT, New Delhi V. M/s. Elymer International Pvt. Ltd., New Delhi

ITA 5878/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58741 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 05-03-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 30-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AROOP KUMAR SINHA SENIOR
• Assessee Lawyers: VP BANSAL
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B : NEW DELHI) BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.5878/DEL./2011 (ASSESSMENT YEAR : 2004-05) DCIT, CIRCLE 11 (1), VS. M/S. ELYMER INTERNATIONA L PVT. LTD., NEW DELHI. 37, BUNGLOW ROAD, KAMLA NAGAR, NEW DELHI 110 007. (PAN : AAACE3789P) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI V.P. BANSAL, CA REVENUE BY : SHRI AROOP KUMAR SINHA, SENIOR DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE REVENUE EMANATES FROM THE ORDER OF THE CIT (APPEALS)-XIII, NEW DELHI DATED 12.10.2011 FOR THE ASSESSMENT YEAR 2004- 05. THE ONLY GROUND TAKEN BY THE REVENUE IS AGAINS T THE DELETION OF PENALTY OF RS.7,25,411/- IMPOSED U/S 271(1)(C) OF THE INCOME-T AX ACT, 1961. 2. THE ASSESSEE IS A PRIVATE LIMITED COMPANY. THE RETURN OF INCOME WAS FILED ON 30.10.2004 DECLARING INCOME OF RS.3,28,58, 577/-. THE ASSESSMENT U/S 143(3) WAS COMPLETED ON 22.09.2006 AT AN INCOME OF RS.3,50,14,150/-. THE ENHANCEMENT IN INCOME WAS ON ACCOUNT OF NOT ALL OWING DEDUCTION U/S ITA NO.5878/DEL./2011 2 80IA ON OTHER INCOME OF RS.71,85,229/-. THIS OTHER INCOME WAS CONSISTING OF FOLLOWING INCOME :- (I) SALE OF SCRAP MATERIAL RS. 5,07,826 (II) INTEREST ON FIXED DEPOSITS AND SECURITY DEPOS ITS RS.15,41,948 (III) EXCHANGE RATE VARIATION RS. 4,48,051 (IV) MISC. INCOME RS.42,51,059 (V) FREIGHT & INSURANCE RS. 4,39,345 THE ASSESSING OFFICER ALSO INITIATED PENALTY PROCEE DINGS U/S 271(1)(C). THE ASSESSING OFFICER LEVIED THE PENALTY OF RS.7,25,411 /-. THE PENALTY WAS LEVIED ON THE BASIS THAT THE ASSESSEE MADE EXCESS CLAIM OF DEDUCTION U/S 80IA OF THE INCOME-TAX ACT, 1961 IN THE RETURN OF INCOME. ASSE SSEE WAS NOT ABLE TO SUBSTANTIATE THE CLAIM. IN VIEW OF THE EXPLANATION 1 TO SECTION 271(1)(C), THE PENALTY WAS LEVIED HOLDING THAT THE ASSESSEE COMPAN Y IS IN DEFAULT IN FILING THE INACCURATE PARTICULARS OF INCOME. THE CIT (A) DELE TED THE PENALTY BY HOLDING THAT THE ISSUES RESULTING IN THE DETERMINATION OF H IGHER INCOME U/S 143(3) WERE CLEARLY DEBATABLE AND FOLLOWING THE RATIO OF VARIOU S CASE LAWS INCLUDING THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CI T VS. RELIANCE PETROPRODUCTS P. LTD. REPORTED IN 322 ITR 158, THE PENALTY WAS HELD TO BE NOT IMPOSABLE ON DEBATABLE ISSUE OR CLAIM OR DEDUCTION DISALLOWED ON ACCOUNT OF VARYING LEGAL INTERPRETATIONS. ITA NO.5878/DEL./2011 3 3. WE HAVE HEARD BOTH THE SIDES IN DETAIL. THE OTH ER INCOME ON WHICH THE ASSESSING OFFICER DID NOT ALLOW THE CLAIM OF THE AS SESSEE U/S 80IA WAS CONSISTING OF SALE OF THE SCRAP MATERIAL, INTEREST ON FIXED DEPOSITS AND SECURITY DEPOSITS, EXCHANGE RATE VARIATION, MISC. INCOME AND FREIGHT AND INSURANCE. THE DISALLOWANCE ON ACCOUNT OF EXCHANGE RATE VARIAT ION WAS ALLOWED BY THE CIT (A) IN THE QUANTUM APPEAL. ASSESSEE FURTHER CH ALLENGED ORDER OF CIT (A) BEFORE ITAT ON OTHER INCOME ON WHICH DISALLOWANCE O F 80IA WAS DENIED. THE LEARNED AR PROVIDED THE ORDER OF ITAT, BENCH B IN ITA NO.1325/DEL/2008. AS PER THIS ORDER OF ITAT, THE A SSESSEES CLAIM ON THE SALE OF THE SCRAP WAS ALLOWED AND IT WAS ALSO NOTED IN THE ORDER THAT IN THE ASSESSMENT YEAR 2001-02 PASSED U/S 143(3), THE DEDU CTION ON THE SALE OF THE SCRAP WAS ALLOWED U/S 80IA OF THE INCOME-TAX ACT. IN THIS YEAR ALSO, THE ITAT HAS HELD THAT IN VIEW OF THE DECISION OF HON'B LE MADRAS HIGH COURT IN THE CASE OF FENNER (INDIA) LTD. VS. CIT 241 ITR 8 03 (MAD.), THE SALE OF THE SCRAP MATERIAL HAS DIRECT LINK OR NEXUS WITH THE IN DUSTRIAL UNDERTAKING. SCRAP WAS HELD TO BE DERIVED FROM BUSINESS UNDERTAKING AN D THE CLAIM OF DEDUCTION U/S 80IA HAS BEEN HELD TO BE ALLOWABLE ON THIS AMOU NT, EXCEPT THE AMOUNT OF EXCISE DUTY AND SALES-TAX SO COLLECTED ON THE SALE OF THE SCRAP. IN THE CASE OF INTEREST ON THE FIXED DEPOSITS AND FDRS, THE ITAT H AS HELD THAT ASSESSEE WILL NOT BE ENTITLED FOR DEDUCTION U/S 80IA IN RESPECT O F THE INTEREST ON FIXED DEPOSIT AND SECURITY DEPOSIT. HOWEVER, THIS VIEW W AS HELD ON THE BASIS OF ITA NO.5878/DEL./2011 4 DECISION OF HON'BLE SUPREME COURT IN THE CASE OF PA NDIAN CHEMICALS LTD. VS. CIT 262 ITR 278 (SC), CAMBAY ELECTRIC SUPPLY INDU STRIAL CO. LTD. VS. CIT 113 ITR 84 (SC) AND THE DECISION OF HON'BLE JURIS DICTIONAL HIGH COURT IN THE CASE OF SHREE RAM HONDA POWER EQUIP 289 ITR 4 75 (DEL). THUS, THIS ISSUE WAS A DEBATABLE AT THE TIME OF FILING THE RET URN OF INCOME AND FINALIZATION OF ASSESSMENT U/S 143(3). THE ITAT HA S ALLOWED THE CLAIM ON THE MISC. INCOME WHICH WAS A RESULT TO BAD DEBT WRITTEN OFF ON ACCOUNT OF LD PENALTY. THE ITAT HELD THAT THESE AMOUNTS HAVE DIR ECT NEXUS WITH THE BUSINESS OF THE INDUSTRIAL UNDERTAKING, HENCE, THE DEDUCTION U/S 80IA OF THE INCOME-TAX ACT IS ALLOWABLE ON SUCH INCOME. IN THE CASE OF FREIGHT AND INSURANCE, ALTHOUGH THE ITAT HAS HELD THAT NO DEDUC TION U/S 80IA WAS ALLOWABLE TO THE ASSESSEE, HOWEVER, WE FIND THAT TH E AMOUNT WAS ONLY RS.4,39,345/-. THE DETAILS OF THE FREIGHT AND INSU RANCE AMOUNTING TO RS.4,39,345/- CREDITED TO PROFIT & LOSS ACCOUNT IS AS UNDER :- TOTAL AMOUNT OF FREIGHT AND INSURANCE COLLECTED FROM THE CUSTOMERS DURING THE YEAR 61,00,101 LESS : FREIGHT OUTWARD 51,96,422 LESS : INSURANCE 4,64,334 56,60,756 FREIGHT AND INSURANCE (NET) CREDITED TO PROFIT AND LOSS ACCOUNT 4,39,345 THIS FREIGHT AND INSURANCE IS CHARGED IN THE INVOIC ES AS PER THE CONTRACT AWARDED BY THE ELECTRICITY BOARDS. THE AMOUNT CHAR GED WAS COMBINED IN THE BILL. THE ASSESSEE HAS MADE A LEGAL CLAIM THAT TH ESE RECEIPTS WERE LINKED TO ITA NO.5878/DEL./2011 5 THE MAIN BUSINESS ACTIVITY OF THE ASSESSEE. THE IT AT WHILE SUSTAINING THE DISALLOWANCE HAS HELD THAT SUCH INCIDENTAL PROFITS CANNOT BE REGARDED AS PROFIT EARNED OUT OF MAIN BUSINESS ACTIVITY. THE ASSESSEE HAD DISCLOSED THE RELEVANT FACTS IN THE RETURN OF INCOME AND WHILE COMPUTING T HE DEDUCTION U/S 80IA. THERE WAS NO MALAFIDE ON THE PART OF ASSESSEE TO CO NCEAL ACCURATE PARTICULARS OR SAY NOT TO DISCLOSE ALL THE RELEVANT FACTS. THE REFORE, IN OUR CONSIDERED VIEW, PENALTY U/S 271(1)(C) CANNOT BE LEVIED ON THIS GROU ND. CIT (A) GRANTED THE RELIEF TO THE ASSESSEE BY RELYING ON VARIOUS HIGH C OURT DECISIONS AND PARTICULARLY THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS P. LTD. 322 ITR 158 WHEREI N THE HON'BLE COURT HAS OBSERVED AS UNDER :- A GLANCE AT THIS PROVISION WOULD SUGGEST THAT IN OR DER TO BE COVERED, THERE HAS TO BE CONCEALMENT OF THE PART ICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. PRE SENT IS NOT THE CASE OF CONCEALMENT OF THE INCOME. THAT IS NOT THE CASE OF THE REVENUE EITHER. HOWEVER, THE LEARNED COUNSEL FOR RE VENUE SUGGESTED THAT BY MAKING INCORRECT CLAIM FOR THE EX PENDITURE ON INTEREST, THE ASSESSEE HAS FURNISHED INACCURATE PAR TICULARS OF THE INCOME. AS PER LAW LEXICON, THE MEANING OF THE WORD 'PARTICULAR' IS A DETAIL OR DETAILS (IN PLURAL SENS E); THE DETAILS OF A CLAIM, OR THE SEPARATE ITEMS OF AN ACCOUNT. THEREFO RE, THE WORD 'PARTICULARS' USED IN THE S. 271(1)(C) WOULD EMBRAC E THE MEANING OF THE DETAILS OF THE CLAIM MADE. IT IS AN ADMITTED POSITION IN THE PRESENT CASE THAT NO INFORMATION GI VEN IN THE RETURN WAS FOUND TO BE INCORRECT OR INACCURATE. IT IS NOT AS IF ANY STATEMENT MADE OR ANY DETAIL SUPPLIED WAS FOUND TO BE FACTUALLY INCORRECT. HENCE, AT LEAST, PRIMA FACIE, THE ASSESS EE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. T HE LEARNED COUNSEL ARGUED THAT 'SUBMITTING AN INCORRECT CLAIM IN LAW FOR THE EXPENDITURE ON INTEREST WOULD AMOUNT TO GIVING INAC CURATE ITA NO.5878/DEL./2011 6 PARTICULARS OF SUCH INCOME'. WE DO NOT THINK THAT S UCH CAN BE THE INTERPRETATION OF THE CONCERNED WORDS. THE WORD S ARE PLAIN AND SIMPLE. IN ORDER TO EXPOSE THE ASSESSEE TO THE PENALTY UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY ANY STRETCH OF IMAG INATION, MAKING AN INCORRECT CLAIM IN LAW CANNOT TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. ' KEEPING ALL THESE FACTS IN VIEW AND CONSIDERING ALL THE RELEVANT CASE LAWS, WE FIND NO FAULT IN THE ORDER OF THE CIT (A) AND DISMI SS THE REVENUES APPEAL. 4. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 9 TH DAY OF MARCH, 2012. SD/- SD/- (I.P. BANSAL) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 9 TH DAY OF MARCH, 2012/TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XIII, NEW DELHI. 5.CIT(ITAT), NEW DELHI AR, ITAT NEW DELHI.