STANDARD CHARTERED (INDIA) WEALTH ADVISORY SERVICES P. LTD (FORMERLY STANDAR CHARTERED UTI SECURITIES INDIA P. LTD, MUMBAI V. ITO 1(3)(3), MUMBAI

ITA 5884/MUM/2009

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 7266 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 21-06-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 05-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G P TRIVEDI
• Assessee Lawyers: NITESH S JOSH I

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI BEFORE SHRI R.S.SYAL, AM AND SHRI V.DURGA RAO, JM ITA NO.5884/MUM/2009 : ASST.YEAR 2002-2003 M/S.STANDARD CHARTERED (INDIA) WEALTH ADVISORY SERVICES PRIVATE LIMITED (FORMERLY KNOWN AS STANDARD CHARTERED UTI SECURITIES INDIA PRIVATE LIMITED) ORIENTAL BUILDING, MEZZANINE FLOOR 364, DR.D.N.ROAD, FORT MUMBAI 400 001. PAN : AAFCS7722K. VS. THE INCOME TAX OFFICER WARD 1(3)(3) MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI NITESH S.JOSHI RESPONDENT BY : SHRI G.P.TRIVEDI DATE OF HEARING : 02.08.2011 DATE OF PRONOUNCEMENT :05.08.2011 O R D E R PER R.S.SYAL, AM : THIS APPEAL BY THE ASS ESSEE ARISES OUT OF TH E ORDER PASSED BY THE COMMISSIONER OF INCOME-T AX (APPEALS) ON 18.08. 2009 UPHOLDING PENALTY OF RS.2,84,886 IMPOSED BY THE ASSESSING OFFI CER U/S.271(1)(C) IN RELATION TO THE ASSESSMENT YEAR 2002-2003. 2. BRIEFLY STATED THE FA CTS OF THE CASE ARE THAT THE ASSESSEE CLAIMED DEDUCTION U/S.35D AMOUNTING TO RS.8,90,800. THE ASSESSING OFFICER OBSERVED THAT THE AUDITOR IN REPORT IN FORM 3CD HAS GIVE N THE FIGURE OF DEDUCTION U/S.35D AT RS.92,800. ON BEING CALLED UPON TO EXPLAIN THE DISCREPANCY THE ASSESSEE STATED THAT IT HAD MADE FOLLOWING FOUR PAYM ENTS, ELIGIBLE FOR DEDUCTION:- (I) REGISTRATION FEES PA ID TO ROC RS.25,00,500 (II) STAMP DUTY PAID RS. 9,90,000 (III) STAMP DUTY PAID FOR ISSU ES OF SHARES RS. 1,30,000 (IV) STAMP DUTY PAID FOR ISSU E OF SHARES RS. 3,70,000 ---------------- TOTAL RS.39,90,500 ========== ITA NO.5884/MUM/2009 M/S.STANDARD CHARTERED (INDIA) WEA LTH ADVISORY SERVICES PVT.LTD. 2 3. THE ASSESSING OFFICER NOTED THAT THE E XPENSES WERE INCURR ED BY THE ASSESSEE IN CONNECTION WITH THE ENHA NCEMENT OF CAPITAL WHEREAS THE COMPANY WAS REGISTERED IN EARLIER YEAR. HE, THEREFORE, REDUCED THE AMOUNT OF DEDUCTION U/S.35D AT RS.92,800 AND DISALLOWED THE REMAINING CL AIM OF RS.7,98,000. IT IS A MATTER OF RECORD THAT THE TRIBUNAL, VIDE ITS OR DER 19.09.2008 IN ITA NO.5779/DEL/2005, HAS UPHELD THE SUSTENANCE OF DISALLOWANCE. THEREAFTER THE A.O. IMPOSED PENALTY U/S.271(1)(C) ON THIS ISSUE WHICH CAME TO BE UPHELD IN THE FIRST APPEAL. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE LEARNED COUNSEL FOR THE AS SESSEE HAS EMPHATICALLY ARGUED THAT THE TRIBUNAL REJECTED THE ASSESSEES CLAIM ON THE GROUND THAT THE EXPE NSES WAS INCURRED U/S.35D(1)(II) BEING AFTER TH E COMMENCEMENT OF ITS BUSINESS. REFERRING TO CERTAIN MATERIAL IT WAS EMPHASIZED THAT THE AS SESSEE COMMENCED ITS BUSINESS ONLY IN THE YEAR UNDER CONSIDERATION AND ALL THE AMOUNT S IN QUESTION WERE INCU RRED PRIOR TO THE COMMENCEMENT OF BUSINESS. THE SUBMISSI ON ADVANCED ON BEHALF OF THE ASSESSEE QUA THE CLAIM OF DEDUCTION DISALLOWED U/S.35D IS NOT COMPLETELY OUT OF THE CONTEXT. THE OBVIOUS REASON IS THAT THE ASSESSEE MADE A CLAIM BY CONSIDERING IT TO BE ALLOWABLE U/S.35D, GIVING ENTIRE BREAKUP OF THE EXPENSES BUT THE AUTHORITIES FOUND IT TO BE NOT ACCEPTABLE. SIMPLY FOR TH E REASON THAT THE ASSESS ING OFFICER DID NOT FIND THE CLAIM OF THE ASSESSE E TO BE SUSTAINABLE IN LAW UP TO A CERTAIN EXTENT, IT CANNOT BE A CASE FOR PENALTY U/S.271(1)(C) MORE SO WHEN THE PARTICULARS FURNISHED BY THE ASSESSEE WERE NOT IN ACCURATE. THE HONBLE SUPR EME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. [(2010) 322 ITR 158 (SC)] HAS ORDERED FOR THE DELETION OF PENALTY IN SUCH CIRCUMSTANCES. 5. THE CONTENTION OF THE LEARNED DEPAR TMENTAL REPRESENTATIVE THAT SINCE THE TRIBUNAL HAS UPHELD THE DISALLOWANCE HENC E PENALTY SHOULD ALSO BE APPROVED, IS SANS MERITS FOR THE REASON THAT THE PE NALTY PROCEEDINGS ARE DISTINCT FROM ITA NO.5884/MUM/2009 M/S.STANDARD CHARTERED (INDIA) WEA LTH ADVISORY SERVICES PVT.LTD. 3 ASSESSMENT PROCEEDINGS. THE VERY FACT THAT BOTH THE PR OCEEDINGS HAVE BEEN MADE SEPARATE FROM EACH OTHER, INDICATES TH AT THE FINDING GIVEN IN THE QUANTUM PROCEEDINGS HAS PERSUASIVE VALUE BUT NOT CONCLUSIVE. IF DURING THE PENALTY PROCEEDINGS THE ASSESSEE ESTABLISHES THAT THE BONA FIDE CLAIM WA S MADE BY IT AS PER THE CORRECT UNDERSTANDING OF THE POSITION PR EVAILING BUT SUCH CLAIM CAME TO BE NEGATIVED, THE PENALTY CANNOT BE IMPOSED UNLESS THE CASE FALLS WITHIN THE AMBIT OF SECTION 271(1)(C) READ WITH ITS EXPLANATIONS. IN OUR CONSIDERED OPINION THE MERE FACT THAT THE TRIBUNAL UPHELD TH E DISALLOWANCE U/S.35D WOULD NOT PER SE LEAD TO THE IMPOSITION OF PENALTY IN THE LIGHT OF THE AFORE-STATED JUDGEMENT IN THE CASE OF RELIANCE PETRO PRODUCTS PVT. LTD. (SUPRA). WE, THEREFORE, REVERSE THE IMPUGNED ORDER AND ORDER FOR THE DE LETION OF PENALTY. 6. IN THE RESULT, TH E APPEAL IS ALLOWED. ORDER PRONOUNCED IN TH E OPEN COURT ON THIS 05 TH DAY OF AUGUST, 2011. SD/- SD/- (V.DURGA RAO) (R.S.SYAL) JUDICIAL MEMBER ACC OUNTANT MEMBER MUMBAI : 05 TH AUGUST, 2011. DEVDAS*` COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) - XXI, MUMBAI. 5. THE DR/ITAT, MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, MUMBAI.