DCIT, New Delhi V. M/s. Minda Stoneridge Instuments Ltd., Delhi

ITA 5895/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97921 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 16-11-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 01-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Assessee Lawyers: DR RAKESH GUPTA
• Keywords: Revenue expenditure; Capital expenditure
• Section: 143(3)

Judgement Text

ITA NO. 5895/DEL/2013 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. NO. 5 8 95 /DEL/201 3 A.Y. : 200 5 - 0 6 DCIT, CIRCLE 6(1), NEW DELHI ROOM NO. 413, C.R. BUILDING, I.P. ESTATE, NEW DELHI VS. M/S MINDA STONERIDGE INSTRUMENTS LIMITED, 36-A, RAJASTHAN UDYOG NAGAR, DELHI 110 033 (PAN:AAACM5600R) (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) DEPARTMENT BY : SH. P. DAM KANUNJNA, SR. DR ASSESSEE BY : DR. RAKESH GUPTA, ADVOCATE & SH. SOMIL AGGARWAL, ADVOCATE DATE OF HEARING : DATE OF HEARING : DATE OF HEARING : DATE OF HEARING : 16 1616 16- -- -11 1111 11- -- -201 201 201 2015 55 5 DATE OF ORDER : DATE OF ORDER : DATE OF ORDER : DATE OF ORDER : 2 22 23 33 3- -- -11 1111 11- -- -201 201 201 2015 55 5 ORDER ORDER ORDER ORDER PER PER PER PER H.S. SIDHU, JM H.S. SIDHU, JM H.S. SIDHU, JM H.S. SIDHU, JM REVENUE HAS FILED THIS APPEAL AGAINST THE ORDER DA TED 30.8.2013 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-IX, NEW DELHI PERTAINING TO ASSESSMENT YEAR 2005-06. 2. THE GROUNDS RAISED BY THE DEPARTMENT READ AS UN DER:- 1. WHETHER THE FACTS AND CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE PENALTY OF RS. 6,62,000/- BY HOLDING THAT THE TREATING OF EXPENSES AS CAPITA L OR ITA NO. 5895/DEL/2013 2 REVENUE IS ONLY A NATURE OF INTERPRETATION AND CANN OT BE HELD TO BE REASON FOR IMPOSITION OF PENALTY? 2. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) FAILED TO CONSIDER THE RECENT JUDGMENT OF J URISDICTIONAL HIGH COURT IN CASES OF CIT VS. ZOOM COMMUNICATION L TD. (2010) 327 ITR 510 AND M/S MAK DATA LTD. (ITA NO. 415/2012). THE HONBLE DELHI HIGH COURT HAS HELD IN THE CASE OF ZOOM COMMUNICATION THAT IF THE ASESSEE MAKE S A CLAIM WHICH IS NOT ONLY INCORRECT IN LAW BUT IS AL SO WHOLLY WITHOUT ANY BASIS AND THE EXPLANATION FURNISHED BY HIM FOR MAKING SUCH A CLAIM IS NOT FOUND TO BE BONAFIDE, IT WOULD BE DIFFICULT TO SAY THAT HE WOULD STILL NOT BE LIABLE TO PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 3. THE ORDER OF THE LD. CIT(A) IS ERRONEOUS AND CON TRARY TO FACTS AND LAW. 4. THAT THE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER. 5. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, A MEND OR FORGO ANY GROUND(S) OF THE APPEAL AGAINST ABOVE AT THE TI ME OF THE HEARING. 3. THE BRIEF FACTS OF THE CASE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF AUTO PANEL INSTRUMENTS INCLUDING SPEEDOMETER, TEMPERATURE GAUGE AND FUEL GUAGE ETC. THE RETURN OF INCOME WAS FILED ON 31.10.2005 DECLARING A LOSS OF RS. 3,76,81,253/-. THE ASSESSMENT ORDER U/S. 143(3) WAS PASSED ON 19.12.2007 ASSESSING TAXABLE INCOME AT RS. ITA NO. 5895/DEL/2013 3 4,31,98,599/-, AFTER MAKING ADDITION ON ACCOUNT OF LEGAL EXPENSES, FOREIGN TRAVEL EXPENSES AND RENT PAID. ON APPEAL THE PREVIO US LD. CIT(A) CONFIRMED SOME OF THE ADDITIONS MADE BY THE AO, AGAINST WHICH THE ASSESSEE PREFERRED AN APPEAL BEFORE THE ITAT AND THE ITAT VIDE ORDER DAT ED 31.8.2010 PASSED IN ITA NO. 1605/DEL/2009 SET ASIDE THE ORDER THE APPEAL TO THE FILE OF THE AO. GIVING EFFECT TO THE ORDER OF THE ITAT, AO PASSED ORDER U/S. 143(3)/254 DATED 24.11.2011 MAKING FOLLOWING ADDITIONS: A) OUT OF DISALLOWANCE OF LEGAL EXPENSES AT RS. 929003/- EXPENSES IS ALLOWED AT RS. 85,440/- AND DISALLOWANCE IS RESTRICTED TO RS. 8,43,563/- B) OUT OF DISALLOWANCE OF FOREIGN TRAVELLING EXPENSES AT RS. 8,80,052/- EXPENSES IS ALLOWED AT RS. 2,38,655/- AND DISALLOWANCE IS RESTRICTED TO RS. 6,41,397/- TOTAL RS. 14,84,960/- ALTHOUGH THE QUANTUM OF THE DISALLOWANCES ARE REDU CED, THE NATURE OF DISALLOWANCE FOR BOTH THE EXPENSES REMAIN SAME. ON THE BASIS OF NOTICE ISSUED U/S. 271(1)(C) REGARDING INITIATION OF PENALTY, TH E AO PASSED THE ORDER U/S. 271(1) OF THE ACT ON 29.3.2010 I.E. BEFORE GIVING EFFECT TO THE ORDER OF THE ITAT, ORDER DATED 24.11.2011 U/S. 143(3)/254. 4. AGGRIEVED WITH THE PENALTY ORDER, ASSESSEE APPE ALED BEFORE THE LD. CIT(A), WHO VIDE IMPUGNED ORDER DATED 30.8.2013 DEL ETED THE PENALTY IN DISPUTE BY PARTLY ALLOWING THE APPEAL FILED BY THE ASSESSEE. 5. NOW AGGRIEVED WITH THE IMPUGNED ORDER, REVENUE FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 6. AT THE TIME OF HEARING, LD. DR RELIED UPON THE ORDER OF THE AO AND REITERATED THE CONTENTION RAISED BY THE REVENUE IN THE GROUNDS OF APPEAL AS WELL AS THE CITATIONS CITED BY THE AO IN THE ASSESSMENT ORDER AND THE PENALTY ORDER. ITA NO. 5895/DEL/2013 4 7. ON THE CONTRARY, LD. COUNSEL OF THE ASSESSEE REL IED UPON THE ORDER PASSED BY THE LD. FIRST APPELLATE AUTHORITY AND DOCUMENTAR Y EVIDENCE FILED BY HIM IN THE SHAPE OF PAPER BOOK CONTAINING PAGES 1 TO 110 IN W HICH HE HAS ATTACHED VARIOUS DOCUMENTARY EVIDENCES AND COPIES CASE LAWS TO SUPPO RT THE IMPUGNED ORDER. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RELEVANT RECORDS AVAILABLE WITH US, ESPECIALLY THE ORDER PASSED BY T HE REVENUE AUTHORITIES. WE ARE OF THE CONSIDERED THAT THE LD. CIT(A) HAS DELET ED THE PENALTY IN DISPUTE BY THOROUGHLY EXAMINING THE WRITTEN STATEMENT FILED BY THE ASSEESSEE AND THE ORDER OF THE LOWER AUTHORITIES AS WELL AS THE DECISION R ENDERED BY THE HONBLE SUPREME COURT OF INDIA AND THE HONBLE HIGH COURT O F DELHI. WE FIND THAT BEFORE THE LD. CIT(A) ASSESSEE ALSO RELIED UPON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. HMA UDYOG (P) LTD . (2007) 211 CTR DEL. 453. IN THE CASE, THE TRIBUNAL WAS OF THE VIEW THAT THE QUESTION WHETHER THE EXPENDITURE INCURRED BY THE ASSESSED WAS A REVENUE EXPENDITURE OR A CAPITAL EXPENDITURE WAS A DEBATABLE ISSUE AND EVEN IF IT WA S ULTIMATELY DECIDED AGAINST THE ASSESSED, IT COULD NOT BE SAID THAT THE ASSESSE E HAD ATTEMPTED TO CONCEAL THE PARTICULARS OF HIS INCOME OR FURNISH THE IN ACCURA TE PARTICULARS SO AS TO ATTRACT THE PENAL PROVISIONS OF SECTION 271(1)(C). THE HONBL E HIGH COURT CONFIRMED THE DECISION OF THE TRIBUNAL A DEBATABLE ISSUE AND WOUL D NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS SO AS TO ATTRACT PENALTY PRO CEEDINGS. 8.1 KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCE S OF THE CASE, WE FIND THAT LD. CIT(A) HAS RIGHTLY DELETED THE PENALTY IN D ISPUTE BY FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF RELIANC E PETRO PRODUCTS 322 ITR 158 (SC), IT CAN BE HELD THAT TREATING OF EXPENSES AS C APITAL OR REVENUE IS ONLY A NATURE OF INTERPRETATION AND CANNOT BE HELD TO BE R EASON FOR IMPOSITION OF PENALTY U/S. 271(1)(C). THE HONBLE SUPREME COURT OF INDIA HAS HELD THAT : ITA NO. 5895/DEL/2013 5 IF THE ASSESSEE HAS FURNISHED DETAILS AND MADE A C LAIM IN THE RETURN OF INCOME, MERELY BECAUSE THE SAME IS DISPUTED BY AO, CANNOT BE HELD TO BE FURNISHING OF INACCURATE PARTICULARS OR CONCEALM ENT OF INCOME. 8.2 RESPECTFULLY FOLLOWING THE ABOVE PRECEDENT, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A), ACCORDI NGLY, WE UPHOLD THE SAME AND DECIDE THE ISSUE AGAINST THE REVENUE BY DISMISSING THE APPEAL FILED BY THE REVENUE. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE S TAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23/11/2015. S SS SD DD D/ // /- -- - S SS SD DD D/ // /- -- - [ [[ [PRASHANT MAHARISHI PRASHANT MAHARISHI PRASHANT MAHARISHI PRASHANT MAHARISHI] ]] ] [ [[ [H.S. SIDHU H.S. SIDHU H.S. SIDHU H.S. SIDHU] ]] ] ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER DATE 23/11/2015 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES ITA NO. 5895/DEL/2013 6