ACIT, CHENNAI V. M/s. Best & Crompton Engg. Limited, CHENNAI

ITA 600/CHNY/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96046 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 03-08-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 22-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS JAYANTHI KRISHNAN
• Assessee Lawyers: S SUBRAMANIAN
• Keywords: Capital asset; Business income; Depreciation; Wholly owned subsidiary; Wrong claim; Bad and doubtful debts; Unabsorbed depreciation
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI ... , ! ', $ %& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ./ ITA NO.600/MDS/2012 ( )( / ASSESSMENT YEAR : 2007-08 THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE I(3), CHENNAI - 600 034. V. M/S BEST & CROMPTON ENGG. LIMITED, 28/C, INDUSTRIAL ESTATE (NORTH), AMBATTUR, CHENNAI - 600 098. PAN : AADCB 3450 D (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : MRS. JAYANTHI KRISHNAN, CIT -.+, / 0 / RESPONDENT BY : SH.S. SUBRAMANIAN, CA 1 / 2$ / DATE OF HEARING : 03.08.2015 34) / 2$ / DATE OF PRONOUNCEMENT : 16.09.2015 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-III, CHENN AI, DATED 28.12.2011 AND PERTAINS TO ASSESSMENT YEAR 2007-08. 2 I.T.A. NO.600/MDS/12 2. SMT. JAYANTHI KRISHNAN, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSING OFFICE R LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). REFERRING TO THE PENALTY ORDER, THE LD. D.R . POINTED OUT THAT ADDITION WAS MADE ON THE FOLLOWING GROUNDS:- (I) CLAIM OF ROC FEES (II) LOSS ON EXCHANGE VARIATION (III) REVERSAL OF PROVISIONS OF SALES TAX (IV) MISCELLANEOUS ADDITIONS (V) DISALLOWANCE UNDER SECTION 14A HOWEVER, THE ASSESSING OFFICER FOUND THAT THE ASSES SEE EXTENDED ITS CO-OPERATION AT THE TIME OF SCRUTINY PROCEEDING S AND THE ISSUE IS ALSO DEBATABLE NATURE. THEREFORE, THE SAME WAS NOT CONSIDERED FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. SIMILARLY, AN ADDITION OF ` 14,11,73,333/- WAS ALSO MADE TOWARDS LONG TERM CAPI TAL LOSS. THEREFORE, THIS ADDITION OF ` 14,11,73,333/- WAS ALSO NOT CONSIDERED FOR LEVY OF PENALTY. HOWEVER, THE ASSES SING OFFICER LEVIED PENALTY ON THE FOLLOWING ADDITIONS MADE IN T HE ASSESSMENT ORDER:- (I) CLAIM OF DEPRECIATION UNDER THE BLOCK BUILDING S (II) LOSS ON SALE OF CURRENT ASSETS (III) CLAIM OF BAD DEBTS (IV) INVESTMENTS WRITTEN OFF (V) IRRECOVERABLE PROJECT EXPENSES WRITTEN OFF 3 I.T.A. NO.600/MDS/12 3. REFERRING TO THE FIRST ADDITION ON WHICH PENALTY WAS LEVIED, REGARDING DEPRECIATION ON THE BLOCK OF ASSETS, THE LD. D.R. POINTED OUT THAT THE ASSESSEE CONVERTED THE CAPITAL ASSET, NAMELY, THE LAND AT CENOTAPH ROAD, INTO STOCK-IN-TRADE IN FINANCIAL YEAR 1994-95. HOWEVER, THE BUILDINGS ERECTED ON THAT LAND CONTINU ED TO BE SHOWN AS FIXED ASSETS AND DEPRECIATION WAS ALSO CLAIMED B Y THE ASSESSEE. ACCORDING TO THE LD. D.R., THE LAND AND BUILDING WE RE SOLD DURING THE YEAR UNDER CONSIDERATION FOR A SUM OF ` 95 CRORES. IN THE SALE DEED EXECUTED BY THE ASSESSEE, THE ASSESSEE SHOWED THE VALUE OF LAND AT ` 60 CRORES AND VALUE OF THE BUILDING AT ` 35 CRORES. ACCORDING TO THE LD. D.R., THE SALE PROCEEDS OF THE LAND PORTION ALONE SHOULD BE TAKEN AS BUSINESS PROFIT, SINCE THE LAND ALONE WAS CONVERTED INTO CAPITAL ASSET. THE BUILDING STANDIN G ON THE SAID LAND CONTINUED TO BE TREATED AS CAPITAL ASSET. THEREFOR E, THE SALE CONSIDERATION OF THE BUILDING CANNOT BE CONSIDERED TO BE A BUSINESS PROFIT. HOWEVER, THE ASSESSEE CLAIMED THE SUM OF ` 95 CRORES AS BUSINESS RECEIPT. 4. THE LD. D.R. FURTHER POINTED OUT THAT THE WRITTE N DOWN VALUE OF THE BLOCK OF ASSET BUILDINGS FOR THE YEAR UNDE R CONSIDERATION WAS ` 20,14,05,759/- AND AFTER REDUCING THE SAME FROM THE SALE VALUE OF THE BUILDING, THE BALANCE TAXABLE COMPONEN T COMES TO 4 I.T.A. NO.600/MDS/12 ` 14,85,94,241/-. THE LD. D.R. FURTHER SUBMITTED THA T THE WRITTEN DOWN VALUE OF THE BLOCK 'BUILDING HAS GOT EXTINGUI SHED BY ABSORPTION OF THE SALE PROCEEDS OF THE BUILDING. T HEREFORE, THE DEPRECIATION WAS FOUND TO BE INELIGIBLE. ACCORDING LY, THE ASSESSING OFFICER DISALLOWED THE CLAIM OF ` 84,20,996/- TREATING THE SAME AS A WRONG CLAIM AND ADDED THE SAME TO THE TAXABLE INCOM E. IN VIEW OF THE ABOVE FACTUAL SITUATION, ACCORDING TO THE LD. D .R., THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS WITH REGARD TO CLAIM OF DEPRECIATION TO THE EXTENT OF ` 84,20,996/-. 5. REFERRING TO THE ISSUE OF LOSS ON CURRENT ASSETS , THE LD. D.R. POINTED OUT THAT THE ASSESSEE HAS MADE AN ENTRY IN THE PROFIT & LOSS ACCOUNT TOWARDS LOSS ON SALE OF CURRENT ASSETS TO THE EXTENT OF ` 2,08,14,610/-. THE ASSESSEE EXPLAINED BEFORE THE A SSESSING OFFICER THAT LOSS ON SALE OF CURRENT ASSETS TO THE EXTENT OF ` 2,08,14,610/- WAS ACTUALLY A PROVISION MADE IN THE BOOKS OF ACCOUNT FOR OBSOLETE AND IRRECOVERABLE CURRENT ASSE TS. IN VIEW OF THIS EXPLANATION OF THE ASSESSEE, THE ASSESSING OFF ICER ADDED THE SAME TO THE TAXABLE INCOME. THE LD. D.R. POINTED O UT THAT BUT BECAUSE OF THE QUERY RAISED BY THE ASSESSING OFFICE R WITH REGARD TO DEBIT IN THE PROFIT & LOSS ACCOUNT TOWARDS LOSS ON SALE OF CURRENT ASSETS, THE ASSESSEE WOULD NOT HAVE ADMITTED THE AD DITION. 5 I.T.A. NO.600/MDS/12 6. REFERRING TO THE CLAIM OF BAD DEBTS, THE LD. D.R . SUBMITTED THAT THE ASSESSEE HAS WRITTEN OFF BAD DEBTS TO THE EXTENT ` 5,26,59,000/- AND DEBITED THE SAME TO PROFIT & LOSS ACCOUNT. ACCORDING TO THE LD. D.R., THE TOTAL SUNDRY DEBTORS AS ON 31.03.2006 WAS ` 2.58 CRORES AND, AS ON 31.03.2007, IT WAS ` 2.90 CRORES. WHEN THE DEBTS CONTINUED TO EXIST, ACCORDING TO THE LD. D.R., IT IS NOT KNOWN FROM WHERE THESE BAD DEBTS HAVE EMANATED. HOWEVER, THE ASSESSEE CLAIMED THE SAME AS BAD DEBTS AND THE ASSESSING OFFICER REJECTED THE CLAIM OF THE ASSESSEE AND ADDE D THE SAME TO THE TAXABLE INCOME. 7. REFERRING TO THE INVESTMENTS WRITTEN OFF, THE LD . D.R. SUBMITTED THAT THE ASSESSEE HAS WRITTEN OFF INVESTM ENTS TO THE EXTENT OF ` 4,09,09,000/-. THE LD. D.R. CLARIFIED THAT ACTUALL Y THESE ARE ALL THE ACTUAL VALUE OF THE SHARES HELD BY THE ASSESSEE-COMPANY IN ITS WHOLLY OWNED SUBSIDIARY COMPANY M/S BEACON P UMPS LTD. AS ON 31.3.2006. THE ASSESSEE BROUGHT OUT 100% DIMINU TION IN THE VALUE OF THE INVESTMENTS AND CLAIMED THE SAME AS EX PENDITURE. ACCORDING TO THE LD. D.R., THE SAME CANNOT BE ALLOW ED AS CAPITAL LOSS SINCE THERE WAS NO TRANSFER OF SHARES TOOK PLA CE. ACCORDING TO THE LD. D.R., THE CLAIM MADE BY THE ASSESSEE WITH R EGARD TO INVESTMENTS WRITTEN OFF AFTER BRINGING OUT 100% DIM INUTION IN THE 6 I.T.A. NO.600/MDS/12 VALUE OF INVESTMENTS AMOUNTS TO FURNISHING INACCURA TE PARTICULARS OF INCOME. 8. COMING TO THE IRRECOVERABLE PROJECT EXPENSES WRI TTEN OFF, THE LD. D.R. POINTED OUT THAT THE ASSESSEE MADE A CLAIM TO THE EXTENT OF ` 5,43,83,000/- TOWARDS IRRECOVERABLE PROJECT EXPENSE S WRITTEN OFF. THE LD. D.R. POINTED OUT THAT THE ACCOUNTING PRINCI PLE DID NOT PERMIT THE ASSESSEE TO CLAIM THE SAME AS REVENUE LOSS. AC CORDING TO THE LD. D.R., AN INVESTMENT WAS MADE IN THE CAPITAL DOM AIN, THEREFORE, IT HAS TO BE NECESSARILY TREATED AS CAPITAL LOSS AN D NOT AS REVENUE LOSS. THE LD. D.R. FURTHER POINTED OUT THAT THE EX PENDITURE RELATES TO SUBSIDIARY COMPANY OF THE ASSESSEE. SINCE THE PROJ ECT WAS SHELVED, THE ASSESSEE CLAIMS THAT THE EXPENDITURE C ANNOT BE CONVERTED INTO PROFIT. THE ASSESSEE CLAIMED THIS E XPENDITURE AS REVENUE LOSS. ACCORDING TO THE LD. D.R., THIS CANN OT BE ALLOWED AS REVENUE LOSS. THEREFORE, THE ASSESSING OFFICER ADD ED THE SAME TO THE TOTAL INCOME. 9. THE LD. D.R. FURTHER POINTED OUT THAT THE ASSESS EE HAS MADE INCORRECT CLAIM OF EXPENDITURE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE LD. D.R. PLACED HER RELIANCE ON T HE JUDGMENT OF APEX COURT IN UNION OF INDIA V. DHARMENDRA TEXTILE PROCESSORS (2008) 306 ITR 277 AND SUBMITTED THAT SECTION 271(1 )(C) OF THE ACT 7 I.T.A. NO.600/MDS/12 INDICATES CLAIM OF STRICT LIABILITY ON THE ASSESSEE FOR CONCEALMENT OR FOR GIVING INACCURATE PARTICULARS OF INCOME WHILE F ILING THE RETURN. ACCORDING TO THE LD. D.R., PENALTY BEING A CIVIL LI ABILITY, WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIENT FOR ATTR ACTING PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE LD. D.R. H AS ALSO PLACED RELIANCE ON THE JUDGMENT OF MADRAS HIGH COURT IN CI T V. B.A. BALASUBRAMANIAM AND BROS. (1985) 152 ITR 529. THE LD. D.R. HAS ALSO PLACED HER RELIANCE ON AN UNREPORTED DECISION OF DELHI BENCH OF THIS TRIBUNAL REFERRED BY THE REVENUE IN ITS GRO UNDS OF APPEAL AT GROUND NO.2.4 IN M/S CHADHA SUGARS P. LTD. IN ITA NO.1773(DEL)/2010 DATED 23.12.2010. ACCORDING TO T HE LD. D.R., THE CIT(APPEALS) COMMITTED AN ERROR IN DELETING THE PENALTY LEVIED BY THE ASSESSING OFFICER, MAINLY PLACING RELIANCE O N THE DECISION OF THE JUDGMENT OF APEX COURT IN CIT V. RELIANCE PETRO PRODUCTS PVT. LTD. (2010) 322 ITR 158. 10. ON THE CONTRARY, SHRI S. SUBRAMANIAN, THE LD. R EPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT PENALTY UNDER SECT ION 271(1)(C) OF THE ACT CAN BE LEVIED EITHER ON CONCEALING THE PART ICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF SUCH INCOME . IN THIS CASE, ACCORDING TO THE LD. REPRESENTATIVE, NO PART OF THE INCOME WAS CONCEALED BY THE ASSESSEE. MOREOVER, THE ASSESSEE HAS NOT FURNISHED ANY INACCURATE PARTICULARS REGARDING ITS INCOME. 8 I.T.A. NO.600/MDS/12 ACCORDING TO THE LD. REPRESENTATIVE, AFTER FURNISHI NG ALL THE DETAILS OF INCOME, MAKING A CLAIM FOR DEDUCTION DOES NOT AMOUN T TO FURNISHING INACCURATE PARTICULARS. THEREFORE, ACCORDING TO TH E LD. REPRESENTATIVE, THE CIT(APPEALS) HAS RIGHTLY DELETE D THE PENALTY LEVIED BY THE ASSESSING OFFICER PLACING RELIANCE ON THE JUDGMENT OF APEX COURT IN CIT V. RELIANCE PETROPRODUCTS PVT. LT D. (2010) 322 ITR 158. 11. ACCORDING TO THE LD. REPRESENTATIVE FOR THE ASS ESSEE, ALL THE PARTICULARS OF INCOME WERE DISCLOSED IN THE RETURN OF INCOME AS WELL AS IN THE AUDIT REPORT. THE CLAIM MADE BY THE ASSE SSEE IS ALSO DISCLOSED IN THE AUDIT REPORT BY WAY OF A SEPARATE ITEM IN THE PROFIT & LOSS ACCOUNT AND IT WAS ALSO DISCLOSED IN THE NOTES ON ACCOUNTS. THE LD. REPRESENTATIVE FURTHER SUBMITTED THAT SCHED ULE 10 OF AUDITED ACCOUNTS PERTAINS TO MANUFACTURING, CONSTRU CTION AND OPERATING COST INCLUDING ALL THE ITEMS CLAIMED BY T HE ASSESSEE AS DEDUCTION. REFERRING TO NOTE 3 OF NOTES ON ACCOUNT S, A COPY OF WHICH IS AVAILABLE AT PAGE 58 OF THE PAPER-BOOK, TH E LD. REPRESENTATIVE SUBMITTED THAT INVESTMENTS WRITTEN O FF TO THE EXTENT OF ` 4.09 CRORES, BAD DEBTS WRITTEN OFF TO THE EXTENT OF ` 5.27 CRORES, IRRECOVERABLE PROJECT EXPENSES TO THE EXTENT OF ` 5.44 CRORES AND LOSS ON DISPOSAL OF INVESTMENTS IN SUBSIDIARIES TO THE EXTENT OF ` 9.21 9 I.T.A. NO.600/MDS/12 CRORES WERE ALL DISCLOSED IN THE NOTES ON ACCOUNTS. ACCORDING TO THE LD. REPRESENTATIVE, THE AUDIT REPORTS WERE PREP ARED AND SIGNED ON 13.08.2007, WHICH WERE MUCH BEFORE THE ISSUE OF NOTICE UNDER SECTION 143(2) OF THE ACT, I.E. ON 22.07.2008. THE LD. REPRESENTATIVE FURTHER SUBMITTED THAT THE REVENUE A UTHORITIES COULD NOT POINT OUT ANY DISCREPANCY EITHER IN THE INCOME OR EXPENDITURE CLAIMED BY THE ASSESSEE DURING THE COURSE OF SURVEY OPERATION. THE ENTIRE PARTICULARS REGARDING INCOME AND EXPENDI TURE CLAIM MADE BY THE ASSESSEE ARE AVAILABLE IN THE AUDITED A CCOUNTS WHICH WERE FILED ALONG WITH RETURN OF INCOME. THE LD. RE PRESENTATIVE FURTHER SUBMITTED THAT IT IS NOT THE CASE OF THE RE VENUE THAT THESE PARTICULARS WERE UNEARTHED DURING THE COURSE OF SUR VEY OPERATION. IN FACT, THE ASSESSEE VOLUNTARILY DISCLOSED ALL THE ITEMS, INCLUDING LOSS ON SALE OF CURRENT ASSETS TO THE EXTENT OF ` 2,08,14,610/-, ON ACCOUNT OF OBSOLETE AND IRRECOVERABILITY THEREOF. THE LD. REPRESENTATIVE SUBMITTED THAT THE APEX COURT IN THE CASE OF CIT V. HINDUSTAN ZINC LTD. (2007) 161 TAXMAN 162, ALLOWED THE SIMILAR CLAIM OF THE ASSESSEE. IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2008-09, THE CLAIM OF THE ASSESSEE WAS ALLOWED BY THIS TRIBUNAL IN I.T.A. NO. 803/MDS/2012. SIMILARLY, PU NE BENCH OF THIS TRIBUNAL IN ATLAS COPCO (INDIA) LTD. AND DELHI BENC H OF THIS TRIBUNAL IN LPS BOSSARD PVT. LTD. ALLOWED THE CLAIM OF THE A SSESSEE IN 10 I.T.A. NO.600/MDS/12 RESPECT OF THE LOSS ON SALE OF CURRENT ASSETS. THE REFORE, ACCORDING TO THE LD. REPRESENTATIVE, THE CLAIM OF THE ASSESSE E OUGHT TO HAVE BEEN ALLOWED WHILE COMPUTING TOTAL INCOME. MERELY BECAUSE AN ADDITION WAS MADE DISALLOWING THE CLAIM OF THE ASSE SSEE, ACCORDING TO THE LD. REPRESENTATIVE, THAT CANNOT BE A REASON TO LEVY PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE LD. REPRES ENTATIVE FURTHER SUBMITTED THAT MAKING A CLAIM OF LOSS ON SALE OF CU RRENT ASSETS, AFTER FURNISHING OF PARTICULARS OF INCOME, DOES NOT AMOUN T TO FURNISHING OF INACCURATE PARTICULARS. IN OTHER WORDS, A CLAIM MA DE BY THE ASSESSEE FOR DEDUCTION FROM THE TOTAL INCOME COMPUT ED CANNOT BE TREATED AS FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE LD. REPRESENTATIVE PLACED HIS RELIANCE ON THE JUDGMENT OF APEX COURT IN RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA). 12. REFERRING TO THE CLAIM OF BAD DEBTS TO THE EXTE NT OF ` 4,71,28,783/-, THE LD. REPRESENTATIVE SUBMITTED THA T THIS CLAIM OF BAD DEBTS WAS WRITTEN OFF AT ERSTWHILE PROJECT DIVI SION, WHICH WAS EARLIER TRANSFERRED TO THE WHOLLY OWNED SUBSIDIARY COMPANY OF THE ASSESSEE. ACCORDING TO THE LD. REPRESENTATIVE, THE ERSTWHILE PROJECT DIVISION COULD NOT COLLECT ITS DEBTS. THEREFORE, I T WAS TRANSFERRED TO THE ASSESSEE. THE LD. REPRESENTATIVE FURTHER SUBMI TTED THAT SINCE THE INCOME FROM THE SAID DIVISION WAS OFFERED BY TH E ASSESSEE, THE 11 I.T.A. NO.600/MDS/12 BAD DEBTS WHICH WERE WRITTEN OFF WERE ALSO CLAIMED UNDER SECTION 36(2) OF THE ACT. ACCORDING TO THE LD. REPRESENTAT IVE, THIS CLAIM OF THE ASSESSEE CANNOT BE CONSTRUED AS FURNISHING OF I NACCURATE PARTICULARS. WHEN THE ERSTWHILE PROJECT DIVISION T OOK THE DEBTS AS ITS INCOME, AND BECAUSE IT COULD NOT COLLECT THE SA ME, THE SAME WAS TRANSFERRED WHILE THE PROJECT DIVISION ITSELF WAS T RANSFERRED TO THE ASSESSEE AND THE ASSESSEE ITSELF OFFERED THE INCOME FROM THE SAID PROJECT DIVISION AS ITS INCOME, ACCORDING TO THE LD . REPRESENTATIVE, IT HAS TO BE ALLOWED AS BAD DEBTS IN THE HANDS OF THE ASSESSEE SINCE THE DEBTS WERE ACTUALLY WRITTEN OFF. THEREFORE, TH E LD. REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAS A LE GALLY CONTESTABLE CASE. THEREFORE, MERELY BECAUSE THE CL AIM OF THE BAD DEBTS WAS DISALLOWED, ACCORDING TO THE LD. REPRESEN TATIVE, THIS CANNOT BE TREATED AS FURNISHING INACCURATE PARTICUL ARS OF INCOME. 13. NOW COMING TO THE ISSUE OF IRRECOVERABLE PROJEC T EXPENSES WRITTEN OFF TO THE EXTENT OF ` 5,43,83,000/-, THE CLAIM WAS MADE AS PROJECT EXPENSES INCURRED BY THE ASSESSEE. HOWEVER , THE SAME COULD NOT BE BILLED ON THE CUSTOMERS ON BECOMING IR RECOVERABLE. THEREFORE, THE SAME WAS WRITTEN OFF. ACCORDING TO THE LD. REPRESENTATIVE, THE IRRECOVERABLE PROJECT EXPENSES ARE COST OVERRUNS ON FIXED CONTRACT PROJECTS WHICH CANNOT BE BILLED. THEREFORE, IT 12 I.T.A. NO.600/MDS/12 BECOMES IRRECOVERABLE. ACCORDING TO THE LD. REPRES ENTATIVE, THIS WAS INCLUDED UNDER THE HEAD EXPENSES IN SCHEDULE 10(4) OF THE AUDITED ACCOUNTS, A COPY OF WHICH IS AVAILABLE AT P AGE 51 OF THE PAPER-BOOK. 14. REFERRING TO THE DISALLOWANCE ON INVESTMENTS WR ITTEN OFF TO THE EXTENT OF ` 4,09,09,000/-, THE LD. REPRESENTATIVE SUBMITTED THA T THE INVESTMENTS WRITTEN OFF WERE ALLOWED BY HIMACHA L PRADESH HIGH COURT AS DEDUCTION IN CIT V. H.P. MINERAL AND INDUS TRIAL DEVELOPMENT CORPORATION LTD. THE LD. REPRESENTATIV E FURTHER SUBMITTED THAT EVEN THIS TRIBUNAL IN DCIT V. RAMBAL PROPERTIES IN I.T.A. NO.1271/MDS/2010 FOR THE ASSESSMENT YEAR 200 6-07 ALLOWED THE INVESTMENTS WRITTEN OFF. REFERRING TO THE CLAI M OF DEPRECIATION UNDER THE BLOCK BUILDINGS TO THE EXTENT ` 84,20,996/-, THE LD. REPRESENTATIVE SUBMITTED THAT THE ASSESSING OFFICER FOUND THAT THE ASSESSEES CLAIM OF LONG TERM CAPITAL LOSS OF ` 14,11,73,333/- CANNOT BE A BASIS FOR LEVYING PENALTY. THE FACT REMAINS T HAT THE LAND WAS CONVERTED INTO STOCK-IN-TRADE IN THE FINANCIAL YEAR 1994-95 RELEVANT TO ASSESSMENT YEAR 1995-96. ONCE THE LAND WAS CONV ERTED INTO STOCK-IN-TRADE AND THE BUILDING CONTINUES AS CAPITA L ASSET IN THE BOOKS OF ACCOUNT, NOTHING WRONG IN CLAIMING DEPRECI ATION ON BUILDING. THE LD. REPRESENTATIVE FURTHER SUBMITTED THAT WHEN A LAND 13 I.T.A. NO.600/MDS/12 AND BUILDING WERE SOLD BY WAY OF A SINGLE SALE DEED , THE ENTIRE SALE CONSIDERATION HAS TO BE TREATED AS BUSINESS RECEIPT BECAUSE THE LAND CANNOT BE TRANSFERRED WITHOUT THE BUILDING. I N OTHER WORDS, THE PURCHASER WOULD NOT BE WILLING TO PURCHASE THE LAND UNLESS THE BUILDING IS TRANSFERRED. THEREFORE, THE ASSESSEE H AS RIGHTLY TREATED THE ENTIRE ` 95 CRORES AS BUSINESS RECEIPT. ADMITTEDLY, THE TOT AL CONSIDERATION OF ` 95 CRORES WAS DISCLOSED AND THERE IS NO DISPUTE ABOUT THAT. MAKING A CLAIM OF ` 84,20,996/- AS DEPRECIATION AFTER DISCLOSING THE ENTIRE SALE CONSIDERATION WILL NOT A MOUNT TO FURNISHING INACCURATE PARTICULARS. THE LD. REPRESENTATIVE PL ACED HIS RELIANCE ON THE JUDGMENT OF THE BOMBAY HIGH COURT IN CIT V. DALMIA DYECHEM INDUSTRIES LTD. IN ITA NO.1396 OF 2013 DATE D 6.7.2015, A COPY OF WHICH IS FILED BY THE ASSESSEE. REFERRING TO THE CLAIM OF DEPRECIATION IN RESPECT OF THE VERY SAME BUILDING, THE LD. REPRESENTATIVE SUBMITTED THAT THE SAME ISSUE CAME B EFORE THIS TRIBUNAL IN ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2007-08 IN 457/MDS/2012. THIS TRIBUNAL, BY ORDER DATED 19.02. 2014, FOUND THAT THE ASSESSEE IS ELIGIBLE FOR DEPRECIATION. TH E TRIBUNAL FOUND THAT UNABSORBED DEPRECIATION FROM ASSESSMENT YEAR 1 997-98 UPTO ASSESSMENT YEAR 2001-02 WAS CARRIED FORWARD TO THE ASSESSMENT YEAR 2002-03 AND BECAME PART THEREOF AND WERE AVAIL ABLE FOR CARRY FORWARD AND SET OFF AGAINST THE PROFITS AND GAINS O F SUBSEQUENT 14 I.T.A. NO.600/MDS/12 YEARS WITHOUT ANY LIMIT WHATSOEVER. IN VIEW OF THE ABOVE, ACCORDING TO THE LD. REPRESENTATIVE, MAKING A CLAIM OF DEPREC IATION ON THE BUILDING CANNOT BE CONSTRUED TO BE FURNISHING INACC URATE PARTICULARS OF ANY INCOME. 15. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE ASSES SING OFFICER LEVIED PENALTY IN RESPECT OF FIVE ITEMS OF DISALLOW ANCE/EXPENDITURE, NAMELY, (I) CLAIM OF DEPRECIATION UNDER BLOCK BUI LDINGS; (II) LOSS ON SALE OF CURRENT ASSETS; (III) CLAIM OF BAD DEBT S; (IV) INVESTMENTS WRITTEN OFF; (V) IRRECOVERABLE PROJECT EXPENSES WR ITTEN OFF, ON THE GROUND THAT THE ASSESSEE HAS FURNISHED INACCURATE P ARTICULARS OF INCOME. HOWEVER, ON APPEAL BY THE ASSESSEE, THE CI T(APPEALS) MAINLY PLACING RELIANCE ON THE JUDGMENT OF APEX COU RT IN RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA) AND THE JUDGMENTS O F THE PUNJAB & HARYANA HIGH COURT IN CIT V. SIDHARTHA ENTERPRISES (322 ITR 80) & IN CIT V. SHAHABAD CO-OPERATIVE SUGAR MILLS LTD. (3 22 ITR 73), DELETED THE PENALTY LEVIED BY THE ASSESSING OFFICER . THE CIT(APPEALS) HAS ALSO PLACED HIS RELIANCE ON THE JU DGMENTS OF MADRAS HIGH COURT IN KAMY SOFTWARE SOLUTIONS P. LTD . (214 CTR 403) & IN S.V. KALYANAM V. ITO (327 ITR 477). THE CIT(APPEALS) FURTHER FOUND THAT THE DETAILS FURNISHED BY THE ASS ESSEE ARE NOT 15 I.T.A. NO.600/MDS/12 INACCURATE PARTICULARS OF INCOME, THEREFORE, IT WOU LD NOT ATTRACT PENALTY. THE QUESTION NOW ARISES FOR CONSIDERATION IS WHEN THE ASSESSEE HAS FURNISHED ENTIRE DETAILS OF INCOME BY DISCLOSING THE SAME IN THE RETURN OF INCOME, AUDIT STATEMENTS, ETC ., WHETHER A CLAIM WITH REGARD TO DEPRECIATION ON BLOCK BUILDING S, LOSS ON SALE OF CURRENT ASSETS, CLAIM OF BAD DEBTS, INVESTMENTS WRI TTEN OFF AND IRRECOVERABLE PROJECT EXPENSES WRITTEN OFF, WOULD A MOUNT TO FURNISHING INACCURATE PARTICULARS OF INCOME. IT IS PERTINENT TO NOTE THAT THE ASSESSING OFFICER HIMSELF AT PARA 8.1 OF T HE PENALTY ORDER FOUND THAT THE ADDITION MADE WITH REGARD TO CLAIM O F (I) ROC FEES; (II) LOSS ON EXCHANGE VARIATION; (III) REVERSAL O F PROVISIONS OF SALES TAX; (IV) MISCELLANEOUS ADDITIONS; AND (V) DISALL OWANCE UNDER SECTION 14A ARE DEBATABLE ISSUE AND THE ASSESSEE EX TENDED ITS CO- OPERATION AT THE TIME OF SCRUTINY, THEREFORE, IT WA S NOT CONSIDERED FOR LEVY OF PENALTY. THEREFORE, THE LEVY OF PENALTY IN RESPECT OF OTHER DISALLOWANCES MADE BY THE ASSESSING OFFICER HAS TO BE CONSIDERED IN THE LIGHT OF THE OBSERVATION MADE BY THE ASSESSI NG OFFICER AT PARA 8.1 OF THE PENALTY ORDER. 16. WE HAVE CAREFULLY GONE THROUGH THE PROVISIONS O F SECTION 271(1)(C) OF THE ACT, WHICH READS AS FOLLOWS:- 271. (1) IF THE ASSESSING OFFICER OR THE 16 I.T.A. NO.600/MDS/12 COMMISSIONER (APPEALS) OR THE COMMISSIONER IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY PERSON (A) .. .. .. .. .. .. .. (B) .. .. .. .. .. .. .. (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. THE ASSESSING OFFICER IS EMPOWERED TO LEVY PENALTY, IF HE IS SATISFIED THAT THE ASSESSEE HAS CONCEALED THE PARTI CULARS OF ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. IN THE CASE BEFORE US, IT IS NOT THE CASE OF THE REVENUE T HAT THE ASSESSEE CONCEALED ANY PARTICULARS OF ITS INCOME. THE SPECI FIC CASE OF THE REVENUE BEFORE THIS TRIBUNAL IS THAT THE ASSESSEE H AS FURNISHED INACCURATE PARTICULARS OF ITS INCOME. AS OBSERVED EARLIER, THE QUESTION ARISES FOR CONSIDERATION IS WHEN THE ASSES SEE HAS FURNISHED ALL THE PARTICULARS/ DETAILS OF ITS INCOM E, AND CLAIMED DEDUCTION IN RESPECT OF DEPRECIATION ON BLOCK OF BU ILDINGS, LOSS ON SALE OF CURRENT ASSETS, CLAIM OF BAD DEBTS, INVESTM ENTS WRITTEN OFF AND IRRECOVERABLE PROJECT EXPENSES WRITTEN OFF, AS DEDUCTION/EXPENDITURE, WHETHER THIS WOULD AMOUNT TO FURNISHING INACCURATE PARTICULARS OF ITS INCOME? THE APEX COU RT IN RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA) CONSIDERED AN IDENT ICAL QUESTION. IN THE CASE BEFORE APEX COURT, THE INTEREST EXPENDITUR E CLAIMED BY THE ASSESSEE WAS DISALLOWED AND WAS ADDED TO THE TOTAL INCOME OF THE 17 I.T.A. NO.600/MDS/12 ASSESSEE. SIMULTANEOUSLY, PENALTY PROCEEDINGS UNDE R SECTION 271(1)(C) OF THE ACT WAS ALSO INITIATED ON ACCOUNT OF CONCEALMENT OF INCOME/FURNISHING OF INACCURATE PARTICULARS OF INCO ME. THE APEX COURT, AFTER REFERRING TO THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT, FOUND THAT SUBMITTING INCORRECT CLAIM IN LAW F OR THE EXPENDITURE ON INTEREST WOULD NOT AMOUNT TO GIVING INACCURATE P ARTICULARS OF INCOME. THE APEX COURT FURTHER FOUND THAT IN ORDER TO EXPOSE THE ASSESSEE TO THE PENALTY, THE CASE HAS TO BE COVERED STRICTLY BY THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT. THE A PEX COURT FURTHER FOUND THAT BY ANY STRETCH OF IMAGINATION MAKING AN INCORRECT CLAIM IN LAW CANNOT TANTAMOUNT TO FURNISHING INACCURATE PART ICULARS OF INCOME. THE APEX COURT, AFTER REFERRING TO ITS EAR LIER JUDGMENTS IN DILIP N. SHROFF V. JCIT (2007) 291 ITR 519 AND IN U NION OF INDIA V. DHARAMENDRA TEXTILE PROCESSORS (2008) 306 ITR 277, FOUND THAT A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REG ARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN C ANNOT AMOUNT TO INACCURATE PARTICULARS. AFTER REFERRING TO ITS EAR LIER JUDGMENT IN SREE KRISHNA ELECTRICALS V. STATE OF TAMIL NADU (2009) 2 3 VST 249, THE APEX COURT FOUND THAT THE SITUATION WAS STILL BETTE R AS NO FAULT HAS BEEN FOUND WITH THE PARTICULARS SUBMITTED BY THE AS SESSEE IN ITS RETURN. IN THIS CASE ALSO, OTHER THAN THE CLAIM MA DE BY THE 18 I.T.A. NO.600/MDS/12 ASSESSEE WITH REGARD TO FIVE ITEMS OF DEDUCTION, NA MELY, CLAIM OF DEPRECIATION UNDER BLOCK BUILDINGS, LOSS ON SALE OF CURRENT ASSETS, CLAIM OF BAD DEBTS, INVESTMENTS WRITTEN OFF AND IRR ECOVERABLE PROJECT EXPENSES WRITTEN OFF, NO FAULT HAS BEEN FOUND BY TH E ASSESSING OFFICER IN THE PARTICULARS OF INCOME SUBMITTED BY T HE ASSESSEE IN ITS RETURN. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDE RED OPINION THAT MERELY BECAUSE THE CLAIM OF THE ASSESSEE WAS FOUND TO BE NOT SUSTAINABLE IN LAW BY THE ASSESSING OFFICER, THAT C ANNOT BE A REASON TO SAY THAT THE ASSESSEE HAS FURNISHED ANY INACCURA TE PARTICULARS REGARDING ITS INCOME. THIS TRIBUNAL IS OF THE CONS IDERED OPINION THAT THE ASSESSEE HAS NOT FURNISHED ANY INACCURATE PARTI CULARS REGARDING ITS INCOME. IN VIEW OF THE JUDGMENT OF THE APEX CO URT IN RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA), THE ASSESSEE CANNO T BE BY ANY STRETCH OF IMAGINATION CONSTRUED AS IF FURNISHED AN Y INACCURATE PARTICULARS OF INCOME. 17. WE HAVE ALSO CAREFULLY GONE THROUGH THE JUDGMEN T OF APEX COURT IN DHARAMENDRA TEXTILE PROCESSORS (SUPRA) AND THE DECISION OF DELHI BENCH OF THIS TRIBUNAL IN CHADHA SUGARS P. LTD. (SUPRA). AFTER GOING THROUGH THE ABOVE JUDGMENT OF THE APEX COURT AND THE DECISION OF DELHI BENCH, THIS TRIBUNAL IS OF THE CO NSIDERED OPINION THAT THE SAME IS NOT APPLICABLE TO THE FACTS OF THE CASE IN VIEW OF THE 19 I.T.A. NO.600/MDS/12 JUDGMENT OF APEX COURT IN RELIANCE PETROPRODUCTS PV T. LTD. (SUPRA). IN FACT, THE JUDGMENT OF APEX COURT IN RELIANCE PET ROPRODUCTS PVT. LTD. (SUPRA) WAS NOT BROUGHT TO THE NOTICE OF THE D ELHI BENCH OF THIS TRIBUNAL IN CHADHA SUGARS P. LTD. (SUPRA). THEREFO RE, BY RESPECTFULLY FOLLOWING THE JUDGMENT OF APEX COURT I N RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA) AND FOR THE REASONS STATED THEREIN, THE ORDER OF THE CIT(APPEALS) IS UPHELD. 18. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED ON 16 TH SEPTEMBER, 2015 AT CHENNAI. SD/- SD/- ( ! ' ) ( ... ) (CHANDRA POOJARI) (N.R.S. GANESAN) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 6 /DATED, THE 16 TH SEPTEMBER, 2015. KRI. / -278 98)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 :2 () /CIT(A)-III, CHENNAI 4. 1 :2 /CIT, CHENNAI-I, CHENNAI 5. 8; -2 /DR 6. <( = /GF.