ITO, New Delhi V. M/s. MCT India Infotech Pvt. Ltd., New Delhi

ITA 6071/DEL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3970 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 09-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Wrong claim; Competent authority
• Section: 143(3); 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: D NEW DELHI BEFORE SHRI G.D. AGRAWAL, HONBLE PRESIDEN T & SHRI K.N. CHARY, JUDICIAL MEMBER ITA NO.-6071/DEL/2015 ( ASSESSMENT YEAR: 2011-12) ITO WARD 16(1) ROOM NO. 213, C.R. BLDG., NEW DELHI. VS MCT INDIA INFOTECH PVT. LTD. SS-11A, 2 ND FLOOR, ADITYA MEGA MALL, CBD GROUND, SHAHDARA, NEW DELHI. AAACJ8718D ASSESSEE BY SH. ANIL KHANNA, CA REVENUE BY SH. ARUN KUMAR YADAV, SR. DR ORDER PER SHRI K.N. CHARY, JUDICIAL MEMBER THIS IS AN APPEAL BY THE REVENUE CHALLENGING THE OR DER DATED 31.08.2015 IN APPEAL NO. 492/14-15 PASSED BY THE LD . COMMISSIONER OF INCOME TAX (APPEALS)-6, DELHI (HERE INAFTER FOR SHORT CALLED AS THE LD. CIT (A)) ON THE FOLLOWING GROUNDS: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT (A) IS JUSTIFIED IN NOT UPHOLDING THE PENALT Y ORDER PASSED BY THE ASSESSING OFFICER (THE AO) U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (THE ACT)? 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) IS JUSTIFIED IN SETTING ASIDE THE PENAL TY ORDER U/S 271(1)(C) DATE OF HEARING 19.09.2017 DATE OF PRONOUNCEMENT 09.10.2017 2 ITA NO. 6071/DEL/2015 OF THE ACT WITHOUT CONSIDERING PROVISIONS OF EXPLAN ATION 1 TO SECTION 271(1)(C) OF THE ACT.? 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) IS JUSTIFIED IN NOT UPHOLDING THE PENAL TY ORDER U/S 271(1)(C) OF THE ACT BY IGNORING RATIO DICIDENDI AS UPHELD BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS. M/S ZOOM COMMUNICATION PVT. LTD. (2010) 327 ITR 510 (DELHI). 4. THAT THE ORDER OF THE LD. CIT (A) IS ERRONEOUS AND IS NOT TENABLE ON FACTS AND IN LAW. 5. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEN D OR FORGO ANY GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF H EARING OF THE APPEAL. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSMENT U/S 143(3) OF THE INCOME TAX ACT, 1961 (FOR SHORT CALLE D AS THE ACT) FOR THE AY 2011-12 WAS COMPLETED AND DURING THE COURSE OF ASSESSMENT IT WAS FOUND THAT THE ASSESSEE WAS CLAIM ING DEDUCTION U/S 10B OF THE ACT BUT SINCE THE ASSESSEE HAD NOT O BTAINED ANY APPROVAL FROM THE COMPETENT AUTHORITY AND THE SOFTW ARE TECHNOLOGY PARK OF INDIA WAS NOT COMPETENT TO GRANT APPROVAL. HOWEVER, ASSESSEE FILED A REVISED COMPUTATION OF IN COME WITHDRAWING THE CLAIM OF DEDUCTION U/S 10B BUT THE ASSESSING OFFICER FOUND THAT FOR NON APPROVAL BY THE ASSESSEE BY THE COMPETENT AUTHORITY THE ASSESSEE IS NOT ENTITLED TO SEEK DEDUCTION U/S 10B AND FOR WANT OF MEETING THIS REQUIREMENT TH E CLAIM OF THE ASSESSEE BECOMES A WRONG CLAIM, AS SUCH, FOLLOWING THE DECISION OF THE HONBLE HIGH COURT IN CIT VS. ZOOM COMMUNICATIO N P. LTD. 3 ITA NO. 6071/DEL/2015 (2010) 327 ITR 510 (DELHI), AO PROCEEDED TO LEVY A PENALTY OF RS. 11,21,000/- OF THE ACT. HOWEVER, IN APPEAL LD. CIT (A) WHILE FOLLOWING THE DECISION OF THE HONBLE APEX COURT IN CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. 322 ITR 158 (SC) AND ALSO THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE O F ENERGETIC CONSTRUCTIONS PVT. LTD. VS. DEPARTMENT OF INCOME TA X AND CIT VS. JAKSON LTD. DELETED THE SAME. HENCE, THE REVENUE I S IN APPEAL. 3. IT IS THE ARGUMENT OF THE LD. DR THAT THE LD. CI T (A) ERRED IN IGNORING THE RATIO OF THE HONBLE JURISDICTIONAL HI GH COURT IN CIT VS. M/S ZOOM COMMUNICATION P. LTD. (SUPRA) AND IN N OT CONSIDERING THE PROVISIONS OF EXPLANATION 1 TO SECT ION 271(1)(C) OF THE ACT. IT IS FURTHER ARGUED THAT THERE ARE NO BONA FIDES ON THE PART OF THE ASSESSEE IN MAKING A FALSE CLAIM FOR DE DUCTION U/S 10B OF THE ACT KNOWING IT FULLY WELL THAT STPI IS NOT A COMPETENT AUTHORITY U/S 14 OF THE INDUSTRIES DEVELOPMENT & RE GULATION ACT (IDAR) ACT, AS SUCH, PENALTY IMPOSED BY THE AR IS P ROPER AND CORRECT. PER CONTRA, IT IS THE SUBMISSION OF THE L D. AR THAT IT IS ONLY UNDER THE MISTAKEN IMPRESSION THAT SINCE THE R EGISTRATION WAS GRANTED BY THE STPI SOCIETY TO THE ASSESSEE AND IN VIEW OF THE 4 ITA NO. 6071/DEL/2015 DECISION REPORTED IN MENTOR GRAPHICS (NOIDA) PVT. L TD. DELIVERED ON 18.01.2015 READ WITH THE DECISION OF THE HONBLE JU RISDICTIONAL HIGH COURT IN CIT VS. TECHNOVATE E SOLUTIONS PVT. L TD., APPROVAL GIVEN BY THE STPI IS VALID HAVING AUTHORITY OF INTE R MINISTERIAL STANDING COMMITTEE IN RESPECT OF THE CLAIMS U/S 10A , THE ASSESSEE CLAIMED DEDUCTION U/S 10B OF THE ACT SINCE THE PROV ISIONS OF SECTION 10A AND 10B ARE SIMILAR. FURTHER HE SUBMIT TED THAT THE MOMENT THE ASSESSEE REALIZED THIS, THEY FILED REVIS ED RETURN OF INCOME WITHDRAWING THE CLAIM FOR DEDUCTION U/S 10B OF THE ACT, AS SUCH, THE DELETION OF PENALTY BY THE LD.CIT (A) IS PROPER AND CANNOT BE INTERFERED WITH. 4. WE HAVE CAREFULLY GONE THROUGH THE RECORD. THE CONTENTION OF THE ASSESSEE IS THAT THE PROVISIONS OF SECTION 10A & 10B ARE SIMILAR, AS SUCH, SINCE THE ASSESSEE HAD FULFILLED ALL THE CONDITIONS ARE REQUIRED FOR DEDUCTION U/S 10A OF THE INCOME TA X ACT UNDER MISTAKE AND IMPRESSION THEY CLAIM THE DEDUCTION U/S 10B IN RESPECT OF THE STPI UNIT. IT IS SUBMITTED THAT THE HONBLE JURISDICTIONAL HIGH COURT IN CIT VS. TECHNOVAT E SO LUTIONS PVT. LTD. HELD THAT THE APPROVALS GIVEN BY THE DIRECTORS OF SOFTWARE 5 ITA NO. 6071/DEL/2015 TECHNOLOGY PARKS OF INDIA ARE VALID HAVING THE AUTH ORITY OF INTER MINISTERIAL STANDING COMMITTEE. IT IS ALSO AN ADMI TTED FACT THAT THE MOMENT THE NOTICE WAS ISSUED CALLING UPON THE A SSESSEE TO EXPLAIN WHY THE DEDUCTION U/S 10B SHOULD NOT BE DIS ALLOWED, THE ASSESSEE FILED A RETURN OF INCOME WITHDRAWING THE C LAIM FOR DEDUCTION U/S 10B OF THE ACT. IN THE CIRCUMSTANCES , WE FIND THAT THE LD.CIT (A) IS JUSTIFIED IN HIS VIEW THAT THE IS SUE WHETHER CLAIMED U/S 10B IS A DEDUCTION OR EXEMPTION IS A DE BATABLE ISSUE AND ON THIS ASPECT THE REASONING GIVEN BY THE LD.CI T (A) IN PARAGRAPH NO. 3 IS IMPACABLE. FURTHER LD.CIT (A) B ASED HIS CONCLUSION ON THE DECISION OF THE HONBLE APEX COUR T IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. 322 ITR 1 58 (SC) THAT DISALLOWANCE OF A CLAIM FOR DEDUCTION WILL NOT AUTO MATICALLY LEAD TO THE LEVY OF PENALTY UNLESS THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS. WE ARE AGREE ING WITH THE FINDINGS OF THE LD. CIT (A) THAT BY REASON A BONA FIDE LEGAL CLAIM IN THE RETURN OF INCOME EVEN IF THE SAME IS ULTIMATELY FOUND TO BE NOT ACCEPTABLE, IT WOULD BE SAID THAT INCOME HAS BEEN C ONCEALED OR INACCURATE PARTICULARS OF INCOME WERE FURNISHED, AN D CONSEQUENTLY, THE ASSESSEE CANNOT BE PENALIZED. WE , THEREFORE, 6 ITA NO. 6071/DEL/2015 WHILE UPHOLDING THE ORDER OF THE LD. CIT (A) DISMIS S THE GROUNDS OF APPEAL. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 09.10.2017 SD/- SD/- (G.D. AGRAWAL) (K.N. CHARY) PRESIDENT JUDICIAL MEMBER DATED: 09.10.2017 *KAVITA ARORA COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI 7 ITA NO. 6071/DEL/2015