RAMA NEWSPRINT AND PAPER LTD, MUMBAI V. DCIT RG 3(3), MUMBAI

ITA 6087/MUM/2012

• Counselvise Citation: 608719914 RSA 2012
• Duration Of Justice: 2 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-11-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 29-10-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 05-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR BORA
• Assessee Lawyers: NARAYAN ATAL
• Keywords: Revenue expenditure; Capital expenditure
• Section: 2; 43B

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE HONBLE S/SHRI H.L. KARWA, PRESIDENT AND B. R.BASKARAN (AM) . . , . . , ./I.T.A. NO.6087/MUM/2012 ( / ASSESSMENT YEAR : 2007-08) RAMA NEWSPRINT AND PAPER LTD., C/O GIRISH SHARMA SR.VICE PRESIDENT-FINANCE AND ACCOUNTS, CHANDRAMUKHI B WING, 8 TH FLOOR, R N GOENKA MARG, NARIMAN POINT, MUMBAI-400021 / VS. DY. COMMISSIONER OF INCOME TAX- 3(3), ROOM NO.605, 6 TH FLOOR, AYAKAR BHAVAN, M K ROAD, MUMBAI-400020 ( / APPELLANT) .. ( !' / RESPONDENT) ./ $% ./ PAN/GIRNO.:AAACR2499H & / APPELLANT BY : SHRI NARAYAN ATAL !' ' & /RESPONDENT BY : SHRI VIJAY KUMAR BORA ( ) ' * + / DATE OF HEARING : 29.10.2014 ,- ' * + /DATE OF PRONOUNCEMENT : 5.11.2014. / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 07-04- 2010 PASSED BY LD CIT(A)-7, MUMBAI AND IT RELATES T O THE ASSESSMENT YEAR 2007-08. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN CONFIRMING THE PENALTY OF RS.5,14,456/- LEVIED BY THE AO U/S 2 71(1)(C) OF THE ACT. 2. WE HEARD THE PARTIES AND PERUSED THE RECORD. WE NOTICE THAT THE ASSESSING OFFICER HAS LEVIED PENALTY FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME IN RESPECT OF THE FOLLOWING ADDITIONS:- (A) PROVISION FOR LEAVE ENCASHMENT - RS.7,96,156 /- (B) PROJECT EXPENSES - RS.7,32,240/-. ITA NO.6087/M/2012 2 IT IS PERTINENT TO NOTE THAT THE ASSESSEE HAD ACCEP TED THE ADDITION OF ABOVE SAID TWO ITEMS IN THE QUANTUM ASSESSMENT PROCEEDING. IN THE PENALTY PROCEEDINGS, THE ASSESSEE SUBMITTED THAT THERE WAS NO CONCEALMEN T OF PARTICULARS OF INCOME. THE AO OBSERVED THAT THE CLAIM OF PROVISION FOR LEA VE ENCASHMENT WAS REQUIRED TO BE DISALLOWED IN TERMS OF SEC. 43B OF THE ACT AN D THE PROJECT EXPENSES WAS CONSIDERED TO BE CAPITAL EXPENDITURE AND HENCE DISA LLOWED. ACCORDINGLY, THE AO HELD THAT THE ASSESSEE HAS FILED INACCURATE PARTICU LARS OF INCOME AND ACCORDINGLY LEVIED PENALTY OF RS.5,14,456/- U/S 271(1)(C) OF TH E ACT. THE LD CIT(A) ALSO CONFIRMED THE PENALTY ON THE REASONING THAT WRONG C LAIM OF DEDUCTION WOULD LEAD TO LEVY OF PENALTY. 3. BEFORE US, THE LD A.R PLACED RELIANCE ON THE DEC ISION OF HONBLE SUPREME COURT RENDERED IN THE CASE OF RELIANCE PETRO PRODUC TS (P) LTD (322 ITR 158) AND SUBMITTED THAT THE MAKING OF ANY CLAIM, WHICH COULD NOT BE SUBSTANTIATED IN LAW, WILL NOT LEAD TO A CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. HE FURTHER SUBMITTED THAT THE QUESTION WHETHER THE PRO JECT EXPENSES INCURRED BY THE ASSESSEE WAS CAPITAL OR REVENUE IN NATURE IS A DEBA TABLE ISSUE. ACCORDINGLY HE SUBMITTED THAT THE LD CIT(A) WAS NOT JUSTIFIED IN C ONFIRMING THE PENALTY. HOWEVER, THE LD D.R PLACED STRONG RELIANCE ON THE D ECISION RENDERED BY LD CIT(A). 4. HAVING HEARD RIVAL CONTENTIONS, WE ARE OF THE VI EW THAT THERE IS MERIT IN THE CONTENTIONS OF THE ASSESSEE. THE CLAIM OF PROVISIO N FOR LEAVE ENCASHMENT IS OTHERWISE ALLOWABLE AS DEDUCTION, BUT FOR THE SPECI FIC PROVISIONS OF SEC. 43B OF THE ACT. THUS, THE SAID CLAIM COULD NOT BE SUBSTAN TIATED IN LAW. HENCE, THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE C ASE OF RELIANCE PETRO PRODUCTS (P) LTD SHALL SQUARELY APPLY TO THIS CLAIM . IN RESPECT OF PROJECT EXPENSES, THE QUESTION WHETHER IT WAS CAPITAL EXPEN DITURE OR REVENUE EXPENDITURE IS, AS SUBMITTED BY LD A.R, IS A DEBATA BLE QUESTION. IT IS WELL SETTLED PRINCIPLE THAT THE PENALTY U/S 271(1)(C) SHALL NOT LIE IN RESPECT OF SUCH DEDUCTIONS, WHICH ARE DEBATABLE IN NATURE. ACCORDINGLY, WE ARE OF THE VIEW THAT THE IMPUGNED PENALTY ORDER COULD NOT BE SUSTAINED. ACC ORDINGLY, WE SET ASIDE THE ITA NO.6087/M/2012 3 ORDER OF LD CIT(A) AND DIRECT THE AO TO DELETE THE PENALTY OF RS.5,14,456/- LEVIED U/S 271(1)(C) OF THE ACT. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 5TH NOV, 2014 . ,- ( . /0 1 25TH NOV , 2014 - ' 6) 7 SD S D ( . . / H.L. KARWA) ( . . , / B.R. BASKARAN ) / PRESIDENT / ACCOUNTANT MEMBER / ( ) MUMBAI: 5TH NOV,2014. . . ./ SRL , SR. PS ! ' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT. 3. ( <* ( ) / THE CIT(A)- CONCERNED 4. ( <* / CIT CONCERNED 5. 6. => 6 !*? , + ? , / ( ) / DR, ITAT, MUMBAI CONCERNED 6 @ ) / GUARD FILE. A ( / BY ORDER, TRUE COPY B $ (ASSTT. REGISTRAR) + ? , / ( ) /ITAT, MUMBAI