ASST CIT 1(3), MUMBAI V. UNILIVER INDUSTRIES P LTD, MUMBAI

ITA 6126/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3791 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2002-2003
• Appeal Filed On: 01-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL KUMAR DAS ARS
• Keywords: Revenue expenditure; Capital expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F, BENCH MU MBAI BEFORE SHRI JASON P. BOAZ, AM AND SHRI SANDEEP GOSA IN, JM ITA NO.6126/MUM/2014 (ASSESSMENT YEAR: 2002-03) ASSTT. COMMISSIONER OF INCOME-TAX 1(3), ROOM NO.564, AAYAKAR BHAWAN, M.K. ROAD, MUMBAI 400 020 VS. M/S. UNILEVER INDUSTRIES PVT. LTD. HINDUSTAN LEVER HOUSE, 165/166,BACKBAY RECLAMATION. MUMBAI 40020. PAN: AAACU0719P APPELLANT .. RESPONDENT APPELLANT BY S/SHRI ANIL KUMAR DAS ARS RESPONDENT BY MS. JASMIN AMALSADVALA (CIT DR) DATE OF HEARING: 27-04-2016 DATE OF PRONOUNCEMENT: 11-05-2016 O R D E R PER SANDEEP GOSAIN,JUDICIAL MEMBER : THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A GAINST THE ORDER OF THE LEARNED CIT (A)-2, MUMBAI DATED 04-06- 2014 PASSED IN APPEAL NO.CIT(A)-2/IT-73/2010-11 FOR ASSESSMENT YEA R 2002-03 THEREBY CANCELLING THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT AGAINST THE ASSESSEE ON THE GROUNDS MENTIONED HEREIN BELOW:- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE PENALTY O F RS.36,11,770/- U/S 271(1)(C) OF THE I.T. ACT? 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY FILED ITS RETURN OF INCOME FOR A.Y. 2002-03 ON 30.10.2002, DE CLARING TOTAL INCOME AT RS.5,00,63,130/-. THE RETURN OF INCOME WAS PROCE SSED U/S 143(1) OF THE ITA NO.6126/MUM/2014 ACIT VS. M/S. UNILEVER INDUSTRIES PVT. LTD. 2 I.T. ACT, ON 13.02.2003. THE ASSESSMENT WAS COMPLET ED U/S 143(3) OF THE I.T. ACT, 1961 ON 28.03.2005, DETERMINING TOTAL INC OME AT RS.6,27,50,030/-. PENALTY PROCEEDINGS U/S 271(1)(C) OF THE INCOME TA X ACT,1961 WERE INITIATED IN RESPECT OF ADDITION ON ACCOUNT OF PURCHASED SERVICES CHARGES (TREATED AS CAPITAL EXPENDITURE): RS. 1,06, 72,064/- WHICH WAS MADE IN THE ORDER U/S 143(3) DATED 28/03/2005 BY IS SUING NOTICE U/S 271(1)(C) R.W.S. 274 OF THE I.T. ACT. AFTER SEEKING REPLY FROM THE ASSESSEE AO PASSED ORDER OF PENALTY DATED 28.03.2005 THEREBY LEVYING THE PENALTY U/S 271(1)(C) OF THE I.T. ACT AMOUNTING TO RS.36,11 ,770/-. AGGRIEVED BY THE ORDER OF THE AO THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LEARNED CIT (A) AND THE LEARNED CIT (A) VIDE ORDER DATED 04.06.2014 CANCELLED THE PENALTY LEVIED U/S 271(1)(C) OF THE I NCOME TAX ACT AND ALLOWED THE APPEAL FILED BY THE ASSESEE. AGGRIEVED BY THE ORDER OF THE LEARNED CIT (A), THE REVENUE IS NOW IN APPEAL BEFOR E US ON THE AFOREMENTIONED GROUND. 3. THE SOLE GROUND RAISED BY REVENUE IS THAT THE LD . CIT(A) ERRED IN DELETING THE PENALTY OF RS.36,11,770/- U/S 271(1)(C ) OF THE I.T. ACT. AT THE VERY OUTSET, LD. AR APPEARING ON BEHALF OF ASSESSEE SUBMITTED BEFORE US THAT THE ITAT VIDE ORDER DATED 27.08.2014 HAS ALREA DY DELETED THE ADDITION MADE ON ACCOUNT OF PURCHASED SERVICE CHARG ES (TREATED AS CAPITAL EXPENDITURE) OF RS.1,06,72,064/- AND DIREC TED THE AO TO CONSIDER ITA NO.6126/MUM/2014 ACIT VS. M/S. UNILEVER INDUSTRIES PVT. LTD. 3 THE SAID GROUND AS PER THE PROVISION OF LAW. THE RE LEVANT PORTION OF HONBLE ITAT WHILE DECIDING ITA NO.996/MUM/2006- A. Y. 2002-03 ARE AS UNDER: 14. THE FOLLOWING PAYMENTS HAVE BEEN CONSIDERED AS CAP ITAL IN NATURE. THE LD. CIT(A) FAILED TO APPRECIATE THAT THE APPELLANT DURING THE NORMAL COURSE OF BUSINESS HAD MADE PAYMENTS DURING THE YEAR TO THE F OLLOWING INSTITUTIONS FOR TECHNICAL SERVICES RENDERED BY THEM. INDIAN INSTITUTE OF TECHNOLOGY RS.28,93,664/- INDIAN INSTITUE OF SCEINCE RS.29,31,802/- UNIVERSITY OF MUMBAI RS.7,90,000/- ALL INDIA INSTITUTE OF MEDICAL SECIENCE RS.1,42,200/- MADHURAI KAMARAJ UNIVERSITY RS.6,21,492/- NIMHANS RS.7,00,000/- SOFIA UNIVERSITY RS.10,02,917/- UNIVERSITY OF AGRICULTURE RS.2,59,900/- 15. FACTS AND ISSUES BEING IDENTICAL WITH THAT OF G ROUND NO. 1 IN ITA NO. 5461/M/04 FOR A.Y. 2000-01. THEREFORE, ON SIMILAR L INES AND FOR SIMILAR REASONS, THIS GROUND RAISED BY THE ASSESSEE IS ALLOWED FOR S TATISTICAL PURPOSE. 16. WHILE DECIDING THIS ISSUE AFRESH, THE AO IS AL SO DIRECTED TO CONSIDER THE ADDITIONAL PLEA OF THE ASSESSEE U/S. 35(1)(II) AND SEC. 35(1)(IV) OF THE ACT AS PER PROVISIONS OF LAW. GROUND NO. 1 ALONGWITH ADDITIONA L GROUNDS ARE ALLOWED FOR STATISTICAL PURPOSE. AND SINCE THE ADDITIONS MADE BY AO AND UPHELD BY CI T(A) HAS ALREADY BEEN DELETED AND SET ASIDE BY THE ORDER OF ITAT WIT H A DIRECTION TO THE AO FOR FRESH DECISION. THEREFORE, PENALTY IS NOT SUSTA INABLE AT THIS STAGE. 4. ON THE OTHER HAND, LEARNED DR APPEARING ON BEHAL F OF THE REVENUE ADMITTED SAID FACTUAL AND LEGAL POSITION. ITA NO.6126/MUM/2014 ACIT VS. M/S. UNILEVER INDUSTRIES PVT. LTD. 4 5. WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO PER USED THE MATERIALS ON RECORD AS WELL AS THE ORDERS OF THE AU THORITIES BELOW. AFTER PERUSAL OF THE IMPUGNED ORDER WE HAVE NOTICED THAT THE HONBLE ITAT IN ITA NO.996/MUM/2006 FOR A.Y. 2002-03 HAS ALREADY DI RECTED THE AO TO CONSIDER THE ISSUE AFRESH VIDE ITS ORDER DATED 27.0 8.2014 AND SUBSEQUENTLY, THE AO AFTER CONSIDERING THE ISSUE AF RESH HAS PASSED FRESH ORDER OF ASSESSMENT DATED 08.01.2015 AND WHILE GIVI NG EFFECT TO THE ORDERS OF HONBLE ITAT HAD ALREADY ALLOWED THE EXPE NSES OF RS.1,06,72,064/- ON ACCOUNT OF KNOWHOW (PURCHASED SERVICES) AS REVENUE EXPENDITURE. THEREFORE, THE PENALTY PROCEED ING INITIATED BY THE AO ON THE PREVIOUS ASSESSMENT ORDER U/S 143(3) OF T HE INCOME TAX ACT DATED 28.03.2005 IS NOT SUSTAINABLE IN THE EYES OF LAW. HENCE, CONSIDERING THE AFORE MENTIONED FACTS AND CIRCUMSTA NCES WE DISMISS THE APPEAL FILED BY THE REVENUE ON THE LIMITED GROUND T HAT WHEN ONCE THE ADDITIONS MADE BY AO IN THE ORIGINAL ORDER OF ASSES SMENT HAVE ALREADY BEEN SET ASIDE THEN NO PENALTY AGAINST THE ASSESSEE ON THAT BASIS IS SUSTAINABLE. THEREFORE, THE GROUND RAISED BY REVENU E IS DISMISSED. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11-05-2016. SD/- SD/- ( JAS ON P. BOAZ ) ( SANDEEP GOSAI N ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI , DATED 11.05.2016 ASHWINI / ASHWINI / ASHWINI / ASHWINI /PS PSPS PS ITA NO.6126/MUM/2014 ACIT VS. M/S. UNILEVER INDUSTRIES PVT. LTD. 5 COPY OF THE ORDER FORWARDED TO : BY ORDER, ASSISTANT REGISTRAR ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT (A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//