ITO 18(1)(1), MUMBAI V. H.S. ENGINEERING & MARKETING SERVICES, MUMBAI

ITA 6196/MUM/2010

• Counselvise Citation: 619619914 RSA 2010
• Duration Of Justice: 1 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 1994-1995
• Appeal Filed On: 13-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V V SHASTRI
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER, A ND SHRI VIJAY PAL RAO, JUDICIAL MEMBER ITA NO. 6196 AND 6197/MUM./2010 (A.YS : 1994-95 AND 1995-96 ) INCOME TAX OFFICER WARD-18(1)(1) PIRAMAL CHAMBERS LALBAUG, MUMBAI 400 012 .. APPELLANT V/S M/S. H.S. ENGINEERING & MARKETING SERVICES, 204, SUMER KENDRA P.B. MARG, WORLI MUMBAI 400 018 PAN AAACS7866F .... RESPONDENT REVENUE BY : MR. V.V. SHASTRI ASSESSEE BY : MR. VIJAY MEHTA DATE OF HEARING 11.10.2011 DATE OF ORDER 21.10.2011 O R D E R PER J. SUDHAKAR REDDY, A.M. THESE APPEALS PREFERRED BY THE REVENUE, ARE DIRECT ED AGAINST COMMON IMPUGNED ORDER DATED 14 TH MAY 2010, PASSED BY THE COMMISSIONER (APPEALS)-XXIX, MUMBAI, FOR ASSESSMENT YEARS 1994-9 5 AND 1995-96. THE SOLE COMMON DISPUTE IN THESE APPEALS IS WHETHER OR NOT THE COMMISSIONER (APPEALS) WAS JUSTIFIED IN DELETING THE PENALTY OF ` 12,01,438 FOR ASSESSMENT YEAR 1995-96 AND ` 7,19,922 FOR ASSESSMENT YEAR 1995-96, IMPOSED BY T HE ASSESSING OFFICER. SINCE THE ISSUE IS COMMON IN BOT H THE YEARS UNDER M/S. H.S. ENGINEERING & MARKETING SERVICES A.YS 1994-95 & 1995-96 2 CONSIDERATION, FOR THE SAKE OF CONVENIENCE, THESE A PPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY WAY OF THIS CONSOLIDATED ORDER. 2. THE ASSESSEE IS ENGAGED IN OFFERING CONSULTANCY TO THE CLIENTS WHO ARE BOTH DOMESTIC AS WELL AS OVERSEAS CLIENTS. IT CLAIM ED DEDUCTION UNDER SECTION 80-O OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ) @ 50% OF THE ENTIRE FOREIGN RECEIPTS AND RESTRICTED THE TOTAL CLAIM TO THE GROSS TOTAL INCOME. THE ASSESSING OFFICER, ORIGINALLY, PROCESSED THE RETURN OF INCOME UNDER SECTION 143(1)(A) OF THE ACT AND THEREAFTER REOPENED ASSESS MENT UNDER SECTION 148 OF THE ACT. IN THE RE-OPENED ASSESSMENT, HE HELD TH AT DEDUCTION UNDER SECTION 80-O IS ALLOWABLE ONLY ON NET RECEIPTS AND NOT ON GROSS RECEIPTS, AS CLAIMED BY THE ASSESSEE. 3. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY WHEREIN THE COMMISSIONER (APPEALS), VIDE HIS ORDER DATED 19 TH AUGUST 2002, UPHELD THE ORDER PASSED BY THE ASSESS ING OFFICER. THE ASSESSEE PREFERRED APPEAL BEFORE THE TRIBUNAL W HEREIN, THE TRIBUNAL, VIDE ORDER DATED 18 TH APRIL 2006, WHILE FOLLOWING THE JUDGMENT OF HON'BL E JURISDICTIONAL HIGH COURT IN CIT V/S ASIAN CABLE CO RPORATION LTD. (NO.2), [2003] 262 ITR 0537 (BOM.), DISMISSED THE APPEAL OF THE ASSESSEE. THEREAFTER, PENALTY UNDER SECTION 271(1)(C) WAS LEV IED ON 20 TH NOVEMBER 2006. THE ASSESSEE CARRIED THE MATTER IN APPEAL AND THE COMMISSIONER (APPEALS), IN HIS IMPUGNED ORDER, HELD THAT THE ALL OWABILITY OF DEDUCTION ON GROSS RECEIPTS OR ON NET INCOME WAS A DEBATABLE ISS UE. HE OBSERVED THAT THERE WERE CONFLICTING DECISIONS OF THE TRIBUNAL ON THIS ISSUE. THEREAFTER, HE APPLIED THE JUDGMENT OF HON'BLE SUPREME COURT IN CI T V/S RELIANCE PETROPRODUCTS PVT. LTD. [2010] 322 ITR 0158 (SC) AND CANCELLED THE PENALTY. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIB UNAL. 4. BEFORE US, LEARNED DEPARTMENTAL REPRESENTATIVE, MR. V.V. SHASTRI, ON BEHALF OF THE REVENUE, SUBMITTED THAT THE ASSESSEE HAS NOT FURNISHED ANY EXPLANATION BEFORE THE ASSESSING OFFICER IN RESPONS E TO THE NOTICE AND, HENCE, THE PROVISIONS OF SECTION 271(1)(C) R/W EXPL ANATION-1, ARE ATTRACTED. HE FURTHER SUBMITS THAT A PLAIN READING OF SECTION 80-O, DEMONSTRATE THAT THE ISSUE IS NOT A DEBATABLE ISSUE. M/S. H.S. ENGINEERING & MARKETING SERVICES A.YS 1994-95 & 1995-96 3 5. LEARNED COUNSEL, MR. VIJAY MEHTA, ON BEHALF OF THE ASSESSEE, SUBMITTED THAT THE PENALTY HAS BEEN LEVIED UNDER SE CTION 271(1)(C) ON THE GROUND THAT THE ASSESSEE HAS FURNISHED INCORRECT PA RTICULARS. REFERRING TO THE PROVISIONS OF SECTION 271(1)(C), HE SUBMITTED THAT THE EXPLANATION IN QUESTION APPLIES TO THE CASES WHERE THE CHARGE IS N OT THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME. COMING TO THE MERI TS, HE SUBMITTED THAT THE ISSUE WAS A DEBATABLE ISSUE AND THE FIRST JUDGMENT WAS RENDERED BY THE HONBLE CALCUTTA HIGH COURT ON 13 TH SEPTEMBER 1991 IN M. N. DASTUR & CO. LTD. V/S DCIT, [1992] 040 ITD 0521 (CAL.), WHICH WA S IN FAVOUR OF THE ASSESSEE. HE FURTHER POINTED OUT THAT THE RETURN O F INCOME WAS FILED ON 31 ST OCTOBER 1994, AND BY THE TIME OF FILING OF RETURN O F INCOME, THE JUDGMENT WAS IN FAVOUR OF THE ASSESSEE. THEREAFTER, HE POINT ED OUT THAT IN THE FOLLOWING DECISIONS, THE ISSUE WAS DECIDED IN FAVOU R OF THE ASSESSEE:- M.N. DASTUR & CO. LTD. VS DCIT [1997] 061 ITD 0167 (CAL.) M.N. DASTUR & CO. LTD. VS DCIT, [1997] 062 ITD 011 3 (BANG.) 6. HE FURTHER SUBMITTED THAT THE HON'BLE JURISDICTIONA L HIGH COURT IN TATA UNISYS LTD. V/S DCIT, [1996] 058 ITD 0334 (BOM.), H AS DECIDED THE ISSUE IN FAVOUR OF THE REVENUE. HE ARGUED THAT THESE CONFLIC TING DECISIONS LED TO CONSTITUTION OF A SPECIAL BENCH OF THE TRIBUNAL IN PETROLEUM INTERNATIONAL (INDIA), [1999] 071 ITD (SB) 0031 (MUM.) AND THE IS SUE WAS RESOLVED IN FAVOUR OF THE REVENUE. HE FURTHER POINTED OUT THAT THE HON'BLE JURISDICTIONAL HIGH COURT IN ASIAN CABLE CORPORATION LTD. (NO.2) ( SUPRA), HAD DECIDED THE ISSUE IN FAVOUR OF THE REVENUE. HE ALSO POINTED OUT THAT THE VERY SAME BENCH OF THE HON'BLE JURISDICTIONAL HIGH COURT IN C IT V/S ASIAN CABLES CORPORATION LTD. (NO.1), [2003] 262 ITR 0535 (BOM. ), HAD ANSWERED THE QUESTION IN FAVOUR OF THE ASSESSEE. THUS, HE SUBMIT TED THAT THE ISSUE IS HIGHLY DEBATABLE AND NO PENALTY CAN BE LEVIED. HE R ELIED ON THE JUDGMENT OF HON'BLE SUPREME COURT IN CIT V/S RELIANCE PETROPROD UCTS PVT. LTD., (2010) 322 ITR 158 (SC), AND SUBMITTED THAT THE COURT HAS EXPLAINED AS TO WHAT CONSTITUTE FURNISHING OF INACCURATE PARTICULARS OF INCOME. M/S. H.S. ENGINEERING & MARKETING SERVICES A.YS 1994-95 & 1995-96 4 7. RIVAL CONTENTIONS HEARD. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND ON PERUSAL OF THE PAP ERS ON RECORD, AS WELL AS THE CASE LAWS CITED BEFORE US, WE FIND THAT THE ISS UE AS TO WHETHER THE ASSESSEE COULD MAKE A CLAIM FOR DEDUCTION UNDER SEC TION 80-O OF THE ACT ON THE GROSS RECEIPTS OR THE NET RECEIPTS WAS A DEBATA BLE ISSUE AND THERE WERE CONFLICTING DECISIONS OF THE TRIBUNAL WHICH LED TO CONSTITUTION OF A SPECIAL BENCH IN PETROLEUM INTERNATIONAL (INDIA) (SUPRA). E VEN IN 262 ITR 535 (BOM.), WHERE THE HON'BLE JURISDICTIONAL HIGH COURT DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE, THE TRIBUNAL HAD TAKEN A VI EW IN FAVOUR OF THE ASSESSEE AND THAT WAS IN REVENUES APPEAL. THE ASSE SSEE HAD DISCLOSED THAT IT HAD CLAIMED 50% OF THE GROSS RECEIPT IN ITS COMP UTATION OF INCOME. ON THESE FACTS, WE FIND NO INFIRMITY IN THE ORDER OF T HE COMMISSIONER (APPEALS) WHEREIN HE CANCELLED LEVY OF PENALTY BY APPLYING TH E JUDGMENT OF HON'BLE SUPREME COURT IN RELIANCE PETROPRODUCTS PVT. LTD. ( SUPRA). CONSEQUENTLY, THE GROUND RAISED BY THE REVENUE IN BOTH THE YEARS UNDER CONSIDERATION ARE DISMISSED. 8. IN THE RESULT, REVENUES APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST OCTOBER 2011 SD/- VIJAY PAL RAO JUDICIAL MEMBER SD/- J. SUDHAKAR REDDY ACCOUNTANT MEMBER MUMBAI, DATED: 21 ST OCTOBER 2011 COPY TO : (1) THE ASSESSEE; (2) THE RESPONDENT; (3) THE CIT(A), MUMBAI, CONCERNED; (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, H BENCH, ITAT, MUMBAI. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY ASSISTANT REGISTRAR SR. PRIVATE SECRETARY ITAT, MUMBAI BENCHES, MUMBAI