DCIT CIR 3(3), MUMBAI V. SAROVAR HOTELS P.TLD, MUMBAI

ITA 6333/MUM/2013

• Counselvise Citation: 633319914 RSA 2013
• Duration Of Justice: 1 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2007-2008
• Appeal Filed On: 29-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: REGISTERING LEASE DOCUMENT OF
• Keywords: Depreciation; Bonafide belief; Revenue expenditure
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E , MUMBAI BEFORE SHRI R.C. SHARMA , ACCOUNTANT MEMBER AND SHRI SANJAY GARG , JUDICIAL MEMBER ITA NO. 6333/M/2013 ASSESSMENT YEAR: 2007 - 08 DY COMMISSIONER OF INCOME - TAX, CIRCLE 3(3), ROOM NO.609, 6 TH F LOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 VS. M/S. SAROVAR HOTELS PVT. LTD., 42, MITTAL CHAMBERS, NARIMAN POINT, MUMBAI - 4000021 PAN: AAACS 8083L (APPELLANT) (RESPONDENT) PRESENT FOR: AS SESSEE BY : SHRI K.S. CHOKSHI, A.R. REVENUE BY : SHRI NEIL PHILIP, D.R. DATE OF HEARING : 18.03 .201 5 DATE OF PRONOUNCEMENT : 29.05. 2015 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAINST THE ORDER DATED 30.08.2013 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [(HEREINAFTER REFERRED TO AS CIT(A)] RELEVANT TO ASSESSMENT YEAR 2007 - 08 . THE REVENUE HAS AGITATED THE ACTION OF THE LD. CIT(A) IN DELETING THE PENALTY OF RS.8 , 27 , 748/ - WHICH WAS LEVI ED BY THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE AO) UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT. 2. BRIEF FACTS OF THE CASE ARE THAT THE AO, DURING THE QUANTUM ASSESSMENT PROCEEDINGS , HAD MADE THE FOLLOWING DISALLOWANCES. I) PAYMENT OF REGISTRATION FEES FOR REGISTERING LEASE DOCUMENT OF ITA NO.6333/M/2013 M/S. SAROVAR HOTELS PVT. LTD. 2 RS.24,23,543/ - . II) CAPITAL EXPENSES ON BUSINESS PREMISES AT INDORE OF RS.35,602/ - . III) EXPENSES INCURRED FOR PRIVATE PLACEMENT OF EQUITY SHARES RS.35,21,325/ - . IV) CAPITAL EXPENSES ON BUSINESS PREMISES AT DELHI RS. 18,65,223/ - . V) LATE PAYMENT OF P.F RS.8,713/ - . VI) DISALLOWANCE U/S. 14A RS.302/ - . VII ) CLAIM OF DEPRECIATION ON PAINTING AT RS.1,50,000/ - . 3. IN APPEAL (IN THE QUANTUM PROCEEDINGS) THE LD. CIT(A) DELETED THE ADDITIONS RELATING TO SL.NOS. I II, IV & VII. HE, HOWEVER, CONFIRMED THE ADDITIONS RELATING TO DISALLOWANCE ON ACCOUNT OF REGISTRATION FEES AS MENTIONED AT SL.NO.(I) ABOVE, EXPENSES RELATING TO NEW PROJECT AT INDORE AS MENTIONED AT SL. NO.(II) REGARDING WHICH THE PENALTY PROCEEDINGS WER E ALSO INITIATED BY THE AO. IN THE PENALTY PROCEEDINGS, THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD MADE BONAFIDE CLAIM OF THE ABOVE EXPENDITURE AND THAT THERE WAS NO ACT OF FURNISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. IT WAS JUST A QUESTION OF INTERPRETATION OF THE NATURE OF EXPENSES AS THE SAME WERE TREATED BY THE AO AS CAPITAL IN NATURE WHEREAS THE ASSESSEE HAD CLAIMED THE SAME AS REVENUE IN NATURE. THE AO, HOWEVER, DID NOT AGREE WITH THE CONTENTION OF THE ASSESSEE AND LEV IED PENALTY IN RELATION TO ABOVE STATED TWO DISALLOWANCES. 4. IN THE APPEAL, THE LD. CIT(A) , HOWEVER, WHILE RELYING UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS LTD. 189 TAXMANN.COM 322 (SC) AND FURTHER OF THE H ONBLE BOMBAY HIGH COURT IN THE CASE OF VIP INDUSTRIES LTD. 30 SOT 254, HELD THAT THE CASE OF THE ASSESSEE WAS NOT A CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. THE ASSESSEE HAD MADE BONAFIDE CLAIM OF EXPENDITURE TRE ATING THE SAME AS REVENUE IN NATURE. HE THEREFORE DELETED THE PENALTY LEVIED BY THE AO. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE REVENUE HAS COME IN APPEAL ITA NO.6333/M/2013 M/S. SAROVAR HOTELS PVT. LTD. 3 BEFORE US. 5. WE HAVE HEARD THE RIVAL CONTENTIONS OF THE LD. REPRESENTATIVES OF BOTH THE P ARTIES AND HAVE ALSO GONE THROUGH THE RECORDS. THE LD. A.R. OF THE ASSESSEE HAS CONTENDED THAT THE ASSESSEE HAD MADE A BONAFIDE CLAIM OF THE EXPENDITURE WHICH WAS BASED ON THE OPINION OF THE SENIOR COUNSEL MR. FIROZE ANDHYARUJINA . HE HAS FURTHER CONTENDE D THAT EVEN THE ASSESSEES CLAIM IN RELATION TO THE OTHER THREE ASSETS HAS BEEN ALLOWED BY THE LD. CIT(A) AND THEREFORE IT WAS A CASE WHERE THE PENALTY UNDER SECTION 271(1)(C) WAS NOT WARRANTED. ON THE OTHER HAND, THE LD. D.R. HAS RELIED UPON THE FINDI NGS OF THE AO. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IT IS NOT DISPUTED THAT THE ASSESSEE , BEFORE MAKING THE CLAIM OF EXPENDITURE AS REVENUE IN NATURE , HAD TAKEN THE OPINION OF THE SENIOR COUNSEL MR. FIROZE ANDHYARUJINA. THE SENIOR COUNSEL HAD AD VISED THE ASSESSEE TO CLAIM THE SAME AS REVENUE EXPENDITURE MAKING HIS OPINION ON THE BASIS OF VARIOUS JUDICIAL DECISIONS ON THIS ISSUE. HENCE, IT CAN BE SAFELY PRESUMED THAT THOUGH , T HE AO DID NOT AGREE IN RESPECT OF SOME OF THE EXPENDITURES CLAIMED BY T HE ASSESSEE THAT THE SAME WAS REVENUE IN NATURE , H OWEVER, THE ISSUE WAS DEBATABLE ONE. THE ASSESSEE WAS UNDER BONAFIDE BELIEF ABOUT THE CLAIM OF EXPENDITURE BEING REVENUE IN NATURE AND EVEN MOST OF THE CONTENTIONS OF THE ASSESSEE HAD BEEN ACCEPTED BY THE LD. CIT(A) IN QUANTUM PROCEEDINGS AND ONLY A PART OF THE DISALLOWANCE HAS BEEN SUSTAINED BY THE LD. CIT(A). WE MAY OBSERVE THAT EVERY CASE OF CONFIRMATION OF DISALLOWANCE CANNOT BE REGARDED AS A CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME OR CO NCEALMENT OF INCOME. MERELY BECAUSE THE CLAIM OF THE ASSESSEE THAT THE EXPENDITURE CLAIMED BY IT WAS OF REVENUE IN NATURE WAS NOT ACCEPTED BY THE AO , THAT ALONE WOULD NOT BE SUFFICIENT TO HOLD THAT THE ASSESSEE HAD FURNISHED THE INACCURATE PARTICULARS OF INCOME OR HAD CONCEALED ITA NO.6333/M/2013 M/S. SAROVAR HOTELS PVT. LTD. 4 ITS INCOME. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA) HAS HELD THAT SIMPLY FOR THE REASON THAT THE AO DID NOT FIND THE CLAIM OF THE ASSESSEE TO BE SUSTAINABLE IN LAW UP TO A CERTAIN EXTENT, IT CANNOT BE SAID TO BE A CASE FOR LEVY OF PENALTY UNDER SECTION 271(1)(C), MORE SO WHEN THE PARTICULARS FURNISHED BY THE ASSESSEE WERE NOT INACCURATE. 7. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A). 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS THEREFORE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29.05.2 01 5 . SD/ - SD/ - ( R.C. SHARMA ) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 29.05.2015 . * KISHORE , SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT ( A) CONCERNED, MUMBAI THE DR CONCERNED BE NCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.