CIRON DRUGS & PHARMACEUTICALS P.LTD, MUMBAI V. DCIT RG 8(1), MUMBAI

ITA 6350/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100828 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 29-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VIRAG M SHAH
• Keywords: Depreciation; Capital receipt

Judgement Text

M/S CIRON DRUGS AND PHARMACEUTICALS PVT LTD ITA NO. 6350 /MUM/20 1 3 1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C , MUMBAI . . , , BEFORE SHRI B R BASKARAN , ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , J UDICIAL MEMBER ITA NO. : 6 3 5 0 /MUM/20 1 3 ( ASSESSMENT YEAR: 20 1 0 - 11 ) M/S CIRON DRUGS AND PHARMACEUTICALS PVT LTD , ALPHA APARTMENTS, M G ROAD, VILE PARLE (E), MUMBAI - 400 057 .: PAN: AABCC 0873 D VS DY COMMISSIONER OF INCOME TAX - RANGE - 8(1), MU MBAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VIRAG M SHAH RESPONDENT BY : SHRI DURGA DUTT /DATE OF HEARING : 25 - 06 - 201 5 / DATE OF PRONOUNCEMENT : 14 - 08 - 201 5 ORDER , . . : PER AMIT SHUKLA, AM : THE A FORESAID APPEAL HA S BEEN FILED BY THE ASS E SSEE A GAINST IMPUGNED ORDER DATED 12 . 08 .20 1 3 , PASSED BY CIT (A) - 16 , MUMBAI IN RELATION TO THE PENALTY PROCEEDINGS U/S 271(1)(C) F OR THE ASSESSMENT YEAR 2010 - 11. THE ASSESSEE I S MA I NLY AGGRIEVED BY THE LEVY OF PENALTY OF RS. 1,37,370/ - ON ACCOUNT OF DISALLOWANCE O N LOSS ON SALE OF FIXED ASSETS OF RS. 2,10,836/ - AND DISALLOWANCE O F DEPRECIATION OF RS. 1,75,670/ - ON CAPITAL SUBSIDY. 2. BRIEF FACTS ARE THAT, AS AGAINST THE RETURNED INCOME OF RS. 3,11,23,170/ - THE ASSESSMENT WAS COMPLETED AT A TOTAL INCOME OF RS. 3,15,09,970/ - AFTER MAKING THE ADDITION ON ACCOUNT OF FIRSTLY, LOSS ON SALE OF FIXED ASSETS AT RS. 2,10,836/ - ; AND SECONDLY , DEPRECIATION ON CAPITAL SUBSIDY OF RS. 1,75,670/ - . IN THE COURSE OF PENALTY PROCEEDINGS, IN RESPONSE TO THE SHOW CAUSE NOTICE, M/S CIRON DRUGS AND PHARMACEUTICALS PVT LTD ITA NO. 6350 /MUM/20 1 3 2 ASSESSEE SUBMITTED THAT THERE IS NO FURNISHING OF INACCURATE PARTICULARS OF INCOME NOR IT HAD INTENDED TO REDUCE ANY TAX LIABIL ITY BECAUSE ASSESSEE HAS DISCLOSED ALL THE RELEVANT PARTICULARS IN THE RETURN OF INCOME. H OWEVER, THE LD. ASSESSING OFFICER OBSERVED THAT AS REGARDS THE DEBITING THE AMOUNT OF RS. 2,10,136/ - ON LOSS ON SALE OF FIXED ASSETS, SAME SHOULD HAVE BEEN ADDED BACK WHILE COMPUTING ITS TOTAL INCOME , WHICH T HE ASSESSEE HAS FAILED TO DO SO AND, THEREFORE , IT AMOUNTS TO FURNISHING OF INACCURATE PARTICULARS OF INCOME . SIMILARLY , ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION ON WRITTEN DOWN VALUE OF A CAPITAL SUBSIDY OF RS. 11,71,130/ - HE OBSERVED THAT THIS ISSUE HAD AROSE IN THE EARLIER YEAR WHEREIN THE PENALTY WAS LEVIED BY THE ASSESSING OFFICER IN 2009 - 10 AND THE MATTER WAS STILL PENDING BEFORE THE CIT(A) . T HUS FOLLOWING EARLIER ORDER, HE LEVIED THE PENALTY ON THIS DISALLO WANCE AFTER DISCUSSING VARIOUS DECISIONS INCLUDING THAT OF THE DECISION OF SUPREME COURT IN THE CASE OF CIT VS DHARMENDRA PROCESSORS, REPORTED IN 306 ITR 377 . F INALLY, HE LEVIED THE PENALTY OF RS. 1,81,370/ - . 3. BEFORE THE CIT(A), REGARDING LOSS ON SALE O F FIXED ASSETS, WHICH WAS IN THE FORM OF CAR, THE ASSESSEE SUBMITTED THAT IT HAD REDUCED TOTAL DEPRECATION FROM G ROSS B LO CK OF ASSETS AND THEREAFTER , REDUCE D THE SALE VALUE OF CAR FROM NET BLOCK OF ASSETS TO ARRIVE AT LOSS ON SALE OF CAR, HENCE, IN THIS MA NNER THE ASSESSEE HAS REDUCED THE LOSS O R SALE OF ASSETS IN THE PROFIT AND LOSS ACCOUNT. THERE WAS NO MALA FIDE INTENTION FOR CLAIM ING LOSS ON SALE OF ASSET. REGARDING LEVY OF PENALTY ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION OF CAPITAL SUBSIDY, THE ASSES SEE SUBMITTED THAT IT HAD DECLARED ALL THE PARTICULARS, THEREFORE NO PENALTY IS LEVIABLE FOR FURNISHING OF INACCURATE PARTICULARS. MOREOVER THE LD. CIT(A) IN AY 2009 - 10 HAS DELETED THE PENALTY ON THIS SCORE. 4. THE LD. CIT(A), HOWEVER CONFIRMED THE PENALT Y AFTER DETAIL DISCUSSION AND RELYING UPON VARIOUS JUDICIAL DECISIONS. M/S CIRON DRUGS AND PHARMACEUTICALS PVT LTD ITA NO. 6350 /MUM/20 1 3 3 5 . AFTER CONSIDERING THE IMPUGNED ORDER, WE FIND THAT SO FAR AS LEVY OF PENALTY O N DISALLOWANCE ON DEPRECIATION IS CONCERNED, THE RELEVANT FACTS ARE THAT THE ASSE S SEE HAD RECEIVED CAPI TAL SUBSIDY IN THE ASSESSMENT YEAR 2009 - 10 . I N TH AT ASSESSMENT YEAR, THE ASSESSEE HAD PREFERRED AN APPEAL FOR TREATING THE SUBSIDY RECEIPT AS REDUCED FROM MACHINERY VALUE AND HENCE DEPRECIATION ON THAT AMOUNT WAS ADDED BACK BY THE ASSESSING OFFICER. ASSESS EES CASE HAD BEEN THAT, THE SUBSIDY WAS GIVEN FOR ASSESSEE FOR SET - UP OF NEW INDUSTRIAL UNIT IN THE BACKWARD ARE A , HENCE NATURE OF RECEIPTS IS CAPITAL RECEIPT AND CANNOT BE REDUCED FROM BLOCK OF MACHINERY. IN THE ASSESSMENT YEAR 2009 - 10, THE LD. CIT(A) HAS DELETED THE PENALTY U/S 271(1)(C) ON THE SIMILAR ADDITION . HERE IN THIS CASE THE ASSESSEE HAS DISCLOSED ALL THE PARTICULARS AND CLAIM OF THE ASSESSEE FOR DEPRECIATION ON FULL VALUE OF MACHINERY CAN BE VERY WELL HELD AS BONA FIDE AS IT IS DULY SUPPORTED BY THE DECISION OF SUPREME COURT IN CASE OF P J CHEMICALS (210 ITR 830). MOREOVER, ASSESSEES EXPLANATION HAS NOT BEEN FOUND TO BE FALSE OR UNTENABLE IN LAW , THEREFORE, NO PENALTY IS WARRANTED ON SUCH A DISALLOWANCE OF DEPRECIATION . REGARDING LEVY OF PEN ALTY ON DISALLOWANCE OF LOSS OF FIXED ASSETS ALSO, NO PENALTY IS LE V I ABLE AS ALL THE PARTICULARS HAVE BEEN DULY DISCLOSED . THE ASSESSEE HAD REDUCED TOTAL DEPRECIATION FROM GROSS BLOCK OF ASSETS AND THEREAFTER REDUCED SALE VALUE OF CAR FROM NET BLOCK OF ASS ET TO ARRIVE AT LOSS ON SALE OF CAR. THE ASSES S EE SHOULD HAVE ADDED BACK THE SAME IN THE COMPUTATION OF INCOME , BUT THIS CAN ONLY BE SAID TO BE GENUINE MISTAKE AND THEREFORE , PENALTY CANNOT BE LEVIED U/S 271(1)(C) AND ACCORDINGLY , THE PENALTY CONFIRMED B Y THE CIT(A) IS DELETED. 5. IN THE RESULT, APPEAL OF THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH AUGUST , 2015. SD/ - SD/ - ( . . ) ( ) ( B R BASKARAN ) ( AMIT SHUKLA ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 14 TH AUGUST , 2015 M/S CIRON DRUGS AND PHARMACEUTICALS PVT LTD ITA NO. 6350 /MUM/20 1 3 4 / COPY TO: - 1 ) / THE APPELLANT. 2 ) / THE RESPONDENT. 3) THE CIT (A) - 16 , MUMBAI. 4 ) THE CIT 8 , MUMBAI. 5 ) , , / THE D.R. C BENC H, MUMBAI. 6 ) \ COPY TO GUARD FILE. / BY ORDER / / TRUE COPY / / / , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI * . . *CHAVAN, SR.PS