DCIT 5(2), MUMBAI V. JINDAL IRON & STEEL CO.LTD, MUMBAI

ITA 6368/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92380 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-04-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Assessment Year: 2002-2003
• Appeal Filed On: 30-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHILENDRA YADAV
• Assessee Lawyers: RAKESH JOSHI RISHABH SHAH
• Keywords: Revenue expenditure
• Section: 43B

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F MUMBAI . . , , BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI N.K.BILLAIYA, ACCOUNTANT MEMBER . / ITA NO. 6368/MUM/2013 / ASSESSMENT YEAR 2002-03 . / ITA NO. 6369/MUM/2013 / ASSESSMENT YEAR 2003-04 DY. COMMISSIONER OF INCOME TAX 5(2), ROOM NO.571, 5 TH FLOOR, AAYKAR BHAVAN, MK ROAD, MUMBAI 400020 / VS. M/S. JINDAL IRON & STEEL CO. LTD., JINDAL MANSION, 5A DR. G.D.DESHMUKH MARG, MUMBAI 400026. ! ./ ./ PAN/GIR NO. : AAACJ 2902K ( !$ / APPELLANT ) .. ( %&!$ / RESPONDENT ) ASSESSEE BY SHRI AKHILENDRA YADAV RESPONDENT BY : S/SHRI RAKESH JOSHI / RISHABH SHAH ( ) * / DATE OF HEARING : 23/04/2015 ( ) * / DATE OF PRONOUNCEMENT : 23/04/2015 / O R D E R PER I.P.BANSAL, JM: BOTH THESE APPEALS ARE FILED BY THE REVENUE AND THEY ARE DIRECTED AGAINST TWO SEPARATE ORDERS PASSED BY LD. CIT(A)-9, MUMBAI DATED 13/8/2013 IN RESPECT OF ASSESSMENT YEARS 2002-03 AND 2003-04. ITA NO.6368/MUM/2013,A.Y.2002-03: . / ITA NO. 6852/MUM/2013 / ASSESSMENT YEAR 2009-10 2 GROUNDS OF APPEAL: WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE PENALTY LEVIED BY THE AO U/S. 271(1)(C) ON ACCOUNT OF DISALLOWANCE U/S. 43B BY CONSIDERING ASS ESSEES SUBMISSION DEPOSIT THE FACT THAT LD. CIT(A) HAD CONFIRMED THE DISALLOW ANCE MADE BY THE AO IN THE QUANTUM APPEAL AND ASSESSEE HAD NOT APPEALED BEFORE THE ITAT AGAINST THIS DECISION. 2. THE AO MADE ADDITION OF RS.2,87,96,771/- (AGGRE GATE OF THREE AMOUNTS), WHICH WAS PAYABLE AS INTEREST TO ICICI AND WAS TRE ATED TO HAVE BEEN PAID BY WAY OF INCLUDING THE SAME INTO FUNDED INTEREST TER M LOAN. THIS WAS CLAIMED BY THE ASSESSEE AS PER DECISION OF ITAT IN THE CASE OF DCIT VS. EICHER TRACTORS LTD., 79 TTJ 158 AND VARIOUS OTHER DECISIONS, ACCOR DING TO WHICH SUCH INTEREST WAS ALLOWABLE. HOWEVER, AO DID NOT ACCEPT SUCH SUB MISSIONS OF THE ASSESSEE AND DISALLOWED THE SAID AMOUNT, AS ACCORDING TO AO THE DISALLOWANCE WAS CALLED FOR UNDER SECTION 43B OF THE INCOME TAX ACT, 1961 (THE ACT). FOR THE SAKE OF COMPLETENESS OF FACTS THE RELEVANT PORTION OF ASSESSMENT ORDER, WHEREBY IMPUGNED ADDITION HAS BEEN MADE IS REPRODUCED BELOW : 10. DISALLOWANCE OF INTEREST U/S. 43B OF THE ACT: A) FACTS: ON A PERUSAL OF ANNEXURE 10 & 11 FORMING PART OF CL AUSE NO. 21(I)(A) OF FORM NO, 3CD, IT IS NOTICED THAT A SUM OF RS.L,59,22,126/- & FURTHER SUMS OF RS.L,04,03,667/- AND RS.24,70,978/-WHICH ARE PAYABL E AS INTEREST TO ICICI HAVE BEEN TREATED TO HAVE BEEN PAID BY WAY OF INCLUDING THE SAME INTO FUNDED INTEREST 'TERM LOAN. ON BEING ASKED, A REPLY HAS BE EN FILED VIDE LETTER DATED 30.3.2005. THE REPLY FILED ON BEHALF OF THE ASSESSE E COMPANY HAS BEEN CONSIDERED WITH DUE CARE. THE SUM AND SUBSTANCE OF THE ASSESSEE'S REPLY IS THAT 'INCLUSION OF THIS INTEREST INTO FUNDED INTEREST TE RM LOAN AMOUNTS TO CONSTRUCTIVE PAYMENT AND THE. LIABILITY U/S.43- B STANDS DISCHAR GED. IN SUPPORT OF ITS CLAIM RELIANCE HAS BEEN PLACED ON THE DECISION OF THE DEL HI TRIBUNAL IN THE CASE OF DCIT VS. EICHER TRACTORS LTD. (79 TTJ 158) RELIANCE HAS ALSO BEEN PLACED ON DECISIONS OF OTHER VARIOUS BENCHES OF THE HON. ITAT. (B) DISCUSSIONS & FINDINGS: HOWEVER, ON CAREFUL CONSIDERATION I FIND THAT REQUI REMENT OF SECTION 43-B HAS TO BE MADE BY WAY OF FULFILLING THE REQUIREMENT IN REA L TERMS OF PAYMENT AND NOT BY WAY OF DEEMING PROVISIONS. THE SECTION 43-B DOES NO T SPEAK OF CONSTRUCTIVE PAYMENTS BUT IT REQUIRES THAT NOT ONLY THE PAYMENT SHOULD BE MADE BY THE DUE DATES, BUT THE PROOF THEREOF SHOULD BE FILED ALONGW ITH THE RETURN. IN THE . / ITA NO. 6852/MUM/2013 / ASSESSMENT YEAR 2009-10 3 CIRCUMSTANCES, THE ASSESSEE'S CLAIM IS BEING REJECT ED AND ADDITION OF RS.2,87,96,771/- IS BEING MADE. 3. ON THE ABOVE ADDITION, CONCEALMENT PENALTY HAS B EEN LEVIED. TO CONTEST THE LEVY OF PENALTY, IT WAS SUBMITTED BEFORE LD. CIT(A) THAT ALL THE FACTS WERE DISCLOSED IN THE AUDIT REPORT FURNISHED FOR THE YEA R UNDER CONSIDERATION. THUS, THERE WAS FULL DISCLOSURE OF THE CLAIM IN THE TAX A UDIT REPORT AS WELL AS RETURN OF INCOME AND THUS, ASSESSEE CANNOT BE SAID TO HAVE CO NCEALED OR FURNISHED INACCURATE PARTICULARS OF INCOME. RELIANCE WAS PLA CED ON SEVERAL DECISIONS TO CLAIM THAT NO PENALTY WAS LEVIABLE IN THESE CIRCUMS TANCES AND THESE DECISIONS ARE AS FOLLOWS: CIT VS. BACARDI MARTINI INDIA LTD., 288 ITR 585 (D EL) CIT VS. TEXTILES AND GENERAL TRADING CO. 244 ITR 87 6 (DEL) CHANDRAPAL BAGGA VS. ITAT AND ANOTHER 261 ITR 67 (R AJ) ITO VS. ROBORANT INVESTMENTS (P) LTD. 7 SOT 181 (MU M) CIT VS. PREMIER PROTEINS LTD. 278 ITR 252 (MP) 3.1 IT WAS FURTHER SUBMITTED THAT CLAIM OF THE ASS ESSEE WAS SUPPORTED BY JUDICIAL PRONOUNCEMENTS AND REFERENCE WAS MADE TO AFOREMENTIONED DECISION OF ITAT DELHI IN THE CASE OF EICHER TRACTORS LTD.( SUPRA). 3.2 IT WAS FURTHER SUBMITTED THAT PENALTY IS NOT L EVIABLE WHERE THERE IS A DISPUTE ABOUT ALLOWABILITY OF THE EXPENDITURE AND T HUS, ON VARIOUS COUNTS THE LEVY OF CONCEALMENT PENALTY WAS AGITATED. 4. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESS EE, LD. CIT(A) HAS CONCLUDED THE ISSUE IN PARA 5.2. HE OBSERVED THAT IT IS UNDISPUTED FACT THAT THE ONLY DISPUTE BETWEEN AO AND THE ASSESSEE WAS RE GARDING THE ALLOWABILITY OR OTHERWISE OF THE EXPENDITURE IN A PARTICULAR YEAR. ACCORDING TO AO EXPENDITURE WAS ALLOWABLE IN SUBSEQUENT YEAR AS AGAINST THE CLA IM OF THE ASSESSEE THAT EXPENDITURE IS ALLOWABLE IN THE CURRENT YEAR. IT IS FURTHER OBSERVED BY LD. . / ITA NO. 6852/MUM/2013 / ASSESSMENT YEAR 2009-10 4 CIT(A) THAT IT IS NOT A CASE OF BOGUS EXPENDITURE A ND IT ALSO CANNOT BE SAID THAT ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF HI S INCOME OR HAS CONCEALED THE INCOME. RELYING UPON THE DECISION CITED BY TH E ASSESSEE OF MUMBAI BENCHES IN THE CASE OF ITO VS. PATHAK CONSTRUCTION AND FINANCE PVT. LTD., ORDER DATED 15/07/2010 IN ITA NO.4295/MUM/2007, IT IS HELD BY LD. CIT(A) THAT ON DISPUTABLE ISSUES CONCEALMENT PENALTY IS N OT LEVIABLE. IT IS IN THIS MANNER, LD. CIT(A) HAS DELETED THE PENALTY AGAINS T WHICH THE DEPARTMENT IS AGGRIEVED, HENCE HAS FILED AFOREMENTIONED GROUNDS O F APPEAL. 5. LD.DR RELIED UPON THE ASSESSMENT ORDER AND PENAL TY ORDER. 6. ON THE OTHER HAND, LD. AR OF THE ASSESSEE RELIED UPON ORDER PASSED BY LD. CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENT IONS HAVE CAREFULLY BEEN CONSIDERED. ACCORDING TO THE FACTS OF THE CASE, WH EN THE CLAIM WAS MADE BY THE ASSESSEE IT WAS BASED ON THE DECISION OF ITAT. FULL PARTICULARS WERE DISCLOSED IN THE AUDIT REPORT AS WELL AS IN THE RET URN OF INCOME. THEREFORE, IT IS NOT A CASE WHERE LEVY OF CONCEALMENT PENALTY CAN BE HELD TO BE JUSTIFIED. IN THIS VIEW OF THE SITUATION, WE ARE OF THE OPINION T HAT LD. CIT(A) DID NOT COMMIT ANY ERROR IN DELETING THE PENALTY, AS IN THE FACTS AND CIRCUMSTANCES OF THE CASE SUCH PENALTY WAS NOT WARRANTED. WE, THEREFORE, DEC LINE TO INTERFERE AND THIS APPEAL OF THE REVENUE IS DISMISSED. ITA NO.6368/MUM/2013,A.Y.2003-04: GROUNDS OF APPEAL: WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE PENALTY LEVIED BY THE AO U/S. 271(1)(C) , BY DECIDING THE ISSUE OF REVAMPING EXPENSES BY FOLLOWI NG THE DECISION OF HONBLE ITAT WHEREIN ADDITION AMOUNTING TO RS.5,97,96,043/- HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE WITHOUT APPRECIATING THE FACTS OF T HE CASE.? . / ITA NO. 6852/MUM/2013 / ASSESSMENT YEAR 2009-10 5 8. THE IMPUGNED ADDITION UPON WHICH THE CONCEALMENT PENALTY HAS BEEN LEVIED IS DELETED BY THE TRIBUNAL VIDE ORDER DATED 19/6/2013 IN ITA NO.880/MUM/2010. COPY OF THE ORDER WAS PLACED ON O UR RECORD AND WAS ALSO GIVEN TO LD. DR. THIS ISSUE HAS BEEN DISCUSSED IN PARA-4 TO 4.5 OF THE ORDE. THE ADDITION HAS BEEN DELETED IN PARA 4.5, WHICH RE AD AS UNDER: 4.5 AS IT CAN BE SEEN FROM THE ABOVE, THE EXPENDIT URE INCURRED ON ABOVE ITEMS DOES NOT GIVES RISE TO ANY ENDURING BENEFIT, EVEN T HOUGH THE LIFE OF THE REPAIRS MAY EXTENT TO 2/3 YEARS. THIS CANNOT BE A REASON F OR TREATING THE EXPENDITURE AS CAPITAL IN NATURE, BECAUSE ANY REPAIRS UNDERTAKEN W ILL ALWAYS GIVE AN ENDURING THE BENEFIT OTHERWISE NO REPAIRS CAN BE UNDERTAKEN WHEN THE MACHINERY DOES NOT FUNCTION AS EXPECTED. CONSIDERING THE GROSS BLOCK OF THE TARAPUR PLANT AND NATURE OF THE REPAIRS UNDERTAKEN AS STATED ABOVE, W E ARE OF THE VIEW THAT THE EXPENDITURE IS CORRECTLY CLAIMED AS REVENUE EXPENDI TURE. THE EXPENDITURE WAS SIMILAR TO THE ONE ALLOWED BY AO ON VASIND PLANT. THEREFORE, THE ORDER OF AO AND THE CIT(A) ARE REVERSED AND ASSESSEES GROUND IS A LLOWED. AO IS DIRECTED TO ALLOW THE EXPENDITURE AS REVENUE EXPENDITURE. 9. IN THIS VIEW OF THE SITUATION, AFTER HEARING BOT H THE PARTIES, WE DO NOT FIND ANY MERIT IN THE APPEAL FILED BY THE REVENUE. THE RELIEF HAS BEEN GIVEN BY LD. CIT(A) ON THE GROUND THAT THE ADDITION ITSELF HAS B EEN DELETED BY ITAT. THEREFORE, THERE IS NO INFIRMITY IN THE RELIEF GRAN TED TO THE ASSESSEE. WE DECLINE TO INTERFERE. THIS APPEAL OF THE REVENUE IS ALSO D ISMISSED. 10. IN THE RESULT, BOTH THE APPEALS FILED BY THE RE VENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23/04/2015 ( 0 1 2 23/04/2015 ( SD/- SD/- ( / N.K.BILLAIYA ) ( . . / I.P. BANSAL ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; 1 DATED 23/04/2015 . / ITA NO. 6852/MUM/2013 / ASSESSMENT YEAR 2009-10 6 / COPY OF THE ORDER FORWARDED TO : 1. !$ / THE APPELLANT 2. %&!$ / THE RESPONDENT. 3. 4) ( ) / THE CIT(A)- 4. 4) / CIT 5. 56 %)78 , * 78 , / DR, ITAT, MUMBAI 6. 9 / GUARD FILE. / BY ORDER, & 5) %) //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . . ./ VM , SR. PS