M/s Leather Sellers, Kanpur V. Asstt. Commissioner of Income Tax-3, Kanpur

ITA 65/LKW/2014

• Counselvise Citation: 6523714 RSA 2014
• Duration Of Justice: 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 15-10-2014
• Assessment Year: 2001-2002
• Appeal Filed On: 06-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: O N PATHAK
• Keywords: Business income; Bonafide mistake
• Section: 80HHC; 80IB

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.65/LKW/2014 ASSESSMENT YEAR:2001 - 02 A.C.I.T - 3, KANPUR. VS M/S LEATHER SELLERS, 14/57B, CIVIL LINES, KANPUR. PAN:AAAFL3215G (RESPONDENT) (APPELLANT) SHRI RAKESH GARG, ADVOCATE APPELLANT BY SHRI O. N. PATHAK, D. R. RESPONDENT BY 15/10/2014 DATE OF HEARING 10 /12/2014 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE ORDER PASSED BY LEARNED CIT(A) - II, KANPUR DATED 28/11/2013 FOR THE ASSESSMENT YEAR 2001 - 2002. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1. THAT THE LEARNED CIT (APPEALS) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CONFIRMING THE ORDER OF LEARNED A.O. IMPOSING PENALTY OF RS.2,12,657/ - IMPOSED U/S 271(1)(C) OF THE I.T. ACT. EVEN THE QUANTUM OF PENALTY IMPOSED IS DISPUTED. 2. THAT THE CLAIM U/S 80 HHC BY THE ASSESSEE WAS DISTURBED ON AC COUNT OF CERTAIN INCOME DISCLOSED IN THE P&L A/C WHICH WAS HELD TO BE NOT BUSINESS INCOME. 3. THAT THE ORDER OF LEARNED C.I.T. (APPEALS) AS WELL AS A.O. IS BAD IN LAW, ARBITRARY EXCESSIVE AND AGAINST THE FACTS OF THE CASE AND IS LIABLE TO BE AMENDED ACCOR DINGLY. 2 3. IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT THE ADDITION MADE BY THE ASSESSING OFFICER BY PARTLY DISALLOWING THE CLAIM OF THE ASSESSEE U/S 80HHC IN RESPECT OF INTEREST INCOME AND SCRAP SALES IS DEBATABLE ISSUE AND THEREFORE, PENALTY ON THIS ACCOUNT IS NOT JUSTIFIED. 4. AS AGAINST THIS, LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDER OF LEARNED CIT(A). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT AS PER THE PENALTY ORDER, THE ADDITION WAS MADE BY THE ASSESSING OFFICER B Y PARTLY DISALLOWING DEDUCTION U/S 80HHC IN RESPECT OF FDR INTEREST OF RS.6,43,992/ - AND IN RESPECT OF INTEREST ON INCOME TAX REFUND OF RS.10,522/ - AND SCRAP SALES OF RS.32,600/ - . THE ISSUE REGARDING ALLOWABILITY OF DEDUCTION U/S 80HHC IN RESPECT OF FDR I NTEREST AND SCRAP SALES IS NO DOUBT A DEBATABLE ISSUE AND PENALTY ON THIS ACCOUNT IS NOT JUSTIFIED. SO FAR THE RECEIPT OF INTEREST ON INCOME TAX REFUND OF RS.10,522/ - IS CONCERNED, ADMITTEDLY THE SAME IS TAXABLE AS INCOME FROM OTHER SOURCES AND THE SAME C ANNOT BE INCLUDED IN BUSINESS INCOME FOR THE PURPOSE OF COMPUTING DEDUCTION ALLOWABLE TO THE ASSESSEE U/S 80HHC BUT BECAUSE OF THE SMALLNESS OF THE AMOUNT, IN OUR CONSIDERED OPINION, THE FAILURE OF THE ASSESSEE IN EXCLUDING THIS AMOUNT FROM BUSINESS PROFIT IS A BONAFIDE MISTAKE AS HAS BEEN SUBMITTED BY THE ASSESSEE BEFORE US AND THEREFORE, IN OUR CONSIDERED OPINION, PENALTY ON THIS ACCOUNT ALSO IS NOT JUSTIFIED IN THE FACTS OF THE PRESENT CASE . 6. REGARDING THE ORDER OF CIT(A) ON THIS ISSUE, WE FIND THAT H E HAS REFERRED TO A JUDGMENT OF HON'BLE APEX COURT RENDERED IN THE CASE OF LIBERTY INDIA VS COMMISSIONER OF INCOME - TAX [2009] 317 ITR 217 (SC) BUT THIS JUDGMENT IS IN RESPECT OF ALLOWABILITY OF DEDUCTION U/S 80IB IN RESPECT OF EXPORT INCENTIVE AND NOT IN R ESPECT OF ALLOWABILITY OF DEDUCTION U/S 80HHC WITH REGARD TO INTEREST INCOME AND SCRAP SALES AND THEREFORE, THIS JUDGMENT IS 3 NOT RELEVANT IN THE FACTS OF THE PRESENT CASE. THE SECOND JUDGMENT CITED BY CIT(A) IS THE JUDGMENT OF HON'BLE DELHI HIGH COURT REN DERED IN THE CASE OF COMMISSIONER OF INCOME - TAX VS ZOOM COMMUNICATION P. LTD. [2010] 327 ITR 510 (DEL) . IN THIS CASE ALSO, THERE IS NO ISSUE IN DISPUTE REGARDING ANY DEBATABLE ISSUE AND IN THAT CASE , THE DISPUTED ISSUE WAS APPARENTLY IN RESPECT OF ITEMS D ISALLOWABLE ON THE FACE WHEREAS IN THE PRESENT CASE , THE ISSUE IS DEBATABLE ISSUE BEING INTEREST INCOME AND SCRAP SALES WHETHER TO BE CONSIDERED FOR DEDUCTION U/S 80HHC. HENCE, IN OUR CONSIDERED OPINION, THIS JUDGMENT IS NOT RELEVANT IN THE FACTS OF THE P RESENT CASE. IN VIEW OF ABOVE DISCUSSION, WE HOLD THAT PENALTY IN THE PRESENT CASE IS NOT JUSTIFIED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 10 /12/2014. *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR