DCIT 10(2), MUMBAI V. QUINA COLOURS P.LTD ( NOW NAME RAVESHIA COLOURS P. LTD), MUMBAI

ITA 6583/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8837 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2004-2005
• Appeal Filed On: 30-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V V SHASTRI
• Section: 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C, MUMBAI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER & SHRI P.M.JAGTAP, ACCOUNTANT MEMBER. I.T.A. NO. 6583/MUM/2011 ASSESSMENT YEAR : 2004-05. DY. COMMISSIONER OF INCOME-TAX-10(2), M/S QUINA COLOURS P. LTD. MUMBAI. VS. PLOT NO.25, GULMOHAR PARK SOC., GULMOHAR ROAD , JUHU, MUMBAI-400049. AAACQ0808R APPELLANT. RESPONDENT. APPELLANT BY : SHRI V.V. SHASTRI. RESPONDENT BY : NONE. DATE OF HEARING : 30-08-2012 DATE OF PRONOUNCEMENT : 26-09-2012. O R D E R PER P.M. JAGTAP, A.M. : THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER OF LEARNED CIT(APPEALS)-22, MUMBAI DATED 05-07-2011 WHEREBY HE CANCELLED THE PENALTY OF RS.5,67,890/- IMPOSED BY THE AO U/S 271(1)(C). 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY WH ICH IS ENGAGED IN THE BUSINESS OF PROCESSING AND MANUFACTURING OF PIGMENT S. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 01- 11-2004 DECLARING TOTAL INCOME OF RS.79,35,143/- AFTER CLAIMING DEDUCTION OF RS.34 ,34,928/- U/S 80HHC. IN THE 2 ITA NO.6583/MUM/2011 ASSESSMENT COMPLETED U/S 143(3), THE CLAIM OF THE A SSESSEE FOR DEDUCTION U/S 80HHC WAS ALLOWED BY THE AO ONLY TO THE EXTENT OF R S.18,51,957/-. THE GROUND ON WHICH THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/ S 80HHC RESTRICTED BY THE AO WAS THAT THE TOTAL TURNOVER FOR THE PURPOSE OF COMP UTING DEDUCTION U/S 80HHC BY USING FORMULA WAS TAKEN BY THE AO AT RS.6.96 CRORES BY INCLUDING THE JOB WORK CHARGES AS AGAINST RS.5.37 CRORES AS TAKEN BY THE A SSESSEE WITHOUT CONSIDERING THE JOB WORK CHARGES. ON APPEAL, THE LEARNED CIT(APPEAL S) CONFIRMED THE ADDITION MADE BY THE AO ON THIS ISSUE. 3. AS A RESULT OF CONFIRMATION BY THE LEARNED CIT(A PPEALS) OF THE ADDITION OF RS.15,82,971/- MADE TO THE TOTAL INCOME OF THE ASSE SSEE BY RESTRICTING ITS CLAIM FOR DEDUCTION U/S 80HHC, A NOTICE WAS ISSUED BY THE AO REQUIRING THE ASSESSEE TO SHOW CAUSE AS TO WHY PENALTY U/S 271(1)(C) SHOULD N OT BE IMPOSED IN RESPECT OF THE SAID ADDITION. IN REPLY TO THE SAID NOTICE, IT WAS SUBMITTED ON BEHALF OF THE ASSESSEE THAT MERELY BECAUSE THE CLAIM MADE BY IT FOR DEDUCT ION U/S 80HHC WAS NOT FULLY ACCEPTED COULD NOT LEAD TO THE LEVY OF PENALTY ES PECIALLY WHEN ALL THE PARTICULARS RELATING TO THE SAID CLAIM WERE FULLY AND TRULY FUR NISHED. THE AO DID NOT ACCEPT THIS CONTENTION OF THE ASSESSEE AND PROCEEDED TO IMPOSE PENALTY OF RS.5,67,890/- U/S 271(1)(C) BEING 100% OF THE TAX SOUGHT TO BE EVADE D BY THE ASSESSEE IN RESPECT OF THE ADDITION OF RS.15,92,971/- MADE TO ITS TOTAL IN COME TREATING THE SAME AS FURNISHING OF INACCURATE PARTICULARS OF ITS INCOME BY THE ASSESSEE. 4. THE PENALTY IMPOSED BY THE AO U/S 271(1)(C) WAS CHALLENGED BY THE ASSESSEE IN AN APPEAL FILED BEFORE THE LEARNED CIT( APPEALS). BEFORE THE LEARNED CIT(APPEALS), IT WAS SUBMITTED THAT THE WORKING OF DEDUCTION U/S 80HHC MADE BY THE ASSESSEE BY EXCLUDING JOB WORK CHARGES FROM TH E TOTAL TURNOVER WAS BASED ON THE DECISIONS OF THE COURT WHEREIN IT WAS HELD THAT JOB WORK CHARGES DO NOT FORM PART OF THE TOTAL TURNOVER AS PER SECTION 80HHC. IT WAS CONTENDED THAT THE ASSESSEE 3 ITA NO.6583/MUM/2011 IN ANY CASE HAD DISCLOSED ALL THE MATERIAL FACTS RE LATING TO ITS CLAIM FOR DEDUCTION U/S 80HHC AND IT WAS NOT A CASE OF FURNISHING OF AN Y INACCURATE PARTICULARS OF ITS INCOME BY THE ASSESSEE. RELYING ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS P. LTD. 36 DTR 449 , IT WAS CONTENDED ON BEHALF OF THE ASSESSEE THAT THE PENALTY IMPOSED BY THE AO U/S 271(1)(C) IN THE FACTS AND CIRCUMSTANCES OF ITS CASE WAS NOT JUSTIFIED. THE L EARNED CIT(APPEALS) FOUND MERIT IN THE CONTENTION RAISED ON BEHALF OF THE ASSESSEE COMPANY. HE NOTED THAT THE ASSESSEE HAD EXCLUDED JOB WORK CHARGES RECEIVED FRO M TOTAL TURNOVER FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 80HHC RELYING ON VARIOUS JUDICIAL PRONOUNCEMENTS INCLUDING THE DECISION OF HONBLE MA DRAS HIGH COURT IN THE CASE OF CIT VS. MADRAS MOTORS LTD. 174 CTR 221. HE ALSO NOTED THAT ALL THE MATERIAL FACTS RELATING TO ITS CLAIM FOR THE SAID DEDUCTION WERE FURNISHED BY THE ASSESSEE ON RECORD AND IT WAS NOT A CASE OF FURNISHING OF ANY I NACCURATE PARTICULARS OF ITS INCOME BY THE ASSESSEE. THE LEARNED CIT(APPEALS) HE LD THAT THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS P. LTD. (SUPRA) WAS CLEARLY APPLICABLE TO THE FACTS OF THE ASSESSEES C ASE AND RELYING THEREON, HE CANCELLED THE PENALTY IMPOSED BY THE AO U/S 271(1)( C) OBSERVING THAT IT WAS NOT A CASE OF FILING OF INACCURATE PARTICULARS OF ITS INC OME BY THE ASSESSEE AND A MERE DISALLOWANCE OF ASSESSEES CLAIM WOULD NOT AMOUNT T O FURNISHING OF INACCURATE PARTICULARS OF INCOME. AGGRIEVED BY THE ORDER OF TH E LEARNED CIT(APPEALS), THE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUN AL. 5. AT THE TIME OF HEARING BEFORE US, NOBODY HAS AP PEARED ON BEHALF OF THE ASSESSEE. THIS APPEAL OF THE REVENUE IS, THEREFORE, BEING DISPOSED OF EXPARTE QUA THE RESPONDENT ASSESSEE AFTER HEARING THE ARGUMENTS OF THE LEARNED DR AND PERUSING THE RELEVANT MATERIAL ON RECORD. 4 ITA NO.6583/MUM/2011 6. IT IS OBSERVED THAT THERE IS NO DISPUTE THAT THE ASSESSEE IN THE PRESENT CASE WAS ENTITLED TO CLAIM DEDUCTION U/S 80HHC FOR THE Y EAR UNDER CONSIDERATION. WHAT HAS BEEN DISPUTED IS ONLY THE QUANTUM OF SUCH DEDUC TION WHICH THE ASSESSEE HAD CLAIMED BY EXCLUDING THE JOB WORK CHARGES RECEIVED FROM THE TOTAL TURNOVER RELYING ON VARIOUS JUDICIAL PRONOUNCEMENTS. THE DEDUCTION C LAIMED BY THE ASSESSEE U/S 80HHC THUS WAS WORKED OUT BY ADOPTING A DEFINITE BA SIS AND THE CLAIM SO MADE, IN OUR OPINION, WAS A BONAFIDE CLAIM. MOREOVER, ALL TH E MATERIAL PARTICULARS RELATING TO THE SAID CLAIM WERE FURNISHED BY THE ASSESSEE AND T HERE IS NO ALLEGATION MADE BY THE AO THAT IT WAS A CASE OF FURNISHING OF INACCURA TE PARTICULARS OF ITS INCOME BY THE ASSESSEE. AS A MATTER OF FACT, THE WORKING OF D EDUCTION U/S 80HHC AS MADE BY THE AO WAS BASED ENTIRELY ON THE PARTICULARS GIVEN BY THE ASSESSEE COMPANY IN ITS RETURN OF INCOME AND IT, THEREFORE, CANNOT BE ALLEG ED THAT ANY PARTICULARS RELATING TO ITS CLAIM FOR DEDUCTION U/S 80HHC AS FURNISHED BY T HE ASSESSEE WERE FOUND TO BE INCORRECT OR INACCURATE. IN THE CASE OF RELIANCE PE TRO PRODUCTS P. LTD. (SUPRA), THE HONBLE SUPREME COURT HAS HELD THAT A MERE MAKING O F A CLAIM WHICH IS NOT FOUND TO BE SUSTAINABLE BY ITSELF WILL NOT AMOUNT TO FURN ISHING OF INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE AND JUST BECAU SE THE ASSESSEES CLAIM FOR DEDUCTION HAS NOT BEEN ACCEPTED, PENALTY U/S 271(1) (C) CANNOT BE ATTRACTED ESPECIALLY WHEN THERE IS NO ALLEGATION THAT ANY PAR TICULARS FILED BY THE ASSESSEE IN RELATION TO HIS CLAIM WERE FOUND TO BE INCORRECT OR INACCURATE. KEEPING IN VIEW THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F RELIANCE PETRO PRODUCTS P. LTD. (SUPRA) AND HAVING REGARD TO ALL THE FACTS OF THE CASE, WE ARE OF THE VIEW THAT IT WAS NOT A FIT CASE TO IMPOSE PENALTY U/S 271(1)(C) AND THE LEARNED CIT(APPEALS) IS FULLY JUSTIFIED IN CANCELLING THE PENALTY IMPOSED B Y THE AO U/S 271(1)(C). WE, THEREFORE, UPHOLD THE IMPUGNED ORDER OF THE LEARNED CIT(APPEALS) CANCELLING THE PENALTY IMPOSED BY THE AO U/S 271(1)(C) AND DISMISS THIS APPEAL FILED BY THE REVENUE. 5 ITA NO.6583/MUM/2011 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED ON THIS 26 TH DAY OF SEPT. , 2012. SD/- SD/- (I.P. BANSAL) (P.M. JAGTAP) JUDICIAL MEMBER ACCO UNTANT MEMBER MUMBAI, DATED: 26 TH SEPT., 2012. COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, C-BENCH. (TRUE COPY) BY ORD ER ASSTT. REGI STRAR, ITAT, MUMBAI BENCHES, MUMB AI. WAKODE 6 ITA NO.6583/MUM/2011 DATE INITIALS DRAFT DICTATED ON 17- 9-12 SR. P.S. DRAFT PLACED BEFORE THE AUTHOR 24-9-12 SR. P.S. DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER AM/JM DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM APPROVED DRAFT COMES TO THE SR. PS SR. P.S. KEPT FOR PRONOUNCEMENT ON SR. P.S. FILE SENT TO THE BENCH CLERK SR. P.S. DATE ON WHICH FILE GOES TO THE HEAD CLERK DATE OF DISPATCH