ASST CIT 10(3), MUMBAI V. SURFACE GRAPHICS P. LTD, MUMBAI

ITA 6600/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8910 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2006-2007
• Appeal Filed On: 03-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V KRISHNAMOORTHY
• Assessee Lawyers: SANJUKTA CHOW DHURY
• Section: 115JB; 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI BEFORE SHRI D.K. AGARWAL, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ITA NO. 6600/MUM/2011 ASSESSMENT YEAR-2006-07 THE ACIT 10(3), AAYAKAR BHAVAN, MUMBAI-400 020 VS. M/S. SURFACE GRAPHICS PVT. LTD., 180, RAJA INDUSTRIAL ESTATE, 1 ST FLOOR, NAHUR, P.K. ROAD, MULUND (W), MUMBAI-400 080 PAN-AAHCS 4043D (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI V.KRISHNAMOORTHY RESPONDENT BY: MS. SANJUKTA CHOWDHURY DATE OF HEARING :3.09.2012 DATE OF PRONOUNCEMENT: 5.9.2012 O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)- 22 MUMBAI DT. 15.7.2011 PERTAINING TO ASSESSMENT YE AR 2006-07. 2. THE SOLE GRIEVANCE OF THE REVENUE IS THAT THE LD . CIT(A) HAS ERRED IN DELETING PENALTY LEVIED AT RS. 6,46,404/- U/S. 271( 1)(C) OF THE ACT. 3. THE FACTS AT THE TIME OF THE ASSESSMENT SHOW THA T THE RETURN FOR THE YEAR UNDER CONSIDERATION WAS FILED ON 29.11.2006 DE CLARING TOTAL INCOME AT RS. 13,39,046/-. THE ASSESSEE HAS CLAIMED DEDUCTIO N U/S. 80IB AT RS. 33,36,578/-. THE BOOK PROFIT WAS DECLARED AT RS.1, 35,39,679/- U/S. 115JB OF THE ACT. ITA NO. 6600/MUM/2011 2 4. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF BUSINESS ACTIVITIES AT THE SILVASA UNIT ON WHICH DEDUCTION U/S. 80IB WAS CLAIMED AND WHETHER ANY OTHE R BUSINESS ACTIVITIES ARE INVOLVED IN THE CONSOLIDATED ACCOUNT OTHER THAN 80IB UNIT. THE ASSESSEE FILED A DETAILED REPLY WHICH IS EXHIBITED AT PAGES 2 & 3 OF THE ASSESSMENT ORDER. 5. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE , THE AO CONCLUDED THAT THERE IS NO SEPARATE UNIT OF THE ASSESSEE. TH E ASSESSEE IS DOING SAME BUSINESS IN ONE PREMISE ONLY. THE AO FURTHER OBSERV ED THAT THE WHOLE MANUFACTURING ACTIVITIES ARE ALSO CARRIED OUT ON TH E SAME PREMISE. THE AO ALLOWED DEDUCTION U/S. 80IB AT THE RATE OF 30% ON T HE CONSOLIDATED PROFIT AND LOSS ACCOUNT WHEREIN GROSS TOTAL INCOME WAS WOR KED OUT AT RS. 47,50,624/-. AS THE TAX PAYABLE ON THE BOOK PROFIT WAS MORE THAN THE TAX PAYABLE ON THE TOTAL INCOME, THEREFORE THE AO DETER MINED THE TAX PAYABLE AS THE BOOK PROFIT OF THE ASSESSEE AND COMPLETED THE A SSESSMENT AND INITIATED THE PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT. 6. THE PENALTY PROCEEDINGS WERE INITIATED IN RESPEC T OF THE DISALLOWANCE OF ALL EXPENSES DEBITED TO THE PROFIT AND LOSS ACCO UNT OF NON 80IB UNIT AND TREATING THE ENTIRE BUSINESS AS ONE AND THE SAME UN IT. THE ASSESSEE WAS SHOW CAUSED AS TO WHY PENALTY SHOULD NOT BE LEVIED. AFTER CONSIDERING THE REPLY FILED BY THE ASSESSEE, THE AO LEVIED PENALTY U/S. 271(1)(C) OF THE ACT AT THE RATE OF 100% AMOUNTING TO RS. 6,46,404/-. 7. THE MATTER WAS AGITATED BEFORE THE LD. CIT(A). THE MAIN CONTENTION OF THE ASSESSEE WAS THAT THE INCOME HAS BEEN FINALL Y COMPUTED BY THE AO U/S. 115JB AND NOT UNDER NORMAL PROVISION. THEREFO RE, NO PENALTY IS LEVIABLE ON THE FACTS OF THE CASE. THE ASSESSEE FURTHER REL IED UPON THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS RELIANCE PETROPRODUCTS PVT. LTD. 322 ITR 158. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS OF THE ASSESSEE, LD. CIT(A) HELD THAT THE AO WAS NOT JUST IFIED IN IMPOSING PENALTY ITA NO. 6600/MUM/2011 3 U/S. 271(1)(C) OF THE ACT AND ACCORDINGLY DIRECTED THE AO TO DELETE THE PENALTY SO LEVIED. 8. AGGRIEVED BY THE FINDINGS OF LD. CIT(A), REVENUE IS IN APPEAL BEFORE US. 9. THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY SUP PORTED THE FINDINGS OF AO AT THE ASSESSMENT STAGE AND ALSO AT THE TIME OF THE PENAL PROCEEDINGS AND SUBMITTED THAT THE ASSESSEE HAS WILLFULLY AND D ELIBERATELY CLAIMED CERTAIN DEDUCTION WHICH WAS LEGALLY NOT PERMISSIBLE. REBUT TING THE ARGUMENT OF THE LD. DR, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS IS NOT A FIT CASE FOR THE LEVY OF PENALTY FOR THE SIMPLE REASON THAT INCOME HAS NOT BEEN ASSESSED UNDER NORMAL PROVISIONS OF ACT BUT THE INC OME HAS BEEN ASSESSED ON BOOK PROFIT U/S. 115JB OF THE ACT. THEREFORE, I T IS NOT A FIT CASE FOR LEVY OF PENALTY. THE LD. COUNSEL FOR THE ASSESSEE RELIED U PON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS NALWA SONS IN VESTMENTS LTD. (2011) 37 ITCL 218. THE LD. COUNSEL FURTHER RELIED UPON T HE DECISION OF MUMBAI BENCH IN THE CASE OF RUCHI STRIPS AND ALLOYS LTD. V S DCIT IN ITA NO. 6940/M/08. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES. AFTER CAREFUL CONSIDERATION OF THE AS SESSMENT ORDER, WE FIND THAT THE ASSESSMENT HAS BEEN COMPLETED ON BOOK PROFIT U/ S. 115JB OF THE ACT. IT HAS BEEN HELD IN THE CASE OF CIT VS NALWA SONS INVES TMENTS LTD. (SUPRA) THAT WHEN THE COMPUTATION HAS BEEN MADE U/S. 115JB OF TH E ACT AND THE INCOME IS DETERMINED UNDER THAT SECTION AND THE TAX IS PAI D ON SUCH INCOME ASSESSED U/S. 115JB OF THE ACT, THE CONCEALMENT HAD NO ROLE TO PLAY AND IS TOTALLY IRRELEVANT. THIS DECISION OF THE HONBLE DELHI HIG H COURT WAS TAKEN BEFORE THE SUPREME COURT IN SLP APPEAL (CIVIL) NO. 18564/2011 WHEREIN THE HONBLE SUPREME COURT HAS DISMISSED THE SLP FILED BY THE RE VENUE. THE FACTS OF THE INSTANT CASE BEING IDENTICAL TO THE FACTS OF M/S. N ALWA SONS INVESTMENTS LTD., RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE HIGH COURT AND THE HONBLE ITA NO. 6600/MUM/2011 4 SUPREME COURT, WE DO NOT FIND ANY REASON TO TINKER WITH THE FINDINGS OF THE LD. CIT(A), THEREFORE ORDER OF THE LD. CIT(A) IS CO NFIRMED. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED ON THIS 5 TH DAY OF SEPTEMBER, 2012 SD/- SD/- (D.K. AGARWAL) (N.K. BILLAIYA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED 5 TH SEPTEMBER, 2012 RJ COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR E BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI