ACIT 20(1), MUMBAI V. INDUS ELECTRONICS, MUMBAI

ITA 6726/MUM/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4402 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 15-12-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 20-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIKASH KUMAR AGARWAL
• Keywords: Business income; Difference of opinion

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI- I,BENCH , , BEFORE S/SH. SANJAY GARG, JUDICIAL MEMBER & ASHWANI TANEJA, ACCOUNTANT MEMBER /.ITA NO.6726/MUM/2013, /ASSESSMENT YEAR-2007-08 ACIT-20(1)ROOM NO.603, 6 TH FLOOR PIRAMAL CHAMBER, PAREL MUMBAI-400 012. VS. M/S. INDUS ELECTRONICS B-53, INDUS HOUSE, 6 TH FLOOR, NEW LINK ROAD, ANDHERI (W) MUMBAI-400 053. PAN NO.AACFI 0670 E ( / APPELLANT ) ( /RESPONDENT) APPELLANT BY SHRI VIKASH KUMAR AGA RWAL RESPONDENT BY NONE DATE OF HEARING : 15.12.2015 DATE OF PRONOUNCEMENT : 08.01.2016 O R D E R PER ASHWANI TANEJA, AM : IMPUGNED APPEAL IS AGAINST THE ORDER OF THE LD.CIT( A) DELETING THE PENALTY LEVIED BY THE ASSESSING OFFICER ON THE FOLLOWING TWO ISSUES:- 1) TREATMENT OF LONG TERM CAPITAL GAIN HELD TO BE BUSINESS INCOME. 2) EXPENSES CLAIMED BY THE ASSESSEE ON REPAIR AND MAINTENANCE OF BMC CHARGES, PROFESSIONAL FEE ETC., DISALLOWED BY THE ASSESSING OFFICER FOR R S.15,45,982/-, ON THE GROUND THAT THESE ARE PART OF VALUATION OF STOCK-IN-TRADE. 2. BASED ON THE FACTS NOTED BY US AND FROM THE PERUSA L OF LOWER AUTHORITIES IT IS LEARNT THAT THESE ISSUES WERE CONFIRMED IN QUANTUM APPEAL AND T HEREFORE, PENALTY WAS LEVIED BY THE ASSESSING OFFICER. PENALTY LEVIED BY THE ASSESSING OFFICER WAS DELETED BY THE LD.CIT(A). BEING AGGRIEVED REVENUE HAS FILED AN APPEAL BEFORE THIS T RIBUNAL. 2 ITA NO.6726/M/13-IN DUS ELECTRONICS 3. DURING THE COURSE OF HEARING BEFORE US, NONE HAS A PPEARED ON BEHALF OF THE ASSESSEE . LD. DEPARTMENTAL REPRESENTATIVE (DR) APPEARING ON BEHAL F OF THE REVENUE HAS RELIED UPON THE PENALTY ORDER. WITH HIS ASSISTANCE WE HAVE GONE THR OUGH THE ORDER OF THE LD. CIT(A) DELETING THE PENALTY. IT IS NOTED BY US ON THE BASIS OF PERUSAL OF THE IMPUGNED ORDER OF THE LD. CIT(A) THAT DETAILED FINDING HAS BEEN RECORDED BY LD. CIT(A) BE FORE DELETING THE PENALTY. 4. THE BRIEF FACTS WITH REGARD TO TREATMENT OF INCOME OF RS.23.00 LACS SHOWN BY THE ASSESSEE UNDER THE HEAD CAPITAL GAINS AS BUSINESS INCOME A RE THAT AS PER THE FACTS NOTED IN THE ASSESSMENT ORDER, THE ASSESSEE HAD SOLD AN AREA OF 4415 SQ.MTRS. FOR RS.2.94 CRORES AND DECLARED NET PROFIT OF RS.1.40 CRORES THEREON. THE ASSESSEE HAD OFFERED THE RESULTANT INCOME PARTLY UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSION AND PARTLY AS INCOME UNDER THE HEAD CAPITAL GAINS. IN THE RETURN FILED BY THE ASSESSEE, AN AMO UNT OF RS.23.04 LACS WAS SHOWN AS LTCG AND EXEMPTION U/S.54EC WAS CLAIMED TO THE EXTENT OF RS. 23.00 LACS. THE ASSESSING OFFICER HELD THAT THIS INCOME WAS TO BE ASSESSED AS BUSINESS INCOME. THE ASSESSMENT ORDER ON THIS ISSUE WAS CONFIRMED BY LD. CIT(A) AS WELL AS THE TRIBUNAL . 5. WITH REGARD TO DISALLOWANCE OF EXPENSES, IT IS NOT ED THAT THE DISALLOWANCE WAS PARTLY UPHELD BY THE TRIBUNAL. DURING THE COURSE OF ASSESS MENT PROCEEDINGS, IT WAS NOTED BY THE ASSESSING OFFICER THAT THE ASSESSEE EARNED INCOME F ROM RENT AS WELL AS PROFIT ON SALE OF UNITS IN THE PROJECT CALLED INDUS HOUSE, AND CLAIMED EXPEN SES OF RS.22,52,600/-. IT WAS HELD BY HIM THAT PART OF THESE EXPENSES HAD NO DIRECT RELATION TO RENTAL INCOME OR INCOME FROM SALE OF UNITS IN THE SAID YEAR AND DISALLOWED AN AMOUNT OF RS.15,45, 982/- ON THE GROUND THAT THESE EXPENSES WERE RELATED TO UN-SOLD STOCK AND THEREFORE, THESE SHOUL D HAVE BEEN CAPITALIZED, AND THEREFORE, THESE WERE HELD TO BE NOT ALLOWABLE AS REVENUE EXPENDITUR E. THE DISALLOWANCE MADE BY THE ASSESSING 3 ITA NO.6726/M/13-IN DUS ELECTRONICS OFFICER WAS CONFIRMED BY THE LD. CIT(A), BUT SUBSEQ UENTLY THE TRIBUNAL PARTLY DELETED THE DISALLOWANCE AND PARTLY UPHELD THE SAME. 6. IN THE PENALTY ORDER THE ASSESSING OFFICER LEVIED PENALTY ON BOTH THE ITEMS. IN THE APPEAL BEFORE LD. CIT(A) DETAILED SUBMISSIONS WERE FILED BY THE ASSESSEE CONTENDING INTERALIA THAT FULL DISCLOSURE WAS MADE BY THE ASSESSEE IN THE RETURN O F INCOME AND THESE ISSUES DO NOT CALL FOR LEVY OF PENALTY UNDER THE LAW AND GIVEN FACTS OF THE CAS E. IT IS NOTED BY US THAT LD. CIT(A) HAS ANALYSED THE FACTS OF THE CASE IN PROPER MANNER AND RECORDED DETAILED FINDINGS AS REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE:- 5.13 IN THE PRESENT CASE, OF THE DISALLOWANCES SUS TAINED BY THE ITAT, ONE RELATES TO AN AMOUNT OF RS. 23.04 LAKHS SHOWN AS LONG-TERM CAPITAL GAINS BY THE APPELLANT AND HELD AS BUSINESS INCOME BY THE A.O. THE SECOND RELATES TO DISALLOWANCE OF EXPE NSES CLAIMED AGAINST THE INCOME EARNED FROM RENT AND THE SALE OF UNITS. 5.14 REGARDING THE ASSESSMENT OF INCOME OFFERED UN DER THE HEAD CAPITAL GAINS AS BUSINESS INCOME, THE PENALTY HAS BEEN LEVIED ON THE BASIS OF TREATMENT OF CAPITAL GAIN DECLARED BY THE ASSESSEE AS BUSINESS INCOME. THUS CLEARLY, THE PART ICULARS RELATING TO THE COMPUTATION OF QUANTUM OF CAPITAL GAIN OR THE VARIOUS HEADS OF EXPENDITURE , WERE NOT DISPUTED BY THE ASSESSING OFFICER, BUT THERE WAS A DIFFERENCE IN PERSPECTIVE WHEREIN T HE INCOME DECLARED BY THE APPELLANT AS SHORT TERM CAPITAL GAIN, WAS TREATED BY THE ASSESSING O FFICER AS BUSINESS INCOME. HOWEVER, IT CANNOT BE SAID THAT THE CLAIM OF THE ASSESSEE TREATING THE SAID INCOME AS CAPITAL GAIN WAS INCONCEIVABLE OR ILLEGAL. THEREFORE, THE ISSUE OF TREATMENT OF THE INCOME WAS A QUESTION OF DIFFERENCE OF OPINION AND THE VIEW TAKEN BY THE ASSESSEE IN TREATING THE SAME AS CAPITAL GAIN, THOUGH NOT FOUND ACCEPTABLE BY THE A.O. COULD NOT IPSO FACTO LEAD TO THE CONCLUSION THAT THE ASSESSEE CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTI CULARS OF INCOME. AS REGARDS THE CLAIM OF EXPENSES, THE SAME WAS EXAMINED DURING THE ASSESSME NT PROCEEDINGS AND FOUND ALLOWABLE IN PART. THERE IS NO FINDING BY THE A.O. THAT ANY EXPENSES CLAIMED WERE BOGUS IN NATURE OR HAD BEEN INFLATED OR EVEN THAT ANY DETAILS SUPPLIED BY THE A PPELLANT IN THE RETURN FILED WERE FOUND TO BE INCORRECT, ERRONEOUS OR FALSE. THIS NOT BEING THE CASE, THERE WOULD BE NO QUESTION OF INVITING THE PENALTY U/S. 271(1)(C) OF THE ACT. AS HELD BY THE A PEX COURT IN THE DECISION IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS P. LTD. (SUPRA), THE MERE MA KING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACC URATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. THUS AFTER DUE CONSIDERATION OF THE ENTIR E CONSPECTUS OF FACTS AVAILABLE ON RECORD AND THE JUDICIAL PRINCIPLES LAID DOWN WHICH HAVE BEEN DISCUSSED IN THE PRECEDING PARAGRAPHS, I FIND THAT PENALTY IS NOT LEVIABLE IN THE PRESENT CASE. ACCORDINGLY, THE PENALTY IMPOSED STANDS CANCELLED AND THE GROUND RAISED BY THE APPELLANT IS ALLOWED. 4 ITA NO.6726/M/13-IN DUS ELECTRONICS 7. WE AGREE WITH THE REASONING OF THE CIT(A) THAT IN THE GIVEN FACTS IT CANNOT BE SAID THAT THE CLAIM OF THE ASSESSEE TREATING THE IMPUGNED INC OME AS CAPITAL GAIN WAS NOT FEASIBLE OR ILLEGAL, THUS, ISSUE OF TREATMENT OF INCOME WAS A QUESTION O F DIFFERENCE OF OPINION AND, THEREFORE, THE VIEW ADOPTED BY THE ASSESSEE IN TREATING THE SAME A S CAPITAL GAIN COULD NOT IPSO FACTO LEAD TO THE CONCLUSION THAT THE ASSESSEE CONCEALED THE PARTICUL ARS OF INCOME. SIMILARLY, WITH REGARD TO CLAIM OF EXPENSES, THERE WAS NO FINDING BY THE ASSESSING OFFICER THAT THE EXPENSES CLAIMED BY THE ASSESSEE WERE BOGUS. IT IS FURTHER NOTED THAT PART RELIEF WAS GIVEN BY THE TRIBUNAL WITH REFERENCE TO DISALLOWANCE OF EXPENSES. THUS, THERE WAS AN ELE MENT OF DEBATE. WE FURTHER FIND THAT FULL DISCLOSURE HAS BEEN MADE IN THE RETURN OF BY THE AS SESSEE WITH RESPECT TO BOTH OF THE ABOVE SAID ITEMS. IN THESE FACTS AND CIRCUMSTANCES, WE FIND TH AT LD. CIT(A) HAS RIGHTLY PLACED RELIANCE ON THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF C IT VS. RELIANCE PETRO PRODUCTS PVT. LTD. (322 ITR 158). WE, THUS, FIND THAT THE FINDINGS REC ORDED BY LD. CIT(A) ARE WELL REASONED AND IN ACCORDANCE WITH LAW AND FACTS, AND NO INTERFERENCE IS CALLED FOR THEREIN, AND THEREFORE THE SAME ARE UPHELD. GROUNDS RAISED BY THE REVENUE ARE DISMI SSED. 8. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COU RT ON 08.01.2016. 08 , 2016 SD/- SD/- ( /SANJAY GARG ) ( /ASHWANI TANEJA) / JUDICIAL MEMBER /ACCOUNTANT MEMBER , MUMBAI, DATED 08.01.2016. JV, SR. PS 5 ITA NO.6726/M/13-IN DUS ELECTRONICS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI