SANJAY NALIN DALAL, MUMBAI V. ASST CIT 18(1), MUMBAI

ITA 6760/MUM/2012

• Counselvise Citation: 676019914 RSA 2012
• Duration Of Justice: 1 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2014
• Appeal Filed By: Assessee
• Bench Allotted: E
• Assessment Year: 2007-2008
• Appeal Filed On: 05-11-2012
• Court: TRIBUNAL
• Department Lawyers: M L PERUMAL
• Assessee Lawyers: SUNIL V SHAH
• Section: 2

Judgement Text

` IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E, MUMBAI . . , !' #'' ' , $ % BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER . : 6760 / / 2012 A.Y. 2007-08 ITA NO. : 6760/MUM/2012 (ASSESSMENT YEAR: 2007-08) MR. SANJAY NALIN DALAL, 353, A-1, SHAH & NAHAR INDUSTRIAL ESTATE, DHANRAJ MILLS COMPOUND, LOWER PAREL (WEST), MUMBAI -400 013 PAN: AACPD 0245 Q VS ASST. COMMISSIONER OF INCOME TAX 18(1), C-10, 7 TH FLOOR, PRATYAKSHA KAR BHAVA, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI -400 051 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUNIL V. SHAH RESPONDENT BY : SHRI M L PERUMAL /DATE OF HEARING : 08-01-2014 / DATE OF PRONOUNCEMENT : 15-01-2014 ( O R D E R #'' ' , : PER VIVEK VARMA, JM: THE APPEAL UNDER REFERENCE IS FILED BY THE ASSESSEE AGAIN ST THE ORDER OF CIT(A) 29, MUMBAI, DATED 21.08.2012, CONFIRMING THE PE NALTY OF RS. 7,30,696/- U/S 271(1)(C) LEVIED BY THE AO. 2. THE FACTS PERTAINING TO THE CASE AND THE ARGUMENTS AS RAISED BY THE ASSESSEE BEFORE REVENUE AUTHORITIES ARE AS UNDER: THAT APPELLANT MADE A PAYMENT OF RS. 22,76,786/- T O MRS. TARLA DALAL, MOTHER OF THE APPELLANT FOR USE OF HER NAME. THE ASSESSING OFF ICER HELD THAT TDS SHOULD HAVE BEEN DEDUCTED AS ROYALTY IS BEING PAID AND THE APPELLAN T DID NOT DEDUCT TAX AT SOURCE. THE ASSESSING OFFICER DISALLOWED THE AMOUNT UNDER SE CTION 40(A)(IA). THE APPELLANT ARGUED BEFORE ASSESSING OFFICER THAT THE PAYMENT WAS NOT CONSIDERED UNDER THE DEFINITION OF ROYALTY AS PER EXPLANATION 2 TO SECTION 9(1) (VI). IT WAS ARGUED THAT IT IS NOT FOR USE OF ANY PATENT ETC. MR. SANJAY NALI N DALAL ITA NO. 6760/MUM/2012 2 HOWEVER ASSESSING OFFICER DISAGREED WITH SUCH A CONTEN TION. HE DISALLOWED THE AMOUNT OF RS. 22,76,786/- U/S 40(A)(IA) AND HAS ALSO LEV IED PENALTY FOR THIS DISALLOWANCE. APPELLANT HAS FILED WRITTEN SUBMISSION. HE HAS ARGUED TH AT IN CASE OF DISALLOWANCE U/S 40(A)(IA) THERE SHOULD BE NO PENALTY. HE HAS ALSO R ELIED UPON THE CASE OF SHYAM NARAYAN & BROS ITA NO. 1111/MUM/2010 DATED 31.3.201 1. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, AR GUMENTS OF THE ASSESSING OFFICER AND THE WRITTEN SUBMISSIONS OF THE AUTHORISED REPRESEN TATIVE OF THE APPELLANT. I FIND THAT PENALTY HAS BEEN RIGHTLY LEVIED BY THE ASSESSING O FFICER FOR THE FOLLOWING REASONS, (I) THERE WAS NO AMBIGUITY REGARDING DEDUCTION OF TAX A T SOURCE IN THIS CASE. THE PAYMENT WAS FOR THE USE OF NAME OF TARLA DALAL WHICH IS A SALEABLE TRADEMARK. (II) IF THERE WAS ANY AMBIGUITY, APPELLANT WOULD HAVE FI LED APPEAL AGAINST THE ASSESSING OFFICERS ORDER. NO SUCH THING HAS BEEN DONE . (III) PENALTY CAN BE LEVIED WHEN APPELLANT MAKES A PATENT LY INACCURATE CLAIM WHICH IS NEITHER BOANFIDE NOR CAN BE SUPPORTED BY ANY EXPLAN ATION. (IV) THE CONTENTION THAT THE NECESSARY TAX HAS BEEN DE DUCTED IN LATER YEAR AND THE EXPENDITURE HAS BEEN CLAIMED, ALSO DOES NOT SUPPORT TH E CASE OF THE APPELLANT AS APPELLANT DID NOT PROPOSE TO DEDUCT TAX AT ALL FROM SUCH PAYMENT. THEREFORE AS THE APPELLANT HAS FILED INACCURATE PARTICUL ARS OF INCOME, PENALTY HAS BEEN RIGHTLY LEVIED BY THE ASSESSING OFFICER AND IT IS CONFIRM ED. 3. THUS, THE PENALTY HAS BEEN LEVIED AND SUSTAINED BY THE REVENUE AUTHORITIES. 4. AGGRIEVED THE ASSESSEE BEFORE THE ITAT. 5. BEFORE US, THE AR SUBMITTED THAT IT IS AN UNCONTROVERT ED FACT THAT THE PAYMENT HAS BEEN MADE AND HAS BEEN ACCEPTE D TO BE A BUSINESS EXPENSE. THE ONLY DEFICIENCY IS THAT THE ASSESSE E DID NOT DEDUCT TAS ON THE PAYMENT MADE TO MRS. TARLA DALAL DURING THE END OF THE FINANCIAL YEAR. ACCORDING TO THE AR, THE ASSESSEE DEDU CTED TAS BEFORE THE DUE DATE, WHICH OTHERWISE ALSO OPENS THE DOOR TO THE ASSESSEE TO HAVE THE EXPENSE ALLOWED U/S 40(A)(IA). 5. THE DR DID NOT BRING ANY FACT, WHICH WOULD CONTRADICT T HE SUBMISSIONS OF THE AR. 6. ON TAKING INTO CONSIDERATION THE FACTS AND THE FICTION P ROVIDED BY THE STATUTE, CANNOT CULMINATE INTO THE LEVY OF PENALTY, AS THERE WAS NO ALLEGATION FOR FURNISHING OF INACCURATE PARTICULARS OF INCOM E OR CONCEALMENT. 7. IN SUCH A CASE, THE ORDERS OF THE REVENUE AUTHORITIE S DOES NOT INSPIRE ANY CONFIDENCE TO SUSTAIN THE PENAL ACTION TAKEN B Y THE REVENUE AUTHORITIES. MR. SANJAY NALI N DALAL ITA NO. 6760/MUM/2012 3 8. IN THESE CIRCUMSTANCES, WE SET ASIDE THE ORDER OF TH E CIT(A) AND DIRECT THE AO TO CANCEL THE PENALTY. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH JANUARY, 2014. SD/- SD/- ( . . ) ( #'' ' ) (R. C. SHARMA) (VIVEK VARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 15 TH JANUARY, 2014 / COPY TO:- 1) / THE APPELLANT. 2) / THE RESPONDENT. 3) THE CIT (A)-29, MUMBAI. 4) THE CIT -18, MUMBAI, 5) !'# $ , % $ , &'( / THE D.R. E BENCH, MUMBAI. 6) #) * COPY TO GUARD FILE. %+,- / BY ORDER / / TRUE COPY / / . / / '0 % $ , &'( DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI *23/ . . * CHAVAN, SR. PS