A.C.I.T.-10(1), MUMBAI V. CENTAUR PHARMACEUTICAL PVT LTD, MUMBAI

ITA 6843/MUM/2011

• Counselvise Citation: 684319914 RSA 2011
• Duration Of Justice: 3 year(s) 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 29-12-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 10-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARMANAND J
• Assessee Lawyers: VISWAS V MEHANDALE
• Keywords: Revenue expenditure; Capital expenditure

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE HONBLE S/SHRI H.L. KARWA, PRESIDENT AND B. R.BASKARAN (AM) . . , . . , ./ I.T.A. NO.6843/MUM/2011 ( / ASSESSMENT YEAR :2004-05) ASSTT.COMMISSIONER OF INCOME TAX CIRCLE 10(1), R NO.455, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 / VS. M/S CENTAUR PHARACEUTICAL PVT.LTD., CENTAUR HOUSE, NEAR GRAND HYAT, VAKOLA, SANTACRUS EAST, MUMBAI-400055 ( / APPELLANT) .. ( ! / RESPONDENT) ./ #$ ./ PAN/GIRNO.:AAACCO444K % / APPELLANT BY : SHRI PARMANAND J ! & % / RESPONDENT BY SHRI VISWAS V MEHANDALE ' ( & ) * / DATE OF HEARING : 29.12.2014 +, & ) * /DATE OF PRONOUNCEMENT : 16.01.2015 / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE REVENUE IS AGGRIEVED BY THE DECISION OF LD CIT( A)-21, MUMBAI IN DELETING THE PENALTY OF RS.3,67,114/- LEVIED IN THE HANDS OF THE ASSESSEE U/S 271(1)(C) OF THE ACT FOR ASSESSMENT YEAR 2004-0 5. 2. WE HEARD THE PARTIES AND PERUSED THE RECORD. TH E ASSESSEE IS IN THE BUSINESS OF MANUFACTURING AND MARKETING PHARMAC EUTICAL ITEMS. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE H AD INCURRED A SUM OF RS.10,23,313/- AS PRODUCT REGISTRATION EXPENSES IN AFRICAN COUNTRIES AND CLAIMED THE SAME AS REVENUE EXPENDITURE. THE AO TR EATED THE SAME AS CAPITAL EXPENDITURE ON THE REASONING THAT THE ASSES SEE WOULD BE GETTING ITA NO.6843/M/11 2 LONG TERM BENEFIT OF SALES IN AFRICAN COUNTRIES DUE TO THIS EXPENDITURE. ACCORDINGLY HE DISALLOWED THE ABOVE SAID CLAIM AND THE LD CIT(A) ALSO CONFIRMED THE SAID DISALLOWANCE. IT APPEARS THAT TH E ASSESSEE DID NOT PURSUE THIS DISALLOWANCE BEFORE THE TRIBUNAL. THE ASSESSING OFFICER LEVIED PENALTY U/S 271(1)(C) OF THE ACT ON THE ABOVE SAID DISALLOWANCE ON THE GROUND THAT THE ASSESSEE HAS FURNISHED INACCURATE P ARTICULARS OF INCOME. HOWEVER, THE LD CIT(A) DELETED THE SAME BY HOLDING THAT THE SAID CLAIM IS A DEBATABLE ONE AND FURTHER BY PLACING RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS (322 ITR 158). 3. BEFORE US THE LD D.R PLACED STRONG RELIANCE ON THE PENALTY ORDER PASSED BY THE AO AND CONTENDED THAT THE AO WAS JUST IFIED IN LEVYING PENALTY, SINCE THE ASSESSEE HAS CLAIMED A CAPITAL E XPENDITURE AS DEDUCTION. ON THE CONTRARY, THE LD A.R SUBMITTED T HAT THE LD CIT(A) WAS JUSTIFIED IN DELETING THE PENALTY ON THE GROUND THA T QUESTION WHETHER THE PRODUCT REGISTRATION CHARGES IS A CAPITAL EXPENDITU RE OR REVENUE EXPENDITURE IS A DEBATABE QUESTION. THE LD A.R INV ITED OUR ATTENTION TO THE ORDER DATED 29-05-2013 PASSED BY THE MUMBAI C B ENCH OF ITAT IN THE ASSESSEES OWN CASE IN AY 2007-08, WHICH IS PLACED IN PAGES 1 12 OF THE PAPER BOOK AND SUBMITTED THAT THE TRIBUNAL HAS DELE TED IDENTICAL DISALLOWANCE MADE BY THE AO IN AY 2007-08. 4. HAVING HEARD THE RIVAL CONTENTIONS, WE ARE OF THE VIEW THAT THE ORDER OF LD CIT(A) DELETING THE PENALTY DESERVES TO BE SU STAINED. WE AGREE WITH THE VIEW OF LD CIT(A) THAT THE QUESTION WHETHER THE PRODUCT REGISTRATION CHARGES IS A CAPITAL EXPENDITURE OR REVENUE EXPENDI TURE IS A DEBATABE QUESTION AND HENCE THE SAME MAY NOT LEAD TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. ACCORDINGLY, WE CONFIRM THE ORDER OF LD CIT(A). ITA NO.6843/M/11 3 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 16TH JAN,2015. +, ' - ./ 0 1 16TH JAN 2015 , & 2( 3 SD SD ( . . / H.L. KARWA) ( . . , / B.R. BASKARAN ) / PRESIDENT / ACCOUNTANT MEMBER . ' ( MUMBAI: TH JAN, 2015. . . ./ SRL , SR. PS ! ' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. ! / THE RESPONDENT. 3. ' 7) ( ) / THE CIT(A)- CONCERNED 4. ' 7) / CIT CONCERNED 5. 6. 89 2 ): , * : , . ' ( / DR, ITAT, MUMBAI CONCERNED 2 ; < ( / GUARD FILE. = ' / BY ORDER, TRUE COPY > # (ASSTT. REGISTRAR) * : , . ' ( /ITAT, MUMBAI