AAKASH STONE INDUSTRIES LTD, MUMBAI V. ACIT RG 8(1), MUMBAI

ITA 7001/MUM/2013

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8273 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 11 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 03-05-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 02-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH DESH
• Keywords: Wrong claim; Revenue expenditure; Capital expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH , JUDICIAL MEMBER ITA NO. 7001/MUM/2013 : A.Y : 2006 - 07 M/S. AAKASH STONE INDUSTRIES LTD., SANTA CRUZ AIRPORT SIDE, MARBLE MARKET, W.E. HIGHWAY, VILE PARLE (E), MUMBAI 400 099. PAN : AAACA9755H (APPELLANT) VS. ACIT, RANGE - 8(1), MUMBAI (RESPONDENT) APPELLANT BY : SHRI VIMAL PUNMIYA RESPONDENT BY : SHRI SAURABH DESHPANDE DATE OF HEARING : 11/09/2017 DATE OF PRONOUNCEMENT : 22 /11/2017 O R D E R PER G.S. PANNU , AM : THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A) - 16, MUMBAI DATED 13.09.2013 PERTAINING TO THE ASSESSMENT YEAR 2006 - 07 , WHICH IN TURN HAS ARISEN FROM THE ORDER PASSED BY THE ASSESSING OFFICER, MUMBAI DATED 20.03.2012 U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. IN THIS APPEAL, THE ONLY GRIEVANCE OF THE ASSESSEE IS AGAINST THE ORDER OF THE CIT(A) DATED 13.09.2013 PERTAINING TO ASSESSMENT YEAR 2 ITA NO. 7001/MUM/2013 M/S. AAKASH STONE INDUSTRIES LTD. 2006 - 07 WHEREIN THE PENALTY U/S 271(1)(C) OF THE ACT AMOUNTING TO RS.1,30,680/ - HAS BEEN SUSTAINED. 3. IN BRIEF, THE RELEVANT FACTS ARE THAT THE RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 28.11.2006 DECLARING A N INCOME OF RS.37,67,174/ - , WHICH WAS SUBJECT TO A SCRUTINY ASSESSMENT U/S 143(3) OF THE ACT DATED 15.12.2008 WHEREIN THE TOTAL INCOME WAS ASSESSED AT RS.59,09,878/ - AFTER MAKING CERTAIN ADDITIONS/DISALLOWANCES. IT IS SEEN THAT OUT OF THE VARIOUS ADDITION S/DISALLOWANCES MADE, THE ASSESSING OFFICER NOTED THREE ADDITIONS, NAMELY (I) SUNDRY BALANCE S WRITTEN OFF RS.2,57,379/ - ; (II) ROC FEE INCURRED FOR INCREASE IN AUTHORISED SHARE CAPITAL RS.1,30,500/ - ; AND (III) LOSS ON SALE OF CAR RS.366/ - , WHICH ACCOR DING TO HIM WERE LIABLE FOR PENALTY U/S 271(1)(C) OF THE ACT. IN AN ORDER PASSED U/S 271(1)(C) OF THE ACT DATED 20.03.2012, THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME QUA THE AFORESAID INCOME S AND ACCORDING LY, LEVIED PENALTY EQUIVALENT TO 100% OF THE TAX SOUGHT TO BE EVADED ON SUCH INCOME, WHICH AMOUNTED TO RS.1,30, 680/ - . THIS PENALTY HAS BEEN AFFIRMED BY THE CIT(A), AGAINST WHICH THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. INSOFAR AS THE ADDITION ON ACCOUNT OF SUNDRY BALANCES WRITTEN - OFF IS CONCERNED, THE LEARNED REPRESENTATIVE POINTED OUT THAT THE TRIBUNAL VIDE ORDER IN ITA NO. 5604/MUM/2010 DATED 04.01.2012 HAS SET - ASIDE THE ADDITION BACK TO THE FILE OF THE ASSESSING OFFICER. THEREFORE, IN THIS BAC KGROUND, WE FIND NO REASONS TO UPHOLD THE LEVY OF PENALTY ON THE SAID ASPECT AS THE RELEVANT ADDITION ITSELF DOES NOT SURVIVE. 3 ITA NO. 7001/MUM/2013 M/S. AAKASH STONE INDUSTRIES LTD. 5. SECONDLY, WITH REGARD TO THE DISALLOWANCE OF ROC FEE PAID FOR INCREASE IN AUTHORISED SHARE CAPITAL, THE LEARNED REPRESENTATIV E CONTENDED THAT IT WAS A DEBATABLE ISSUE INASMUCH AS ASSESSEE HAS ADOPTED A POSSIBLE VIEW OF TREATING SUCH EXPENDITURE AS REVENUE EXPENDITURE, WHEREAS THE ASSESSING OFFICER HAS DISALLOWED THE SAME BY TREATING IT AS A CAPITAL EXPENDITURE. 6. IN THIS CONTE XT, WE FIND THAT THE ISSUE AS TO WHETHER THE ROC FEE PAID ON ACCOUNT OF INCREASE IN SHARE CAPITAL IS REVENUE OR CAPITAL EXPENDITURE HAS BEEN SETTLED BY THE HON'BLE SUPREME COURT IN THE CASE OF BROOKE BOND INDIA LTD. VS. COMMISSIONER OF INCOME TAX, 225 ITR 798 (SC) . THE ASSESSEE HAS RELIED ON THE FOLLOWING JUDGMENTS TO SUPPORT HIS CASE THAT TREATMENT OF THE IMPUGNED EXPENDITURE AS A REVENUE EXPENDITURE IS A POSSIBLE VIEW : - I) CIT VS. KISENCHAND CHELLARAM (INDIA) P. LTD., (1981) 130 ITR 385 (MADRAS HIGH COURT); II) WARNER HINDUSTAN LTD. VS. CIT, (1988) 171 ITR 224 (AP HIGH COURT); III) HINDUSTAN MACHINE TOOLS LTD. (NO. 3) VS. CIT, (1989) 175 ITR 220 (KARNATAKA HIGH COURT) NO DOUBT, THE RELIANCE PLACED BY THE ASSESSEE ON THE AFORESAID DECISIONS SUPPORT TH E PLEA THAT THE EXPENDITURE IS REVENUE IN NATURE, SO HOWEVER, THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF BROOKE BOND INDIA LTD. (SUPRA) HAD SETTLE D THE CONTROVERSY THAT THE EXPENDITURE IS NOT REVENUE IN NATURE. THEREFORE, THE CLAIM MADE BY T HE 4 ITA NO. 7001/MUM/2013 M/S. AAKASH STONE INDUSTRIES LTD. ASSESSEE IN THE RETURN OF INCOME WA S OSTENSIBLY A WRONG CLAIM. SO HOWEVER, MAKING OF A WRONG CLAIM IS NOT ENOUGH TO FASTEN THE PENALTY U/S 271(1)(C) OF THE ACT. SOMETHING MORE IS REQUIRED, AND IN THE PRESENT, THERE IS NOTHING TO SHOW THAT ASSESSEE HAD CONCEALED OR FURNISHED ANY INACCURATE PARTICULARS OF INCOME ON THIS ASPECT. THEREFORE, ON THIS ASPECT ALSO , WE DELETE THE LEVY OF PENALTY. 7. THE LAST ASPECT IS WITH REGARD TO THE LOSS ON SALE OF CAR OF RS.366/ - . ON THIS ASPECT, WE FIND THAT IT IS A C ASE WHERE NO PARTICULARS HAVE BEEN FOUND TO BE INACCURATELY FILED BY THE ASSESSEE AND IT IS A CASE OF MERE DISALLOWANCE OF A CLAIM WHICH DOES NOT WARRANT LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. THUS, ON THIS ASPECT, THE PENALTY IS DIRECTED TO BE DELETED. 8. IN THE RESULT, ORDER OF THE CIT(A) IS SET - ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO DELETE THE LEVY OF PENALTY , AS INDICATED ABOVE. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND NOVEMBE R, 2017 SD/ - SD/ - ( AMARJIT SINGH ) JUDICIAL MEMBER (G.S. PANNU) ACCOUNTANT MEMBER MUMBAI, DATE : 22 ND NOVEMBER , 201 7 *SSL* 5 ITA NO. 7001/MUM/2013 M/S. AAKASH STONE INDUSTRIES LTD. COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, A BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI