DCIT (OSD)-I CEN RG 7, MUMBAI V. ITL FABRICS P. LTD, MUMBAI

ITA 7206/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9545 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Assessment Year: 2006-2007
• Appeal Filed On: 24-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMARD EEP
• Keywords: Depreciation; Unabsorbed depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH I, MUMBAI BEFORE SHRI I.P.BANSAL,JUDICIAL MEMBER & SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO. 7206/MUM/2011(A.Y. 2006-07) THE ACIT (OSD)-I, CENTRAL RANGE -7, ROOM NO.413, 4 TH FLOOR, AAYKAR BHAVAN,MK ROAD, MUMBAI 20. (APPELLANT) VS. M/S.ITL FABRICS P LTD. PLOT NO.7, CHANDIVALI FARMS ROAD, CHANDIVALI, MUMBAI 400 072. (RESPONDENT) APPELLANT BY : SHRI AMARDEEP RESPONDENT BY : SHRI PARESH SHAPARIA DATE OF HEARING : 21/11/2012 DATE OF PRONOUNCEMENT : 3 0/11/2012 ORDER PER I.P.BANSAL, J.M THIS IS AN APPEAL FILED BY THE DEPARTMENT. IT IS DIRECTED AGAINST ORDER PASSED BY LD. CIT(A) DATED 9/8/2011 FOR ASSESSMENT YEAR 2006-07. THE GROUND OF APPEAL READS AS UNDER: 1. THAT IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN CANCELLING THE PENALTY LEVIED U /S. 271(1)(C) OF RS.5,53,100/- ON ACCOUNT OF SET OFF OF BUSINESS LOS S AGAINST SHORT TERM CAPITAL GAINS. 2. DURING THE COURSE OF ASSESSMENT PROCEEDING IT W AS NOTICED BY THE AO THAT ASSESSEE HAD CREDITED A SUM OF RS.32,58,543/- ON ACCOUNT OF PROFIT ON SALE OF ASSETS WHICH WAS SET OFF AGAINST UNABSORBED BUSINESS LOSS AND UNABSORBED DEPRECIATION OF EARLIER YEAR. SUCH CLAI M OF THE ASSESSEE WAS DENIED BY THE AO AND AFTER GIVING SET OFF OF UNABSORBED DE PRECIATION THE NET INCOME ITA NO. 7206/MUM/2011(A.Y. 2006-07 ) 2 WAS COMPUTED AT RS.16,43,095/- ON WHICH CONCEALMENT PENALTY WAS INITIATED. THE ADDITION MADE IN QUANTUM PROCEEDINGS HAS ALSO U PHELD BY TRIBUNAL VIDE ORDER DATED 8/2/2012 IN ITA NO.3276/M/2010. ON SU CH ADDITION AO HAS LEVIED CONCEALMENT PENALTY AMOUNTING TO RS.5,53,100 /-. 3. LD. CIT(A) HAS CANCELLED THIS PENALTY ON THE GRO UND THAT AT THE TIME WHEN THE ASSESSEE HAD MADE THIS CLAIM THERE WERE JUDGMEN TS BOTH IN FAVOUR AND AGAINST THE ASSESSEE. IT WAS A DEBATABLE AND LEGAL ISSUE WHICH HAS BEEN REFERRED TO SPECIAL BENCH IN THE CASE OF NANDI STEE L LTD., VS. ACIT, ITA NO.546/BANG/2008. THUS LD. CIT(A) HAS HELD THAT IN VIEW OF EXISTENCE OF NUMBER OF JUDICIAL PRONOUNCEMENTS ON THE SUBJECT TH AT NO PENALTY IS IMPOSABLE IN RESPECT OF VEXED LEGAL ISSUE WHICH AR E DEBATABLE OR ON WHICH TWO VIEWS / OPTIONS ARE POSSIBLE. THE DECISIONS IN WHIC H IT HAS BEEN HELD THAT BROUGHT FORWARD BUSINESS LOSSES CAN BE SET OFF AGAI NST CAPITAL GAIN ARISING ON SALE OF DEPRECIABLE BUSINESS ASSETS HAVE BEEN LISTE D IN THE ORDER OF LD. CIT(A) AND ARE AS UNDER: 1. JK CHEMICAL LTD. VS. ACIT (ITA NO.8206/BOM/198 9 AND 8618/BOM/1989 OF MUMBAI TRIBUNAL, ORDER DATED 1.11. 1993 2. EMPRESS TIN FACTORY P. LTD. VS. JCIT ITA BOM 15 55/M/2000 DATED 26.10.2004. 3. M/S. SRI PADMAVATHI SRINIVAS COTTON GINNING & P RESSING FACTORY, GUNTUR, APPELLANT VS. DCIT, CIRCLE 2(1), GUNTUR, RE SPONDENT (ITAT VISHAKAPATNAM DATED 6.3.2009) 4. COMMISSIONER OF INCOME TAX V. S&S POWER SWITCHG EAR LTD., 2008 (218)CTR 0701-MAD. 5. THE OBSERVATION OF ITAT, MUMBAI BENCH IN THE CA SE OF ACE BUILDER PVT. LTD. 71 TTJ (MUM) 188/76 ITD 389 (MUM) AND BOM BAY HIGH COURT IN 281 ITR 210 (BOM) ARE AS UNDER: 6. WESTERN STATES TRADING VS. CIT 80 ITR 21 (SC) 7. O R M SP. SV FIRM VS. CIT 63 ITR 404 (SC) ITA NO. 7206/MUM/2011(A.Y. 2006-07 ) 3 8. UNITED COMMERCIAL BANK LTD. VS. CIT 32 ITR 688(S C) 9. BROOK BOND & CO. LTD. VS. CIT, 162 ITR 373 (SC) 10. CIT VS. COCANADA RADHASWAMI BANK, 57 ITR 306 (S C) 11. HIMALAYA CO. LTD. V. INCOME-TAX OFFICER, 1989(0 34) TTJ 0457 (CAL) 12. COMMISSIONER OF INCOME TAX VS. RAMNATH GOENKA, 2002 (178) CTR 034C- MAD 13.SNAM PROGETTI S.P.A V. ADDITIONAL COMMISSIONER O F INCOME TAX,NEW DELHI-II, AND OTHERS 1981 (132) ITR 0070-DEL 14. COMMISSIONER OF INCOME-TAX, MADHYA PRADESH V.SH RIKISHAN CHANDMAL, 1966 (060) ITR 0303-MP. 4. THE DECISIONS IN WHICH IT HAS BEEN HELD THAT ON DEBATABLE AND LEGAL ISSUE PENALTY CANNOT BE IMPOSED ARE ALSO LISTED IN THE OR DER OF LD. CIT(A), WHICH READ AS UNDER: 1. CIT V. M.M.RICE MILLS (2002) 253 ITR 17 (P&H) 2. SOUTHERN GAS FITTING (P) LTD. VS. DCIT 80 ITD 202 (CHENNAI) 3. CIT VS. PREM DAS (NO.1) 248 ITR 234 (P&H) / CI T VS. PREM DAS NO.2) 248 ITR 237 (P&H) 4. CIT VS. HARSHVARDHAN CHEMICALS AND MINERAL LTD . 259 ITR 0212 RAJ 5. ITO VS. ROBORANT INVESTMENTS (P) LTD. ITA NO.3 937/MUM/2002 7 SOT 181 (MUM) 6. CIT VS. BACARDI MARTINI INDIA LTD. 206 CTR 250 (DELHI) 7. ITO VS. MAHAVIR CYCLE INDUSTRIES, DECIDED BY: ITAT, CHANDIGARH, DECIDED ON 24 TH SEPTEMBER, 2009. 5. IN THIS VIEW OF THE SITUATION AFTER HEARING BOTH THE PARTIES AND AFTER CAREFULLY CONSIDERING THE ORDER OF LD. CIT(A), WE A RE OF THE OPINION THAT THE ITA NO. 7206/MUM/2011(A.Y. 2006-07 ) 4 ISSUE ON WHICH PENALTY HAS BEEN LEVIED WAS LEGAL A ND DEBATABLE ONE. THEREFORE, APPLYING THE RATIO LAID DOWN IN AFOREMENTIONED CASE S, WE SEE NO INFIRMITY IN THE ORDER OF LD. CIT(A) VIDE WHICH IMPUGNED PENALTY HAS BEEN DELETED. WE DECLINE TO INTERFERE AND THE APPEAL FILED BY THE REVENUE IS DISMISSED. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON THE 30 TH DAY OF NOV. 2012 SD/- SD/- (RAJENDRA ) (I.P.BANSAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 30 TH NOV. 2012 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.R I BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR, I TAT, MUMBAI BENCHES MUMBAI. VM.