ACIT, Jaipur V. MODERN DENIM LTD., Jaipur

ITA 764/JPR/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5203 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 1994-1995
• Appeal Filed On: 10-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KALIKA SINGH; R A VARMA CIT OKBZ DH
• Keywords: Depreciation; Question of law; Difference of opinion
• Section: 32

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH FOE FLAG ;KN O] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI VIKRAM SINGH YA DAV, AM VK;DJ VIHY LA-@ ITA NO.764/JP/12 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 1994-95 THE ACIT, CIRCLE-6, JAIPUR CUKE VS. M/S MODERN DENIM LTD. A-4, VIJAY PATH TILAK NAGAR, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AABCM 0861 H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI VED JAIN (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI KALIKA SINGH (CIT & SHRI R.A. VARMA, (ADDL.CIT) OKBZ DH RKJH[K@ DATE OF HEARING : 28.06.2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 04/08/2016. VKNS'K @ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A), II, JAIPUR DATED 11.06.2012 WHEREIN THE ASSESSEE HAS TA KEN FOLLOWING EFFECTIVE GROUNDS OF APPEAL: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS. 1,28,09,428/- IMPOSE D BY THE AO U/S 271(1)()C) AND IN HOLDING THAT CLAIM OF EXCESS RATE OF DEPRECIATION ON PLANT, MACHINERY AND BUILDING DOES NOT TENTAMOUNT T O DELIBERATE INTENTION OF THE ASSESSEE TO FURNISH INACCURATE PAR TICULARS OF INCOME. ITA NO/. 764/JP/14 ACIT, CIRCLE-6, JAIPUR VS., M/S MODERN DENIM LTD. J AIPUR 2 2. BRIEFLY THE FACTS OF THE CASE THAT THE ASSESSEE IS A PUBLIC LIMITED COMPANY AND IT HAS CLAIMED 100% DEPRECIATION ON BOILERS AND ROPE DYEING MACHINES ON THE GROUND THAT THESE ARE POWER SAVING PLANT AND MA CHINERY. FURTHER ASSESSEE HAD ALSO CLAIMED 100% DEPRECIATION ON TEMPORARY STR UCTURES. BOTH THE CLAIMS WERE RESTRICTED UPTO 25% BY THE AO. THIS ACTION OF AO WAS UPHELD BY THE LD. CIT(A) AS WELL AS BY THE COORDINATE BENCH OF THE TR IBUNAL IN ITA NO. 220/JP/2010 VIDE ORDER DATED 30.07.2010. SUBSEQUENT LY, THE AO IMPOSED A PENALTY OF RS. 1,28,09,428/- U/S 271(1)(C) ON ACCO UNT 100% DEPRECIATION CLAIMED BY THE ASSESSEE AS AGAINST 25% ALLOWED IN T HE ASSESSMENT PROCEEDINGS. THE SAID LEVY OF PENALTY HAS BEEN DEL ETED BY THE LD CIT(A) AND THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST THE SAID ACTION OF THE LD CIT(A). 2.1 AT THE OUTSET, THE LD AR SUBMITTED THAT THE ASS ESSEE HAS PREFERRED AN APPEAL AGAINST THE SAID ORDER OF HONBLE ITAT BEFOR E HONBLE RAJASTHAN HIGH COURT WHICH HAS BEEN ADMITTED ON THIS VERY SUBSTANT IAL QUESTION OF LAW REGARDING ASSESSEES CLAIM OF 100% DEPRECIATION. IT WAS SUBMITTED THAT SINCE THE ISSUE IS NOW ADMITTED BY HONBLE RAJASTHAN HIGH COURT, THE ISSUE IS DEBATABLE HENCE NO PENALTY COULD BE IMPOSED. IN SUP PORT, RELIANCE WAS PLACED UPON FOLLOWING JUDGEMENTS. 1. SADHU RAM GOYAL VS. DCIT (2011) 128 ITD 436 (JA IPUR) 2. ACIT VS. SHRI PAWAN KUMAR MALHOTRA (ITA NO.5556 DEL/2011) (ITAT DELHI) 3. LARSON & TUBRO LTD. VS. DCIT (ITA NO.3255/MUM/20 10) 4. ACIT RG 8(1) MUMBAI VS. ADITYA BIRLA CEMENT AND VICE-VERSA (ITA NO.5931/ MUM/2010, ITA NO. 5686/MUM/2010) 2.2 THE LD AR FURTHER SUBMITTED THAT THE ASSESSEE H AS FURNISHED ALL THE DETAILS OF ITS EXPENDITURE INCLUDING DEPRECATION AS WELL AS INCOME IN ITS RETURN, WHICH DETAILS, IN THEMSELVES, WERE NOT FOUND TO BE INACCURATE NOR COULD BE VIEWED AS THE CONCEALMENT OF INCOME ON ITS PART OR IN ACCURATE PARTICULARS OF ITA NO/. 764/JP/14 ACIT, CIRCLE-6, JAIPUR VS., M/S MODERN DENIM LTD. J AIPUR 3 INCOME. IT WAS UPTO THE AUTHORITIES TO ACCEPT ITS C LAIM OF DEPRECATION IN THE RETURN OR NOT. MERELY BECAUSE THE ASSESSEE HAD CLAI MED THE DEPRECIATION AT A HIGHER RATE WHICH WAS NOT ACCEPTED FULLY, THAT BY I TSELF WOULD NOT ATTRACT THE PENALTY UNDER SECTION 271(1)(C). IF THIS CONTENTIO N OF THE REVENUE WAS ACCEPTED THEN IN CASE OF EVERY RETURN WHERE THE CLA IM MADE WAS NOT ACCEPTED BY THE AO FOR ANY REASON, THE ASSESSEE WOULD INVITE PENALTY U/S 271(1)(C). THAT WAS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE. FURTHER AT IS AN ADMITTED FACT THAT EVERY FACT AND FIGURE HAVING BEEN DISCLOS ED HONESTLY IN ITS RETURN BY THE ASSESSEE FOR CLAIMING THE DEPRECIATION AT A RAT E OF 100%, THIS IS NOT A CASE OF CONCEALMENT OF INCOME NOR THERE IS ANY FURNISHI NG OF INACCURATE PARTICULARS. MERE DISALLOWANCE OF A CLAIM OF THE ASSESSEE ON DIF FERENCE OF OPINION DOES NOT LEAD TO PENALTY. RELIANCE IS PLACE ON THE FOLLOWIN G JUDGEMENTS: 1. CIT VS. RELIANCE PETRO PRODUCT (SC) 230 CTR 320 2. CIT V. RAJ OVERSEAS (P&H) (2011) 336 ITR 261 3. ACIT VS. HARMONY PLASTICS P. LTD. ITA NO. 344 & 393/JODH/2014 DATED 12.9.14 4. CHARBUJA INDUSTRIES P. LTD. VS. ACIT ITA NO.6345 -6/ MUM/12 DATED 22.5.2013 2.3 THE LD DR VEHEMENTLY ARGUED THE MATTER AND SUBM ITTED THAT IN QUANTUM PROCEEDINGS, THE DISALLOWANCE OF DEPRECIATION HAS B EEN CONFIRMED BY THE ITAT AND THE AO HAS RIGHTLY LEVIED THE PENALTY FOR FURNI SHING INACCURATE PARTICULARS OF INCOME BY WAY OF CLAIMING HIGHER DEPRECIATION AS AGAINST WHAT IS ALLOWABLE AS PER THE PROVISIONS OF THE ACT. HE HAS ALSO RELI ED UPON THE DECISION OF HONBLE GUJARAT HIGH COURT IN CASE OF COMMISSIONER OF INCOME-TAX V. DHARAMSHI B. SHAH (366 ITR 140). 2.4 WE HAVE HEARD THE RIVAL CONTENTIONS AND PURSUED THE MATERIAL AVAILABLE ON RECORD. THE LD CIT(A) WHILE DELETING THE PENALT Y HAS HELD THAT THE FACTS OF THE PRESENT CASE ARE PARI MATERIA WITH THE FACTS IN CASE OF THIRD MEMBER ITA NO/. 764/JP/14 ACIT, CIRCLE-6, JAIPUR VS., M/S MODERN DENIM LTD. J AIPUR 4 DECISION IN CASE OF RUPAM MERCANTILE (91 ITD 237) W HERE IT WAS HELD THAT WHERE THE HONBLE HIGH COURT HAS ADMITTED THE SUBST ANTIAL QUESTION OF LAW, THEN NO PENALTY UNDER SECTION 271(1)(C) CAN BE LEVI ED. THE LD CIT(A) HAS ALSO STATED THAT ORDER OF THE HONBLE RAJASTHAN HIGH COU RT IN INCOME TAX APPEAL NO. DB ITA NO. 53/2011 DATED 9.12.2010 HAS BEEN PLA CED ON RECORD WHEREIN THE HONBLE HIGH COURT HAS ADMITTED THE SUBSTANTIAL QUESTION OF LAW IN RESPECT OF DISALLOWANCE OF DEPRECIATION CLAIMED BY THE ASSE SSEE. FURTHER, OUR REFERENCE WAS DRAWN TO THE DECISIONS OF COORDINATE BENCHES IN CASE OF SADHU RAM GOYAL, PAWAN KUMAR MALHOTRA, LARSEN &TURBO AND OTHERS (SUPRA) WHERE A SIMILAR VIEW HAS BEEN TAKEN. IT IS NOTED THAT THE HONBLE DELHI HIGH COURT IN CASE OF LIQUID INVESTMENT LIMITED (ITA NO. 240/2009 DATED 5.10.2010) HAS HELD THAT WHERE THE HIGH COURT HAS ACCEPTED THE SUBSTANT IAL QUESTION OF LAW U/S 260A, THIS ITSELF SHOWS THAT ISSUE IS DEBATABLE AND IN SUCH A CASE, NO PENALTY WAS IMPOSSIBLE U/S 271(1)(C). 2.5 WE HAVE ALSO GONE THROUGH THE DECISION OF HONB LE GUJARAT HIGH COURT IN CASE OF COMMISSIONER OF INCOME-TAX V. DHARAMSHI B. SHAH 366 ITR 140 WHEREIN IT WAS HELD THAT PENALTY UNDER SECTION 271(1)(C) CO ULD NOT BE DELETED ON SOLE GROUND THAT ASSESSEE'S APPEAL IN RESPECT OF ADDITIO N ON BASIS OF WHICH PENALTY WAS LEVIED HAD BEEN ADMITTED BY HIGH COURT. IN THE INSTANT CASE, THE AO HAS HELD THAT THE ASSESSEE DIDNT TAKE INTO ACCOUNT THE RELEVANT PROVISIONS OF THE ACT WHILE WORKING OUT THE DEPRECIATION. THE LD CIT (A) HAS GIVEN A CATEGORICAL FINDING THAT THE ASSESSEE HAD DISCLOSED ALL MATERIA L FACTS PERTAINING TO THE CLAIM OF DEPRECIATION ADMISSIBLE UNDER SECTION 32 OF THE ACT. IT IS THUS A CASE WHERE THERE IS DIFFERENCE OF OPINION IN TERMS OF RATE OF DEPRECIATION IN RESPECT OF THE SPECIFIED ASSETS. THUS, THE SUBJECT DECISION OF HO NBLE GUJARAT HIGH COURT IS DISTINGUISHABLE ON FACTS AS EVEN ON MERITS, IT CANN OT BE HELD THAT PENALTY IS LEVIABLE IN THE INSTANT CASE. ITA NO/. 764/JP/14 ACIT, CIRCLE-6, JAIPUR VS., M/S MODERN DENIM LTD. J AIPUR 5 2.5 IN LIGHT OF ABOVE, WE HEREBY CONFIRM THE DELETI ON OF PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. HENCE, THE GROUND OF APPEAL OF REVENUE IS DISMISSED. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 04/ 08/2016. SD/- SD/- ( R.P. TOLANI) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- 04/ 08/2016 PILLAI VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- ACIT, CIRCLE -6. JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- M/S MODERN DENIM LTD. JAIPUR 3. VK;DJ VK;QDR@ CIT -II, JAIPUR 4. VK;DJ VK;QDRVIHY@ THE CIT(A)-II, JAIPUR 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 764/JP/2012) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR