M/s Abhishek Industries Limited, Ludhiana V. ACIT, Ludhiana

ITA 786/CHANDI/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9146 (ITAT-CHANDIGARH)
• Duration Of Justice: 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 28-07-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 20-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Section: 143(3); 115JB; 80G; 12

Judgement Text

PAGE 1 OF 4 INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 786 /CHD/20 15 ASSESSMENT YEAR: 2003 - 04 M/S. ABHISHEK INDUSTRIES LTD, (NOW TRIDENT LTD) 85, INDUSTRIAL AREA - A, (NOW E - 212, KITCHLU NAGAR, LUDHIANA VS. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE - 1, LUDHIANA (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. ASHWANI KUMAR REVENUE BY: SH. MANJIT SINGH DATE OF HEARING 02 /0 8 /2016 DATE OF PRONOUNCEMENT 0 9 /0 8 /2016 O R D E R PER PRASHANT MAHARISHI , A . M . 1 . THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD CIT ( A) - I, LUDHIANA DATED 28.08.2015 FOR THE ASSESSMENT YEAR 2003 - 04 RAISING SOLITARY GROUND OF APPEAL, WHEREIN LD CIT (A) HAS UPHELD THE PENALTY OF RS. 983222/ - LEVIED BY THE AO U/S 271(1 ) ( C) OF THE INCOME TAX ACT ON ACCOUNT OF DISALLOWANCE MADE OUT O F P R IOR PERIOD EXPENSE AND DONATION EXPENSE ADJUSTED TO THE BOOK PROFIT U/S 115JB OF THE ACT. 2 . THE BRIEF FACTS OF THE CASE IS THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING THE YARN, PROCESSED YARN, TERRY TOWELS, SULPHURIC ACID, WRITING/ PRINTING PAPER AND GENERATION OF POWER AND FILED ITS RETURN OF INCOME ON 29.11.2003 SHOWING TAXABLE INCOME OF RS. 10937 66/ - AND FURTHER COMPUTED TAX PAYABLE ON BOOK PROFIT OF RS. 94353675/ - U/S SECTION 115JB OF THE INCOME TAX ACT VIDE ASSESSMENT ORDER DATED 07.02.2006. THE LD AO MADE DISALLOWANCE ON ACCOUNT OF PRIOR PERIOD EXPENSE OF RS. 2663900/ - AND ALSO DONATION U/S 80G OF RS. 225000/ - . BOTH THESE ABOVE ADDITION WERE ACCEPTED BY THE ASSESSEE AND CONSEQUENTLY INCOME OF THE ASSESSEE FINALLY VIDE ORDER DATED 30.11.2009 PASSED U/S 143(3) READ WITH 254 OF THE ACT WAS DETERMINED UNDER THE NORMAL COMPUTATION OF TOTAL INCOME OF RS. PAGE 2 OF 4 35202887/ - AN BOOK PROFIT OF RS. 189551797/ - U/S 115JB OF THE ACT. CONSEQUENTLY , PENALTY PROCEEDINGS WERE INITIATED ON THE ABOVE TWO DISALLOWANCE AND LD AO LEVIED PENALTY OF RS. 983222/ - U/S 271(1 ) ( C) OF THE ACT. THIS PENALTY WAS CONTESTED BEFORE THE LD CIT(A) WHO UPHELD THE PENALTY, FURTHER DIRECTED AO NOT TO LEVY PENALTY ON DISALLOWANCE OF DONATION DEDUCTION OF RS. 1 LAKHS U/S 80G OF THE ACT. AGGRIEVED BY THE ORDER OF THE LD CIT ( A) THE ASSESSEE FILED APPEAL BEFORE US. 3 . THE LD AR AT THE FIRST INSTANCE SUBMITTED THAT THE ASSESSEE IS ASSESSED AT THE BOOK PROFIT U/S 115JB OF THE ACT DESPITE THERE ARE BEING TWO ADDITION IN THE NORMAL COMPUTATION OF TOTAL INCOME. HE FURTHER SUBMITTED THAT IN VIEW OF THE CIRCLE OF THE CBD T NO. 25/2015 DATED 31.12.2015 WHERE IN THE VIEW HAS BEEN ACCEPTED BY THE CBDT THAT THE ASSESSEE IF ASSESSED ON THE SAME BOOK PROFIT DESPITE THEY ARE BEING AN ADDITION TO THE NORMAL COMPUTATION OF THE TOTAL INCOME PENALTY U/S 271(1 ) ( C) IS NOT ATTRACTED WITH RES PECT TO THE ADDITION OF DISALLOWANCE MADE UNDER NORMAL PROVISION. 4 . THE LD DR RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 5 . WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND ALSO PERUSED THE CIRCULAR NO. 25/2015 DATED 31.12.2015 WHICH IS AS UNDER: - SECTION 115JB, READ WITH SECTIONS 115JA AND 271(1)(C), OF THE INCOME - TAX ACT, 1961 - MINIMUM ALTERNATE TAX - PENALTY UNDER SECTION 271(1)(C) WHEREIN ADDITIONS/DISALLOWANCES MADE UNDER NORMAL PROVISIONS OF THE SAID ACT BUT TAX LEVIED UNDER MAT PROVISIONS UN DER SECTIONS 115JB/115JC, FOR CASES PRIOR TO ASSESSMENT YEAR 2016 - 17 CIRCULAR NO.25/2015 [F.NO.279/MISC./140/2015/ITJ], DATED 31 - 12 - 2015 SECTION 115JB OF THE ACT IS A SPECIAL PROVISION FOR LEVY OF MINIMUM ALTERNATE TAX ON COMPANIES, INSERTED BY FINANCE AC T, 2000 WITH EFFECT FROM 1 - 4 - 2001. 2. UNDER CLAUSE ( III ) OF SUB - SECTION (1) OF SECTION 271 OF THE ACT, PENALTY FOR CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME IS DETERMINED BASED ON THE 'AMOUNT OF TAX SOUGHT TO BE EVADED' WHICH HAS BEEN DEFINED INTER - ALIA, AS THE DIFFERENCE BETWEEN THE TAX DUE ON THE INCOME ASSESSED AND THE TAX WHICH WOULD HAVE BEEN CHARGEABLE HAD SUCH TOTAL INCOME BEEN REDUCED BY THE AMOUNT OF CONCEALED INCOME OR INCOME IN RESPECT OF WHICH INACCURATE PARTICULARS HA D BEEN FILED. 3. IN THIS CONTEXT, HON'BLE DELHI HIGH COURT IN ITS JUDGMENT DATED 26 - 8 - 2010 IN ITA NO.1420 OF 2009 [2010] 194 TAXMAN 387 (DELHI) IN THE CASE OF NALWA SONS INVESTMENT LTD. (AVAILABLE IN NJRS AS 2010 - LL - 0826 - 2), HELD THAT WHEN THE TAX PAYABLE ON INCOME COMPUTED UNDER NORMAL PROCEDURE IS LESS THAN THE TAX PAYABLE UNDER THE DEEMING PROVISIONS OF SECTION 115JB OF THE ACT, THEN PENALTY UNDER SECTION 271(1)(C) OF THE ACT COULD NOT BE IMPOSED WITH REFERENCE TO ADDITIONS /DISALLOWANCES MADE UNDER NORM AL PROVISIONS. THE JUDGMENT HAS ATTAINED FINALITY. PAGE 3 OF 4 4. SUBSEQUENTLY, THE PROVISIONS OF EXPLANATION 4 TO SUB - SECTION (1) OF SECTION 271 OF THE ACT HAVE BEEN SUBSTITUTED BY FINANCE ACT, 2015, WHICH PROVIDE FOR THE METHOD OF CALCULATING THE AMOUNT OF TAX SOUGH T TO BE EVADED FOR SITUATIONS EVEN WHERE THE INCOME DETERMINED UNDER THE GENERAL PROVISIONS IS LESS THAN THE INCOME DECLARED FOR THE PURPOSE OF MAT U/S 115JB OF THE ACT. THE SUBSTITUTED EXPLANATION 4 IS APPLICABLE PROSPECTIVELY W.E.F. 1 - 4 - 2016. 5. ACCORDIN GLY, IN VIEW OF THE DELHI HIGH COURT JUDGMENT AND SUBSTITUTION OF EXPLANATION 4 OF SECTION 271 OF THE ACT WITH PROSPECTIVE EFFECT, IT IS NOW A SETTLED POSITION THAT PRIOR TO 1 - 4 - 2016, WHERE THE INCOME TAX PAYABLE ON THE TOTAL INCOME AS COMPUTED UNDER THE N ORMAL PROVISIONS OF THE ACT IS LESS THAN THE TAX PAYABLE ON THE BOOK PROFITS U/S 115JB OF THE ACT, THEN PENALTY UNDER SECTION 271(1)(C) OF THE ACT, IS NOT ATTRACTED WITH REFERENCE TO ADDITIONS /DISALLOWANCES MADE UNDER NORMAL PROVISIONS. IT IS FURTHER CLAR IFIED THAT IN CASES PRIOR TO 1 - 4 - 2016, IF ANY ADJUSTMENT IS MADE IN THE INCOME COMPUTED FOR THE PURPOSE OF MAT, THEN THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT, WILL DEPEND ON THE NATURE OF ADJUSTMENT. 6. THE ABOVE SETTLED POSITION IS TO BE FOLLOWED IN R ESPECT OF SECTION 115JC OF THE ACT ALSO. 7. ACCORDINGLY, THE BOARD HEREBY DIRECTS THAT NO APPEALS MAY HENCEFORTH BE FILED ON THIS GROUND AND APPEALS ALREADY FILED, IF ANY, ON THIS ISSUE BEFORE VARIOUS COURTS/TRIBUNALS MAY BE WITHDRAWN/NOT PRESSED UPON. THI S MAY BE BROUGHT TO THE NOTICE OF ALL CONCERNED. 6 . IT IS UN DISPUTED FACT THAT ADDITIONS / DISALLOWANCES ARE MADE TO THE TOTAL INCOME COMPUTED UNDER THE NORMAL PROVISIONS OF THE ACT AND NOT UNDER THE PROFIT U/S 115JB OF THE ACT. ACCORDING TO THAT CIRCULAR THE REVENUE HAS ACCEPTED THE POSITION THAT PENALTY U/S 271(1 ) ( C) OF THE ACT IS NOT ATTRACTED WITH REFERENCE TO ADDITION OR DISALLOWANCE MADE UNDER NORMAL PROVISION WHERE THE BOOK PROFIT REMAINS UNALTERED. IN THE PRESENT CASE IT WAS NOT CONTROVERTED BY THE LD DR THAT THE CIRCULAR STATED ABOVE DOES NOT APPLY . IN VIEW OF THE ABOVE WE REVERSE THE FINDING OF THE LD CIT ( A) IN CONFIRMING THE PENALTY OF RS. 983222/ - LEVIED U/S 271(1 ) ( C) OF THE ACT ON ACCOUNT OF DISALLOWANCE OF EXPENSES AND DENIAL OF CLAM OF DEDU CTION ON ACCOUNT OF DEDUCTION UNDER NORMAL COMPUTATION OF TOTAL INCOME , THOUGH FINAL ASSESSMENT IS MADE U/S 115 JB OF THE ACT ON ITS BOOK PROFIT . 7 . IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 0 9 / 08 /2016 . - S D / - - S D / - ( BHAVNESH SAINI ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 0 9 / 08 / 2016 A K KEOT COPY FORWARDED TO 1 . APPLICANT 2 . RESPONDENT PAGE 4 OF 4 3 . CIT 4 . CIT (A) 5 . DR:ITAT ASSISTA NT REGISTRAR ITAT, CHANDIGARH