DCIT 8(1), MUMBAI V. CLEAR PLASTIC LTD ( NOW KNOWN AS CLEAR MIPAK PACKAGING SOLUTION LTD), MUMBAI

ITA 790/MUM/2012

• Counselvise Citation: 79019914 RSA 2012
• Duration Of Justice: 1 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 12-08-2013
• Assessment Year: 2003-2004
• Appeal Filed On: 06-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C TRIPURA SUNDARI
• Assessee Lawyers: DALPAT SHAH
• Keywords: Bonafide belief; Difference of opinion
• Section: 80IB

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - C BENCH. . . , , BEFORE S/SH. B.R. MITTAL, JUDICIAL MEMBER & RA JENDRA, ACCOUNTANT MEMBER ./ ITA NO.790/MUM/2012, ! ! ! ! ' ' ' ' / ASSESSMENT YEAR-2003-04 DCIT 8(1) R.NO. 260A, 2 ND FLOOR, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI- 400020 VS. M/S CLEAR PLASTIC LTD. (NOW KNOWN AS CLEAR MIPAK PACKAGING SOLUTION LTD.), C/130 SOLARIS, OPP L & T GAGE NO.6, POWAI MUMBAI- 400 072 PAN: AAACC4489N ( #$ / APPELLANT ) ( %&#$ / RESPONDENT ) #$ #$ #$ #$ ' ' ' ' / APPELLANT BY : MS. C.TRIPURA SUNDARI %&#$ ( ' / RESPONDENT BY : SHRI DALPAT SHAH ! ! ! ! ( (( ( )* )* )* )* / DATE OF HEARING : 13-08-2013 +,' ( )* / DATE OF PRONOUNCEMENT : 21-08-2013 ! ! ! ! , 1961 ( (( ( 254(1) )-) )-) )-) )-) . . . . ORDER U/S..254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, A.M. CHALLENGING THE ORDER DATED 28.04.2011 OF THE CIT(A )-16, MUMBAI ASSESSING OFFICER (AO) HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE PENALTY OF RS. 24,11,154/- U/S. 271(1)(C) WITHOUT A PPRECIATING THE FACTS OF THE CASE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE PENALTY U/S. 271(1)(C) HOLDING THAT THE RESTRICTION OF THE QUANTUM OF THE DEDUCTION U/S. 80IB OF THE ACT OCCURRED PURELY BECAUSE OF THE TREATMENT GIVEN TO THE FIRST YEAR OF PRODUCTION WHICH THE APPELLANT STATED AS A TRIAL PRODUCTION CONTRARY TO THE VIEW OF THE AO AND THE HONBLE ITAT THAT IT WAS THE FIRST YEAR OF COMMERCIAL PRODUCTION WITHOUT APPRECIATING THAT BY DOING SO THE ASSESSEE CLAIMED 100% DEDUCTION U/S. 80IB AS AGAINST THE ADM ISSIBLE RATE OF 30%. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE PENALTY U/S. 271(1)(C) WITHOUT APPRECIATING THAT TH E ASSESSEE HAS FAILED TO REBUT THE PRESUMPTION OF EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT IN SO MUCH THAT THE ASSESSEE FAILED TO PROVE ITS CLAIM THAT A.Y. 1998-99 WAS NOT THE FIRST YEAR OF C OMMERCIAL PRODUCTION EVEN THOUGH UNDOUBTEDLY IN THAT YEAR THE ASSESSEE HAD SOLD SUBSTANTIAL QUAN TITY OF ITS PRODUCT ON THREE DIFFERENT DATES IN THE OPEN MARKET, RAISING INVOICES ON THE PURCHASER M/S ALFA PACKAGING AS ALSO NOTED BY HONBLE ITAT IN PARA4 OF ITS ORDER DATED 06.10.2010 IN QU ANTUM APPEAL. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE PENALTY U/S. 271(1)(C) WITHOUT APPRECIATING THAT HA D THE CASE NOT COME UP FOR SCRUTINY ASSESSMENT THE ASSESSEE HAD ALREADY TAKEN UNDUE ADVANTAGE BY C LAIMING DEDUCTION OF 100% OF PROFITS U/S. 80IB AS AGAINST THE ADMISSIBLE RATE OF 30% THEREBY REDUCING ITS TAX LIABILITY BY RS. 24,11,154/-. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE A.O. BE RESTORED. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GR OUNDS OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 2 .ASSESSEE HAD FILED ITS RETURN OF INCOME ON 06.11.2 003 DECLARING TOTAL INCOME AT RS. NIL AFTER CLAIMING 100% DEDUCTION U/S.80IB OF THE ACT AT RS. 81,64,236/-.AO FINALISED THE ASSESSMENT U/S. 143(3)OF THE ACT ON 08.11.2005 ASSESSING TOTAL INCO ME AT RS. 2.80 CRORES. DURING THE ASSESSMENT PROCEEDINGS,AO FOUND THAT ASSESSEE HAD CLAIMED 100% DEDUCTION U/S. 80IB OF THE ACT, THAT IT HAD CLAIMED THAT INITIAL ASSESSMENT ORDER WAS AY 1999-2 000 FOR QUALIFYING AS NEW INDUSTRIAL UNDERTAKING ELIGIBLE FOR DEDUCTION U/S. 80IB @ 100% UP TO ASSESSMENT YEAR 2004-05 AND @ 30% UP TO AY 2009-10. HE FURTHER FOUND THAT COMMERC IAL PRODUCTION IN THE PRESENT CASE HAD COMMENCED DURING THE ASSESSMENT YEAR 2008-09. HE HE LD THAT YEAR UNDER CONSIDERATION WAS THE 6 TH YEAR OF DEDUCTION AND THE ASSESSEE WAS ELIGIBLE FO R DEDUCTION @ 30% AND NOT @ 100% AS CLAIMED BY THE ASSESSEE.HE REJECTED THE CLAIM MADE BY THE ASSESSEE U/S. 80IB OF THE ACT. IN THE APPELLANT PROCEEDINGS,FIRST APPELLATE AUTHORITY (FA A) UPHELD THE ADDITION MADE BY THE AO WITH REGARD TO THE ISSUE OF DEDUCTION U/S. 80IB OF THE A CT.ASSESSEE PREFERRED AN APPEAL BEFORE THE ITAT.PARTIALLY ALLOWING THE APPEAL OF THE ASSESSEE TRIBUNAL HELD THAT ASSESSEE WAS ENTITLED TO DEDUCTION U/S.80IB @ 30% INSTEAD OF 100%, THAT THE FIRST YEAR OF CLAIM WAS ASSESSMENT YEAR 1997-98 AND NOT 1998-99. 2.1 .AO ISSUED A NOTICE U/S. 274 R.W. SECTION 271(1)(C) OF THE ACT ON 8.11.2005 WITH REGARD TO THE DISALLOWANCE OF RS. 81.64 LACS CLAIMED AS DEDUCTION U/S.80IB OF THE ACT.AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE,AO LEVIED THE PENALTY OF RS. 24,11,154/- VIDE HIS ORDER DATED 29.03.2011 FOR FURNISHING INACCURATE PARTICULARS OF THE INCOME. 2.2 .ASSESSEE PREFERRED AN APPEAL BEFORE THE FAA. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE COMPANY AND THE PENALTY ORDER HELD THAT PR IMA FACIE THE CLAIM OF THE ASSESSEE MADE U/S. 80IB OF THE ACT COULD NOT BE REJECTED, THAT ASSESSE E WAS A BONAFIDE BELIEF THAT COMMERCIAL PRODUCTION BEGAN WHEN IT ACTUALLY STARTED SELLING G OODS COMMERCIALLY,THAT THE ISSUE UNDER CONSIDERATION WAS LEGALLY DEBATABLE,THAT IN THE CAS E UNDER CONSIDERATION THERE WAS NOT FURNISHING OF INACCURATE PARTICULARS/CONCEALMENT OF INCOME, TH AT IT WAS NOT A CASE OF DEEMED CONCEALMENT ALSO,THAT THE PENALTY PROVISIONS COULD NOT BE INVOK ED AT ALL, THAT THERE WAS NO FINDING IN THE ASSESSMENT ORDER THAT PROVE THE INCORRECTNESS OF TH E DETAILS FILED BY THE ASSESSEE IN ITS RETURNS, THAT A MERE MAKING OF A CLAIM BY ITSELF WOULD NOT A MOUNT TO FURNISH INACCURATE PARTICULARS, THAT THE ASSESSEE HAD FURNISHED ALL THE DETAILS IN ITS R ETURN OF INCOME,THAT THE CLAIM OF THE ASSESSEE DID NOT SUFFER FROM ANY INFIRMITY AS FAR AS CLAIM WAS C ONCERNED, THAT THE RESTRICTION OF THE QUANTUM OF DEDUCTION WAS PURELY MADE ON THE BASIS OF THE TREAT MENT GIVEN TO THE FIRST YEAR OF PRODUCTION. HE RELIED UPON THE CASES OF A RELIANCE PETRO PRODUCTS PVT. LTD.(328 ITR 158-SC), NATH BROS. EXIM INTERNATIONAL LTD.(288 ITR 670-DEL.), HARSHVARDHAN CHEMICALS AND MINERAL LTD. (259 ITR 212- RAJ.)AND LAKHANI INDIA LTD.(324 ITR 73-P&H).FINALLY ,HE DELETED THE PENALTY LEVIED BY THE AO. 2.3. BEFORE US,DEPARTMENTAL REPRESENTATIVE(DR) SUBMITTED THAT THE ASSESSEE HAD FAILED TO REBUT THE PRESUMPTION OF EXPLANATION 1 TO SECTION 271(1)( C) OF THE ACT, THAT THE ASSESSEE HAD FAILED TO PROVE ITS CLAIM THAT AY 1998-98 WAS NOT THE FIRST Y EAR OF COMMERCIAL PRODUCTION,THAT BY CLAIMING DEDUCTION@ 100% ASSESSEE HAD FILED INACCURATE PARTI CULARS OF INCOME.AUTHORISED REPRESENTATIVE (AR)SUBMITTED THAT THE AO ERRED IN NOT CONSIDERING THE FACT THAT THE ISSUE ON COMMENCEMENT OF MANUFACTURING IN THE AY 1997-98 AND 1998-99 WAS DAT ABLE ISSUE, THAT APPEAL FILED BY THE ASSESSEE ABOUT THE QUANTUM ADDITION HAS ADMITTED BY THE HONBLE HIGH COURT OF BOMBAY, THAT THE ISSUE ABOUT THE INITIAL YEAR OF DEDUCTION U/S.8 0IB WAS A DEBATABLE QUESTION, THAT THE CLAIM MADE BY THE ASSESSEE WAS NOT REJECTED FULLY, THAT I N THE COMPUTATION OF TOTAL INCOME AND IN FORM NO. 10 CCB FOR THE AY 2003-04 THE DATE OF COMMERCIA L PRODUCTION WAS STATED TO BE JUNE, 1998 IN RESPECT OF CLAIM MADE U/S. 80IB OF THE ACT.HE RE LIED UPON THE JUDGMENTS DELIVERED IN THE CASES OF RELIANCE PETRO PRODUCTS PVT. LTD.(322 ITR 158-SC ),LAKHANI INDIA LTD.(324 ITR 73-P&H), HARSHVARDHAN CHEMICALS AND MINERAL LTD.(259 ITR 212 -RAJ.),ARISUDANA SPINNING MILLS LTD. (326ITR429),HINDALCO INDUSTRIES LTD.(41 SOT 254-MUM BAI),INDUSTRIAL DEVELOPMENT BANK OF INDIA LTD.(42SOT325),GRAND ORGANICS PVT. LTD.(24 TA XMANN.COM 20)AND SREI INFRASTRUCTURE FINANCE LTD.(85 DTR 361-DEL.) 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.IN THE CASE UNDER CONSIDERATION PENALTY FOR CONCEALING PARTICULARS O F INCOME HAS BEEN LEVIED FOR CLAIMING DEDUC - TION U/S.80IB OF THE ACT FOR A PARTICULAR YEAR AT P ARTICULAR RATE.AS FAR AS BASIC FACTS OF AVAILABILI TY OF DEDUCTION IS CONCERNED AO AND THE ASSESSEE HAVE NO DISAGREEMENT-THEY DIFFER ABOUT THE RATE AT WHICH IT SHOULD BE ALLOWED.TRIBUNAL HAD HELD THAT I N THAT PARTICULAR AY ASSESSEE WAS ENTITLED FOR DEDUCTION @OF 30% AND THE ORDER OF THE ITAT HAS BEE N CHALLENGED BY THE ASSESSEE BEFORE THE HONBLE HIGH COURT OF MUMBAI.HONBLE COURT HAS ADMI TTED THE QUESTION OF INITIAL YEAR OF PRODUCTION FOR ALLOWING DEDUCTION U/S.80IB OF THE A CT.THUS,THE ISSUE BEFORE US IS A DEBATABLE ISSUE.AS PER THE ESTABLISHED NORMS OF TAXATION JURI SPRUDENCE PENALTY CANNOT BE IMPOSED WHERE ISSUE IS DEBATABLE OR WHERE THE AO AND THE ASSESSEE HADVE DIFFERENCE OF OPINION.AS FAR AS DISALLOWANCE IN QUANTUM APPEAL IS CONCERNED IT SHOU LD NOT RESULT IN AUTOMATIC LEVY OF PENALTY.FOR INVOKING PROVISIONS OF SECTION 271(1)( C) OF THE AC T AO HAS TO MENTION AS WHICH PARTICULARS WERE INACCURATE.HERE,AO HIMSELF ADMITS THAT THE ASSESSEE HAD CLAIMED EXCESS DEDUCTION.THUS,CLAIM OF DEDUCTION THE ASSESSEE WAS THERE IN THE RETURN OF I NCOME FILED BY IT.ONLY DISPUTE WAS RATE OF DEDUCTION.IN APPELLATE PROCEEDINGS STAND TAKEN BY T HE AO HAS BEEN UPHELD. BUT,IT DOES NOT MEAN THAT ASSESSEE HAS FILED INACCURATE PARTICULARS OF I NCOME.THEREFORE,WE ARE OF THE OPINION THAT THE ORDER OF THE FAA DOES NOT NEED ANY INTERFERENCE FRO M US.CASES RELIED UPON BY THE AR ALSO SUPPORT THE STAND TAKEN BY US. SO,EFFECTIVE GROUND OF APPEAL FILED BY THE AO IS DECIDED AGAINST HIM. AS A RESULT,APP EAL FILED BY THE AO STANDS DISMISSED. / )0 !/) * 1 2 ( - !3 ( ) 45 . ORDER PRONOUNCED IN T HE OPEN COURT ON 21 ST AUGUST,2013 . . ( +,' 6 7! 21 -) , 2013 , ( - 8 SD/- SD/- ( . 9 9 9 9 . . B.R.MITTAL ) ( / RAJENDRA ) / JUDICIAL MEMBER /ACCOUNTANT MEMBER / MUMBAI, 7! /DATE: 21 ST AUGUST,2013 SK . . . . ( (( ( %): %): %): %): ;:') ;:') ;:') ;:') / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / #$ 2. RESPONDENT / %&#$ 3. THE CONCERNED CIT (A) / < = , 4. THE CONCERNED CIT / < = 5. DR C BENCH, ITAT, MUMBAI / :>- %)! , . . . 6. GUARD FILE/ - ? &:) &:) &:) &:) %) %)%) %) //TRUE COPY// .! / BY ORDER, @ / 4 DY./ASST. REGISTRAR , /ITAT, MUMBAI