ITO,Ward-3(1), Kolkata, Kolkata V. M/s Carnation Industries Ltd., Kolkata

ITA 795/KOL/2012

• Counselvise Citation: 79523514 RSA 2012
• Duration Of Justice: 3 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 17-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R P NAG
• Assessee Lawyers: J M THARD
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 154; 143(3); 142(1); 80HHC

Judgement Text

I.T.A. NO . 795 / KOL ./20 1 2 ASSESSMENT YEAR: 200 3 - 20 0 4 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B BENCH, KOLKATA BEFORE SHRI P.K. BANSAL , ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH , JUDICIAL MEMBER I.T.A. NO. 795 / KOL / 20 1 2 ASSESSMENT YEAR : 200 3 - 20 0 4 INCOME TAX OFFICER,...................... ........ ........ ........ . APPELLANT WARD - 3 ( 1 ), KOLKATA , 8/2, ESPLANADE EAST, DWARLI HOUSE, GROUND FLOOR, KOLKATA - 700 069 - VS. - M/S. CARNATION INDUSTRIES LIMITED, ...... .. ....... ..... . RESPONDE NT 222, A.J.C. BOSE ROAD, KOLKATA - 700 017 [PAN : AA BCC 0379 E ] APPEARANCES BY: SHRI R.P. NAG , JCIT, SR. D.R., FOR THE DEPARTMENT SHRI J.M. THARD , ADVOCATE, FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : JUNE 18 , 2 01 5 DATE OF PRONOUNCING THE ORDER : JU LY 07 , 201 5 O R D E R PER P.K. BANSAL : THIS A PPEAL HA S BEEN FILED BY THE REVENU E AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS) - I, KOLKATA D ATED 2 0 . 0 2 .20 1 2 FOR THE ASSESSMENT YEAR 200 3 - 0 4, BY WHICH THE CIT(APPEALS) DELETED THE PENALTY IMPOSED ON THE ASSESSEE UNDER SECTION 271(1)(C) OF THE IN COME TAX ACT, 1961 . 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSMENT UNDER SECTION 143(3) WAS COMPLETED ON 20.03.2006 ON AN INCOME OF RS.1,21,79,646/ - . THE ASSESSING OFFICER NOTED DURING THE COURSE OF THE ASSESSMENT THAT THE ASSESSEE HAD ADJUSTED DEPRECIATI ON LOSS TO THE TUNE OF RS.36,42,927/ - TO ARRIVE AT A GROSS TOTAL INCOME OF RS.82,63,453/ - AND THE SAME AMOUNT HAS BEEN CLAIMED AS DEDUCTION UNDER SECTION 80HHC. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE. THE ASSESSING OFFICER NOTED THAT IN I.T.A. NO . 795 / KOL ./20 1 2 ASSESSMENT YEAR: 200 3 - 20 0 4 PAGE 2 OF 5 THE ASSESSMENT YEAR 2000 - 01, WHEN THE GROSS TOTAL INCOME WAS RS.1,29,95,435/ - , THE ASSESSEE DID NOT SET OFF BROUGHT FORWARD LOSS OF DEPRECIATION AMOUNTING TO RS.71,77,448/ - , BUT CARRIED FORWARD THE SAME TO BE SET OFF IN FUTURE. THE UNABSORBED BROUGHT FORW ARD DEPRECIATION OF RS.71,77,448/ - WAS SET OFF BY THE ASSESSEE DURING THE ASSESSMENT YEAR 2002 - 03 AND, THEREFORE, THERE REMAINS NO UNABSORBED BROUGHT FORWARD DEPRECIATION LOSS. WHEN QUESTIONED, THE ASSESSEE FILED THE RECTIFICATION APPLICATION UNDER SECTION 154 FOR THE ASSESSMENT YEAR 2002 - 03 AND CLAIMED ONLY A SUM OF RS.31,76,333/ - AS SET OFF OF THE UNABSORBED DEPRECIATION OUT OF THE PROFIT OF THE ASSESSEE AVAILABLE AFTER CLAIMING THE DEDUCTION UNDER SECTION 80HHC AMOUNTING TO RS.95,58,506/ - AND CARRIED FOR WARD UNABSORBED DEPRECIATION TO THE EXTENT OF RS.40,01,115/ - . THE ASSESSING OFFICER REJECTED THE APPLICATION OF THE ASSESSEE. THE ASSESSING OFFICER DISALLOWED THE SET OFF OF UNABSORBED DEPRECIATION AND TOOK THE VIEW THAT THERE WAS NO ACTUAL BROUGHT FORWARD DEPRECIATION AND THE UNABSORBED DEPRECIATION GOT EXHAUSTED UP TO ASSESSMENT YEAR 2002 - 03. THE ASSESSEE WANTED TO TAKE ADVANTAGE OF DEDUCTION AVAILABLE UNDER SECTION 80HHC AND, THEREFORE, THE ASSESSING OFFICER INITIATED THE PENALTY PROCEEDINGS UNDER SECTIO N 271(1)(C) AND ULTIMATELY IMPOSED THE PENALTY BEING 100% OF TAX SOUGHT TO BE EVADED ON THE ASSESSEE AMOUNTING TO RS.12,75,015/ - BY OBSERVING AS UNDER: - FROM THE ABOVE DISCUSSION, IT CAN BE SEEN THAT THE ASSESSEE COMPANY, ON ONE HAND, HAS FURNISHED INACCU RATE PARTICULARS BY CLAIMING MALADJUSTMENT OF DEPRECIATION TO THE TUNE OF RS.36,42,927/ - IN THE RELEVANT ASSESSMENT YEAR 2003 - 04. ON THE OTHER HAND, THE ASSESSEE - COMPANY AFTER RECEIVING A NOTICE UNDER SECTION 142(1) SEEKING EXPLANATION FOR SUCH MALADJUSTME NT OF DEPRECIATION HAS FILED A RECTIFICATION PETITION IN PLACE OF REPLY IN ORDER TO TAKE A CHANCE. ALL THIS ACT OF THE ASSESSEE COMPANY SHOWS THAT IT HAS CONSCIOUSLY FURNISHED INACCURATE PARTICULARS. THEREFORE, PENALTY UNDER SECTION 271(1)(C) OF CLAUSE (II I) IS CALLED FOR AN IMPOSITION OF PENALTY AS DECIDED IN THE CASE LAW OF K.C. BUILDERS VS. - CIT (2004) 135 TAXMAN 461 (SC). THUS, AFTER DISCUSSING THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE OPINION THAT THIS IS A FIT CASE FOR IMPOSING PENA LTY UNDER SECTION 271(1)(C) OF THE I.T. ACT, 1961. QUANTUM OF PENALTY IS DETERMINED @ 100% I.T.A. NO . 795 / KOL ./20 1 2 ASSESSMENT YEAR: 200 3 - 20 0 4 PAGE 3 OF 5 ON THE TAX SOUGHT TO BE EVADED WHICH IS RS.12,75,015/ - I.E. @ 100% ON RS.36,42,927/ - . PENALTY UNDER SECTION 271(1)(C) OF THE I.T. ACT, 1961 IS IMPOSED AT RS.12,75,0 15/ - BEING 100% OF TAX SOUGHT TO HAVE BEEN EVADED. THIS PENALTY ORDER IS PASSED WITH THE PRIOR APPROVAL OF THE LEARNED ADDITIONAL CIT, RANGE - 1, KOLKATA . 3 . THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(APPEALS). THE CIT(APPEALS) DELETED THE PENALTY IMPOSED ON THE ASSESSEE BY OBSERVING AS UNDER: - 4. I HAVE CAREFULLY CONSIDERED THE OBSERVATION OF THE AO AS WELL SUBMISSION OF THE APPELLANT. THE APPELLANT IS AN EXPORTER AND CLAIMED DEDUCTION U/S 80HHC OF THE INCOME TAX ACT, 1961. THE MAIN ISSUE INVOLVED IN THI S CASE IS THAT WHETHER PENALTY U/S 271(1)(C) CAN BE IMPOSED FOR CLAIMING DEDUCTION U/S 80HHC FIRST WITHOUT SETTING OFF OF UNABSORBED BROUGHT FORWARD DEPRECIATION ALLOWANCE. THE APPELLANT HAD CLAIMED DEDUCTION UNDER SECTION 80HHC BEFORE SETTING OFF BROUGHT FORWARD DEPRECIATION ALLOWANCES DURING THE ASSESSMENT YEARS 2001 - 01 AND 2001 - 02, HOWEVER DURING THE ASSESSMENT YEAR 2002 - 03 BY MISTAKE IT HAD FIRST SET OFF THE UNABSORBED BROUGHT FORWARD DEPRECIATION ALLOWANCE FOR WHICH A RECTIFICATION PETITION WAS FILED WITHIN TIME. IN MAKING SUCH CLAIM, APPELLANT HAS RELIED ON THE JUDGMENT IN THE CASE OF CIT VS. - SHRIKE CONSTRUCTION EQUIPMENTS LIMITED 246 ITR 429 (MUM.). LATER ON, THE HON BLE APEX COURT IN THE CASE IPCA LABORATORIES VS. - CIT OF 266 ITR 521 REVERSED, T HE DECISION OF THE SHIRKE CONSTRUCTION EQUIPMENTS LIMITED AND HELD THAT DEDUCTION U/S 80HHC CANNOT BE ALLOWED BEFORE SETTING OFF OF THE UNABSORBED DEPRECIATION AND BROUGHT FORWARD LOSSES OF THE PREVIOUS YEARS. THIS DECISION OF THE HON BLE APEX COURT CAME M UCH LATER THAN THE RETURN FILED BY THE APPELLANT. SO, IT CANNOT BE SAID THAT APPELLANT WAS AWARE OF THE ORDER OF THE HON BLE APEX COURT AS IT WAS NOT AT ALL AVAILABLE AT THAT TIME. IN VIEW OF ABOVE AND ALSO BY PLACING RELIANCE ON THE HON BLE DELHI HIGH CO URT DECISION IN THE CASE OF CIT VS. - SICLAIR EXPORTS LTD. ITA 352/2010 I AM OF THE OPINION THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, IT CANNOT BE SAID THAT THE APPELLANT, HAVING PLACED RELIANCE ON THE DECISION OF THE ANDHRA PRADESH HIGH COURT, THE APPELLANT HAD CONCEALED ANY PARTICULARS OR HAD FURNISHED INACCURATE PARTICULARS OF INCOME . I.T.A. NO . 795 / KOL ./20 1 2 ASSESSMENT YEAR: 200 3 - 20 0 4 PAGE 4 OF 5 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME ALONG WITH THE ORDER OF TAX AUTHORITIES BELOW. WE NOTED THAT WHEN THE ASSESSEE MADE THE C LAIM FOR CARRY FORWARD OF UNABSORBED DEPRECIATION IN THE EARLIER YEAR AND SET IT OFF AFTER CLAIMING THE DEDUCTION UNDER SECTION 80HHC OUT OF THE CURRENT YEAR PROFIT. THE CLAIM MADE BY THE ASSESESE WAS DULY SUPPORTED BY THE DECISION OF THE HON BLE BOMBAY HI GH COURT IN THE CASE OF CIT VS. - SHIRKE CONSTRUCTION EQUIPMENTS LIMITED REPORTED IN 246 ITR 429 (BOM.), BUT SUBSEQUENTLY THE SAID DECISION WAS REVERSED BY THE HON BLE SUPREME COURT IN THE CASE OF IPCA LABORATORIES LIMITED REPORTED IN 266 ITR 521. THEREFOR E, THE CLAIM MADE BY THE ASSESSEE WAS DULY SUPPORTED AT THE TIME BY THE DECISION OF THE HON BLE BOMBAY HIGH COURT AND, THEREFORE, THE SAME CAN BE REGARDED TO BE A BONAFIDE CLAIM. IN OUR OPINION, PENALTY CANNOT BE IMPOSED UNDER SECTION 271(1)(C) MERELY ON T HE BASIS THAT THE CLAIM MADE BY THE ASSESSEE HAS BEEN DISALLOWED. MERELY THE CLAIM OF THE ASSESSEE UNDER SECTION 80HHC, WHICH WAS DULY SUPPORTED AT THE TIME BY THE DECISION OF THE HON BLE BOMBAY HIGH COURT, NOT ACCEPTED BY THE REVENUE WILL NOT MAKE THE CLA IM MADE BY THE ASSESSEE TO BE PENALTY HOLDING THE ASSESSEE AS FURNISHED INACCURATE PARTICULARS OF INCOME. OUR AFORESAID VIEW IS DULY SUPPORTED BY THE DECISI ON OF THE HON BLE SUPREME COURT IN THE CASE OF RELIANCE PETRO - PRODUCTS PVT. LTD. REPORTED IN 322 ITR 1 58 (SC). WE ACCORDINGLY CONFIRM THE ORDER OF CIT(APPEALS). 5 . IN THE RESULT, THE APPEAL FILED BY THE REVENU E STAND S DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON JU LY 07 , 201 5 . SD/ - SD/ - MAHAVIR SINGH P.K. BANSAL ( J UDICIAL MEMBER) ( ACCOUNTANT MEMBER) KOLKATA, THE 7 TH D AY OF JU LY , 201 5 COPIES TO : (1) INCOME TAX OFFICER, WARD - 3(1), KOLKATA, 8/2, ESPLANADE EAST, DWARLI HOUSE, GROUND FLOOR, KOLKATA - 700 069 I.T.A. NO . 795 / KOL ./20 1 2 ASSESSMENT YEAR: 200 3 - 20 0 4 PAGE 5 OF 5 (2) M/S. CARNATION INDUSTRIES LIMITED , 222, A.J.C. BOSE ROAD, KOLKATA - 700 017 (3) COMMISSIONER OF INCOME - TAX (APPEALS) (4) COMMISSIONER OF INCOME TAX ( 5 ) THE DEPARTMENTAL REPRESENTATIVE ( 6 ) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA B ENCHES, KOLKATA LAHA/SR. P.S .