DCIT 3(2), MUMBAI V. INDIAN RAYON & INDS. LTD ( NOW KNOWN AS ADIOTYA BIRLA NUVO LTD), MUMBAI

ITA 796/MUM/2010

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3506 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 18-02-2016
• Assessment Year: 1993-1994
• Appeal Filed On: 02-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B C NAIK
• Assessee Lawyers: YOGESH A THAR
• Keywords: Depreciation; Question of law; Capital receipt
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH I, MUMBAI BEFORE SHRI R.C.SHARMA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.796/MUM/2010 ASSESSMENT YEAR: 1993-94 ACIT (LTU-1 , WORLD TRADE CENTRE, CENTRE-1, 29 TH FLOOR, CUFFE PARADE, MUMBAI-400005. VS. M/S ADITYA BIRLA NUVO LTD. (EARLIER KNOWN AS M/S. INDIAN RAYON & INDUSTRIES LTD.) A-4, ADITYA BIRLA CENTRE, S.K. AHIRE MARG, WORLI, MUMBAI-400030 PAN: AAACI1747H (APPELLANT) (RESPONDENT) C.O. NO.43/MUM/2014 (ARISING OUT OF ITA NO. 796/M/2 010) ASSESSMENT YEAR: 1993-94 M/S ADITYA BIRLA NUVO LTD. (EARLIER KNOWN AS M/S. INDIAN RAYON & INDUSTRIES LTD.) A-4, ADITYA BIRLA CENTRE, S.K. AHIRE MARG, WORLI, MUMBAI-400030 PAN: AAACI1747H VS. ACIT-LTU, WORLD TRADE CENTRE, CENTRE-1, 29 TH FLOOR, CUFFE PARADE, MUMBAI-400005. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI B.C. NAIK (CIT- DR) ASSESSEE BY : SHRI YOGESH A. THAR (AR) DATE OF HEARING : 21.03.2016 DATE OF PRONOUNCEMENT : 25.05.2016 O R D E R PER PAWAN SINGH, JM: 1. THIS APPEAL FILED BY THE REVENUE AND CROSS OBJECTIO N (C.O.) FILED BY ASSESSEE AGAINST THE ORDER OF CIT(A)-7, MUMBAI DATED 10.11.2 009 FOR ASSESSMENT YEAR 2 ITA.NO.796/MUM/2010 & C.O.43/M/14-M/S ADITYA BIRL A NUVO LTD. (AY) 1993-94 WERE HEARD TOGETHER AND ARE BEING DISP OSED OF BY COMMON ORDER, AS THE SAME ARE ARISING OUT OF PENALTY U/S. 271(1)(C) OF THE ACT. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IN TH E HAD CLAIMED DEPRECIATION ON POWER PLANT INSTALL RAJSHREE CEMENT LTD. AND ON THE BOILER IT HAD CLAIMED DEPRECIATION FOR FULL YEAR AT NORMAL RATE OF 100% A MOUNTING TO RS. 6,52,24,546/-. AO DISALLOWED THE CLAIM OF DEPRECIAT ION FOR FULL YEAR ON THE GROUND THAT BOILER WAS NOT USE FOR MORE THAN 180 DA YS, ACCORDINGLY ALLOWED ONLY 50% OF THE CLAIM. THE ORDER OF AO WAS CONFIRME D BY CIT(A) AND SUBSEQUENTLY BY ITAT OBSERVING THAT BOILER WAS NOT READY TO USE ON THAT DATE. 3. AFTER DISMISSAL OF THE APPEAL OF THE ASSESSEE BY IT AT, THE ASSESSEE WAS SERVED NOTICE DATED 25.03.1996 U/S. 274 R.W.S. 271(1)(C) F OR INITIATION OF PENALTY. THE ASSESSEE SUBMITTED ITS REPLY DATED 19.08.2008 WHERE IN THE PENALTY WAS OPPOSED AND EXPLAINED THE BACKGROUND OF THE CASE. T HE EXPLANATION OF ASSESSEE WAS NOT ACCEPTED BY AO AND THE AO LEVIED P ENALTY OF RS. 33753700/- U/S. 271(1)(C) OF THE ACT @ 100% OF THE AMOUNT OF THE TAX SOUGHT TO BE EVADED. AGGRIEVED BY THE ORDER OF AO ASSESSEE FILED APPEAL BEFORE CIT(A), WHEREIN IT WAS CONTENDED THAT HONBLE HIGH COURT HAS ADMITTED THE SUBSTANTIAL QUESTION OF LAW IN RESPECT OF ORDER PAS SED BY TRIBUNAL PERTAINING TO THE GROUND RELATED WITH THE DEPRECIATION OF BOILER AND ALSO MADE SUBMISSION ON THE MERIT OF THE CASE. THE LD. CIT(A) AFTER CONS IDERING THE CONTENTION OF ASSESSEE HOLD AS UNDER: I HOLD THAT THE APPELLANT HAD NOT MADE CONSCIOUS E FFORTS TO CONCEAL THE PARTICULARS OF ITS INCOME AND AS SUCH NO MALAFIDE I S INVOLVED ON THE PART OF THE APPELLANT IN CLAIMING FULL NORMAL DEPRECIATI ON ON THE BOILER. HENCE, IN GIVEN CIRCUMSTANCES THOUGH THE DISALLOWAN CE ON THE PART OF DEPRECATION CLAIMED BY APPELLANT IS JUSTIFIED, BUT THE PENAL ACTION FOR CONCEALMENT OF INCOME IS HELD TO BE NOT JUSTIFIED. ACCORDINGLY, THE PENALTY IMPOSED FOR CONCEALMENT U/S. 271(1)(C) IS D ELETED. 4. AGGRIEVED BY THE ORDER OF CIT(A), THE REVENUE HAS F ILED THE PRESENT APPEAL AND THE ASSESSEE FILED C.O. WE HAVE HEARD LD. DR FO R REVENUE AND AR FOR ASSESSEE AND PERUSED THE MATERIAL AVAILABLE ON RECO RD. LD. DR FOR REVENUE ARGUED THAT ASSESSEE WAS CONSCIOUS SINCE FILING OF RETURN OF INCOME THAT DEPRECIATION ON THE BOILER IS NOT ALLOWABLE AND CON CEALED THE MATERIAL DATE WHEN THE SAME WAS PUT TO USE. LD. DR FURTHER ARGUED THAT THE DISALLOWANCE WAS CONFIRMED BY CIT(A) AS WELL AS CO-ORDINATE BENC H OF ITAT. LD. DR 3 ITA.NO.796/MUM/2010 & C.O.43/M/14-M/S ADITYA BIRL A NUVO LTD. FURTHER RELIED UPON THE ORDER OF ITAT, DELHI IN ACI T VS. M/S KHANNA & ANNANDHANAM REPORTED VIDE [2013] 13 TAXMANN.COM 94 (DELHI). ON THE OTHER HAND, LD. AR OF ASSESSEE ARGUED THAT ASSESSEES APP EAL BEFORE THE HONBLE HIGH COURT IN QUANTUM APPEAL IS ADMITTED VIDE ORDER DATED 16.09.2008. HENCE, SUBSTANTIAL QUESTION OF LAW ON WHICH THE DIS ALLOWANCE WAS MADE HAS BEEN ADMITTED BY THE HONBLE HIGH COURT AND NO PENA LTY CAN BE LEVIED AGAINST THE ASSESSEE. LD. AR HEAVILY RELIED UPON THE JUDGME NT OF HONBLE DELHI HIGH COURT IN CIT VS. LIQUID INVESTMENT & TRADING CO. (I TA NO. 240/09), ORDER OF CO-ORDINATE BENCH OF ITAT IN ACIT VS. ADITYA BIRLA CENTRE (ITA NO. 5931/MUM/2010(T MUM) AND JUDGMENT OF HONBLE JURISD ICTIONAL HIGH COURT IN CIT VS. NAYAN BUILDERS & DEVELOPER IN ITA NO. 41 5/2012. 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS OF THE PAR TIES AND GONE THROUGH THE RECORD OF THE CASE AND THE LAW CITED BY LD. REPRESE NTATIVE OF THE PARTIES. THE LAW CITED BY LD. DR IN ACIT VS. KHANNA & ANNANDHANA M IS NOT APPLICABLE AS THE FACT OF THIS CASE IS IN DIFFERENCE FROM THE CAS E IN HAND. IN KHANNA & ANNANDHANAM THE RECEIPT OF COMPENSATIO N WAS A REVENUE RECEIPT AND THE ASSESSEE INSTEAD OF CREDITING THE A MOUNT IN ITS P&L A/C CREDITED THE AMOUNT DIRECTLY IN THE ACCOUNT OF PART NERS, THEREFORE, THE ASSESSEE TRIED TO EVADE TAXES BY TREATING PATENT RE VENUE RECEIPT AS CAPITAL RECEIPT BY CREDITING TO PARTNERS ACCOUNT. 6. THE HONBLE BOMBAY HIGH COURT WHILE CONSIDERING THE ALMOST IDENTICAL RATIO(GROUNDS) HELD AS UNDER: HAVING HEARD MR AHUJA, LEARNED COUNSEL APPEARING O N BEHALF OF THE APPELLANT, WE FIND THAT THIS APPEAL CANNOT BE ENTER TAINED AS IT DOES NOT RAISE ANY SUBSTANTIAL QUESTION OF LAW. THE IMPOSITI ON OF PENALTY WAS FOUND NOT TO BE JUSTIFIED AND THE APPEAL WAS ALLOWE D. AS A PROOF THAT THE PENALTY WAS DEBATABLE AND ARGUABLE ISSUE, THE TRIBU NAL REFERRED TO THE ORDER ON ASSESSEES APPEAL IN QUANTUM PROCEEDINGS A ND THE SUBSTANTIAL QUESTIONS OF LAW WHICH HAVE BEEN FRAMED THEREIN. WE HAVE ALSO PERUSED THAT ORDER DATED 27 TH SEPTEMBER 2010 ADMITTING INCOME TAX APPEAL NO.2368 OF 2009. IN OUR VIEW, THERE WAS NO CASE MAD E OUT FOR IMPOSITION OF PENALTY AND THE SAME WAS RIGHTLY SET ASIDE. THE APPEAL RAISES NO SUBSTANTIAL QUESTION OF LAW, IT IS DISMISSED, NO CO STS. FURTHER, THE HONBLE DELHI HIGH COURT WHILE DISCUSS ING THE ISSUE OF PENALTY WHEREIN SUBSTANTIAL QUESTION OF LAW FRAMED HAS BEEN ADMITTED FOR CONSIDERATION HELD AS UNDER: BOTH THE CIT(A) AS WELL AS THE ITAT HAVE SET ASIDE THE PENALTY IMPOSED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 ON THE GROUND THAT THE ISSUE OF DEDUCTION UNDE R SECTION 14A OF THE ACT WAS A DEBATABLE ISSUE. WE MAY ALSO NOTE THAT AG AINST THE QUANTUM ASSESSMENT WHERE UNDER DEDUCTION UNDER SECTION 14A OF THE ACT WAS 4 ITA.NO.796/MUM/2010 & C.O.43/M/14-M/S ADITYA BIRL A NUVO LTD. PRESCRIBED TO THE ASSESSEE, THE ASSESSEE HAS PREFER RED AN APPEAL IN THIS COURT UNDER SECTION260A OF THE ACT WHICH HAS ALSO B EEN ADMITTED AND SUBSTANTIAL QUESTION OF LAW FRAMED. THIS ITSELF SHO WS THAT THE ISSUE IS DEBATABLE. FOR THESE REASONS, WE ARE OF THE OPINION THAT NO QUESTION OF LAW ARISES IN THE PRESENT CASE. 7. NOW COMING TO THE FACTS OF THE PRESENT CASE. IT IS NOT IN DISPUTE IN THE PLEA OF ASSESSEE THAT A SUBSTANTIAL QUESTION OF LAW HAS BEE N ADMITTED BY HONBLE JURISDICTIONAL HIGH COURT ON QUANTUM APPEAL. IN VIE W OF THE JUDGMENTS OF HONBLE JURISDICTIONAL HIGH COURT AND DELHI HIGH CO URT NO PENALTY CAN BE LEVIED ON THE DEBATABLE AND ARGUABLE ISSUE. ADMITTE DLY, SUBSTANTIAL QUESTION OF LAW HAD BEEN ADMITTED BY THE HONBLE HIGH COURT ON THE ASSESSEES APPEAL. 8. IN VIEW OF THE ABOVE LEGAL DISCUSSION, THE PENALTY ORDER U/S 271(1)(C) OF THE ACT WAS NOT JUSTIFIED WHEN DEBATABLE AND ARGUABLE I SSUE ON SUBSTANTIAL QUESTION OF LAW HAS BEEN ADMITTED BY THE HONBLE HI GH COURT. THUS, THE APPEAL OF REVENUE IS DISMISSED. 9. AS WE HAVE ALREADY DISMISSED THE APPEAL OF REVENUE, HENCE, DISCUSSION ON THE C.O. OF ASSESSEE HAS BECOME ACADEMIC AND THE SAME A RE DISMISSED AS INFRUCTUOUS. 10. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMI SSED AND THE C.O. FILED BY THE ASSESSEE IS DISMISSED AS INFRUCTUOUS. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH MAY 2016. SD/- SD/- (R.C.SHARMA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 25/05/2016 S.K.PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / (ASSTT .REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. !'# / GUARD FILE. $ //TRU/