INDOCO REMEDIES LTD, MUMBAI V. ACIT CEN CIR 34, MUMBAI

ITA 8652/MUM/2011

• Counselvise Citation: 865219914 RSA 2011
• Duration Of Justice: 1 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 17-07-2013
• Assessment Year: 2003-2004
• Appeal Filed On: 22-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P SINGH
• Keywords: Capital asset; Depreciation; Wrong claim
• Section: 143(3); 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI .. , !'# $ $ $ $ ! %, & !'# !' BEFORE SHRI P.M. JAGTAP, AM AND SHRI SANJAY GARG, J M !./ I.T.A. NO. 8652 /MUM/2011 ( &) % $*% &) % $*% &) % $*% &) % $*% / / / / ASSESSMENT YEAR : 2003-04) !./ I.T.A. NO. 8735 /MUM/2011 ( &) % $*% &) % $*% &) % $*% &) % $*% / / / / ASSESSMENT YEAR : 2004-05) INDOCO REMEDIES LIMITED, INDOCO HOUSE, 166, C.S.T. ROAD, SANTACRUZ (EAST), MUMBAI 400 098. ) ) ) ) / VS. ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 34, AAYAKAR BHAVAN, M.K. MARG, MUMBAI 400 020. #+ !./ PAN : AAACI 0380C ( +, / // / APPELLANT ) .. ( -.+, / RESPONDENT ) +, / 0 ! / APPELLANT BY : SHRI JITENDRA JAIN -.+, / 0 ! / RESPONDENT BY : SHRI O.P. SINGH !)$ / / // / DATE OF HEARING : 17-07-2013 12* / / DATE OF PRONOUNCEMENT : 06-09-2013 '3 / O R D E R PER P.M. JAGTAP, A.M . : .. , !'# THESE TWO APPEALS FILED BY THE ASSESSEE ARE DIRECTE D AGAINST TWO SEPARATE ORDERS PASSED BY THE LD. CIT(A) 36, MUMB AI DTD. 12-09-2011 WHEREBY HE CONFIRMED THE PENALTIES OF RS. 4,30,294/ - AND RS. 3,15,874/- IMPOSED BY THE A.O. U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (THE ACT) FOR ASSESSMENT YEARS 2003-04 AND 2004-05 RESPECTIVELY. ITA 8652 & 8735/MUM/2011 2 2. THE RELEVANT FACTS OF THE CASE GIVING RISE TO T HESE APPEALS ARE THAT THE ASSESSEE IN THE PRESENT CASE IS A COMPANY ENGAGED I N THE BUSINESS OF MANUFACTURING AND TRADING OF PHARMACEUTICALS FORMUL ATIONS AND BULK DRUGS WHICH FILED ITS RETURN OF INCOME FOR A.Y. 2003-04 O N 28-11-2003 DECLARING TOTAL INCOME OF RS. 5,91,65,408/-. IN THE ASSESSME NT COMPLETED U/S 143(3) OF THE ACT VIDE ORDER DATED 30-3-2006, THE TOTAL INCOM E OF THE ASSESSEE WAS COMPUTED BY THE A.O. AT RS. 7,74,06,207/- AFTER MAK ING ADDITION , INTER ALIA, ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION ON LAND AMOUNTING TO RS. 9,78,318/- AND DISALLOWANCE OUT OF FOREIGN TRAVEL E XPENSES AMOUNTING TO RS. 1,92,551/-. ON APPEAL, THE LD. CIT(A) AS WELL AS T HE TRIBUNAL CONFIRMED THE SAID ADDITIONS IN THE QUANTUM PROCEEDINGS. CONSEQU ENTLY, NOTICE WAS ISSUED BY THE A.O. REQUIRING THE ASSESSEE TO SHOW CAUSE AS TO WHY PENALTY U/S 271(1)(C) OF THE ACT SHOULD NOT BE IMPOSED IN RESPE CT OF THE SAID TWO ADDITIONS MADE TO ITS TOTAL INCOME. IN REPLY, IT WAS SUBMITT ED ON BEHALF OF THE ASSESSEE THAT BUILDING COULD BE TREATED AS A UNIT PLACING IT ON PAR WITH PLANT AND MACHINERY FOR THE PURPOSE OF ALLOWING DEPRECIATION AND THE SAME COULD NOT BE SPLIT UP INTO BUILDING AND LAND. IT WAS CONTENDED THAT THE BUILDING IS TREATED AS A UNIT FOR THE PURPOSE OF ALLOWING REPAIRS AND T HERE IS NO PROVISION IN THE ACT WHICH WOULD PERMIT THE A.O. TO SPLIT UP THIS UN IT INTO LAND AND BUILDING FOR THE PURPOSE OF ALLOWING DEPRECIATION U/S 32 OF THE ACT. IT WAS CONTENDED THAT THE CLAIM MADE BY THE ASSESSEE FOR DEPRECIATIO N ON BUILDING AS UNIT WAS A BONAFIDE CLAIM AND ALTHOUGH THE DISALLOWANCE MADE BY THE A.O. ON ACCOUNT OF DEPRECIATION ON LAND BY SPLITTING UP THE VALUE O F LAND AND BUILDING SEPARATELY WAS CONFIRMED EVEN BY THE TRIBUNAL IN TH E QUANTUM PROCEEDINGS, THE SAME COULD NOT INVITE PENALTY U/S 271(1)(C) OF THE ACT. AS REGARDS THE FOREIGN TRAVEL EXPENSES, IT WAS CONTENDED ON BEHALF OF THE ASSESSEE THAT THE PENALTY COULD NOT BE LEVIED U/S 271(1)(C) OF THE AC T ON THE DISALLOWANCE OF FOREIGN TRAVEL EXPENSES MADE ON ADHOC BASIS. ITA 8652 & 8735/MUM/2011 3 3. THE A.O. DID NOT FIND MERIT IN THE CONTENTIONS R AISED ON BEHALF OF THE ASSESSEE AND RELYING ON THE DECISION OF THE TRIBUNA L CONFIRMING THE DISALLOWANCE MADE ON ACCOUNT OF DEPRECIATION ON LAN D IN THE QUANTUM PROCEEDINGS, HE HELD THAT THE ASSESSEE HAD FURNISHE D INACCURATE PARTICULARS OF ITS INCOME BY MAKING WRONG CLAIM FOR SUCH DEPREC IATION WHICH OTHERWISE WAS NOT ALLOWABLE UNDER THE INCOME TAX ACT. HE FUR THER HELD THAT SIMILARLY THERE WAS FURNISHING OF INACCURATE PARTICULARS OF I NCOME BY THE ASSESSEE BY MAKING WRONG CLAIM OF FOREIGN TRAVEL EXPENSES INCUR RED ON THE TOUR OF MRS. ARUNA S. KARE, WIFE OF CHAIRMAN & MANAGING DIRECTOR , WHO WAS NEITHER AN EMPLOYEE NOR A DIRECTOR OF THE ASSESSEE COMPANY. HE HELD THAT THE SAID EXPENSES WERE NOT INCURRED FOR THE PURPOSE OF ASSES SEES BUSINESS AND IT WAS A WRONG CLAIM OF DEDUCTION MADE BY THE ASSESSEE. HE , THEREFORE, IMPOSED PENALTY OF RS. 4,30,294/- U/S 271(1)(C) OF THE ACT BEING 100% OF THE TAX SOUGHT TO BE EVADED BY THE ASSESSEE IN RESPECT OF A DDITIONS MADE ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION ON LAND AND DISALLO WANCE OUT OF FOREIGN TRAVEL EXPENSES. FOR A.Y. 2004-05 ALSO, THE A.O. IMPOSED PENALTY OF RS. 3,15,874/- U/S 271(1)(C) OF THE ACT IN RESPECT OF SIMILAR ADDI TION MADE TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF DISALLOWANCE OF DEPRE CIATION ON LAND FOR THE SAME REASONS AS GIVEN IN THE PENALTY ORDER FOR A.Y. 2003-04. 4. THE PENALTIES IMPOSED BY THE A.O. U/S 271(1)(C) OF THE ACT FOR BOTH THE YEARS UNDER CONSIDERATION WERE CHALLENGED BY THE IN THE APPEALS FILED BEFORE THE LD. CIT(A) WHO CONFIRMED THE PENALTIES IMPOSED BY THE A.O. U/S 271(1)(C) OF THE ACT IN RESPECT OF ADDITION MADE IN RESPECT O F DEPRECIATION ON LAND FOLLOWING THE ORDER OF THE ITAT IN THE CASE OF BRIJ WASI ART PRESS LTD. VS. DCIT (ITA NO. 4212 AND 4213/DEL/2010) WHEREIN PENALTY IM POSED BY THE A.O. U/S 271(1)(C) OF THE ACT IN RESPECT OF SIMILAR ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION ON LAND WAS CONFIRMED BY THE TRIBUNAL. AS REGARDS THE PENALTY IMPOSED BY THE A.O. U/S 271(1)( C) OF THE ACT IN RESPECT OF FOREIGN TRAVEL EXPENSES, NO SEPARATE FINDING, HOWEV ER, WAS GIVEN BY THE LD. ITA 8652 & 8735/MUM/2011 4 CIT(A) WHILE DISMISSING THE APPEAL FOR A.Y. 2003-04 . AGGRIEVED BY THE ORDERS OF THE LD. CIT(A), THE ASSESSEE HAS PREFERRED THESE APPEALS BEFORE THE TRIBUNAL. 5. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE BUILDING PURCHASED BY THE ASSESSEE IN THE PREVIOUS YEAR RELEVANT TO A. Y. 2000-01 WAS TREATED AS A SINGLE UNIT FOR THE PURPOSE OF CLAIMING DEPRECIATIO N ON FULL VALUE AND THE DEPRECIATION SO CLAIMED WAS ALLOWED BY THE A.O. IN THE ASSESSMENTS COMPLETED U/S 143(3) OF THE ACT FOR A.Y. 2001-02 AN D 2002-03. HE SUBMITTED THAT FOR THE YEARS UNDER CONSIDERATION I.E. ASSESSM ENT YEARS 2003-04 AND 2004-05, THE A.O. HOWEVER, APPORTIONED THE SAID VAL UE BETWEEN LAND AND BUILDING AND DISALLOWED THE DEPRECIATION ON THE VAL UE APPORTIONED TO LAND. HE CONTENDED THAT ALTHOUGH THIS DISALLOWANCE MADE B Y THE A.O. WAS CONFIRMED BY THE TRIBUNAL IN THE QUANTUM PROCEEDING S, THE ORDER OF THE TRIBUNAL WAS PASSED MUCH AFTER THE DATES OF FILING OF RETURNS FOR THE YEARS UNDER CONSIDERATION. RELYING ON THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF BRIJ MOHAN VS. CIT 120 ITR 1 (SC), HE CONTE NDED THAT THE POSITION AS ON THE DATE OF FILING OF RETURNS HAS TO BE SEEN TO ASCERTAIN THE BONAFIDE OF THE CLAIM MADE BY THE ASSESSEE AND SINCE THE CLAIM MADE BY THE ASSESSEE FOR DEPRECIATION ON BUILDING AS ONE UNIT WAS THE BONAFI DE CLAIM IN THE FACTS AND CIRCUMSTANCES AS PREVAILED ON THE DATES OF FILING O F RETURNS FOR THE YEARS UNDER CONSIDERATION, THE PROVISIONS OF SECTION 271( 1)(C) OF THE ACT ARE NOT ATTRACTED. AS REGARDS THE DECISION OF DELHI BENCH O F ITAT RELIED UPON BY THE LD. CIT(A) WHILE CONFIRMING THE PENALTY IMPOSED BY THE A.O. U/S 271(1)(C) OF THE ACT, HE CONTENDED THAT THE SAID CASE IS DISTING UISHABLE ON FACTS INASMUCH AS THE YEAR INVOLVED THEREIN WAS THE FIRST YEAR OF CLAIM MADE BY THE ASSESSEE FOR DEPRECIATION. HE CONTENDED THAT THE DECISION OF THE TRIBUNAL IN THE CASE OF NAMASTE VOYAGES P. LTD. (2010) 5 ITR (TRIB) 90 (DEL HI), ON THE OTHER HAND, IS CLEARLY APPLICABLE IN THE CASE OF THE ASSESSEE WHER EIN PENALTY IS IMPOSED U/S 271(1)(C) OF THE ACT IN RESPECT OF SIMILAR DISALLOW ANCE MADE ON ACCOUNT OF DEPRECIATION ON LAND WAS CANCELLED BY THE TRIBUNAL. AS REGARDS THE FOREIGN ITA 8652 & 8735/MUM/2011 5 TRAVEL EXPENSES, THE LD. COUNSEL FOR THE ASSESSEE S UBMITTED THAT THE FOREIGN TRAVEL EXPENSES INCURRED ON MRS. ARUNA S. KARE, WIF E OF THE CHAIRMAN & MANAGING DIRECTOR WERE AS PER THE FOREIGN TRAVEL PO LICY IMPLEMENTED BY THE ASSESSEE COMPANY. HE INVITED OUR ATTENTION TO THE RELEVANT POLICY DOCUMENT PLACED AT PAGE 13 TO 18 OF HIS PAPER BOOK AND CONTE NDED THAT THE CLAIM MADE BY THE ASSESSEE FOR FOREIGN TRAVEL EXPENSES AS PER THE SAID POLICY WAS BONAFIDE AND ALL THE PARTICULARS RELATING TO THE SAID CLAIM HAVING BEEN TRULY AND FULLY FURNISHED BY THE ASSESSEE, THE DISALLOWANCE MADE ON ACCOUNT OF FOREIGN TRAVEL EXPENSES CANNOT ATTRACT PENALTY U/S 271(1)(C) OF TH E ACT. HE URGED THAT THE PENALTY IMPOSED BY THE A.O. U/S 271(1)(C) AND CONFI RMED BY THE LD. CIT(A) MAY BE CANCELLED. 6. THE LD. D.R., ON THE OTHER HAND, STRONGLY RELIE D ON THE IMPUGNED ORDERS OF THE LD. CIT(A) IN SUPPORT OF THE REVENUES CASE AND CONTENDED THAT THE PENALTIES IMPOSED BY THE A.O. U/S 271(1)(C) OF THE ACT HAVING BEEN CONFIRMED BY THE LD. CIT(A) RELYING ON THE DECISION OF THE CO -ORDINATE BENCH OF THE TRIBUNAL AT DELHI ON A SIMILAR ISSUE, THE IMPUGNED ORDERS OF THE LD. CIT(A) SHOULD BE UPHELD. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND AL SO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERVED THAT ALTHOUGH THE DECISION OF THE DELHI BENCH OF THIS TRIBUNAL IN THE CASE OF BRIJWAS I ART PRESS LTD. (SUPRA) RELIED UPON BY THE LD. CIT(A) IN HIS IMPUGNED ORDER FOR CONFIRMING THE PENALTIES IMPOSED BY THE A.O. U/S 271(1)(C) OF THE ACT IS AGAINST THE ASSESSEE, THERE IS ANOTHER DECISION OF DELHI BENCH OF THE TRI BUNAL IN THE CASE OF NAMASTE VOYAGES P. LTD. VS. ITO (2010) 5 ITR 90 (DE LHI) CITED BY THE LD. COUNSEL FOR THE ASSESSEE WHEREIN PENALTY IMPOSED BY THE A.O. U/S 271(1)(C) OF THE ACT AND CONFIRMED BY THE LD. CIT(A) IN RESPECT OF SIMILAR ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION ON ;LAND IN THE IDENTICAL FACTS AND CIRCUMSTANCES HAS BEEN CANCELLED BY THE TRIBUNAL. IN THE SAID CASE, THE DEPRECIATION WAS CLAIMED BY THE ASSESSEE ON BUILDIN G WITHOUT REDUCING THE ITA 8652 & 8735/MUM/2011 6 VALUE OF LAND FOR THE PURPOSE OF COMPUTATION OF DEP RECIATION. WHEN THIS ASPECT WAS BROUGHT TO THE NOTICE OF THE ASSESSEE BY THE A.O., THE ASSESSEE AGREED FOR THE BIFURCATION OF VALUE OF THE LAND AND BUILDING AND DISALLOWANCE OF DEPRECIATION ON THE VALUE OF LAND. THEREAFTER, PENALTY WAS IMPOSED BY THE A.O. U/S 271(1)(C) IN RESPECT OF ADDITION MADE ON A CCOUNT OF DISALLOWANCE OF DEPRECIATION ON LAND AND AFTER CONFIRMATION OF THE SAID PENALTY BY THE LD. CIT(A), THE ASSESSEE PREFERRED AN APPEAL BEFORE THE TRIBUNAL WHICH CANCELLED THE SAID PENALTY FOR THE FOLLOWING REASONS GIVEN IN ITS ORDER:- WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RE CORDS. WE FIND THAT THE FIRST ADDITION IN THIS CASE IS MADE ON ACC OUNT OF DEPRECIATION CLAIMED ON THE COMPONENT OF LAND IN RESPECT OF BUIL DING. THE ASSESSING OFFICER HAS NOTED THAT ASSESSEE HAD CLAIMED DEPRECI ATION OF RS. 1,43,707 IN RESPECT OF THE BUILDING AT 5 PER CENT. ON THE TOTAL VALUE ON THE OPENING WRITTEN DOWN VALUE OF RS. 28,74,131 OF LAND BUILDING. WHEN THE VALUE OF LAND BEING INCLUDED IN THE VALUE OF T HE BUILDING WAS POINTED OUT TO THE ASSESSEE, THE ASSESSEE GOT THE VALUATION OF THE PROPERTY DONE BY THE REGISTERED VALUER. ON THE BASI S OF VALUATION OF LAND AND BUILDING DONE BY THE VALUER, THE DEPRECIATION P ERTAINING TO LAND COMPONENT AMOUNTING TO RS. 94,347 WAS IDENTIFIED. T HE ASSESSEE IN THIS REGARD ALSO GAVE THE FIGURE OF DEPRECIATION C LAIMED ON LAND FOR THE ASSESSMENT YEARS 2002-03, 2003-04 AND 2004-05 AND STATED THAT IT WAS READY TO PAY THE TAX. IN THIS REGARD, HOWEVER, THE ASSESSING OFFICER HELD THAT THIS WOULD NOT BE LEGALLY CORRECT. HENCE DEPRECIATION RELATABLE TO THE YEAR ONLY UNDER CONSIDERATION WHICH IS RS. 9 4,347 IS DISALLOWED. NOW HERE WE FIND THAT IT IS NOT THE CASE THAT THE A SSESSEE HAD MADE ANY CONCEALMENT OR FURNISHING OF INACCURATE PA RTICULARS OF INCOME FOR THE CURRENT YEAR. THE VALUE OF LAND AND BUILDING WAS SHOWN AS COMPOSITE FIGURE AND DEPRECIATION IN THAT REGARD WAS CLAIMED AND ALLOWED SINCE THE PAST THREE YEARS. THE ASSESSEE DU RING THE YEAR HAS ALSO CO-OPERATED AND HAS GOT THE VALUATION DONE HIM SELF AND IDENTIFIED THE PORTION OF DEPRECIATION ATTRIBUTABLE TO THE LAN D PORTION IN THE FIGURE OF DEPRECIATION ON LAND AND BUILDING AND OFFERED T HE SAME FOR TAXATION. OOOO OOOO OOOO NOW IN THIS BACKGROUND WE HAVE TO SEE WHETHER THE A SSESSEE IS GUILTY OF PENALTY UNDER SECTION 271(1)(C) OF THE A CT. WE FIND THAT SECTION 271(1(C) OF THE ACT POSTULATES IMPOSITION OF PENAL TY FOR FURNISHING OF INACCURATE PARTICULARS AND CONCEALMENT OF INCOME. I N OUR CONSIDERED OPINION ON THE FACTS OF THE PRESENT CASE AS REGARDS THE DEPRECIATION, IT WAS AN INADVERTENT MISTAKE WHICH WAS COMING FOR THE LAST THREE YEARS. ITA 8652 & 8735/MUM/2011 7 AS REGARDS THE ISSUE OF UTILISATION OF THE RESERVE FOR THE PURPOSE OF DEDUCTION UNDER SECTION 80HHD, THE ASSESSEE WAS UN DER THE BONA FIDE BELIEF THAT PURCHASE OF NEW MOTOR CYCLES WILL AMOU NT TO UTILISATION FOR THE PURPOSE SPECIFIED UNDER SECTION 80HHD. IN OUR CONSIDERED OPINION, IN THIS BACKGROUND IT CANNOT BE SAID THAT THE ASSE SSEE WAS GUILTY OF CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT. IN THIS REGARD WE PLACE RELIANCE ON THE APEX COURT DECISION RENDERED BY A LARGER BENCH COMP RISING THREE OF THEIR LORDSHIPS IN THE CASE OF HINDUSTAN STEEL LTD. V. STATE OF ORISSA [1965] 83 ITR 26 WHEREIN IT WAS HELD THAT (HEADNOTE ) 'AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTO RY OBLIGATION IS THE RESULT OF A QUASI-CRIMINAL PROCEEDING, AND PENALTY WILL NOT ORDINARILY BE IMPOSED UNLESS THE PARTY OBLIGED EITHER ACTED DELI BERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DI SHONEST, OR ACTED IN CONSCIOUS DISREGARD OF ITS OBLIGATION. PENALTY WILL NOT ALSO BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENAL TY SHOULD BE IMPOSED FOR FAILURE TO PERFORM A STATUTORY OBLIGATI ON IS A MATTER OF DISCRETION OF THE AUTHORITY TO BE EXERCISED JUDICIA LLY AND ON A CONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCES. EV EN IF A MINIMUM PENALTY IS PRESCRIBED, THE AUTHORITY COMPETENT TO I MPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY, WH EN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT, OR W HERE THE BREACH FLOWS FROM A BONA FIDE BELIEF THAT THE OFFENDER IS NOT LI ABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE.' AS REGARDS THE DECISION OF THE HON'BLE APEX COURT I N THE CASE OF DHARAMENDRA TEXTILE PROCESSORS [2008] 306 ITR 277, WE FIND THAT THE SAME IS NOT APPLICABLE TO THE PRESENT CASE, AS IN THE PRESENT CASE WE DO NOT FIND THERE IS ANY CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS BY THE ASSESSEE. THE INTERPOLATION OF THIS CASE LAW BY THE LEARNED DEPARTMENTAL REPRESENTATIVE IS MISPLACED. W E FURTHER FIND THAT THE HON'BLE APEX COURT IN THE CASE OF CIT V. ATUL MOHAN BINDAL [2009] 317 ITR 1 HAS ITSELF EXPLAINED THE RATIO OF THE DE CISION AS UNDER IN PARAGRAPH 23 PAGE 13. '23. THE DECISION IN DHARAMENDRA TEXTILE PROCESSORS [2008] 306 ITR 277 MUST, THEREFORE, BE UNDERSTOOD TO MEAN THAT THOUGH THE APPLICATION OF SECTION 11AC W OULD DEPEND UPON THE EXISTENCE OR OTHERWISE OF THE COND ITIONS EXPRESSLY STATED IN THE SECTION, ONCE THE SECTION IS APPLICABLE IN A CASE THE CONCERNED AUTHORITY WOULD HAVE NO DISCRETION IN QUANTIFYING THE AMOUNT AND PENALT Y MUST BE IMPOSED EQUAL TO THE DUTY DETERMINED UNDER SUB-SECTION (2) OF SECTION 11A. THAT IS WHAT DHARA MENDRA TEXTILE DECIDES.' WE WOULD ALSO LIKE TO REFER TO THE HON'BLE APEX COU RT DECISION IN THE CASE OF CIT V. RELIANCE PETROPRODUCTS LTD. IN CIVIL APPEAL NO. 2463 ITA 8652 & 8735/MUM/2011 8 OF 2010 VIDE ORDER DATED MARCH 17, 2010 [2010] 322 ITR 158 HAS HELD THAT THE LAW LAID DOWN IN DILIP SHROFF V. JOINT CI T [2007] 291 ITR 519 (SC) AS TO THE MEANING OF WORD 'CONCEALMENT' AND 'I NACCURATE' CONTINUES TO BE A GOOD LAW BECAUSE WHAT WAS OVERRU LED IN DHARAMENDRA TEXTILE PROCESSORS CASE [2008] 306 ITR 277 WAS ONLY THAT PART IN DILIP SHROFF CASE WHERE IT WAS HELD TH AT MENS REA WAS AN ESSENTIAL REQUIREMENT OF PENALTY UNDER SECTION 271( 1)(C). THE HON'BLE APEX COURT ALSO OBSERVED THAT IF THE CONTENTION OF THE REVENUE IS ACCEPTED THEN IN CASE OF EVERY RETURN WHERE THE CLA IM IS NOT ACCEPTED BY THE ASSESSING OFFICER FOR ANY REASON, THE ASSES SEE WILL INVITE THE PENALTY UNDER SECTION 271(1)(C). THIS IS CLEARLY N OT THE INTENDMENT OF THE LEGISLATURE. 8. THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE C ASE OF NAMASTE VOYAGES P. LTD. (SUPRA) THUS HAS CANCELLED THE PENALTY IMPO SED BY THE A.O. IN RESPECT OF SIMILAR ADDITION MADE ON ACCOUNT OF DEPRECIATION ON LAND IN THE SIMILAR FACTS AND CIRCUMSTANCES. IN THE SAID CASE, THE REL IANCE WAS PLACED BY THE ASSESSEE ON THE DECISION OF HONBLE PUNJAB HIGH COU RT IN THE CASE OF CIT VS. ALPS THEATRE (1965) 58 ITR 192 WHEREIN THE CLAIM OF THE ASSESSEE FOR DEPRECIATION ON BUILDING INCLUSIVE OF LAND WAS HELD TO BE ALLOWABLE OBSERVING THAT ALTHOUGH THE WORD BUILDING WAS NOT DEFINED I N THE ACT, THE BUILDING WAS TREATED AS A UNIT, LIKE MACHINERY OR FURNITURE, GOI NG BY THE RELEVANT PROVISIONS OF THE ACT DEALING WITH THE ALLOWABILITY OF REPAIRS , INSURANCE CHARGES ETC. IT WAS HELD THAT THE DEPRECIATION THUS WAS ALLOWABLE O N BUILDING AS A UNIT AS ONE COULD NOT CONSTRUCT BUILDING WITHOUT A LAND BEN EATH IT. IT WAS HELD THAT DEPRECIATION MOREOVER IS ALLOWABLE ON THE CAPITAL A SSET AND THE BUILDING AS A UNIT BEING A CAPITAL ASSET, SURPLUS EARNED LATER ON ITS SALE OVER AND ABOVE THE WRITTEN DOWN VALUE IS LIABLE TO TAX. IT WAS HELD T HAT THE BUILDING THEREFORE WOULD INCLUDE THE LAND FOR THE PURPOSE OF COMPUTATI ON OF DEPRECIATION. FINALLY IT WAS HELD BY THE HONBLE PUNJAB HIGH COUR T THAT AT BEST THIS WAS A CASE WHERE TWO EQUALLY PLAUSIBLE INTERPRETATIONS WE RE POSSIBLE AND THE INTERPRETATION IN FAVOUR OF THE ASSESSEE WAS LIABLE TO BE ADOPTED. ALTHOUGH THIS DECISION OF THE HONBLE PUNJAB HIGH COURT HAS BEEN SUBSTANTIALLY REVERSED BY THE HONBLE SUPREME COURT ON MERIT, WE ARE OF THE VIEW THAT THE BASIS GIVEN THEREIN WHILE ALLOWING THE CLAIM OF THE ASSESSEE FOR DEPRECIATION ITA 8652 & 8735/MUM/2011 9 ON LAND APPURTENANT TO THE BUILDING TREATING THE SA ME AS A PART OF BUILDING UNIT IS SUFFICIENT TO SHOW THAT THE CLAIM MADE BY T HE ASSESSEE IN THE PRESENT CASE FOR DEPRECIATION ON LAND WAS A BONAFIDE CLAIM AND SINCE THE SIMILAR CLAIM OF THE ASSESSEE FOR DEPRECIATION WAS ALLOWED BY THE A.O. HIMSELF IN THE EARLIER YEARS, IT CANNOT BE SAID THAT THE SAID CLAIM MADE B Y THE ASSESSEE IN THE YEARS UNDER CONSIDERATION WAS PATENTLY WRONG ATTRACTING P ENALTY U/S 271(1)(C) OF THE ACT. AS REGARDS THE CLAIM MADE BY THE ASSESSEE ON ACCOUNT OF EXPENDITURE INCURRED ON FOREIGN TRAVELING OF MRS. ARUNA S. KARE , WIFE OF ITS CHAIRMAN & MANAGING DIRECTOR , IT IS OBSERVED THAT THIS CLAIM WAS BASED ON FOREIGN TRAVEL POLICY (COPY PLACED AT PAGE 13 TO 18 OF THE PAPER B OOK) OF THE ASSESSEE COMPANY AND ALTHOUGH IT WAS DISALLOWED IN THE QUANT UM PROCEEDINGS, WE ARE OF THE VIEW THAT THE SAME HAVING BEEN MADE BONAFIDE ON THE BASIS OF FOREIGN TRAVEL POLICY OF THE COMPANY CANNOT BE EQUATED WITH CONCEALMENT OF PARTICULARS OF ITS INCOME BY THE ASSESSEE OR FURNIS HING OF IN-ACCURATE PARTICULARS OF ITS INCOME SO AS TO ATTRACT PENALTY U/S 271(1)(C) OF THE ACT. AS SUCH, CONSIDERING ALL THE FACTS OF THE CASE, WE ARE OF THE VIEW THAT THE PRESENT CASE IS NOT A FIT CASE TO IMPOSE PENALTY U/S 271(1) (C) OF THE ACT AND CANCELING THE PENALTY IMPOSED BY THE A.O. AND CONFIRMED BY TH E LD. CIT(A) FOR BOTH THE YEARS UNDER CONSIDERATION, WE ALLOW THE APPEALS OF THE ASSESSEE. 9. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. 4 5 &) %4 / #$ 6 #$ 6 / 78 ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH SEPT. 2013. . '3 / 12* 9')5 06-09-2013 2 / SD/- SD/- (SANJAY GARG) (P.M. JAGTAP ) & !'# JUDICIAL MEMBER !'# / ACCOUNTANT MEMBER MUMBAI ; 9') DATED 06-09-2013 ITA 8652 & 8735/MUM/2011 10 $.&).!./ RK , SR. PS '3 / -&:; <;* '3 / -&:; <;* '3 / -&:; <;* '3 / -&:; <;*/ COPY OF THE ORDER FORWARDED TO : 1. +, / THE APPELLANT 2. -.+, / THE RESPONDENT. 3. = () / THE CIT(A)- 36, MUMBAI 4. = / CIT (CENTRAL)- I, MUMBAI 5. ;$@ -&&) , , / DR, ITAT, MUMBAI I BENCH 6. A% B / GUARD FILE. '3)! '3)! '3)! '3)! / BY ORDER, !.; -& //TRUE COPY// C C C C/ // /!7 !7 !7 !7 ( DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI