ACIT (OSD ) 3(1), MUMBAI V. DO PUBLICITY MEDIA P.LTD, MUMBAI

ITA 939/MUM/2013

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9159 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 11-03-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 04-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LOVE KUMAR
• Assessee Lawyers: ANJALI JAGTIANI
• Keywords: Depreciation; Bonafide belief; Difference of opinion

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D , MUMBAI BEFORE SHRI B.R. BASKARAN , ACCOUNTANT MEMBER AND SHRI SANJAY GARG , JUDICIAL MEMBER ITA NO. 939/M/2013 ASSESSMENT YEAR: 2008 - 09 DY. CIT, CIRCLE 3(1), ROOM NO.607, 6 TH FLOOR, AAYAKAR BHAVAN, MUMBAI - 400020 VS. M/S. DO PUBLICITY MEDIA PVT. LTD., 310 - B, SKYLARK, NEW KANTAWADI ROAD, BANDRA (EAST), MUMBAI 400 050 PAN: AACCD8460G (APPELLANT) (RESPONDENT) ASSESSEE BY : MS. ANJALI JAGTIANI , A.R. REVENUE BY : SHRI LOVE KUMAR, D.R. DATE OF HEARING : 11.03. 201 5 DATE OF PRONOUNCEMENT : 25.03. 2015 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAINST THE ORDER DATED 19.11.2012 OF T HE COMMISSIONER OF INCOME TAX (APPEALS) [(HEREINAFTER REFERRED TO AS CIT(A)] RELEVANT TO ASSESSMENT YEAR 2008 - 09 . 2. THE REVENUE HAS AGITATED THE ACTION OF THE LD. CIT(A) IN DELETING THE PENALTY OF RS.6,34,062/ - LEVIED BY THE ASSESSING OFFICER (HEREINAF TER REFERRED TO AS THE AO) UNDER SECTION 271(1)(C) OF THE ACT ON ACCOUNT OF CLAIM OF HIGHER RATE OF DEPRECIATION IN RESPECT OF LCD SCREENS. 3. THE FACTS OF THE CASE AS DRAWN FROM THE IMPUGNED ORDER ARE AS UNDER: THE AO OBSERVED THAT: - ITA NO.939/M/2013 M/S. DO PUBLICITY MEDIA PVT. LTD. 2 (I) DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO EXPLAIN WHY NOT DEPRECIATION @15% BE ALLOWED ON LCD SCREENS TREATING IT IS AS PLANT AND MACHINERY AND NOT COMPUTERS. THE AO STATES THAT THE ASSESSEE DID NOT OFFER ANY EXPLANATION NOR ANY DETAILS WERE FURN ISHED AND IT WAS HELD THAT THE ASSE SSEE HAS PURCHASED LCD SCREENS BUT IT HAD SHOWN THE SAME AS INTEGRATED P ANEL COMPUTERS FOR THE SOLE PURP OSE OF CLAIMING HIGHER DEPRECIATION @60%. (II) THE ASSESSEE NEITHER FILED ANY APPEAL AGAINST THE ASSESSMENT ORDER NOR ANY DETAILED IN RESPONSE TO PENAL T Y NOTI CES DATED 16.12.2010. THE ASSESSEE C OMPANY HOWEVER A TTE NDED ON 15.06.2011 ARID FURNISHED ITS SUBMISSION WHICH IS REPRODUCED BY THE AO FROM PAGE 2 TO 8 OF THE ASSESSMENT ORDER. (III) THE AO AT PARA 3 CON CLUDED THAT THE APPELLANT CLAIMED HIGHER DEPRECIATION AND HAD THE CASE NOT BEEN SELECTED FOR SCRUTINY ASSESSMENT, THE ASSESSEE COULD HAVE BENEFITED BY FILING INACCUR ATE PARTICULARS OF INCOME. THE FINANCE ACT 1964 AMENDED THE PROVISIONS OF SECTION 271(1)(C) AND OMITTED THE WORD DELIBERATEL Y . THE A O CONC LU DED THAT THE ASSESSEE HAS NOT ONLY DELIBERAT ELY FURNISHED INACCURATE PARTICULARS OF INCOME BY WRONGFULLY CLAIMING HI GHER DEPRECIATION BUT IT HAS AL SO F AILED TO OFFER ANY EXPLANATION WITH REGARD TO SUCH PUR CHASE OF ASSETS ON WHICH IT HAS WRONGLY CLAIMED DEP RECIATION AT HIGHER RATE. THE AO LEVIED PENALT Y AT THE MINIMUM RATE OF 100% OF RS. 6,34 , 062 / - . 4. THE LD. CIT(A) DELETED THE PENALTY SO LEVIED BY THE AO BY OBSERVING AS UNDER: 4. I HAVE GONE THROUGH TH E ORDER OF THE AO AND SUBMISSION OF THE APPELLANT. 4.1 THE APPELLANTS LOSS AS PER RETURN OF INCOME WAS AT RS.70,51,443/ - AND AFTER DISALLOWANCE OF DEPRECIATION, THE ASSESSED LOSS WAS AT ( - ) RS.51,30,040/ - . THE APPELLANT SUBMITS THAT IT DID NOT FILE AP PEAL BECAUSE THE ADDITION DID NOT LEAD TO ANY TAX LIABILITY AND THE DEPRECIATION ON THE CAPITAL ASSE T WOULD EVEN OTHERWISE BE ALLOWED, EVEN THOUGH AT A LOWER RATE. 4.2 THE APPELLANT FILED INVOICE OF PURCHASE DATED 30.03.2007, WHICH GIVES THE DESCRIPTION AS 'IRIS INTEGRATED THIN CLIENT, 32' LCD, 512MB RAM, 40GB HDD' AND IRIS INTEGRATED THIN CLIENT, 42' LCD, 512MB RAM, 40GB HDD' THE INVOICE OF $76290. THE BILL OF ENTRY EXAMINED BY RAJIV AGRAWAL, APPRAISING OFFICER OF INDIAN CUSTOMS, JNPT, NA V S SHEVA MU M BAI ALSO GIVES THE DESCRIPTION OF THE GOODS IMPORTED BY THE APPELLANT COMPANY AS MENTIONED. THE APPELLANT, THEREFORE, WAS UNDER THE BONA FIDE BELIEF THAT THE GOODS IMPORTED BY IT AND INSTALLED BY I T WERE COMPUTERS AS THE SAME CONTAINED '512MB RAM, 40GB HDD' AN D THERE IS A VERY THIN LINE OF DIFFERENCE BETWEEN AN I NTEGRATED LCD S CREEN AND A COMPUTER SCREEN AS THE INTEGRATED LCD SCREEN CONTAINS NUMEROUS FEATURES OF A COMPUTER AND THE LCD SCREEN RUNS VARIOUS COMPUTER SOFTWARE. 4.3 I N THE PRESENT CASE, THE FACT OF ACQUISITION OF ASSETS WERE DISCLOSED IN THE ITA NO.939/M/2013 M/S. DO PUBLICITY MEDIA PVT. LTD. 3 SCHEDULE FORMING PART OF THE ACCOUNT AT SCHEDULE - A OF 2 ND ANNUAL REPORT OF PROFIT AND LOSS A/C AS WELL AS IN THE DIRECTOR'S REPORT AND THE AUDITED ACCOUNTS OF THE APPELLANT. FURTHERMORE, IT IS A CASE OF REDUCTION OF DEPRECIATION BASED ON DIFFERENCE OF OPINION. I T IS, THEREFORE, HELD THAT THE PRESENT CASE IS NOT FIT FOR LEVY OF PENALTY OF CONCEA LMENT OF INCOME. THE PENALTY OF RS. 6,34,062 / - IS CANCELLED. 5. THE APPEAL IS ALLOWED . 5. RIVAL CONTENTIONS HAVE BEEN CONSIDERED. IN OUR VIEW, IT IS NOT A CASE WHERE THE ASSESSEE HAD CLAIMED ANY HIGHER DEPRECIATION TO AVOID OR REDUCE ANY TAX LIABILITY PAYABLE DURING THE YEAR. AS OBSERVED BY THE LD. CIT(A), THE DESCRIPTION OF THE HIGH DEFINITION LCD SCREENS ITSELF SHOWS THAT CERTAIN FEATURES AND COMPONENTS OF THE SAID SCREENS GIVES DESCRIPTION OF A COMPUTER. THERE IS VERY THIN LINE OF DIFFERENCE BETWEEN AN INTEGRATED HIGH DEFINITION LCD SCREEN AND A COMPUTER SCREEN. IN THIS ERA OF EMERGING TECHNOLOGY EVEN THE HIGH DEFIN ITION LCD SCREENS CANNOT BE SAID TO BE LESS THAN A COMPUTER BECAUSE OF ITS COMPONENTS AND FEATURES. THE ASSESSEE HAD , UNDER BONAFIDE BELIEF, CLAIMED DEPRECIATION CLAIMING THE SAME AS COMPUTERS. MOREOVER, AS OBSERVED BY THE LD. CIT(A), THE ASSESSEE HAS RE TURNED THE LOSS OF RS.70,51,443/ - . THE AO, AFTER DISALLOWANCE OF DEPRECIATION , HAS ASSESSED THE LOSS AT RS.51,30,040/ - . UNDER SUCH CIRCUMSTANCES, EVEN AFTER THE DISALLOWANCE OF CERTAIN PERCENTAGE OF DEPRECIATION , THERE WAS NO TAX LI ABILITY PAYABLE DURING THE YEAR. 5.1 EVEN TO THE EXTENT THE CLAIM OF DEPRECIATION HAS BEEN DISALLOWED DURING THE YEAR UNDER CONSIDERATION, IT IS OBVIOUS THAT THE ASSESSEE W OULD OTHERWISE BE ENTITLED TO THE REMAINING CLAIM OF THE DEPRECIATION DURING SUBSEQUENT YEARS AS PER TH E PROVISIONS OF THE INCOME TAX ACT AND THE RULES. IT IS NEITHER A CASE OF ANY CONCEALMENT OF INCOME NOR A CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME, NOR HAS RESULTED ANY ESCAPEMENT OF TAX AT THE HANDS OF THE ASSESSEE. HENCE, WE DO NOT FIND A NY INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN DELETING THE PENALTY LEVIED BY THE AO UNDER SECTION 271(1)(C) OF THE ACT. THE ORDER OF ITA NO.939/M/2013 M/S. DO PUBLICITY MEDIA PVT. LTD. 4 THE LD. CIT(A) IS THEREFORE UPHELD. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS HEREBY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25.03. 201 5 . SD/ - SD/ - ( B.R. BASKARAN ) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 25.03.2015 . * KISHORE , SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT ( A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.