Chandigarh Housing Board, Chandigarh V. ACIT, Chandigarh

ITA 976/CHANDI/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86124 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 31-12-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 10-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JYOTI KUMARI
• Assessee Lawyers: RAVI SHANKAR B M MONGA
• Keywords: Depreciation; Wrong claim; Competent authority; Revenue expenditure; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R. SOOD, ACCOUNTANT MEMBER ITA NO. 76/CHD/2013 ASSESSMENT YEAR: 2007-08 CHANDIGARH HOUSING BOARD, VS THE ACIT, CIRCLE 1(1 ), SECTOR 9, CHANDIGARH CHANDIGARH PAN NO. AAALC0132H ITA NO. 975/CHD/2014 ASSESSMENT YEAR: 2008-09 CHANDIGARH HOUSING BOARD, VS THE DCIT, CIRCLE 1(1 ), SECTOR 9, CHANDIGARH CHANDIGARH ITA NO. 976/CHD/2014 ASSESSMENT YEAR: 2009-10 CHANDIGARH HOUSING BOARD, VS THE ACIT, CIRCLE 1(1 ), SECTOR 9, CHANDIGARH CHANDIGARH & ITA NO. 965/CHD/2014 ASSESSMENT YEAR: 2008-09 THE DCIT, CIRCLE 1(1), CHANDIGARH HOUSING BOARD, CHANDIGARH SECTOR 9, CHANDIGARH (APPELLANT) (RESPONDENT) APPELLANT BY : S/SHRI RAVI SHANKAR, B.M. MONGA & ROHIT KAURA RESPONDENT BY : SMT. JYOTI KUMARI DATE OF HEARING : 31.12.2014 DATE OF PRONOUNCEMENT : 12-01-2015 ORDER PER T.R.SOOD, A.M. THESE APPEALS FILED BY THE ASSESSEE AND REVENUE ARE DIRECTED AGAINST THE SEPARATE ORDERS DATED 17.12.2012, 22.8.2014 & 29.5. 2013 RESPECTIVELY OF CIT(A) CHANDIGARH. 2 2. SINCE THE ISSUES INVOLVED ARE IDENTICAL AND ALL THE APPEALS WERE HEARD TOGETHER THEY ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF BREVITY. 3. FIRST WE SHALL TAKE UP APPEAL OF THE ASSESSEE IN ITA NO. 76/CHD/2013 FOR ASSESSMENT YEAR 2007-08. 4. IN THIS APPEAL VARIOUS GROUNDS HAVE BEEN RAISED BUT THE ONLY DISPUTE IS REGARDING CONFIRMATION OF LEVY OF PENALTY U/S 271(1 )(C) OF THE ACT. 5. THE BRIEF FACTS OF THE CASE ARE THAT THERE WERE SOME SLUMS AREA IN CITY OF CHANDIGARH AND WITH A VIEW TO DEVELOP SUCH SLUM ARE AS, CHANDIGARH ADMINISTRATION FLOATED A SCHEME IN WHICH ONE ROOM R ESIDENTIAL FLATS WAS TO BE ALLOTTED TO POOR / SOME SLUM DWELLERS ON A MONTHLY LICENSE FEE. IN ORDER TO RAISE FUNDS FOR THE SAID SCHEME IT WAS DECIDED TO DEVELOP RAJIV GANDHI CHANDIGARH TECHNOLOGY PARK (RGCTP) ON PUBLIC PRIVATE PARTNERSH IP BASIS AND TO GENERATE FUNDS THROUGH AUCTION OF PLOTS IN THIS PARK. TO F ACILITATE THE DEVELOPMENT OF RGCTP THE ASSESSEE PURCHASED CERTAIN LANDS FROM CHA NDIGARH ADMINISTRATION AND AFTER NECESSARY FORMALITIES, SOME OF THE PLOTS WERE AUCTIONED THOUGH PUBLIC AUCTION. IN THE BIDDING M/S PARSAVNATH DEVELOPERS LTD WORK WAS SOLD A PLOT AS A DEVELOPER OF THE RGCTP AND SOME FUNDS WERE RECEIV ED FROM THEM. THIS SALE WAS NOT OFFERED TO TAXATION BY CLAIMING THAT ASSESS EE WAS ONLY A NODAL AGENCY TO CHANDIGARH ADMINISTRATION AND THEREFORE, SUMS WE RE RECEIVED ON BEHALF OF THE CHANDIGARH ADMINISTRATION. HOWEVER, ASSESSING OFFICER DID NOT AGREE WITH THIS AND THESE FUNDS AMOUNTING TO RS. 8,00,89,75,16 8/- WERE TAXED AS INCOME OF THE ASSESSEE. THE ADDITION HAS BEEN CONFIRMED LATER ON BY LD. CIT(A) AS WELL AS TRIBUNAL. ON THIS ADDITION, PENALTY PROCEEDINGS U/ S 271(1)(C) WERE ALSO INITIATED. 3 6. LATER ON, PENALTY U/S 271(1)(C) WAS LEVIED WHICH HAS BEEN CONFIRMED BY CIT(A). 7. BOTH THE PARTIES WERE HEARD. 8. AFTER CONSIDERING THE RIVAL SUBMISSIONS CAREFULL Y WE FIND THAT WHEN ADDITION WAS CONFIRMED BY THE TRIBUNAL, THE ASSESSE E HAS APPROACHED THE HON'BLE PUNJAB & HARYANA HIGH COURT AND THE APPEAL WAS ADMITTED. THE HON'BLE HIGH COURT ASKED BOTH THE PARTIES TO REACH AT AMICABLE SETTLEMENT AND ON 21.2.2013 PASSED AN INTERIM ORDER, WHICH IS AS U NDER:- AT THE SAME TIME, WE ARE OF THE OPINION THAT THERE IS A POSSIBILITY OF AMICABLE SOLUTION OF THE DISPUTE HAVING REGARD T O ITS NATURE. IN THESE CIRCUMSTANCES, WE FEEL THAT THE SECRETARY, FINANCE MAY SUMMON BOTH THE PARTIES AND DISCUSS THE MATTER WITH THEM TO FIND OUT THE POSSIBLE SOLUTION, IF ANY. 9. THE ASSESSEE IN THE MEANTIME DEPOSITED A SUM OF RS. 278 CRORES WITH THE HON'BLE HIGH COURT. THEREAFTER, A MEETING WAS CAL LED ON 14.3.2013 WHICH WAS ATTENDED BY MEMBER (L&C) CBDT, CIT-I CHANDIGARH, CH AIRMAN CHB, CONTROLLER GENERAL OF ACCOUNTS, JOINT SECRETARY (BU DGET), DCIT(I)(I) CHANDIGARH, DIT (SYSTEMS) V, SPECIAL SECRETARY (F INANCE) CHANDIGARH, CF&AO , CHB, DIRECTOR (BUDGET); AND ULTIMATELY IT WAS OBSERVED AS UNDER:- AS AN AMICABLE VIEW, IT MAY BE APPROPRIATE THT PE NALTY IS NOT LEVIED ON CHANDIGARH HOUSING BOARD IN RESPECT OF TH E INCOME TAX DUES. A DECISION IN THIS REGARD CAN HOWEVER BE TAKE N ONLY BY THE COMPETENT INCOME TAX AUTHORITY OR IN ANY APPELLATE PROCEEDINGS. HONBLE HIGH COURT MAY CONSIDER PASSING APPROPRIAT E ORDERS IN THIS REGARD. 10. AGAINST THE INTERIM ORDER PASSED BY THE HON'BLE HIGH COURT OF PUNJAB & HARYANA, THE REVENUE FILED AN SLP BEFORE THE HON'BL E SUPREME COURT. THE 4 HON'BLE SUPREME COURT PASSED THE FOLLOWING ORDER IN SLP NO. IA NO.2 IN SLP(C) NO. 5346/13 IN CIT VS CHANDIGARH HOUSING BOA RD ORDER DATED 30.4.2014 THIS SPECIAL LEAVE PETITION IS FILED AGAINST AN IN TERIM ORDER DATED 07.05.2012 PASSED BY THE HIGH COURT IN ITA NO . 41/12. SINCE THE MATTER IS BETWEEN THE INCOME TAX DEPARTME NT AND THE CHANDIGARH HOUSING BOARD, WHICH IS A STATUTORY BOARD UNDER THE PROVISIONS OF CHANDIGARH ADMINISTRATIVE, THERE WAS SOME DISCUSSION OF AN AMICABLE SETTLEMENT OF TH E DISPUTE BETWEEN THE PARTIES. THE RECORD OF DISCUSSION HEL D ON 14.05.2013 IS PLACED ON RECORD IN I.A. NO. 2 OF 201 4. A PERUSAL THEREOF WOULD DEMONSTRATE THAT A SUM OF RS. 278 CRORES, WHICH WAS DEPOSITED BY THE CHANDIGARH HOUSI NG BOARD IN THE GOVERNMENT TREASURY, IS AGREED TO BE A DJUSTED IN INCOME TAX HEAD AND IT IS TREATED AS FINAL IN SO FAR AS LIABILITY OF INCOME TAX IS CONCERNED. HAVING REGARD TO THE SETTLEMENT REACHED BETWEEN THE PARTIES, IT IS CLEAR THAT THE DISPUTE REGARDING PAYMENT OF TAX BY THE CHANDIGARH HOUSING BOARD TO THE INCOME TAX DEPARTMENT STANDS RESOLVED. IT IS FURTHER AGREED THAT NO PENALTY PROCEEDING WOULD BE INITIATED AGAINST THE CHANDIGARH HOUSING BOARD. HOWEVER, IT I S ALSO STATED THAT THE DECISION IN THIS REGARD CAN FURTHER BE TAKEN ONLY BY THE COMPETENT INCOME TAX AUTHORITY. NEEDLESS TO MENTION THAT THE COMPETENT AUTHORITY SH ALL KEEP IN MIND THE SPIRIT OF THE AGREEMENT ARRIVED AT IN RECORD OF DISCUSSIONS. THE PARTIES SHALL ALSO APPROACH THE HIGH COURT FOR DISPOSAL OF THE PENDING ITA. 11. IN VIEW OF THE ABOVE OBSERVATION OF THE HON'BLE SUPREME COURT THE ASSESSEE FILED AN APPLICATION WITH CHIEF COMMISSIO NER OF INCOME TAX AND NWR CHANDIGARH REGARDING WAIVER OF PENALTY (COPY OF THE APPLICATION IS AVAILABLE AT PAGES 28 TO 31 OF THE PAPER BOOK). THE COMMISSIONE R IN ORDER U/S 273A DECLINED THE REQUEST BY MAINLY OBSERVING THAT NO SE TTLEMENT HAS BEEN REACHED 5 BETWEEN THE ASSESSEE AND DEPARTMENT. IN FACT, THE R ELEVANT PORTION OF THE ORDER IS AS UNDER:- A CAREFUL PERUSAL OF THE MINUTES OF THE MEETING / RECORD OF DISCUSSIONS AND THE ORDER OF HONBLE SUPREME COURT, BRINGS OUT THAT NO SETTLEMENT WAS EVER ARRIVED AT IN RESPECT OF WAIVER OF PENALTY SINCE, THE PENALTY PROCEEDINGS HAVE ALREADY NOT ONL Y BEEN INITIATED BUT INFACT PENALTY STANDS LEVIED / IMPOSED, ANY FUR THER DECISION CAN ONLY BE TAKEN IN THE APPELLATE PROCEEDINGS PENDING BEFORE THE ITAT AND THE CIT(A) RESPECTIVELY AND SUCH TECHNICAL PROP RIETY STANDS NOTED IN THE RECORD OF DISCUSSION. 12. AGAINST THE ABOVE ORDER THE ASSESSEE FILED A WRIT PETITION BEFORE THE HON'BLE JURISDICTIONAL HIGH COURT. 13. THE HON'BLE HIGH COURT ULTIMATELY PASSED THE FO LLOWING ORDER:- MR. G.C. SRIVASTAVA APPEARING FOR THE REVENUE STAT ES, ON INSTRUCTIONS, THAT A COMPROMISE EFFECTED BEFORE THE SECRETARY, FINANCE, UNION OF INDIA, WAS REDUCED INTO WRITING A ND IS TITLED AS RECORD OF DISCUSSION. MR. SRIVASTAVA FU RTHER STATES, ON INSTRUCTIONS, THAT OBSERVATION BY THE HONBLE SU PREME COURT IN ORDER DATED 30.04.2014 PASSED IN IA NO. 2 IN SPECIAL LEAVE TO APPEAL (CIVIL) NO. 5346 OF 2013 (COMMISSIO NER OF INCOME TAX, CHANDIGARH VS. CHANDIGARH HOUSING BOARD ) RECORDING THAT DISPUTE REGARDING PAYMENT OF TAX BY THE CHANDIGARH HOUSING BOARD STANDS RESOLVED, IS CORREC T. MR. SRIVASTAVA ALSO STATES THAT IT IS CORRECT THAT IT W AS AGREED BEFORE THE HONBLE SUPREME COURT THAT NO PENALTY PR OCEEDINGS WOULD BE INITIATED AGAINST THE CHANDIGARH HOUSING B OARD AND DECISION IN THIS REGARD WOULD BE TAKEN BY THE COMPE TENT AUTHORITY. MR. SRIVASTAVA FURTHER STATES THAT HE HA S INSTRUCTIONS TO MAKE A POSITIVE STATEMENT THAT THE REVENUE SHALL NOT OPPOSE THE ASSESSEES PRAYER FOR QUASHING OF PENALTY IN THE APPEAL PENDING BEFORE THE INCOME TAX APPELLA TE TRIBUNAL. 6 LIBERTY IS GRANTED TO COUNSEL FOR THE ASSESSEE TO FILE AN APPLICATION BEFORE THE TRIBUNAL FOR PREOPENING THE APPEAL. IN CASE, SUCH AN APPLICATION IS FILED, WE HOPE AND EXPECT TH AT THE APPELLATE AUTHORITY TAKES UP THE APPEAL FOR HEARING BEFORE TH E END OF THE YEAR. 14. THE READING OF THE ABOVE ORDER PARTICULARLY ALO NG WITH ORDER PASSED BY HON'BLE SUPREME COURT CLEARLY SHOWS THAT PARTIES HA S ULTIMATELY REACHED TO AN AMICABLE SETTLEMENT WITH REGARD TO THE TAXABILITY O F THE PROCEEDS RECEIVED ON AUCTION OF THE PLOTS. THE HON'BLE SUPREME COURT HAS CLEARLY OBSERVED THAT NO PENALTY PROCEEDINGS WOULD BE INITIATED. IN OUR OP INION IN VIEW OF THE AMICABLE SETTLEMENT REACHED AND THE ASSURANCE GIVEN BEFORE T HE HON'BLE SUPREME COURT AS WELL AS HIGH COURT, NO PENALTY COULD BE LEVIED. WE FEEL THAT THIS IS NOT A FIT CASE OF LEVY OF PENALTY AND ACCORDINGLY WE SET ASIDE THE ORDER OF LD. CIT(A) AND DELETE THE PENALTY. 15. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED . ITA NOS. 975 & 976/CHD/2014 : 16. IN BOTH THESE CASES THE FACTS ARE IDENTICAL TO THE FACTS OF ITA NO. 76/CHD/2013 FOR ASSESSMENT YEAR 2007-08 AND FOLLOWI NG THAT ORDER WE DELETE THE PENALTIES IN THESE TWO YEARS ALSO. 17. RESULTANTLY, BOTH THE APPEALS ARE ALLOWED. ITA NO. 965/CHD/2014 18. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS:- 1. THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY ON THE AMOUNT DULY CONFIRMED BY THE HONBLE ITAT IN ITA NO . 386 & 549/CHD/2012. 2. THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY U/S 271(1)(C) WITHOUT APPRECIATING THE FACTS OF THE CAS E AS THE CASE IS 7 SQUARELY COVERED BY THE JUDGMENT OF HONBLE DELHI H IGH COURT IN THE CASE OF CIT VS ZOOM COMMUNICATION (P) LTD. (201 0)327 ITR 510 WHEREIN THE HONBLE COURT UPHELD THE PENALTY LE VIED FOR WRONG CLAIM OF DEDUCTION. 19. THE LD. DR SUBMITTED THAT THIS ISSUE IS NOT REL ATED TO THE ISSUE OF TAXABILITY OF CERTAIN RECEIPTS OUT OF THE SALE PROC EEDS OF RGCTP AND THIS IS AN INDEPENDENT ISSUE IN WHICH PENALTY WAS LEVIED. 20. THE ASSESSEE HAS CLAIMED EXPENDITURE OF RS. 17, 41,935/- ON ACCOUNT OF CONSULTANCY CHARGES WHICH WAS PAID TO M/S FEEDBACK ADVERTISERS. ACCORDING TO ASSESSING OFFICER THE PERUSAL OF AGREEMENT ITSELF S HOWS THAT EXPENDITURE WAS INCURRED FOR IMPROVEMENT IN THE WORK AND PROCEDURES BEING DEPLOYED BY THE ASSESSEE AND, THEREFORE, THE ASSESSING OFFICER HAD TREATED THIS AS CAPITAL EXPENDITURE AND ALLOWED ONLY 25% DEPRECIATION. 21. ON THIS BACKGROUND PENALTY WAS LEVIED U/S 271(1 )(C) OF THE ACT. HOWEVER, ON APPEAL, PENALTY WAS DELETED BY LD. CIT( A) BY OBSERVING THAT ASSESSEE HAS NOT CONCEALED ANY PARTICULARS OF INC OME IN REPEAT OF THESE ITEMS. 22. BEFORE US LD. DR SUBMITTED THAT NATURE OF EXPEN DITURE CLEARLY SHOWS THAT THE SAME WAS FOR ENDURING BENEFIT AND, THEREFORE, I T WAS A CASE OF WRONG CLAIM OF EXPENDITURE AS REVENUE EXPENDITURE AND THEREFO RE, LEVY OF PENALTY WAS JUSTIFIED. 23. ON THE OTHER HAND LD. COUNSEL OF THE ASSESSEE S UBMITTED THAT ISSUE IS DEBATABLE. IN ANY CASE MERELY DISALLOWANCE OF EXPEN DITURE WOULD NOT INVITE PENAL ACTION. 24. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY AND WE AGREE WITH THE OBSERVATION OF LD. CIT(A) THAT ASSESSEE HAS MADE CO MPLETE DISCLOSURE IN RESPECT OF THIS ITEM. AT BEST, IT IS A CASE OF DISALLOWANCE OF A PARTICULAR ITEM OF EXPENDITURE BECAUSE SAME WAS IN THE NATURE OF CAPIT AL EXPENDITURE BUT THAT DOES 8 NOT MEAN THAT ASSESSEE HAS FURNISHED INACCURATE PAR TICULARS OR CONCEALED SOME PARTICULARS. IN OUR OPINION, THE LD. CIT(A) HAS CO RRECTLY DELETED THE PENALTY AND THEREFORE, WE CONFIRM HIS ORDER. 25. IN THE RESULT, APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12.01.2015. SD/- SD/- (BHAVNESH SAINI) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 12 JANUARY, 2015 RKK COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR