M/S SARDA ENERGY & MINERALS LTD( FORMERLY KNOWN AS, RAIPUR (CG) V. THE ASSISTANT COMMISSIONER OF IMCOME TAX CENTRAL CIRCLE-1 RAIPUR, RAIPUR (CG)

SA 7/BIL/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6515 (ITAT-RAIPUR)
• Duration Of Justice: 2 year(s) 11 day(s)
• Appeal Type: TDS Appeal
• Pronouncement Date: 08-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 27-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K SINGH
• Assessee Lawyers: N C BEGANI
• Keywords: Application of stay

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH , RAIPUR BEFORE : SHRI N.S.SAINI, ACCOUNTANT MEMBER AND SHRI PAV AN KUMAR GADALE, JUDICAL MEMBER STAY APPLICATION NO. 07 / RPR /20 1 7 (ARISING OUT OF ITANO.53/RPR/2017) ( ASSESSMENT YEAR : 2 0 06 - 2007 ) SARDA ENERGY & MINERALS LTD. (FORMERLY KNOWN AS CHHATTISGARH ELECTRICITY CO. LTD. MERGED WITH RAIPUR ALLOYS & STEEL LTD.), INDUSTRIAL GROWTH CENTRE, SILTARA, RAIPUR(CG) - 492001 V S ACIT, CIRCLE - 1,RAIPUR P AN NO. : A AA CR 6149 L (APPELLANT ) .. R PNEDSOPSE ASSESSEE BY : SHRI N.C.BEGANI, AR REVENUE BY : SHRI R.K.SINGH, CITDR DATE OF HEARING : 10 / 01 /201 8 DATE OF PRONOUNCEMENT 11 / 01 /201 8 / O R D E R PER SHRI N.S.SAINI , A M : THIS IS A STAY APPLICATION FILED BY THE ASSESSEE SEEKING STAY OF DEMAND OF RS. 1,33,00,000/ - . 2. THE AR OF THE ASSESSEE SUBMITTED IN THIS CASE THE ASSESSING OFFICER HAS LEVIED PENALTY U/S.271(1)(C) OF THE ACT ON THREE ADDITIONS MADE IN THE ASSESSMENT FRAMED U/S.143(3) OF THE I.T.ACT VIDE ORDER DATED 29.12.2008 . HE SUBMITTED THAT IN THAT ASSESSMENT THE AO DISALLOWED THE CLAIM FOR DEDUCTION U/S.80IA OF THE ACT OF RS.9,44,040/ - ON THE GROUND THAT ACCORDING TO THE PROVISIONS OF SECTION 80IA(4) OF THE ACT, IF AN UNDERTAKING STARTS TRANSMISSION OR DISTRIBUTION FOR PO WER BY LAYING THE NETWORK OF NEW TRANSMISSION OR DISTRIBUTION LINES , THEN SUCH UNDERTAKING WILL ALSO BE S.A NO. 07 / RPR /201 7 2 ELIGIBLE FOR DEDUCTION U/S.80IA(4) OF THE ACT. T HE PROVISO TO CLAUSE IV(B) MAKES IT FURTHER CLEAR THAT DEDUCTION SHALL BE ALLOWED ONLY IN RELATION TO TH E PROFITS DERIVED FROM LAYING OF SUCH NETWORK OF NEW LINES FOR TRANSMISSION OR DISTRIBUTION. IN THE CASE OF THE ASSESSEE THE CLAIM HAS BEEN MADE IN RESPECT OF SALE OF POWER AS WELL AS SALE OF FLY ASH BRICKS. THE SALE OF BRICK IS NOT IMMEDIATELY AND DIRECTL Y CONNECTED TO THE SALE OF POWER. IT IS ENTIRELY A DIFFERENT PRODUCT. 3. FURTHER THE AO OBSERVED THAT INTEREST EXPENSES DEBITED IN THE PROFIT AND LOSS ACCOUNT AMOUNTING TO RS.1,20,71,158/ - OUT OF TOTAL INTEREST OF RS.3,43,97,026/ - WAS DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE. THE AO DISALLOWED THE PROFIT OF POWER DIVISION OF RS.1,20,71,158/ - BY ALLOCATING THE INTEREST TO THE POWER DIVISION ON THE GROUND THAT THE COMPANY IS A SISTER CONCERN OF THE ASSESSEE AND THE FUND WAS AVAILABLE FOR SHORT PERI OD IN EARLIER YEAR AND IT WAS UTILIZED BY BOTH THE COMPANY. THEREFORE, THE INTEREST OF RS.3,07,72,026/ - IS ALLOCATED TO BOTH THE DIVISION ON THE BASIS OF THEIR TURNOVER OF THE UNITS . HENCE, DEDUCTION U/S.80IA OF THE ACT WAS CONSEQUENTLY DECREASED AND DISAL LOWED BY THE SAME AMOUNT . 4. FURTHER THE AO DISALLOWED DEDUCTION ON ACCOUNT OF FOREIGN TRAVEL EXPENSES OF RS. 64,358/ - ON THE GROUND THAT IT WAS INCURRED BY ONE OF THE DIRECTORS AND HIS SISTER. IN THIS WAY, IN THE ASSESSMENT MADE U/S.143(3) OF THE ACT ADDI TION CAME TO BE MADE TO THE INCOME OF THE ASSESSEE FOR RS.1,30, 79,556/ - S.A NO. 07 / RPR /201 7 3 5. THEREAFTER THE AO LEVIED PENALTY U/S.271(1)(C) OF THE ACT FOR CONCEALMENT OF INCOME OF RS. 1,30,79,556/ - AND LEVIED PENALTY OF RS.44,02,578/ - BEING 100% OF THE TAX SOUGHT TO BE EVAD ED BY THE ASSESSEE . 6. ON APPEAL BY THE ASSESSEE AGAINST THE SAID ORDER, THE CIT(A) ENHANCED THE PENALTY BY RS.95,97,422/ - AND, HENCE, THE TOTAL PENALTY LEVIED WORKED OUT TO RS.1,40,00,022/ - . 7. AGAINST THIS PENALTY, THE PRESENT STAY APPLICATION HAS BEEN F ILED FOR STAYING THE DEMAND OF PENALTY. IN THE STAY APPLICATION IT HAS BEEN STATED THAT THE ASSESSEE HAS PAID 15% OF THE AMOUNT WHICH WAS RS.7,00,000/ - AND THE BALANCE AMOUNT OF PENALTY OUTSTANDING AND PAYABLE IS RS.1,33,00,022/ - . 8. THE AR OF THE ASSESSEE SUBMITTED THAT THOUGH THE ADDITION WAS MADE TO THE INCOME OF THE ASSESSEE FOR RS.1,30,79,556/ - BUT AS THE INCOME LIABLE TO TAX UNDER NORMAL PROVISIONS OF THE ACT WAS COMPUTED AT NIL. THE AO DETERMINED THE INCOME OF THE ASSESSEE ON THE BASIS OF MAT OF RS.3 ,24,66,017/ - AND DETERMINED THE TAX PAYABLE AT RS.41,38,266/ - WHICH WAS THE VERY SAME AMOUNT SHOWN BY THE ASSESSEE IN THE RETURN OF INCOME. HE, THEREFORE, SUBMITTED THAT THE ISSUE WAS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. NALWA SONS INVESTMENT LTD., (2010) 327 ITR 543(DELHI), WHERE IT WAS HELD THAT WHEN COMPUTATION OF INCOME WAS MADE UNDER SECTION 115JB, AND THERE WAS LOSS UNDER THE NORMAL PROVISIONS, CONCEALMENT, IF ANY, DID NOT LEAD TO TAX EVA SION AT ALL AND, THEREFORE, PENALTY U/S.271(1)(C) S.A NO. 07 / RPR /201 7 4 OF THE ACT COULD NOT BE IMPOSED. HE ALSO PLACED RELIANCE ON THE CBDT CIRCULAR NO. 25/2015, DATED 31.12.2015 AND POINTED OUT THAT IN PARA 5 OF THE SAID CIRCULAR THE CBDT HAS STATED THAT IN VIEW OF THE DECISIO N OF HONBLE DELHI HIGH COURT IN THE CASE OF NALWA SONS INVESTMENTS LTD. (SUPRA) AND SUBSTITUTION OF EXPLANATION 4 OF SECTION 271 OF THE ACT WITH PROSPECTIVE EFFECT, IT IS NOW A SETTLED POSITION THAT PRIOR TO 01.04.2016, WHERE THE INCOME TAX PAYABLE ON THE TOTAL INCOME AS COMPUTED UNDER THE NORMAL PROVISIONS OF THE ACT IS LESS THAN THE TAX PAYABLE ON THE BOOK PROFITS U/S.115JB OF THE ACT, THEN PENALTY U/S.271(1)(C) OF THE ACT, IS NOT ATTRACTED WITH REFERENCE TO THE ADDITIONS/DISALLOWANCES MADE UNDER NORMAL PROVISIONS. HE SUBMITTED THAT THE ASSESSMENT YEAR UNDER CONSIDERATION OF THE ASSESSEE WAS A.Y.2006 - 2007 AND, THEREFORE, THE ASSESSEE IS NOT LIABLE TO PENALTY IN VIEW OF THE AFORESAID CBDT CIRCULAR. IT WAS, THEREFORE, PRAYED THAT THE BALANCE OF CONVENIENCE WAS IN FAVOUR OF THE ASSESSEE AND, HENCE, ABSOLUTE STAY OF DEMAND OF RS.1,33,00,022/ - SHOULD BE ALLOWED TO THE ASSESSEE. 9. THE DR CONCEDED TO THE SUBMISSIONS OF AR OF THE ASSESSEE AND ARGUED THAT THE OFFICERS OF THE INCOME TAX DEPARTMENT ARE BOUND BY THE CIRCULAR ISSUED BY THE CBDT . 10. THE BENCH THEN OPINED THAT IN THE ABOVE FACTS AND CIRCUMSTANCES, THE APPEAL OF THE ASSESSEE ITSELF SHOULD BE DECIDED BEING ITA NO.53/RPR/2017. 11. THE DR SUBMITTED THAT HE WANTS TO MAKE ARGUMENT IN THE APPEAL, AND THEREFOR E, HE SHOULD BE ALLOWED TIME FOR THE SAME. S.A NO. 07 / RPR /201 7 5 12. IN THE ABOVE BACKGROUND OF THE CASE, WE ARE CONVINCED THAT THE STAY OF DEMAND OF RS.1,33,00,022/ - SHOULD BE ALLOWED TO THE ASSESSEE. WE, THEREFORE, GRANT STAY OF DEMAND OF RS.1,33,00,022/ - TO THE ASSESSEE FOR A PERIOD OF 60 DAYS OR TILL THE DISPOSAL OF THE APPEAL, WHICHEVER IS EARLIER. THUS, THIS STAY APPLICATION OF THE ASSESSEE IS ALLOWED. 13. IN THE RESULT, STAY APPLICATION FILED BY THE ASS E SSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 11 / 0 1 /201 8 . SD/ - ( PAVAN KUMAR GADALE ) SD/ - (N. S. SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER RAIPUR ; DATED 11 /01/2018 . . / PKM , SENIOR PRIVATE SECRETARY / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) INCOME TAX APPELLATE TRIBUNAL, RAIPUR 1. / THE APPELLANT - 2. / THE RESPONDENT - 3. ( ) / THE CIT(A), 4. / CIT 5. , , RAIPUR / DR, ITAT, RAIPUR 6. / GUARD FILE. //TRUE COPY//