ACIT, New Delhi v. Sh. Surinder Lal Chopra,, New Delhi

ITA 2140/DEL/2009 | 2001-2002
Pronouncement Date: 18-02-2010 | Result: Allowed

Appeal Details

RSA Number 214020114 RSA 2009
Bench Delhi
Appeal Number ITA 2140/DEL/2009
Duration Of Justice 8 month(s) 29 day(s)
Appellant ACIT, New Delhi
Respondent Sh. Surinder Lal Chopra,, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 18-02-2010
Appeal Filed By Department
Order Result Allowed
Bench Allotted G
Tribunal Order Date 18-02-2010
Date Of Final Hearing 08-12-2009
Next Hearing Date 08-12-2009
Assessment Year 2001-2002
Appeal Filed On 20-05-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `G : NEW DELHI BEFORE SHRI DEEPAK R. SHAH ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN JUDICIAL MEMBER I.T.A. NO.2140/DEL/2009 ASSESSMENT YEAR : 2001-02 ASSTT. COMMISSIONER OF INCOME-TAX SHRI SURINDER LA L CHOPRA CIRCLE 23(1) NEW DELHI. VS. S -131 1 ST FLOOR PANCHSHEEL PARK NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VIVEK KUMAR SR. DR. RESPONDENT BY : SHRI V.K. SABHARWAL ADVOCATE O R D E R PER DEEPAK R. SHAH ACCOUNTANT MEMBER THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-XXIII NEW DEL HI DATED 17 TH MARCH 2009 FOR THE ASSESSMENT YEAR 2001-02 IN AN A PPEAL AGAINST ORDER LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE INC OME-TAX ACT 1961 (THE ACT). 2. THE ASSESSEE FILED RETURN OF INCOME INTER ALIA C LAIMING DEDUCTION UNDER SECTION 80-O. THE ASSESSEE CLAIMED DEDUCTION U/S 80-O NOT ONLY ON ACCOUNT OF CONSULTANCY FEE RECEIPTS BUT ALSO IN REG ARD TO INTEREST INCOME AND MISCELLANEOUS INCOME. BY INCLUDING SUCH RECEIPTS T HE ASSESSEE CLAIMED 2 DEDUCTION U/S 80-O TO THE TUNE OF RS.1 05 78 996/-. THE ASSESSING OFFICER HELD THAT THE INTEREST FROM BANK AND MISCELLANEOUS INCOME ARE NOT ELIGIBLE FOR DEDUCTION U/S 80-O FOR THE REASON THAT SUCH INC OME IS NOT RECEIVED IN CONVERTIBLE FOREIGN EXCHANGE IN INDIA AND IS ALSO N OT IN THE NATURE OF CONSIDERATION FOR USE OUTSIDE INDIA OF ANY PATENT INVENTION DESIGN OR REGISTERED TRADE MARK. ACCORDINGLY DEDUCTION UNDER SEC. 80-O WAS RESTRICTED TO RS.68 40 493/- ONLY IN RESPECT OF CONSULTANCY FE E RECEIPTS. THIS ORDER ATTAINED FINALITY AT INCOME-TAX APPELLATE TRIBUNAL ALSO. THE A.O. THEREAFTER LEVIED PENALTY IN RESPECT OF EXCESS CLAIM OF DEDUCT ION UNDER SEC. 80-O. IT WAS HELD THAT THE ASSESSEE DELIBERATELY CLAIMED WRO NG DEDUCTION TO REDUCE ITS TAX LIABILITY. 3. BEFORE THE LEARNED CIT(A) IT WAS STATED THAT IN RESPECT OF PREPARATION AND PROVIDING DESIGN AND ENGINEERING SERVICES THE A SSESSEE RECEIVED PAYMENT IN CONVERTIBLE FOREIGN EXCHANGE. THIS RECE IPT WAS HELD ELIGIBLE FOR DEDUCTION UNDER SECTION 80-O. HOWEVER THE DIFFERE NCE IS ONLY IN COMPUTATION OF DEDUCTION U/S 80-O. SUCH INTEREST I NCOME WAS PART OF BUSINESS INCOME AND HENCE THE ASSESSEE WAS UNDER BE LIEF THAT SAME IS ALSO QUALIFIED FOR DEDUCTION U/S 80-O. THE LEARNED CIT( A) HELD THAT THE ASSESSEE HAD FILED ALL THE DETAILS IN THE RETURN AS WELL AS DURING ASSESSMENT PROCEEDINGS. ONLY ON THE BASIS OF DETAILS FILED TH E ASSESSING OFFICER CAME TO 3 AN OPINION THAT THE ASSESSEE WAS NOT ENTITLED TO DE DUCTION TO THE EXTENT CLAIMED. THUS THERE IS ONLY REDUCTION OF DEDUCTION CLAIMED U/S 80-O. THE EXPLANATION IS NOT FANCIFUL OR MALA FIDE. THEREFOR E THE PENALTY IS NOT LEVIABLE. THE REVENUE IS IN FURTHER APPEAL BEFORE US. 4. THE LEARNED DR SHRI VIVEK KUMAR SUBMITTED THAT I T IS NOT A CASE OF SIMPLE REDUCTION IN THE CLAIM OF DEDUCTION UNDER SE C. 80-O. DEDUCTION U/S 80-O IS ALLOWABLE ONLY IN RESPECT OF INCOME ARISING BEING CONSIDERATION FOR THE USE OUTSIDE INDIA OF ANY PATENT INVENTION DES IGN OR REGISTERED TRADE MARK AND SUCH INCOME SHOULD ALSO BE RECEIVED IN CON VERTIBLE FOREIGN EXCHANGE IN INDIA. THEREFORE THE DEDUCTION IS ALL OWABLE ONLY WHEN BOTH THESE CONDITIONS ARE SATISFIED. IN THE PRESENT CAS E THE INCOME IS BY WAY OF INTEREST ON FDR WHICH CAN NEVER BE CONSIDERED TO BE CONSIDERATION FOR USE OUTSIDE INDIA OF ANY PATENT INVENTION DESIGN OR R EGISTERED TRADE MARK. THE FIXED DEPOSITS WERE PLACED IN INDIA AND HENCE SUCH INTEREST WAS ALSO RECEIVED IN INDIAN CURRENCY AND NOT IN CONVERTIBLE FOREIGN E XCHANGE. THUS THE CLAIM ITSELF WAS PATENTLY INCORRECT AND HENCE IT AMOUNT T O FURNISHING OF INACCURATE PARTICULARS OF INCOME SO AS TO LEVY PENALTY UNDER S ECTION 271(1)(C) OF THE ACT. RELIANCE WAS PLACED ON THE DECISION OF HONBL E DELHI HIGH COURT IN THE CASE OF CIT VS. GURBACHAN LAL 250 ITR 157. 4 THE LEARNED COUNSEL FOR THE ASSESSEE SHRI V.K. SAB HARWAL ON THE OTHER HAND REITERATED THE SUBMISSIONS MADE BEFORE THE CO MMISSIONER (APPEALS) AND HIS FINDING THEREON. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. SECTI ON 80-O PROVIDES AS UNDER:- 80-O. WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE BEING AN INDIAN COMPANY [OR A PERSON OTHER THAN A COMPANY WH O IS RESIDENT IN INDIA] INCLUDES [ANY INCOME RECEIVED BY THE ASSESSEE FROM THE GOVERNMENT OF A FOREIGN STATE OR FOREIGN ENTERPRISE IN CONSIDERATION FOR THE USE OUTSIDE INDIA OF ANY PATENT INVENTION DESIGN OR REGISTERED TRADE MARK] AND SUCH INCOME IS RECEIVED IN CONVERTIBLE FOREIGN EXCHANGE IN INDIA OR HAVING BEEN RECEIVED IN CONVERTIBLE FOREIGN EXCHANG E OUTSIDE INDIA OR HAVING BEEN CONVERTED INTO CONVERTIBLE FO REIGN EXCHANGE OUTSIDE INDIA IS BROUGHT INTO INDIA BY O R ON BEHALF OF THE ASSESSEE IN ACCORDANCE WITH ANY LAW FOR THE TIM E BEING IN FORCE FOR REGULATING PAYMENTS AND DEALINGS IN FOREI GN EXCHANGE THERE SHALL BE ALLOWED IN ACCORDANCE WITH AND SUBJ ECT TO THE PROVISIONS OF THIS SECTION. READING THE ABOVE IT IS CLEAR THAT THE DEDUCTION IS ALLOWABLE ONLY WHERE THE INCOME RECEIVED IS IN NATURE OF CONSIDERATION FOR T HE USE OUTSIDE INDIA OF ANY PATENT INVENTION DESIGN OR REGISTERED TRADE MARK AND SUCH INCOME IS ALSO RECEIVED IN CONVERTIBLE FOREIGN EXCHANGE IN INDIA. NONE OF THE CONDITION MAKING THE ASSESSEE ELIGIBLE FOR CLAIM OF DEDUCTION UNDER SEC. 80-O IS APPLICABLE. IN THE PRESENT CASE DEDUCTION U/S 80-O WAS CLAIMED IN RESPECT OF INTEREST INCOME EARNED ON FIXED DEPOSITS PLACED IN INDIA. THEREFORE SUCH INCOME IS NEITHER THE CONSIDERATION FOR USE OUTSIDE INDIA OF ANY PATENT 5 INVENTION DESIGN OR REGISTERED TRADE-MARK NOR SUC H INCOME IS RECEIVED IN CONVERTIBLE FOREIGN EXCHANGE IN INDIA. IT IS NOT A CASE OF BELIEF THAT SUCH INCOME IS ELIGIBLE FOR DEDUCTION U/S 80-O WITHOUT S HOWING THAT THE CONDITION OF SEC. 80-O IS BEING FULFILLED. WHEN THE CLAIM IS PATENTLY INCORRECT IT AMOUNTS TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. RECENTLY SIMILAR ISSUE AROSE BEFORE THE HONBLE DELHI HIGH COURT IN THE CASE OF ESCORTS FINANCE LTD. IN THE SAID CASE THE ASSESSEE BEING A FINANCE COMPANY CLAIMED DEDUCTION U/S 35-D IN RESPECT OF AMORTIZATION OF CE RTAIN EXPENSES PRIMARILY THOUGH THE ASSESSEE WAS NOT AN INDUSTRIAL UNDERTAKI NG BUT ONLY A FINANCE COMPANY. HONBLE DELHI HIGH COURT HELD THAT WHEN S UCH CLAIM IS PATENTLY INCORRECT HOWSOEVER THE BELIEF OF THE ASSESSEE MAY BE BONA FIDE OR MAY BE THAT THE ASSESSEE WAS GUIDED BY EXPERT OPINION WIL L STILL AMOUNT TO FURNISHING INACCURATE PARTICULARS OF INCOME SO AS T O ATTRACT PENALTY UNDER SEC.271(1)(C ) OF THE ACT. IT IS BY NOW SETTLED LA W BY HONBLE SUPREME COURT AFTER THE DECISION IN THE CASE OF UNION OF IN DIA & ORS. VS. DHARMENDRA TEXTILE PROCESSORS & ORS. 306 ITR 277 THAT THE RE VENUE IS NOT REQUIRED TO PROVE ANY MENS REA. SINCE THE CLAIM OF THE ASSESSE E FOR DEDUCTION U/S 80-O IN RESPECT OF SUCH INTEREST INCOME WAS PATENTLY INC ORRECT AND NOT FULFILLING ANY OF THE CONDITION PRESCRIBED THEREIN WE HOLD TH AT THE ASSESSEE FURNISHED INACCURATE PARTICULARS OF INCOME BY CLAIMING EXCESS DEDUCTION U/S 80-O AND 6 HENCE IS LIABLE TO PENALTY UNDER SEC. 271(1)(C ) OF THE ACT. WE THEREFORE SET ASIDE THE IMPUGNED ORDER AND RESTORE THAT OF THE AS SESSING OFFICER. 6. IN THE RESULT THE APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 18-02-2010. SD/- SD/- (GEORGE MATHAN) (DEEPAK R. SHAH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 18-02-2010. COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR ITAT.