DCIT CIR - 8(1), MUMBAI v. M/s. CASTROL INDIA LTD., MUMBAI

ITA 2276/MUM/2008 | 1998-1999
Pronouncement Date: 31-05-2010 | Result: Dismissed

Appeal Details

RSA Number 227619914 RSA 2008
Assessee PAN NUARY2008P
Bench Mumbai
Appeal Number ITA 2276/MUM/2008
Duration Of Justice 2 year(s) 1 month(s) 27 day(s)
Appellant DCIT CIR - 8(1), MUMBAI
Respondent M/s. CASTROL INDIA LTD., MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 31-05-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 31-05-2010
Date Of Final Hearing 20-05-2010
Next Hearing Date 20-05-2010
Assessment Year 1998-1999
Appeal Filed On 03-04-2008
Judgment Text
ITA NO S . 2067 AND 2276/MUM/08 ASSESSMENT YEAR 1998-99 PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI C BENCH MUMBAI BEFORE SHRI PRAMOD KUMAR (ACCOUNTANT MEMBER) AND SMT ASHA VIJAYRAGHAVAN ( JUDICIAL MEMBER) ITA NO. 2276/MUM/08 ASSESSMENT YEAR 1998-99 DY COMMISSIONER OF INCOME TAX RANGE 8 (1) MUMBAI .APPELLANT VS. CASTROL INDIA LIMITED . RESPONDENT TECHNOPOLIS KNOWLEDGE PARK MAHAKALI CAVES ROAD CHAKALA ANDHERI (EAST) MUMBAI 400 093 ITA NO. 2067/MUM/08 ASSESSMENT YEAR 1998-99 CASTROL INDIA LIMITED .APPELLANT TECHNOPOLIS KNOWLEDGE PARK MAHAKALI CAVES ROAD CHAKALA ANDHERI (EAST) MUMBAI 400 093 VS. DY COMMISSIONER OF INCOME TAX RANGE 8 (1) MUMBAI . RESPONDENT REVENUE BY : SHRI AJIT K SINHA ASSESSEE BY : SHRI APOORVA R SHAH O R D E R PER PRAMOD KUMAR: 1. THESE CROSS APPEALS ARE DIRECTED AGAINST THE OR DER DATED 25 TH JANUARY 2008 PASSED BY THE CIT(A) IN THE MATTER OF PENALTY LEVIED ON THE ASSESSEE ITA NO S . 2067 AND 2276/MUM/08 ASSESSMENT YEAR 1998-99 PAGE 2 OF 6 UNDER SECTION 271(1)( C ) OF THE INCOME TAX ACT 1 961 FOR THE ASSESSMENT YEAR 1998-99. 2. IN APPEAL FILED BY THE ASSESSING OFFICER GRIEVA NCE RAISED BY THE ASSESSING OFFICER IS THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW LEARNED CIT(A) ERRED IN CANCELLING THE AOS PENALTY UNDER SECTION 271(1)(C) IN RESPECT OF DISALLOWANCE OF ASS ESSES CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE INCOME TAX ACT WITHOUT APPRECIATING THE FACTS OF THE CASE 3. LEARNED REPRESENTATIVES AGREE THAT THE OUTCOME O F THIS APPEAL WILL DEPEND ON OUR DECISION ON ASSESSING OFFICERS APPEA L ON THE SAME ISSUE FOR THE ASSESSMENT YEAR 2001-02 WHICH WAS ALSO HEAR D ALONGWITH THIS APPEAL. THAT WAS THE ASSESSMENT YEAR IN WHICH CIT(A ) HAD PASSED THE SPEAKING ORDER WHEREAS IN THE PRESENT ASSESSMENT Y EAR HE HAS MERELY FOLLOWED HIS ORDER FOR THE ASSESSMENT YEAR 2001-02. VIDE OUR ORDER OF EVEN DATE WE HAVE DISMISSED THE SAID APPEAL AND OB SERVED AS FOLLOWS: 3. THE RELEVANT MATERIAL FACTS ARE LIKE THIS. THE ASSESSEE IS A COMPANY ENGAGED IN MANUFACTURING AND DISTRIBUTION O F LUBRICATING OILS GREASES BRAKE FLUIDS SPECIALTY PRODUCTS AND WOOD PRESERVATIVES ETC. THE ASSESSEE HAD CLAIMED DEDUCTION ON ACCOUNT OF INTER ALIA EXPENDITURE OF RS 1 85 368 ON FOREIGN TRAVEL OF ACC OMPANYING SPOUSES OF DIRECTORS AND DEDUCTION OF RS 2 31 94 988 UNDER SECTION 80 IA AND SECTION 80 HHC OF THE ACT WHICH WAS FOUND TO BE IN ADMISSIBLE. AS REGARDS SPOUSE TRAVEL EXPENSES IT HAS BEEN CONTENT ION OF THE ASSESSEE THAT THE CLAIM HAS BEEN MADE IN A TRANSPARENT MANNE R AND IT IS ESSENTIALLY A MATTER OF OPEINION WHETHER SUCH EXPEN SES ARE DEDUCTIBLE BUSINESS EXPENDITURE OR NOT. AS REGARDS EXCESSIVE C LAIM OF DEDUCTION UNDER SECTION 80 IA IT WAS MAINLY ON ACCOUNT OF TH E FACT THAT THE ITA NO S . 2067 AND 2276/MUM/08 ASSESSMENT YEAR 1998-99 PAGE 3 OF 6 ASSESSEE DID NOT CLAIM DEPRECIATION - A FACT WHICH WAS DISCLOSED IN THE INCOME TAX RETURN ITSELF AND THAT THE CLAIM UNDER SECTION 80 IB WAS ALSO MADE IN RESPECT OF NON MANUFACTURING RECEIPTS - WHICH WAS ALSO DULY DISCLOSED IN THE AUDIT REPORT ACCOMPANYING THE INCOME TAX RETURN. AS REGARDS EXCESSIVE DEDUCTION UNDER SECTION 80 HHC IT WAS NOTED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS ARRIVED AT THE PROFIT OF THE BUSINESS WITHOUT EXCLUDING THE DEDUCTION UNDER SECT ION 80 IA AND NON BUSINESS RECEIPTS FROM THE PROFITS. THE ASSESSING O FFICER APART FROM MAKING ADDITIONS IN RESPECT OF THE ABOVE ALSO IMPO SED PENALTY UNDER SECTION 271(1)(C) FOR CONCEALMENT OF INCOME. HOWEVE R WHEN MATTER WAS CARRIED IN APPEAL BEFORE THE CIT(A) THE CIT(A) WAS OF THE VIEW THAT IT WOULD NOT BE CORRECT TO PRESUME THAT THE A PPELLANT HAD FILED INACCURATE PARTICULARS OF INCOME AND BY DOING SO MA DE AN ATTEMPT TO CLAIM THE EXCESS DEDUCTION WHICH WAS EXPRESSLY NOT AVAILABLE TO THE ASSESSEE UNDER THE INCOME TAX ACT AND THAT IT IS A COMMON KNOWLEDGE THAT EACH AND EVERY ASPECT OF SECTION 80 HHC AND 80 IA HAVE UNDERGONE JUDICIAL INTERPRETATION RIGHT FROM T HE HONBLE ITAT TO THE HIGHEST COURT OF THE LAND. THE CIT(A) WAS OF T HE VIEW THAT IN SUCH CIRCUMSTANCES IT IS INDEED IMPOSSIBLE TO CONCLUDE THAT THE APPELLANT HAD FILED INACCURATE PARTICULARS. HE CONCLUDED THAT THE EXPLANATION OFFERED BY THE APPELLANT REARDING THE VARIOUS PARTI CULARS FILED FOR CLAIMING DEDUCTION UNDER SECTION 80 HHC AND UNDER S ECTION 80 IA APPEARS TO BE BONAFIDES AND UNDER THESE CIRCUMSTAN CES IT IS HELD THAT AO WAS NOT JUSTIFIED IN HOLDING THAT THE ASSESSEE H AD CONCEALED ITS INCOME BY FILING INACCURATE PARTICULARS. THE ASS ESSING OFFICER IS AGGRIEVED OF THE RELIEF SO GIVEN BY THE CIT(A) AND IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS PERUSED TH E MATERIAL ON RECORD AND DULY CONSIDERED FACTUAL MATRIX OF THE CA SE AS ALSO THE APPLICABLE LEGAL POSITION. 5. WE FIND THAT IT IS AN UNDISPUTED POSITION THAT THE ASSESSEE HAS MADE THE CLAIM INADMISSIBLE AS THEY MAY BE IN A TRANSPARENT MANNER AND WITHOUT CONCEALING THE DETAILS. IN OUR C ONSIDERED VIEW MERE MAKING OF A CLAIM OF DEDUCTION INCORRECT AS I T MAY TURN OUT TO BE CANNOT BE CONSTRUED AS CONCEALMENT OF PARTICULARS. WHAT IS A CORRECT CLAIM AND WHAT IS AN INCORRECT CLAIM IS A MATTER OF PERCEPTION. IN OUR CONSIDERED VIEW RAISING A LEGAL CLAIM EVEN IF IT IS ULTIMATELY FOUND TO BE LEGALLY UNACCEPTABLE CANNOT AMOUNT OF FURNISHIN G OF INACCURATE PARTICULARS OF INCOME. INACCURATE AS WE HAVE NOT ED ABOVE IS SOMETHING FACTUALLY INCORRECT AND INTERPRETATION OF LAW CAN NEVER BE A FACTUAL ASPECT. IN ANY EVENT THE CONNOTATIONS OF E XPRESSION PARTICULARS OF INCOME DO NOT EXTEND TO THE ISSUES OF INTERPRETATION OF LAW AND AS SUCH MAKING A CLAIM WHICH IS FOUND TO B E UNACCEPTABLE IN LAW CANNOT BE TREATED AS FURNISHING OF INACCURATE PARTICULARS OF ITA NO S . 2067 AND 2276/MUM/08 ASSESSMENT YEAR 1998-99 PAGE 4 OF 6 INCOME. MERE MAKING OF AN INCORRECT CLAIM AS IS TH E SETTLED LEGAL POSITION IN VIEW OF HONBLE SUPREME COURTS JUDGMENT IN THE CASE OF CIT VS RELIANCE PETROPRODUCTS LIMITED (322 ITR 158) CAN NOT BE VISITED WITH PENAL CONSEQUENCES UNDER SECTION 271(1)(C) OF THE A CT. IN THIS CASE HONBLE SUPREME COURT WERE DEALING WITH A SITUATIO N IN WHICH A CLAIM FOR DEDUCTION WAS MADE WHICH WAS FOUND TO BE INADMI SSIBLE IN LAW. THIR LORDSHIPS WERE CONCERNED WITH THE QUESTION WHETHER IN THIS CASE AS A MATTER OF FACT THE ASSESSEE HAS GIVEN INACCURATE P ARTICULARS. THEIR LORDSHIPS NOTED THAT IN THIS CASE THERE IS NO FIN DING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN WERE FOUND T O BE INCORRECT OR ERRONEOUS OR FALSE AND ADD THAT SUCH BEING THE CA SE THERE WOULD BE NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271( 1)(C) OF THE ACT AND THAT A MERE MAKING OF THE CLAIM WHICH IS NOT SUST AINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO FURNISHING INACCURATE PA RTICULARS REGARDING INCOME OF THE ASSESSEE. IN OUR CONSIDERED VIEW I T IS THE SAME SITUATION IN THE PRESENT CASE. IT IS NOBODYS ALLEGATION THAT TH ERE HAS BEEN ANY CONCEALMENT OF PARTICULARS OR THAT THE CLAIMS ARE M ADE IN LESS THAN TRANSPARENT MANNER. 6. IN VIEW OF THE ABOVE DISCUSSIONS AND RESPECTFUL LY FOLLOWING THE ESTEEMED VIEWS OF HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS (SUPRA) WE APPROVE THE CONCLUSIONS A RRIVED AT BY THE CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. 4. WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW SO TAKEN BY US IN ASSESSEES OWN CASE FOR ANOTHER A SSESSMENT YEAR. RESPECTFULLY FOLLOWING THE SAME WE REJECT THE GRIE VANCE OF THE ASSESSING OFFICER AND CONFIRM THE ORDER OF THE CIT(A). NO INT ERFERENCE IS THUS CALLED FOR. 5. IN THE RESULT THE APPEAL FILED BY THE ASSESSING OFFICER IS DISMISSED. 6. AS REGARDS THE APPEAL FILED BY THE ASSESSEE THE SAME IS DIRECTED AGAINST CIT(A)S CONFIRMING THE DISALLOWANCE OF DEP RECIATION ON RESIDENTIAL FLAT AMOUNTING TO RS 20 44 508. LEAR NED REPRESENTATIVES ITA NO S . 2067 AND 2276/MUM/08 ASSESSMENT YEAR 1998-99 PAGE 5 OF 6 FAIRLY AGREE THAT NOW THAT A COORDINATE BENCH OF TH IS TRIBUNAL HAS REMITTED THE MATTER TO THE FILE REGARDING THIS DISA LLOWANCE TO THE FILE OF THE ASSESSING OFFICER THE IMPUGNED PENALTY WILL NOT SU RVIVE. WE ACCORDINGLY CANCEL THE SAME. THE ASSESSING OFFICER HOWEVER WI LL BE AT LIBERTY TO INITIATE THE PENALTY PROCEEDINGS AFRESH IF SO DEEM ED PROPER AFTER DECIDING THE QUANTUM DISALLOWANCE IN REMANDED PROCEEDINGS. 7. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. TO SUM UP WHILE THE APPEAL FILED BY THE ASSESSING OFFICER IS DISMISSED THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT TODAY ON 31 ST DAY OF MAY 2010 SD/XX SD/XX (ASHA VIJAYRAGHAVAN) (PRAMOD KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; 31 ST DAY OF MAY 2010. COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT MUMBAI 4. THE COMMISSIONER (APPEALS) MUMBAI 5. DEPARTMENTAL REPRESENTATIVE - BENCH MUMB AI 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL ITA NO S . 2067 AND 2276/MUM/08 ASSESSMENT YEAR 1998-99 PAGE 6 OF 6 MUMBAI BENCHES MUMBAI DATE INITIAL 1. DRAFT DICTATED ON 28.5.2010 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 28.5.2010 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 28.5.2010 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 28.5.2010 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 28.5.2010 SR.PS/PS 6. DATE OF PRONOUNCEMENT 31.5.2010 SR.PS 7. FILE SENT TO THE BENCH CLERK 31.5.2010 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER