Bosch Rexroth (India) Ltd., Ahmedabad v. The ACIT.,Range-1,, Ahmedabad

ITA 1926/AHD/2009 | 2002-2003
Pronouncement Date: 28-01-2011 | Result: Allowed

Appeal Details

RSA Number 192620514 RSA 2009
Assessee PAN AAACM9898F
Bench Ahmedabad
Appeal Number ITA 1926/AHD/2009
Duration Of Justice 1 year(s) 7 month(s) 16 day(s)
Appellant Bosch Rexroth (India) Ltd., Ahmedabad
Respondent The ACIT.,Range-1,, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 28-01-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 28-01-2011
Date Of Final Hearing 24-01-2011
Next Hearing Date 24-01-2011
Assessment Year 2002-2003
Appeal Filed On 11-06-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL : B BENCH : AHMEDABAD (BEFORE HONBLE SHRI G.D. AGRAWAL V.P.(AZ) & HON'BLE SHRI T.K. SHARMA J.M. ) I.T.A. NO. 1926/AHD./2009 ASSESSMENT YEAR : 2002-2003 BOSCH REXROTH (INDIA) LIMITED VS.- ASSISTA NT COMMISSIONER OF INCOME TAX (OSD) AHMEDABAD (PAN : AAACM 9898 F) RANGE-1 AHMEDA BAD (APPELLANT) (RESPONDENT) APPELLANT BY : MS. APURNA PARELKAR A.R. RESPONDENT BY : SHRI K. MADHUSUDAN SR. D.R. O R D E R PER SHRI T.K. SHARMA JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE O RDER DATED 24.02.2009 OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-VI AHMEDABAD CONFIRMING THE PENALTY OF RS.7 09 336/- LEVIED BY THE ASSESSING OFFICER UNDER SECTION 271(1 )(C) OF THE INCOME TAX ACT 1961 FOR THE ASSESSMENT YEAR 2002-03. 2. BRIEFLY STATED THE FACTS ARE THAT FOR THE ASSESS MENT YEAR UNDER APPEAL THE ASSESSEE- COMPANY FILED ITS RETURN OF INCOME SHOWING TOTAL IN COME OF RS.7 62 91 422/- UNDER NORMAL PROVISIONS OF THE ACT. THE ASSESSING OFFICER FRAMED THE ASSESSMENT UNDER SECTION 143(3) ON 31.01.2005 AT TOTAL INCOME OF RS.7 83 24 638/- AND ALSO INITIATED THE PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT IN RESPECT OF FOLLOWIN G TWO ADDITIONS MADE :- (I) ADDITION OF RS.7 31 437/- UNDER SECTION 80HHC THE ASSESSING OFFICER RECOMPUTED THE DEDUCTION UNDER SECTION 80HHC BECAUS E ACCORDING TO HIM SALES TAX AND EXCISE DUTY OUGHT TO HAVE BEEN INCLUD ED IN THE TOTAL TURNOVER. (II) ADDITION OF RS.12 55 500/- UNDER SECTION 92CA( 3)- ACCORDING TO FORM NO. 3CEB EVIDENCING THE TRANSACTIONS CARRIED OUT BY IT WITH ITS ASSOCIATED CONCERNS THE ASSESSING OFFICER REFERRED THE MATTER TO THE TRANSFER PRICING OFFICER (TPO) WHO CARRIED OUT TRANSFER PRICING ASSE SSMENT. THE TPO RECOMPUTED THE ARMS LENGTH PRICE IN RESPECT OF THE SAID TRANSACTION BY 2 ITA NO. 1926-AHD-2009 REJECTING THE ADJUSTMENT MADE BY THE ASSESSEE ON AC COUNT OF CREDIT PERIOD AND 5% ADJUSTMENT AS PER PROVISO TO SECTION 92C(2) OF THE INCOME TAX ACT 1961. SUBSEQUENTLY IN RESPECT OF THE AFORESAID TWO ADDITI ONS VIDE ORDER DATED 28.03.2008 THE ASSESSING OFFICER LEVIED THE PENALTY UNDER SECTION 271(1)(C) AMOUNTING TO RS.7 09 336/- @ 100% OF TAX SOUGHT TO BE EVADED IN RESPECT OF INCOM E TO THE EXTENT OF RS.19 86 937/- BECAUSE ACCORDING TO ASSESSING OFFICER THE ASSESSEE HAS FU RNISHED INACCURATE PARTICULARS OF INCOME IN RESPECT OF BOTH THE AFORESAID ADDITIONS I.E. RS.7 31 437/- AND RS.12 55 500/-. 3. ON APPEAL IN THE IMPUGNED ORDER THE LEARNED COM MISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE PENALTY LEVIED BY THE ASSESSING OFFIC ER IN RESPECT OF THE AFORESAID BOTH THE ADDITIONS. AGGRIEVED WITH THE ORDER OF LEARNED COMM ISSIONER OF INCOME TAX (APPEALS) THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL ON THE FO LLOWING GROUNDS :- 1. THE ORDER PASSED BY THE LEARNED COMMISSIONER O INCOME TAX (APPEALS) IS ERRONEOUS AND CONTRARY TO THE PROVISIONS OF LAW AND FADS AND THEREFORE REQUIRES TO BE SUITABLY MODIFIED. IT IS SUBMITTED THAT IT BE SO DO NE NOW. 2. LEARNED C1T(A) OUGHT LO HAVE QUASHED THE ORDER O F LEARNED ASSESSING OFFICER AS THE SAME WAS PASSED WITHOUT AFFORDING REASONABLE OPPORT UNITY TO THE APPELLANT AND HENCE IS BAD IN LAW. IT IS SUBMITTED THAT IT BE SO HELD NOW. 3. LEARNED CIT(A) GROSSLY ERRED IN UPHOLDING THE OR DER OF ASSESSING OFFICER INVOKING PROVISION OF SECTION 271 (L)(C) OF THE I.T. ACT AND IN LEVYING PENALTY OF RS.7 09 336/-U/S. 271(L)(C). IN THE FACTS AND CIRCUMSTANCES OF THE CA SE IT IS SUBMITTED THAT THE APPELLANT HAS NOT COMMITTED ANY DEFAULT AS ENVISAGED U/S. 271(L)( C) OF THE ACT. IT IS SUBMITTED THAT IT BE SO HELD NOW AND PENALTY LEVIED BE CANCELLED. 4. LEARNED CIT(A) ERRED IN UPHOLDING THE LEVY OF PE NALTY AS APPELLANT HAD NOT FILED ANY INACCURATE PARTICULARS OF ITS INCOME WHILE FILING I TS RETURN OF INCOME. IT IS SUBMITTED THAT THE PENALTY HAS BEEN LEVIED IN RESPECT OF THE ADDIT ION SUSTAINED BY THE CTT(A) IN RESPECT OF DISALLOWANCES WHICH ARE OF HIGHLY DEBATABLE NATU RE AND ON WHICH PENALTY CANNOT BE LEVIED. IT IS SUBMITTED THAT IT TO BE SO HELD NOW A ND PENALTY LEVIED BE CANCELLED. 5. LEARNED CIT(A) HAS ERRED IN HOLDING THAT THERE W AS CONSCIOUS CONCEALMENT OR AN ACT OF FURNISHING OF INACCURATE PARTICULARS ON PART OF THE APPELLANT. IT IS SUBMITTED IT BE SO HELD NOW. 5.1 BASED ON VARIED DECISIONS OF VARIOUS HIG H COURTS ON THE INTERPRETATIONAL AND TECHNICAL ISSUES LEARNED CIT(A) HAS ERRED IN HOLDI NG THAT THE APPELLANT HAD DISCLOSED IN ITS RETURN OF INCOME INCORRECT OR FALSE IN FORMATIO N. IT IS SUBMITTED IT BE SO HELD NOW. 3 ITA NO. 1926-AHD-2009 5.2 LEARNED CIT(A) ERRED IN NOT APPRECIATIN G THAT THE CLAIMS MADE WERE GENUINE AND BONAFIDE PUT UP BY THE APPELLANT AS PER PROVISI ONS OF LAW CBDT CIRCULAR AND/OR DECISION OF JUDICIAL AUTHORITIES. IT IS SUBMITTED T HAT WITHOUT GIVING A FINDING AS TO HOW ME CLAIMS OF THE APPELLANT WERE NOT BONAFIDE AND REMAI N UNSUBSTANTIATED THE PENALTY HAS BEEN CONFIRMED WHICH IS BAD M LAW. IT IS SUBMITTED THAT IT BE SO HELD NOW. 6. THE LEARNED CIT(A) ERRED IN NOT CONSIDERING THE PROOF FILED IN RESPECT OF THE TRANSFER PRICING REGARDING 90 DAYS' CREDIT PERIOD AWARDED B Y THE ASSOCIATED ENTERPRISE NOR THE HON'BLE SUPREME COURT DECISION FOR DEDUCTION U/S 80 HHC OF THE ACT WHILE UPHOLDING THE PENALTY LEVIED. IN THE FACTS & CIRCUMSTANCES OF THE CASE IT IS SUBMITTED HAD THE SAME BEEN CONSIDERED THEN PENALTY WOULD NOT HAVE BEEN SU STAINED. IT IS SUBMITTED IT BE SO HELD NOW. 7. THE LEARNED CIT(A) FAILED TO APPRECIATE MAT MERE ADDITION OR CONFIRMATION OF ADDITION WOULD NOT ATTRACT PENALTY UNDER SECTION 27L(L)(C) O F THE ACT. IT IS SUBMITTED THAT IT BE SO HELD NOW. 4. AT THE TIME OF HEARING BEFORE US ON BEHALF OF A SSESSEE MS. APURNA PARELKAR LD. COUNSEL APPEARED AND SHE FAIRLY CONCEDED THAT BOTH THE AFOR ESAID ADDITIONS WERE CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IN QUA NTUM APPEAL. HOWEVER ON ASSESSEES APPEAL ITAT B BENCH AHMEDABAD VIDE ITS ORDER D ATED 09.04.2010 IN ITA NO. 1446/AHD/2006 FOLLOWING THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS.- LAKSHMI MACHINE WORKS REPORTED IN 290 ITR 667 (SC) HELD THAT EXCISE DUTY AND SALES TAX ARE NOT INCLUDIBLE IN TOTAL TURNOVER IN THE FORMULA C ONTAINED IN SECTION 80HHC(3). TRIBUNAL ACCORDINGLY DIRECTED THE ASSESSING OFFICER TO EXCLU DE THE SALES TAX AND EXCISE DUTY FROM THE TOTAL TURNOVER. APART FROM THIS THE TRIBUNAL IN THIS ORD ER FOLLOWING THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS.- SHIRKE CONST RUCTION EQUIPMENTS LTD. REPORTED IN 291 ITR 380 (SC) HELD THAT SECTION 80HHC IS GOVERNED BY SECTION 80AB AND UNABSORBED LOSSES OF EARLIER YEARS UNDER SECTION 72 HAVE TO BE SET OFF I N COMPUTING ELIGIBLE PROFIT FOR THE PURPOSE OF SECTION 80HHC. THIS ISSUE IS ACCORDINGLY DECIDED AG AINST THE ASSESSEE FOLLOWING THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF LAKSHMI MA CHINE WORKS (SUPRA). 4.1. IN RESPECT OF AFORESAID TWO ADJUSTMENTS THE L D. COUNSEL OF THE ASSESSEE PLEADED THAT PENALTY UNDER SECTION 271(1)(C) IS NOT LEVIABLE AS PER THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS PVT. LTD. RE PORTED IN 322 ITR 158 (SC). 4 ITA NO. 1926-AHD-2009 4.2. WITH REGARD TO THE ADDITION OF RS.12 55 500/- ALSO MADE BY THE ASSESSING OFFICER UNDER SECTION 92CA(3) THE LD. COUNSEL OF THE ASSESSEE PO INTED OUT THAT THE ASSESSEE HAS FILED THE FORM NO. 3CEB EVIDENCING THE TRANSACTIONS CARRIED OUT BY IT WITH ITS ASSOCIATED ENTERPRISES. WHILE SO COMPLETING THE ASSESSMENT THE TPO DISPUTED THE ARM SS LENGTH PRICE (ALP) IN RESPECT OF IMPORT OF TRADING GOODS. THE TPO ACCORDINGLY RECOMP UTED THE ARMS LENGTH PRICE IN RESPECT OF THE SAID TRANSACTION BY REJECTING THE ADJUSTMENT MA DE BY THE ASSESSEE ON ACCOUNT OF CREDIT PERIOD AND 5% ADJUSTMENT AS PER PROVISO TO SECTION 92C(2). THE TPO ACCORDINGLY DETERMINED THE ARMS LENGTH PRICE AT RS.2 27 04 423/- AS AGAINST RS.2 39 59 924/-. THIS RESULTED IN ADDITION OF RS.12 55 500/-. IN RESPECT OF THIS ADDITION ALSO S HE POINTED OUT THAT ITAT B BENCH AHMEDABAD IN ITA NO. 1446/AHD/2006 VIDE ITS ORDER D ATED 09.04.2010 IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2002-03 RESTORED THIS MATTE R TO THE FILE OF ASSESSING OFFICER FOR THE REASONS GIVEN IN PARA 17 WHICH READS AS UNDER :- 17. WE FIND THAT THE CERTIFICATE DATED 1.12.2008 N OW FILED BY THE ASSESSEE WAS NOT AVAILABLE BEFORE THE LOWER AUTHORI TIES AND THEREFORE COULD NOT BE TAKEN INTO CONSIDERATION BY THEM FOR D ETERMINING THE ARMS LENGTH PRICE (ALP). IN THE CIRCUMSTANCES IN OUR CO NSIDERED OPINION IT SHALL BE IN THE INTEREST OF THE JUSTICE TO REMIT TH E ISSUE BACK TO THE FILE OF THE LEARNED ASSESSING OFFICER AS THE CERTIFICATE NOW FI LED GOES TO THE ROOT OF THE MATTER AND REQUIRES VERIFICATION BY THE LEARNED ASS ESSING OFFICER BEFORE ACCEPTING THE SAME. WE THEREFORE SET ASIDE THE OR DERS OF THE LOWER AUTHORITIES AND DIRECT THE LEARNED ASSESSING OFFICE R TO VERIFY THE CERTIFICATE AND THEREAFTER RE-DECIDE THE ISSUE AFRESH AS PER LA W AFTER ALLOWING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. THUS THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL P URPOSES. 4.3. THE LD. COUNSEL OF THE ASSESSEE POINTED OUT TH AT PENALTY UNDER SECTION 271(1)(C) IS NOT LEVIABLE BECAUSE THE ADDITION OF RS.12 55 500/- MAD E UNDER SECTION 92CA(3) IS NO MORE SURVIVING. EVEN OTHERWISE THIS ADDITION WAS MADE O N ACCOUNT OF DIFFERENCE OF OPINION FOR WHICH NO PENALTY UNDER SECTION 271(1)(C) IS LEVIABLE BECA USE THE ASSESSEE HAS DISCLOSED ALL THE PRIMARY FACTS IN THE RETURN OF INCOME INCLUDING THE AUDIT R EPORT IN THE PRESCRIBED FORM NO. 3CEB AS REQUIRED UNDER THE INCOME TAX ACT. FOR THIS ALSO T HE LD. COUNSEL RELIED ON THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF HON'BLE SUPREM E COURT IN THE CASE OF RELIANCE PETRO PRODUCTS PVT. LTD. (SUPRA) AND POINTED OUT THAT WHI LE CANCELLING THE PENALTY THE HON'BLE SUPREME COURT HELD THAT MAKING INCORRECT CLAIM DOES NOT AMO UNT TO CONCEALMENT OF PARTICULARS OF INCOME. 5 ITA NO. 1926-AHD-2009 5. ON THE OTHER HAND SHRI K. MADHUSUDAN LD. SR. D .R. APPEARING ON BEHALF OF THE REVENUE COULD NOT CONTROVERT THE AFORESAID SUBMISSIONS MADE BY THE LD. COUNSEL OF THE ASSESSEE. 6. HAVING HEARD BOTH THE SIDES WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT IN THE IMPUGNED ORDER WHEN LEARNED COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE PENALTY OF RS.12 55 500 /- LEVIED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) THE APPEAL OF THE ASSESSEE (IN Q UANTUM APPEAL) WAS PENDING BEFORE THE TRIBUNAL. AFTER CONSIDERING THE DECISION OF THE TRI BUNAL IN QUANTUM APPEAL AND THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF RELIANCE P ETRO PRODUCTS PVT. LTD. [322 ITR 158 (SC)] WE ARE OF THE VIEW THAT THIS IS NOT A FIT CASE TO L EVY THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE HON'BLE SUPREME COURT IN THE CASE OF RELIANCE P ETRO PRODUCTS PVT. LTD. HELD AS UNDER :- A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME TAX ACT 1961 SUGGESTS THAT IN ORDER TO BE COVERED BY IT THERE H AS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION 271(1)(C) WOULD EMBRA CE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS F OUND TO BE INCORRECT OR INACCURATE THE ASSESSEE CANNOT BE HELD GUILTY OF F URNISHING INACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASSESSEE TO PEN ALTY UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION THE PENALTY PROVISION CAN NOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUN T TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHIN G WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE BECAUSE THAT IS THE ONLY DOC UMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PA RTICULARS ARE FOUND TO BE INACCURATE THE LIABILITY WOULD ARISE. TO ATTRACT P ENALTY THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE NOT EXACT OR CORRECT NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE I S NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C). A MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO F URNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. 7. IN OUR CONSIDERED OPINION THE AFORESAID JUDGMEN T OF THE HON'BLE SUPREME COURT IS SQUARELY APPLICABLE TO THE FACTS OF ASSESSEES CASE . WHATEVER DEDUCTION EXEMPT HAS BEEN CLAIMED BY THE ASSESSEE IN THE RETURN OF INCOME THESE WERE BASED ON THE DIVERSION VIEW OF THE VARIOUS COURTS AT THE RELEVANT TIME WITH REGARD TO COMPUTAT ION OF DEDUCTION UNDER SECTION 80HHC. FOR TRANSACTIONS CARRIED OUT BY THE ASSESSEE WITH THE A SSOCIATE CONCERNS ALSO THE ASSESSEE HAS FURNISHED FORM NO. 3CEB EVIDENCING THE DETAILS OF T RANSACTIONS. WE ACCORDINGLY CANCEL THE 6 ITA NO. 1926-AHD-2009 PENALTY LEVIED BY THE ASSESSING OFFICER UNDER SECTI ON 271(1)(C) IN RESPECT OF BOTH THE AFORESAID ADDITIONS AMOUNTING TO RS.12 55 500/- AND RS.7 31 4 37/-. 8. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 28.01.20 11 SD/- SD/- (G.D. AGRAWAL) (T.K. SHARMA ) VICE-PRESIDENT (AZ) JUDICIAL MEMBER DATED : 28/ 01 / 2011 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A.) CONCERNED (4) CIT CONCERNED (5) D.R. ITAT AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGI STRAR ITAT AHMEDABAD LAHA/SR.P.S.