ACIT 2(3), MUMBAI v. TRACTOR ENGINEERING LTD, MUMBAI

ITA 2686/MUM/2010 | 2004-2005
Pronouncement Date: 27-07-2011 | Result: Dismissed

Appeal Details

RSA Number 268619914 RSA 2010
Assessee PAN AAACT4499B
Bench Mumbai
Appeal Number ITA 2686/MUM/2010
Duration Of Justice 1 year(s) 3 month(s) 19 day(s)
Appellant ACIT 2(3), MUMBAI
Respondent TRACTOR ENGINEERING LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 27-07-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted J
Tribunal Order Date 27-07-2011
Date Of Final Hearing 19-07-2011
Next Hearing Date 19-07-2011
Assessment Year 2004-2005
Appeal Filed On 07-04-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL 'J' BENCH MUMBAI BEFORE SHRI R.S. PADVEKAR JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER ITA NO. 2686/MUM/2010 (ASSESSMENT YEAR: 2004-05) D C I T - 2(3) M/S. TRACTOR ENGINEERING LTD. ROOM NO. 555 AAYAKAR BHAVAN L&T HOUSE N.M. MARG MUMBAI 400020 VS. BALLARD ESTATE MUMBAI 400001 PAN - AAACT 4499 B APPELLANT RESPONDENT APPELLANT BY: SHRI SANJAY GHADGAY RESPONDENT BY: MISS HEENA DOSHI O R D E R PER B. RAMAKOTAIAH A.M. THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER OF THE CIT(A) VI MUMBAI DATED 15.01.2010 CANCELLING THE PENALTY OF ` 2 38 796/- IMPOSED UNDER SECTION 271(1)(C). 2. BRIEFLY STATED THE A.O. HAD LEVIED PENALTY IN RESP ECT DISALLOWANCES UNDER SECTION 35DDA AND 14A OF THE I.T. ACT. THE FA CTS RELATING TO THE DISALLOWANCE UNDER SECTION 35DDA WAS THAT ASSESSEE CLAIMED 1/5 TH OF THE TOTAL EXPENDITURE INCURRED ON VRPS INTRODUCED IN A. Y. 2001-02. HOWEVER IN THAT YEAR THE DEDUCTION WAS RESTRICTED TO THE ACTUA L AMOUNT PAID UNDER THE VOLUNTARY RETIREMENT SCHEME. CONSEQUENTLY THE DEDUC TION IN THIS YEAR WAS CORRESPONDINGLY REDUCED. WITH REFERENCE TO SECTION 14A THE A.O. DISALLOWED EXPENDITURE ON THE DIVIDEND RECEIVED IN RESPECT OF MUTUAL FUNDS AND UTI BONDS WHICH MATTER WAS CONTESTED IN APPEAL. THE CI T(A) CONSIDERED THAT THESE TWO ISSUES ARE GENUINE CLAIMS/BONAFIDE CLAIMS AND PENALTY UNDER SECTION 271(1)(C) CANNOT BE LEVIED ON ISSUES WHICH ARE HIGHLY CONTENTIOUS AND DIFFERENT VIEWS ARE POSSIBLE. ACCORDINGLY THE P ENALTY LEVIED WAS DELETED. 3. THE LEARNED D.R. RELIED ON THE ORDER OF THE A.O. WH EREAS THE LEARNED COUNSEL SUBMITTED THAT THE CLAIMS ARE BONAFIDE AND SUBMITTED THAT BASED ON THE PRINCIPLES ESTABLISHED BY THE HON'BLE SUPREME C OURT IN THE CASE OF ITA NO. 2686/MUM/2010 M/S. TRACTOR ENGINEERING LTD. 2 RELIANCE PETROPRODUCTS 322 ITR 158 PENALTY IS NOT LEVIABLE ON BONAFIDE CLAIMS MADE WHICH ARE NOT ALLOWED IN THE ASSESSMENT . 4. WE HAVE CONSIDERED THE ISSUE. AS FAR AS DISALLOWANC E UNDER SECTION 14A IS CONCERNED IT WAS INFORMED THAT THE SAID DIS ALLOWANCE WAS RESTORED TO THE FILE OF THE A.O. BY THE ITAT IN THE QUANTUM APP EAL THEREFORE THE QUESTION OF LEVY OF PENALTY ON THAT ISSUE AT THE MO MENT DOES NOT ARISE. THE A.O. IS FREE TO INITIATE PENALTY PROCEEDINGS IF RE QUIRED KEEPING IN MIND THE PRINCIPLES ON THE ISSUE. WITH REFERENCE TO THE CLAI M OF DISALLOWANCE UNDER SECTION 35DDA THE DISALLOWANCE AROSE CONSEQUENT TO THE DECISION IN A.Y. 2001-02. THE CLAIM IS A BONAFIDE CLAIM. BECAUSE OF INTERPRETATION OF THE PROVISION THE CLAIM WAS RESTRICTED IN THAT YEAR AND CONSEQUENTLY IN THIS YEAR. THE SAME CANNOT BE CONSIDERED FOR PENALTY UNDER SEC TION 271(1)(C). NOT ONLY THAT PENALTY LEVIED IN A.Y. 2001-02 WAS ALSO DELETE D BY THE CIT(A). THEREFORE WE AGREE WITH THE FINDINGS OF THE CIT(A). THE FACTS OF THE CASE DOES NOT WARRANT LEVY OF PENALTY UNDER SECTION 271(1)(C) AS THE ISSUES ARE CONTENTIOUS AND DIFFERENT VIEWS ARE POSSIBLE. 5. APART FROM THAT THE APPEAL ALSO TO BE DISMISSED ON TAX EFFECT AS THE TAX/ PENALTY INVOLVED IS ONLY ` 2 38 796/- ONLY. FOLLOWING THE PRINCIPLES ESTABLISHED BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. MADHUKAR K. INAMDAR (HUF) 318 ITR 149 THE APPEAL I S NOT MAINTAINABLE ON TAX BASIS AS THE CBDT CIRCULAR ISSUED IS EQUALLY AP PLICABLE TO ALL CASES PENDING IN APPELLATE FORUMS. ON THE TAX EFFECT ISSU E ALSO THE APPEAL IS NOT MAINTAINABLE. 6. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH JULY 2011. SD/- SD/- (R.S. PADVEKAR) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED: 27 TH JULY 2011 ITA NO. 2686/MUM/2010 M/S. TRACTOR ENGINEERING LTD. 3 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) VI MUMBAI 4. THE CIT II MUMBAI CITY 5. THE DR J BENCH ITAT MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI N.P.