RUSAN PHARMA LTD, MUMBAI v. ACIT 9(3), MUMBAI

ITA 2817/MUM/2009 | 2002-2003
Pronouncement Date: 30-04-2010

Appeal Details

RSA Number 281719914 RSA 2009
Assessee PAN AABCR3179H
Bench Mumbai
Appeal Number ITA 2817/MUM/2009
Duration Of Justice 11 month(s) 29 day(s)
Appellant RUSAN PHARMA LTD, MUMBAI
Respondent ACIT 9(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-04-2010
Appeal Filed By Assessee
Bench Allotted D
Date Of Final Hearing 12-03-2010
Next Hearing Date 12-03-2010
Assessment Year 2002-2003
Appeal Filed On 01-05-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D BEFORE SHRI N.V. VASUDEVAN (JM) & B. RAMAKOTAIAH (A M) I.T.A.NO. 2817/MUM/09 (ASSESSMENT YEAR : 2002-03) RUSAN PHARMA LIMITED RUSAN HOUSE 58-D GOVERNMENT INDUSTRIAL ESTATE CHARKOP KANDIVALI MUMBAI-400 067. VS. ACIT 9(3) AAYAKAR BHAVAN M.K. ROAD MUMBAI-400 020. APPELLANT RESPONDENT PAN/GIR NO. : AABCR3179H ASSESSEE BY : SHRI PRAKASH PANDIT DEPARTMENT BY : SHRI T.T. JACOB ORDER PER N.V. VASUDEVAN JM :- THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDE R DATED 20.1.2009 OF LEARNED CIT(A)-CENTRAL I MUMBAI RELAT ING TO A.Y. 2002-03. 2. IN THIS APPEAL THE ASSESSEE HAS CHALLENGED THE ORDER OF LEARNED CIT(A) WHEREBY LEARNED ASSESSING OFFICER IMPOSED P ENALTY ON THE ASSESSEE U/S. 271(1)(C) OF THE ACT. 3. FACTS AND CIRCUMSTANCES UNDER WHICH PENALTY WAS IMPOSED ON THE ASSESSEE BY THE ASSESSING OFFICER ARE FOLLOWS : - THE ASSESSEE IS MANUFACTURER AND TRADER OF PHARMAC EUTICAL PRODUCTS. THE ASSESSEE WAS ENTITLED TO CLAIM DEDUC TION U/S.80-HHC OF THE ACT. THE DISPUTES IN THE ASSESSMENT PROCEEDING S WAS (I) WHETHER THE COMPUTATION OF DEDUCTION U/S. 80HHC AS COMPUTED BY THE ASSESSING OFFICER AT RS. 4 76 785/- IS AN PER LAW OR NOT. (II ) WHETHER FOR CALCULATING INDIRECT COSTS 10% OF THE EXPORT INCENTIVES IS TO B E ADDED TO THE OVERHEAD EXPENSES FOR COMPUTING INDIRECT COSTS OR NOT. RUSAN PHARMA LIMITED 2 4. AS REGARDS THE ISSUE OF INDIRECT COSTS WAS CONCE RNED THE ASSESSING OFFICER HAS CALCULATED INDIRECT COSTS ATT RIBUTABLE TO THE TRADING GOODS EXPORTED IN THE FOLLOWING MANNER : OVERHEAD EXPENSES RS. 3 97 57 722/- ADD 10% OF EXPORT INCENTIVES RS. 7 02 028/- RS. 4 04 59 750/- THEREFORE THE TOTAL INDIRECT COST WAS INCREASED IN THE FOLLOWING MANNER : TOTAL INDIRECT COST = TOTAL OVERHEAD EXPENSES X EXPORT TURNOVER OF TRADING GOODS TOTAL TURNOVER = 4 04 59 750 X 3 33 59 534 10 70 36 903 = 1 26 09 842 AS AGAINST THIS THE ASSESSEES COMPUTATION OF INDIR ECT COST WAS IN THE FOLLOWING MANNER : 3 97 57 722 X 3 33 59 534 10 70 36 903 = 1 23 91 045 5. THE ASSESSEE DID NOT ADD 10% OF THE EXPORT INCEN TIVES AS ALSO PART OF THE INDIRECT COST. BY REASON OF THE AFORES AID ADJUSTMENT MADE TO THE COMPUTATION OF INDIRECT COST THE OVER ALL DEDUC TION U/S. 80HHC WAS REDUCED MARGINALLY. THE ASSESSING OFFICER WHILE COM PLETING ASSESSMENT WAS OF THE VIEW THAT ALL INDIRECT COST SHOULD BE AP PORTIONED. THE ASSESSING OFFICER WAS OF THE VIEW THAT EXPLANATION (E) TO SECTION 80HHC(3) MANDATES THAT ALL INDIRECT COST SHOULD BE ALLOCATED IN PARTICULAR MANNER. THE ASSESSING OFFICER THEREFORE ADDED 10% OF THE EX PORT INCENTIVE ALSO AS INDIRECT COST AND THEREAFTER ARRIVED AT THE DEDUCTI ON U/S. 80HHC AS GIVEN ABOVE. IT IS IN RESPECT OF THIS ADDITION MADE IN THE ASSESSMENT PROCEEDINGS THAT PENALTY WAS IMPOSED ON THE ASSESSE E BY THE ASSESSING OFFICER AND CONFIRMED BY LEARNED CIT(A). RUSAN PHARMA LIMITED 3 6. WE HAVE HEARD THE RIVAL SUBMISSIONS. IN OUR VIEW THIS IS NOT THE FIT CASE FOR IMPOSITION OF PENALTY. THE ISSUE WAS W ITH REGARD TO APPORTIONMENT OF INDIRECT COST. THIS ISSUE ON WHIC H THE ASSESSEE MADE A CLAIM ACCORDING TO HIM WAS CORRECT BUT ACCORDING TO THE ASSESSING OFFICER WAS NOT IN ACCORDANCE WITH LAW. IT MUST BE REMEMBER ED THAT THE ASSESSEE HAD GIVEN ALL FACTS AND THERE IS NO COMPLA INT THAT THERE WAS ANY CONCEALMENT OF PARTICULAR OF INCOME. IT WAS A CASE OF DIFFERENCE OF OPINION BETWEEN THE ASSESSEE AND THE ASSESSING OFFICER. THE FACT THAT THE ASSESSEE MADE AN INCORRECT CLAIM IN LAW CAN NOT MEA N THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS. THE HON'BLE S UPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROCHEMICALS 230 CTR 32 0 (SC) HAS HELD THAT WHERE INFORMATION GIVEN IN THE RETURN WAS NOT FOUND TO BE CORRECT OR INACCURATE AND WHERE THE ASSESSING OFFICER MAKES A DISALLOWANCE THAT WILL NOT GIVE RISE TO A CASE FOR IMPOSITION OF PENA LTY. THE HONBLE SUPREME COURT HAS HELD THAT MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO FURNISHING INACC URATE PARTICULARS REGARDING INCOME OF ASSESSEE. SUCH CLAIM MADE IN T HE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. THE C OURT ALSO OBSERVED THAT PENALTY IS NOT AUTOMATIC WHERE CLAIM MADE BY A N ASSESSEE IS NOT ACCEPTED BY THE REVENUE. IN THE LIGHT OF THE RATIO LAID DOWN AS ABOVE WE ARE OF THE VIEW THAT PENALTY OUGHT NOT TO HAVE BEEN IMPOSED ON THE ASSESSEE. WE DIRECT THAT THE PENALTY IMPOSED BE CAN CELLED. 7. THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER HAS BEEN PRONOUNCED ON 30 TH DAY OF APRIL 2010. SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER SD/- (N.V. VASUDEVAN) JUDICIAL MEMBER DATED : 30 TH APRIL 2010 COPY TO : 1. THE ASSESSEE 2. THE RESPONDENT 3. THE CIT(A)-CONCERNED. 4. THE CIT CONCERNED. RUSAN PHARMA LIMITED 4 5. THE DR CONCERNED MUMBAI 6. GUARD FILE BY ORDER TRUE COPY ASSTT. REGISTRAR ITAT MUMBAI PS