DCIT,Cir.-8,, Pune v. Creole Holding Co. Pvt. ltd.,, Pune

ITA 286/PUN/2010 | 2004-2005
Pronouncement Date: 27-07-2011 | Result: Dismissed

Appeal Details

RSA Number 28624514 RSA 2010
Assessee PAN AAACC7260M
Bench Pune
Appeal Number ITA 286/PUN/2010
Duration Of Justice 1 year(s) 5 month(s) 7 day(s)
Appellant DCIT,Cir.-8,, Pune
Respondent Creole Holding Co. Pvt. ltd.,, Pune
Appeal Type Income Tax Appeal
Pronouncement Date 27-07-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 27-07-2011
Assessment Year 2004-2005
Appeal Filed On 19-02-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO ACCOUNTANT MEMBER I.T.A. NO. 286/PN/2010 : A.Y. 2004-05 DY. CIT CIR. 8 PUNE APPELLANT VS. CREOLE HOLDING CO. PVT. LTD. G-4 GROUND FLOOR NORTH MAIN ROAD KOREGAON PARK PUNE-411 001 PAN AAACC 7260 M RESPONDENT APPELLANT BY: SHRI S.K. AMBASTHA RESPONDENT BY: NONE ORDER PER SHAILENDRA KUMAR YADAV JM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDERS OF THE CIT(A)-V PUNE DATED 30-11-2009 FOR A. Y. 2004-05 AGAINST THE DELETION OF PENALTY LEVIED BY T HE ASSESSING OFFICER U/S 271(1)(C) OF THE ACT. 2. THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGE D IN THE BUSINESS OF DEALING/TRADING IN SHARES SECURITI ES DEBENTURES AND OTHER SECURITIES. THE ASSESSING OFFI CER ADDED AN AMOUNT OF RS. 17 28 814/- BEING THE DIFFE RENCE BETWEEN THE BOOK VALUE OF SHARES HELD AS STOCK IN T RADE WHICH WERE SOLD BY THE ASSESSEE TO ITS HOLDING COMP ANY THROUGH OFF MARKET MODE (I.E. NOT THROUGH STOCK 2 ITA NO. 286/PN/2010 CREOLE HOLDING CO. A.Y. 200-05 EXCHANGE) AND MARKET VALUE THEREOF AS ON THE DAY O F SALE. WHILE COMPLETING THE ASSESSMENT THE ASSESSING OFFI CER INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT WHEREBY HE LEVIED THE PENALTY TO THE TUNE OF RS. 6 05 085/. 3. THE STAND OF THE ASSESSEE BEFORE THE CIT(A) IN P ENALTY PROCEEDINGS WAS THAT THERE IS NO TAX IMPACT SINCE TAX LIABILITY IN THEIR CASE HAD BEEN CALCULATED UNDER T HE MAT PROVISIONS. THE OTHER CONTENTIONS WERE AS UNDER: I) PROPER DISCLOSURE OF THE TRANSACTION HAD BEEN MADE IN THE RETURN OF INCOME. PROPER EXPLANATIONS F OR THE TRANSACTION AND SUPPORTING DOCUMENTS INCLUDING CONTRACT NOTE BANK TRANSACTION ETC. WERE ALSO FURNISHED DURING THE ASSESSMENT PROCEEDINGS. II) THE TRANSACTION WAS BETWEEN 100% SUBSIDIARY AND HOLDING COMPANY. THERE CANNOT BE ANY PROFIT EARNED BETWEEN SUBSIDIARY AND HOLDING COMPANY . THE LOGIC OF SEC. 47(IV) AND THE RATIO OF RUPEE FINANCE MANAGEMENT (P) LTD. AND K.P. VERGHESE WILL APPLY IN THEIR CASE. III) THE ASSESSEE WAS ENTITLED TO ARRANGE ITS AFFAI RS IN SUCH A MANNER AS TO REDUCE ITS TAX LIABILITY. IV) THE ASSESSMENT ORDER WAS ACCEPTED BY THE APPELLANT TO BUY PEACE AND BECAUSE THERE WAS NO T AX IMPACT. THIS FACT SHOULD NOT HAVE BEEN HELD AGAINS T THEM BY THE AO FOR LEVY OF PENALTY U/S 271(1)(C). V) TWO VIEWS ARE POSSIBLE ON THE ISSUE AND THE APPELLANTS CANNOT BE FAULTED FOR ADOPTING THE VIEW FAVOURABLE TO THEM. VI) THE APPELLANT COMPANY ACTED BONAFIDE. 3 ITA NO. 286/PN/2010 CREOLE HOLDING CO. A.Y. 200-05 4. AFTER CONSIDERING THE ARGUMENTS PUTFORWARD ON BE HALF OF THE ASSESSEE THE CIT(A) DELETED THE PENALTY IN QUESTION. SAME HAS BEEN OPPOSED BEFORE US BY THE REVENUE. 5. THE STAND OF THE REVENUE IS THAT THE PENALTY IN QUESTION IS JUSTIFIED WHEN THE ASSESSEE NEVER CONTE STED THE ORDER OF THE ASSESSING OFFICER WHEREBY ADDITION WAS MADE ON ACCOUNT OF DIFFERENCE BETWEEN THE BOOK VALUE OF SHARES HELD AS STOCK IN TRADE BY THE ASSESSEE AND MARKET V ALUE OF THE SHARES SOLD BY THE ASSESSEE TO ITS HOLDING COMP ANY THROUGH OFF MARKET MODE. NONE WAS PRESENT ON BEHA LF OF THE ASSESSEE. SO THE APPEAL IS BEING DECIDED ON TH E BASIS OF THE ARGUMENTS ADVANCED ON BEHALF OF THE REVENUE AND AFTER TAKING INTO CONSIDERATION THE MATERIAL ON REC ORD. 6. WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE. IT IS NOT IN DISPUTE THAT PROPER D ISCLOSURE OF THE TRANSACTION HAD BEEN MADE IN THE RETURN OF I NCOME. THE EXPLANATIONS FOR THE TRANSACTION AND SUPPORTING DOCUMENTS WERE ALSO FURNISHED DURING THE ASSESSMENT PROCEEDINGS. THE TRANSACTIONS WERE BETWEEN 100% SUBSIDIARY AND HOLDING COMPANY. THERE CANNOT BE ANY PROFIT EARNED BETWEEN SUBSIDIARY AND HOLDING COMPAN Y. TWO VIEWS ARE POSSIBLE ON THE ISSUE AND THE ASSESSE E CANNOT BE FAULTED FOR ADOPTING THE VIEW FAVOURABLE TO IT SO 4 ITA NO. 286/PN/2010 CREOLE HOLDING CO. A.Y. 200-05 IT SHOULD NOT BE SUBJECTED TO PENALTY. THE DECISIO N OF THE CIT(A) IS FORTIFIED BY THE DECISION OF TRIBUNAL IN THE CASE OF KANBAY SOFTWARE PVT. LTD. VS DCIT (122 TTJ 721) WHI CH HAS BEEN DELIVERED AFTER TAKING INTO CONSIDERATION THE CASE LAW ON THE ISSUE. IN THE FACTS AND CIRCUMSTANCES THE CIT(A) WAS JUSTIFIED IN DELETING THE PENALTY BECAU SE THE REVENUE COULD NOT MAKE OUT A CASE OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS THER EOF OR EVEN THE SITUATIONS IN WHICH THE DEEMING FICTION OF EXPLANATION 1 TO THE SAID PROVISION COULD BE INVOKE D. ACCORDINGLY DELETION OF PENALTY IS UPHELD. 7. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 27 TH JULY 2011 SD/- SD/- (D. KARUNAKARA RAO) ACCOUNTANT MEMBER (SHAILENDRA KUMAR YADAV JUDICIAL MEMBER PUNE DATED THE 27 TH JULY 2011 ANKAM COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)- V PUNE 4. THE CIT V PUNE 5. THE D.R ITAT PUNE BENCH PUNE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL 5 ITA NO. 286/PN/2010 CREOLE HOLDING CO. A.Y. 200-05