ALLY PHARMA OPTIONS P.LTD, MUMBAI v. DCIT 8(1), MUMBAI

ITA 339/MUM/2015 | 2007-2008
Pronouncement Date: 30-09-2016 | Result: Allowed

Appeal Details

RSA Number 33919914 RSA 2015
Assessee PAN AAECA0450D
Bench Mumbai
Appeal Number ITA 339/MUM/2015
Duration Of Justice 1 year(s) 8 month(s) 16 day(s)
Appellant ALLY PHARMA OPTIONS P.LTD, MUMBAI
Respondent DCIT 8(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-09-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted J
Tribunal Order Date 30-09-2016
Assessment Year 2007-2008
Appeal Filed On 13-01-2015
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J MUMBAI BEFORE SHRI D. KARUNAKARA RAO ACCOUNTANT MEMBER AN D SHRI SANJAY GARG JUDICIAL MEMBER ITA NO.339/M/2015 ASSESSMENT YEAR: 2007-08 M/S. ALLY PHARMA OPTIONS P. LTD. 301 3 RD FLOOR MAXHEAL HOUSE BANGUR NAGAR GOREGAON W MUMBAI 400 090 PAN: AAECA 0450D VS. DY. COMMISSIONER OF INCOME TAX CIRCLE-8(1) ROOM NO.210/260 A 2 ND FLOOR AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400020 (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI ISHWAR PRAKASH RATHI A.R. REVENUE BY : SHRI ALOK JOHARI D.R. DATE OF HEARING : 26.07.2016 DATE OF PRONOUNCEMENT : 30.09.2016 O R D E R PER SANJAY GARG JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 29.10.2014 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] AGITATING THE CONFIRMATI ON OF THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 2. THE ASSESSING OFFICER (HEREINAFTER REFERRED TO A S THE AO) LEVIED THE IMPUGNED PENALTY OF RS.2 13 870/- ON ACCOUNT OF THE FOLLOWING DISALLOWANCE/ADDITIONS MADE: I. PREOPERATIVE EXPENSES OF RS.6 15 600/- OUT OF R S.8 05 729/- II. DONATION OF RS.5 846/- III. LATE PAYMENT OF EMPLOYEES CONTRIBUTION TO PRO VIDENT FUND RS.8 759/- IV. TDS EXPENSES OF RS.5 166/- 3. THE LD. CIT(A) HAS ALSO CONFIRMED THE SAID PENAL TY. ITA NO.339/M/2015 M/S. ALLY PHARMA OPTIONS P. LTD. 2 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE ALS O GONE THROUGH THE RECORDS. THE LD. A.R. OF THE ASSESSEE BEFORE US HAS STATED THAT THE MAJOR ITEM OF DISALLOWANCE IS PREOPERATIVE EXPENSES. HE WHIL E INVITING OUR ATTENTION TO THE IMPUGNED ORDERS OF THE LOWER AUTHORITIES AS WEL L AS THE BALANCE SHEET OF THE ASSESSEE HAS STATED THAT THE DISALLOWANCE ON ACCOU NT OF PREOPERATIVE EXPENSES HAS BEEN MADE BY THE AO BY APPLYING THE PROVISIONS OF SECTION 35D OF THE ACT. HE HAS FURTHER STATED THAT THE ASSESSEE HAD C LAIMED RS.8.05 LAKH AS PREOPERATIVE EXPENSES WHICH WERE AS PER THE TAX AUD IT REPORT BY THE AUDITOR. THE AO WHILE MAKING THE DISALLOWANCE OBSERVED THA T THE ASSESSEES ISSUED SHARE CAPITAL WAS AT RS.1 90 12 900/- AND THAT AS P ER THE PROVISIONS OF SECTION 35D DEDUCTION IN RESPECT OF AGGREGATE AMOUNT OF THE EXPENDITURE FOR THE RELEVANT YEAR WOULD NOT EXCEED AN AMOUNT CALCULATED AT 5% OF THE COST OF PROJECT OR CAPITAL EMPLOYED IN THE BUSINESS OF THE COMPANY. HOWEVER THE AO IGNORED THE PROVISIONS OF SECTION 35D AS TO WHAT CO NSTITUTE THE CAPITAL EMPLOYED. HE INVITING OUR ATTENTION TO THE PROVIS IONS OF SECTION 35D(III) HAS STATED THAT A CAPITAL EMPLOYED IN THE BUSINESS OF C OMPANY IS THE AGGREGATE OF THE ISSUED SHARE CAPITAL DEBENTURES AND LONG TERM BORROWINGS. THE AO HAS NOT TAKEN INTO CONSIDERATION THE LONG TERM BORROWINGS W HILE CALCULATING THE 5% OF THE CAPITAL APPLIED. HE HAS FURTHER INVITED OUR AT TENTION TO PAGE 10 OF THE PAPER BOOK TO SHOW THAT EVEN THE TAX AUDITOR HAS WORKED O UT THE ALLOWABLE EXPENDITURE AT RS.8 05 729/-. HE HAS STATED THAT T HOUGH IN THE QUANTUM ADDITIONS THE ASSESSEE DID NOT CARRY THE MATTER TO THE TRIBUNAL HOWEVER IT WAS APPARENT FROM THE RECORD THAT THE ASSESSEE HAD NEIT HER FURNISHED ANY INACCURATE PARTICULARS OF INCOME NOR HAD CONCEALED ITS INCOME. THE DISALLOWANCE IN THIS RESPECT WAS MADE BECAUSE OF THE DIFFERENCE OF OPIN ION REGARDING THE CALCULATION/WORKING OF THE ALLOWABLE EXPENDITURE UN DER SECTION 35D OF THE ACT. REGARDING THE OTHER DISALLOWANCES THE LD. A.R. HAS STATED THAT THE AMOUNTS INVOLVED IN RELATION TO THOSE DISALLOWANCES ARE VER Y SMALL AND THERE WAS NO INTENTION OF THE ASSESSEE TO AVOID ANY TAX LIABILIT Y IN THIS REGARD. THE DISALLOWANCE ON ACCOUNT OF DONATION INADVERTENTLY C OULD NOT BE ADDED BACK IN ITA NO.339/M/2015 M/S. ALLY PHARMA OPTIONS P. LTD. 3 THE COMPUTATION OF INCOME. THE OTHER TWO DISALLOWA NCES ARE RELATING TO THE LATE PAYMENT OF PF AND TDS EXPENSES AND THAT IT WAS NOT THE CASE OF THE AO THAT THE ASSESSEE HAD NOT INCURRED THESE EXPENSES. THOUGH THE ASSESSEE DID NOT AGITATE THE ADDITIONS BY WAY OF APPEAL BEFORE THE T RIBUNAL HOWEVER LOOKING AT THE NATURE OF EXPENSES AND SMALLNESS OF THE AMOUNTS IT CANNOT BE SAID THAT THE ASSESSEE HAD ANY INTENTION TO CONCEAL THE PARTICULA RS OF ITS INCOME OR TO FURNISH INACCURATE PARTICULARS OF INCOME. 5. THE LD. D.R. ON THE OTHER HAND HAS RELIED UPON THE FINDINGS OF THE LOWER AUTHORITIES. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND JUSTIFICATION IN THE SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE THA T IT IS NOT A CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME OR C ONCEALMENT OF INCOME WHICH MAY WARRANT THE LEVY OF PENALTY UNDER SECTION 271(1 )(C) OF THE ACT. THE ASSESSEE HAS DULY EXPLAINED THAT IT HAD PLAUSIBLE R EASONS TO CLAIM THE SAID EXPENDITURE WHICH WERE BASED ON BONAFIDE REASONING AND BELIEF. THOUGH THE AOS VIEW DIFFERED FROM THE ASSESSEE AND HE DISALLO WED CERTAIN EXPENDITURE BUT IT CANNOT BE SAID TO BE A CASE OF FURNISHING O F INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME WARRANTING LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. WE THEREFORE DELETE THE PE NALTY SO LEVIED/CONFIRMED BY THE LOWER AUTHORITIES. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS HER EBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.09.2016. SD/- SD/- (D. KARUNAKARA RAO) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED: 30.09.2016. * KISHORE SR. P.S. COPY TO: THE APPELLANT ITA NO.339/M/2015 M/S. ALLY PHARMA OPTIONS P. LTD. 4 THE RESPONDENT THE CIT CONCERNED MUMBAI THE CIT (A) CONCERNED MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR ITAT MUMBAI.