DCIT 8(3), MUMBAI v. VENTURE INFOTEK GLOBAL P. LTD, MUMBAI

ITA 4788/MUM/2010 | 2002-2003
Pronouncement Date: 15-07-2011 | Result: Dismissed

Appeal Details

RSA Number 478819914 RSA 2010
Assessee PAN AAACF2403J
Bench Mumbai
Appeal Number ITA 4788/MUM/2010
Duration Of Justice 1 year(s) 1 month(s) 5 day(s)
Appellant DCIT 8(3), MUMBAI
Respondent VENTURE INFOTEK GLOBAL P. LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 15-07-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted F
Tribunal Order Date 15-07-2011
Date Of Final Hearing 23-06-2011
Next Hearing Date 23-06-2011
Assessment Year 2002-2003
Appeal Filed On 10-06-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F MUMBAI BEFORE SHRI P.M.JAGTAP ACCOUNTANT MEMBER & SMT. ASHA VIJAYRAGHAVAN JUDICIAL MEMBER. I.T.A. NO.4788 4789&4790/MUM/20 10 ASSESSMENT YEARS : 2002-03 2003-04&2004-05 DY. COMMISSIONER OF INCOME-TAX VENT URE INFOTEK GLOBAL PRIVATE LTD. 8(3) MUMBAI. VS. 701 INTERFACE 11 MALAD (WEST) MUMBAI 400 064. PAN AAACF2403J APPELLANT. RESPONDENT. APPELLANT BY : SHRI T.T. JACOB. RESPON DENT BY : SHRI SANJAY SANGHVI MS. SHABNAM SHAIKH O R D E R. PER P.M. JAGTAP A.M. : THESE THREE APPEALS ARE PREFERRED BY THE REVENUE A GAINST THREE SEPARATE ORDERS DATED 17-03-2010 PASSED BY THE LEARNED CIT(A PPEALS)-18 MUMBAI WHEREBY HE CANCELLED THE PENALTIES IMPOSED BY THE AO FOR AS SESSMENT YEARS 2002-03 2003- 04 AND 2004-05 IN RESPECT OF ADDITIONS MADE TO THE TOTAL INCOME OF THE ASSESSEE BY WAY OF DISALLOWANCE OF DEPRECIATION CLAIMED AT HIGH ER RATE ON POS TERMINALS AND ATMS CLAIMING THE SAME TO BE EQUIPMENTS OF THE NATU RE OF COMPUTERS. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY WH ICH IS ENGAGED IN THE BUSINESS OF PROVIDING FACILITIES FOR AUTOMATION OF CONSUMER PAYMENT SYSTEM. IN THE RETURN OF INCOME FILED FOR ALL THE THREE YEARS UNDE R CONSIDERATION IT CLAIMED DEPRECIATION AT HIGHER RATE OF 60% ON POS TERMINALS AND ATMS. CLAIMING THAT THE 2 ITA NOS.4788 4789&4790/MUM/2010 A.YS. :2002 -03 2003-04&2004-05. SAME WERE EQUIPMENTS OF THE NATURE OF COMPUTERS. IN THE ASSESSMENTS COMPLETED U/S 143(3) THE CLAIM OF THE ASSESSEE FOR HIGHER RA TE OF DEPRECIATION AT 60% ON POS TERMINALS AND ATMS. WAS DISALLOWED BY THE AO HOLDIN G THAT THE SAID EQUIPMENTS WERE NOT IN THE NATURE OF COMPUTERS AND THE ASSESSE E WAS ENTITLED TO DEPRECIATION THEREON AT THE NORMAL RATE OF 25%. THE EXCESS DEPRE CIATION CLAIMED BY THE ASSESSEE AMOUNTING TO RS.6 15 94 339/- RS.3 38 29 286/- AND RS.78 27 779/- FOR ASSESSMENT YEARS 2002-03 2003-04 AND 2004-05 WAS ACCORDINGLY DISALLOWED BY THE AO. 3. ON CONFIRMATION OF THE AFORESAID DISALLOWANCE BY THE LEARNED CIT(APPEALS) IN THE QUANTUM PROCEEDINGS PENALTY PROCEEDINGS U/S 271(1)(C) WERE INITIATED BY THE AO AND SINCE THE EXPLANATION OFFERED BY THE AS SESSEE IN RESPONSE TO THE SHOW CAUSE NOTICES ISSUED DURING THE COURSE OF THE SAID PROCEEDINGS WAS NOT FOUND ACCEPTABLE BY HIM THE AO IMPOSED PENALTY U/S 271(1 )(C) FOR ALL THE THREE YEARS UNDER CONSIDERATION IN RESPECT OF ADDITION MADE BY WAY OF DISALLOWANCE OF EXCESS DEPRECIATION CLAIMED BY THE ASSESSEE ON POS TERMINA LS AND ATMS. HOLDING THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF HI S INCOME TO THAT EXTENT. 4. THE PENALTIES IMPOSED BY THE AO FOR ALL THE THRE E YEARS UNDER CONSIDERATION WERE CHALLENGED BY THE ASSESSEE IN THE APPEALS FILE D BEFORE THE LEARNED CIT(APPEALS) AND THE FOLLOWING CONTENTIONS WERE MAI NLY RAISED ON BEHALF OF THE ASSESSEE BEFORE THE LEARNED CIT(APPEALS) IN SUPPORT OF ITS CASE THAT THE SAID PENALTIES IMPOSED BY THE AO WERE NOT SUSTAINABLE : (A) THAT THE HONBLE CIT FOR AY 1999-2000 VIDE ORD ER DATED 26.03.2003 HAD ALLOWED DEPRECIATION ON POS TERMINALS @60%. AT THE TIME OF FILING OF RETURN THE DECISION OF APPELLATE AUTHORI TY WAS IN FAVOUR OF THE COMPANY WHERE DEPRECIATION ON POS TERMINALS WAS ALL OWED AT 60%. (B) THAT THE CLAIM OF DEPRECIATION @60% ON POS TER MINALS WAS MADE AS PER THE TAX AUDIT REPORT CERTIFIED BY THE QUALIFIED CHARTERED ACCOUNTANT. 3 ITA NOS.4788 4789&4790/MUM/2010 A.YS. :2002 -03 2003-04&2004-05. (C) THAT THE ISSUE WHETHER POS TERMINALS OR COMPUT ERS ARE ELIGIBLE FOR DEPRECIATION @60% IS A QUESTION OF LAW AND IS ADMIT TED BY THE HONBLE HIGH COURT AND IS PENDING AS ON DATE. (D) THAT AS THE ISSUES ARE DEBATABLE WHERE THERE I S A POSSIBILITY OF TWO VIEWS IN THE MATTER AND SINCE THE ISSUE IS PENDING BEFORE THE HONBLE HIGH COURT NO PENALTY CAN BE LEVIED. 5. RELIANCE WAS ALSO PLACED ON BEHALF OF THE ASSESS EE ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS IN SUPPORT OF ITS CASE : (I) RUPAM MERCANTILES LTD. VS. DCIT (2004) 91 ITD 2 37 WHEREIN IT WAS HELD THAT A PLEA OR A CLAIM WHICH IS HELD BY THE HI GH COURT TO GIVE RISE TO SUBSTANTIAL QUESTION OF LAW CAN NOT BE TREATED TO BE FRIVOLOUS OR MALAFIDE AS TO ATTRACT PENALTY U/S 271(1)(C). (II) CIT VS. ATUL BINDALL (2009) TIOL-97-SC-IT WHE REIN THE HONBLE SUPREME COURT RULED THAT IT GOES WITHOUT SAYING TH AT FOR APPLICABILITY OF SEC. 271(1)(C) CONDITIONS STATED THEREIN MUST E XIST I.E. THERE MUST BE CONCEALMENT OF INCOME OR THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF INCOME. FROM THE FACTS AN D CIRCUMSTANCES OF OUR CASE AND OUR FORGOING SUBMISSIONS YOUR HONOUR WILL APPRECIATE THAT IN THE PRESENT CASE NEITHER OF THE CONDITIONS EXIST AND THEREFORE PENALTY LEVIED BY THE AO IS BAD IN LAW. (III) CIT VS. SIDHARTHA ENTERPRISES ITA NO.908 OF 2008 THE HONBLE PUNJAB & HARYANA HIGH COURT HELD THAT UNLESS THERE IS DEBATABLE FAULT PENALTY CANNOT BE LEVIED. THE HONBLE HIGH COURT ALSO DISTINGUISHED THE HONBLE SUPREME COURTS DECISION IN UOI VS. DHARMENDRA TEXTILE PROCESSORS (306 ITR 277) AND HEL D THAT THE JUDGEMENT IN DHARMENDRA TEXTILE CANNOT BE READ AS LAYING DOWN THAT IN EVERY CASE WHERE PARTICULARS OF INCOME ARE INACC URATE PENALTY MUST FOLLOW THE CONCEPT OF PENALTY HAS NOT UNDERGONE CH ANGE BY VIRTUE OF THE SAID JUDGMENT. PENALTY IS IMPOSED ONLY WHEN THE RE IS SOME ELEMENT OF DELIBERATE DEFAULT AND NOT A MERE MISTAK E. IN THE PRESENT MATTER THERE IS NO DELIBERATE DEFAULT ON PART OF T HE ASSESSEE OR ANY CONCEALMENT ETC. AND HENCE ANY QUESTION OF LEVYING PENALTY DOES NOT APPLY. (IV) CIT VS. HARYANA WAREHOUSING CORPORATION (2009) 313 ITR 215 (P&H) THE PUNJAB & HARYANA HIGH COURT HELD THAT S ECTION 271(1)(C) 4 ITA NOS.4788 4789&4790/MUM/2010 A.YS. :2002 -03 2003-04&2004-05. CAN BE INVOKED FOR IMPOSING A PENALTY ON AN ASSESSE E ONLY IF THERE IS A CONCEALMENT OF PARTICULARS OF INCOME OR ALTERNA TIVELY IF AN ASSESSEE FURNISHES INCORRECT PARTICULARS OF INCOME. (V) KANBAY SOFTWARE VS. DCIT PUNE ITA NO. 300/PN/ 07 THE HONBLE ITAT HELD THAT ON FIRST PRINCIPLES PENALTY U/S.27 1(1)(C) IS NOT SIMPLY A CONSEQUENCE OF AN ADDITION BEING MADE TO THE INCO ME OF THE ASSESSEE. PENALTY U/S.271(1)(C) IRRESPECTIVE OF WH ETHER IT IS A CIVIL LIABILITY OR A CRIMINAL LIABILITY CAN ONLY BE IMPOS ED WHEN THE SCHEME OF THE ACT PERMITS OR REQUIRES SO. IT IS NOT AN AUT OMATIC CONSEQUENCE OF AN ADDITION BEING MADE TO THE INCOME. AN ADDITION M ADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS BY ITSELF CANNOT BE ENOUGH TO INITIATE LEAVE ASIDE CONCLUDE PENALTY PROCEEDINGS U/S 271(1)(C). FURTHER IT WAS ALSO HELD THAT THE ONSERVATIONS IN DHARMENDRA TEXTILE TO THE EFFECT THAT PENALTY IS TO PROVIDE A REMEDY F OR LOSS OF REVENUE CANNOT BE CONSTRUED TO MEAN THAT PENALTY CAN BE IMP OSED AS AN AUTOMATIC CONSEQUENCE FOR ADDITION TO RETURNED INCO ME GIVEN THE SCHEME OF SEC. 271(1)(C); AND ACCORDINGLY DHARMEND RA TEXTILE NOT AN AUTHORITY FOR THE PROPOSITION THAT PENALTY IS AN AUTOMATIC CONSEQUENCE OF AN ADDITION BEING MADE TO THE INCOME OF THE TAXPAYER. (VI) ASHOK GRIH UDYOG KENDR (P) LTD. VS. ACIT (2009 ) 121 TTJ (LUCKNOW) 979 WHEREIN THE HONBLE ITAT HELD IT IS NOT A CASE WHERE THE EXPENDITURE HAS BEEN FOUND TO BE BOGUS OR HAVING NOT INCURRED. THE ACCOUNTS HAVE BEEN AUDITED AND ALL TH E FACTS RELATING TO THE ADDITION HAVE BEEN DISCLOSED BY THE ASSESSEE. F URTHERMORE THE EXPLANATIONS GIVEN IN RESPECT OF ENTRIES IN THE BOO KS ARE BONA FIDE: IT IS ONLY A CASE OF ASSESSEES FAILURE TO ESTABLISH HIS CASE IN QUANTUM PROCEEDINGS. BUT THAT WOULD NOT AUTOMATICALLY BECOM E A CASE FOR LEVY OF PENALTY FOR CONCEALMENT OF FURNISHING INACCURATE PARTICULARS. REVENUE HAS NOT BROUGHT ANY MATERIAL ON RECORD TO S HOW THAT THE ASSESSEE HAS NOT DISCLOSED ANY MATERIAL FACT NECESS ARY FOR ASSESSMENT. (VII) IN A RECENT DECISION IN CASE OF VARIABLE INSU RANCE PRODUCTS FUND OVERSEAS PORTFOLIO VS. ADIT (INTERNATIONAL TAXATION ) THE HONBLE JURISDICTIONAL ITAT(MUMBAI) HELD THAT THERE IS NO CONCEALMENT WHATSOEVER MNOR HAS THE ASSESSEE COMMITTED AN ACT O F FURNISHING OF INACCURATE PARTICULARS OF INCOME IN THESE CASES. T HE ENTIRE CLAIM HAS BEEN EXPLAINED BY WAY OF A LETTER WHILE FILING THE REVISED RETURNS OF 5 ITA NOS.4788 4789&4790/MUM/2010 A.YS. :2002 -03 2003-04&2004-05. INCOME AND IT WAS BASED ON CERTAIN JUDICIAL DECISIO NS DELIVERED IN THE CASE OF ASSESSEE SISTER CONCERN. THE ISSUES ARE DEB ATABLE AND THE EXPLANATION FURNISHED BY THE ASSESSEE IS NOT HELD T O BE FALSE BY THE ASSESSING OFFICER. THE EXPLANATION IS BONA FIDE AND UNDER SUCH CIRCUMSTANCES LEVY OF PENALTY IS BAD IN LAW. 6. KEEPING IN VIEW THE SUBMISSIONS MADE ON BEHALF O F THE ASSESSEE AS WELL AS THE JUDICIAL PRONOUNCEMENTS CITED IN SUPPORT THEREO F THE LEARNED CIT(APPEALS) ACCEPTED THE STAND OF THE ASSESSEE THAT THE CLAIM O F THE ASSESSEE FOR HIGHER DEPRECIATION ON POS TERMINALS AND ATMS. TREATING TH E SAME AS IN THE NATURE OF COMPUTERS INVOLVED A DEBATABLE ISSUE ON WHICH TWO V IEWS WERE CLEARLY POSSIBLE. IN THIS REGARD HE TOOK NOTE OF THE FACT THAT IN ASSESS MENT YEAR 1999-2000 THE LEARNED CIT(APPEALS) HAD ALLOWED THE CLAIM OF THE ASSESSEE FOR SUCH HIGHER DEPRECIATION AND ALTHOUGH THE SAID DECISION OF THE LEARNED CIT(A PPEALS) WAS REVERSED BY THE TRIBUNAL THE APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE TRIBUNAL WAS ADMITTED BY THE HONBLE BOMBAY HIGH COURT HOLDING T HAT THE QUESTION AS TO WHETHER THE TRIBUNAL WAS RIGHT IN HOLDING THAT POS TERMINALS AND ATMS. ARE NOT COMPUTERS AND THEREFORE NOT ELIGIBLE FOR HIGHER R ATE OF DEPRECIATION WAS A SUBSTANTIAL QUESTION OF LAW. THE LEARNED CIT(APPEAL S) ACCORDINGLY HELD THAT PENALTY IMPOSED BY THE AO IN RESPECT OF ADDITION MA DE BY WAY OF DISALLOWANCE OF EXCESS DEPRECIATION ON POS TERMINALS AND ATMS. WAS NOT SUSTAINABLE AND THE PENALTY SO IMPOSED FOR ALL THE YEARS UNDER CONSIDER ATION WAS CANCELLED BY HIM. AGGRIEVED BY THE ORDERS OF THE CIT(APPEALS) THE RE VENUE HAS PREFERRED THESE APPEALS BEFORE THE TRIBUNAL. 7. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT HIGHER DEPR ECIATION WAS CLAIMED BY THE ASSESSEE ON POS TERMINALS AND ATMS AT THE RATE OF 6 0% IN ALL THE THREE YEARS UNDER CONSIDERATION ON THE BASIS OF THE DECISION OF THE LEARNED CIT(APPEALS) IN ITS 6 ITA NOS.4788 4789&4790/MUM/2010 A.YS. :2002 -03 2003-04&2004-05. OWN CASE RENDERED IN ASSESSMENT YEAR 1999-2000 ALLO WING SUCH HIGHER DEPRECIATION. THE SAID DECISION OF THE LEARNED CIT( APPEALS) WAS AVAILABLE TO THE ASSESSEE WHEN IT FILED THE RETURNS FOR ALL THE THRE E YEARS UNDER CONSIDERATION MAKING THEREIN A SIMILAR CLAIM FOR HIGHER DEPRECIATION WHI CH WAS ALLOWED BY THE LEARNED CIT(APPEALS) IN ASSESSMENT YEAR 1999-2000. THE CLAI M SO MADE FOR HIGHER DEPRECIATION ON POS TERMINALS AND ATMS THUS WAS A B ONAFIDE CLAIM MADE BY THE ASSESSEE ON THE BASIS OF DECISION OF THE FIRST APPE LLATE AUTHORITY IN ITS OWN CASE ON A SIMILAR ISSUE IN ASSESSMENT YEAR 1999-2000. MOREOVE R ALL THE MATERIAL FACTS IN RELATION TO THE SAID CLAIM WERE FULLY AND TRULY FUR NISHED BY THE ASSESSEE ALONG WITH ITS RETURN OF INCOME WHEREIN THE BASIS OF THE SAID CLAIM WAS CLEARLY GIVEN BY CLAIMING THAT POS TERMINALS AND ATMS BEING THE EQUI PMENTS OF THE NATURE OF COMPUTERS WERE ENTITLED FOR A HIGHER DEPRECIATION A T THE RATE OF 60%. THIS CLAIM MADE BY THE ASSESSEE REGARDING THE NATURE OF POS TE RMINALS AND ATMS BEING COMPUTERS WAS A LEGAL CLAIM AND AS IS CLEARLY EVIDE NT FROM THE ORDER PASSED BY THE LEARNED CIT(APPEALS) IN ASSESSMENT YEAR 1999-2000 A ND THE APPEAL ADMITTED BY THE HONBLE BOMBAY HIGH COURT AGAINST THE ORDER OF THE TRIBUNAL HOLDING THAT THIS ISSUE INVOLVED SUBSTANTIAL QUESTION OF LAW SHOWS T HAT THE SAID ISSUE IS DEBATABLE ON WHICH TWO VIEWS ARE POSSIBLE. THE CLAIM OF THE ASSE SSEE FOR HIGHER DEPRECIATION ON POS TERMINALS AND ATMS THUS WAS MADE BY TAKING A PO SSIBLE VIEW OF THE MATTER AND THERE IS NOTHING EITHER IN THE ASSESSMENT ORDER OR EVEN IN THE PENALTY ORDER TO SHOW THAT THE MATERIAL PARTICULARS FURNISHED BY THE ASSESSEE IN RELATION TO THE SAID CLAIM WERE INACCURATE. IN THE CASE OF RELIANCE PETR O PRODUCTS P. LTD. 322 ITR 158 (SC) CITED BY THE LEARNED COUNSEL FOR THE ASSESSEE THE ASSESSEE HAD FURNISHED ALL THE DETAILS OF HIS EXPENDITURE WHICH DETAILS IN TH EMSELVES WERE NOT FOUND TO BE INACCURATE AND IT WAS HELD BY THE HONBLE SUPREME C OURT THAT MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE WHICH CLAIM W AS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE THAT BY ITSELF WOULD NOT IN OUR OPINION ATTRACT THE 7 ITA NOS.4788 4789&4790/MUM/2010 A.YS. :2002 -03 2003-04&2004-05. PENALTY U/S 271(1)(C) . KEEPING IN VIEW THE DECISIO N OF THE HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS P. LTD. (SUP RA) AND HAVING REGARD TO THE FACTS OF THE CASE AS DISCUSSED ABOVE WE ARE OF THE VIEW THAT THE CLAIM MADE BY THE ASSESSEE FOR HIGHER DEPRECIATION ON POS TERMINALS A ND ATMS DOES NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF ITS INCOME BY THE ASSESSEE AND THE DISALLOWANCE OF SUCH CLAIM CANNOT ATTRACT PENALTY U /S 271(1)(C) AS RIGHTLY HELD BY THE LEARNED CIT(APPEALS). WE THEREFORE UPHOLD THE IMPUGNED ORDERS OF THE LEARNED CIT(APPEALS) CANCELLING THE PENALTY IMPOSED BY THE AO IN RESPECT OF ADDITION MADE BY WAY OF DISALLOWANCE OF HIGHER DEPR ECIATION CLAIMED BY THE ASSESSEE ON POS MACHINES AND ATMS AND DISMISS THESE APPEALS FILED BY THE REVENUE. 8. IN THE RESULT THE APPEALS FILED BY THE REVENUE ARE DISMISSED. . ORDER PRONOUNCED ON THIS 15 TH DAY OF JULY 2011. SD/- SD/- (ASHA VIJAYRAGHAVAN) (P.M. JA GTAP) JUDICIAL MEMBER ACCO UNTANT MEMBER MUMBAI DATED: 15 TH JULY 2011. COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR F-BENCH. (TRUE COPY ) BY ORDER ASSISTANT REGISTRAR. ITAT MUMBA I BENCHES WAKODE MUMBAI.