DATTANAND B. KAMBALI, MUMBAI v. ITO 26(2)(1), MUMBAI

ITA 5162/MUM/2009 | 2003-2004
Pronouncement Date: 14-05-2010 | Result: Allowed

Appeal Details

RSA Number 516219914 RSA 2009
Assessee PAN AARPK0957F
Bench Mumbai
Appeal Number ITA 5162/MUM/2009
Duration Of Justice 8 month(s) 3 day(s)
Appellant DATTANAND B. KAMBALI, MUMBAI
Respondent ITO 26(2)(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 14-05-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 14-05-2010
Assessment Year 2003-2004
Appeal Filed On 10-09-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D MUMBAI BEFORE SHRI R.S.SYAL AM AND SHRI VIJAY PAL RAO JM ITA NOS.5161 5162 & 5163/MUM/2009 : A.YRS 2004-05 2003-04 & 2002-03 SHRI DATTANAND B.KAMBALI 303 BUILDING NO.13 FLOWER VALLEY KHOPAT THANE (WEST) 400 601. PA NO.AARPK0957F. VS. THE INCOME TAX OFFICER WARD 26(2)(1) MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAVI KRISHNAN MULCHANDANI RESPONDENT BY : SHRI T.T.JACOB SR.DR O R D E R PER BENCH : THIS BATCH OF THREE APPEALS BY THE ASSESSEE IS DIR ECTED AGAINST THE ORDERS PASSED BY THE CIT(A) UPHOLDING PENALTY IMPOSED BY THE ASSESSING OFFICER U/S.271(1)(C) IN RELATION TO THE ASSESSMENT YEARS 2002-2003 2003-2004 AND 2004- 2005. SINCE ALL THE APPEALS ARE BASED ON IDENTICAL FACTS AND COMMON GROUND OF APPEAL WE ARE THEREFORE PROCEEDING TO DISPOSE TH EM OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ASSESSMENT YEAR 2002-2003 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE IS AN EMPLOYEE OF M/S.BHARAT PETROLEUM CORPORATION LIMITED (HEREINAFT ER REFERRED TO AS BPCL). BPCL INTRODUCED SCHEME OF SELF-LEASING UNDER WHICH ITS EMPLOYEES WERE EITHER EXTENDED LOAN FROM BPCL ITSELF OR THEY COULD TAKE L OAN FROM ANY BANK FOR ACQUIRING HOUSE PROPERTY. THE PROPERTY SO ACQUIRED WAS LEASED OUT TO BPCL IN LIEU OF MAINTENANCE CHARGES AND LEASE RENT AS PER AGREEM ENT ENTERED INTO BY BPCL WITH ITS EMPLOYEES. THIS PROPERTY IN TURN WAS GIVEN BACK TO THE SAME EMPLOYEE AS RENT FREE ACCOMMODATION BY BPCL TREATING IT AS PERQUISIT E IN THE HANDS OF THE EMPLOYEES BEING UNFURNISHED RENT FREE ACCOMMODATION . THE ASSESSING OFFICER FOUND THAT APART FROM RECEIPT OF LEASE RENT OF RS.7 8 120 THE ASSESSEE ALSO RECEIVED ITA NOS.5161 5162 & 5163/MUM/2009 SHRI DATTANAND B.KAMBALI. 2 REIMBURSEMENT OF MAINTENANCE EXPENSES OF RS.20 736. AS THE ASSESSEE IN THE INSTANT CASE DID NOT OFFER FOR TAX THE SAID SUM OF RS.20 736 AS REIMBURSEMENT OF MAINTENANCE CHARGES THE A.O. OPINED THAT SUCH AMOU NT WAS CHARGEABLE TO TAX. CONSEQUENTLY PENALTY WAS ALSO LEVIED FOR A SUM OF R S.6 343 U/S.271(1)(C) BEING 100% OF THE AMOUNT OF TAX SOUGHT TO BE EVADED. THE LEARNED CIT(A) UPHELD THE PENALTY ORDER AGAINST WHICH THE ASSESSEE HAS COME I N APPEAL BEFORE US. 3. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD IT IS FOUND THAT THE ASSESSEE DID NOT ASSAIL THE ADDITION OF RS.20 736 MADE BY THE ASSESSING OFFICER ON ACCOUNT OF REIMBURSEMENT O F MAINTENANCE EXPENSES. HERE IT IS PERTINENT TO MENTION THAT WE ARE DEALING WITH A PENALTY MATTER WHICH PROCEEDINGS ARE DISTINCT AND SEPARATE FROM THE ASSE SSMENT PROCEEDINGS. MERELY BECAUSE AN ADDITION HAS BEEN MADE OR SUSTAINED NO EMBARGO CAN BE PLACED ON THE ASSESSEE TO CHALLENGE THE CORRECTNESS OF SUCH ADDIT ION IN THE PENALTY PROCEEDINGS WITH A VIEW TO ESCAPE FROM THE PENALTY. THUS IT IS AUSTERE THAT THE MAKING OR CONFIRMATION OF AN ADDITION IN THE ASSESSMENT DOES NOT AUTOMATICALLY LEAD TO THE IMPOSITION OF PENALTY U/S 271(1). 4. HERE IS A CASE IN WHICH THE SUM OF RS.20 7 36 WAS RECEIVED AS REIMBURSEMENT OF MAINTENANCE EXPENSES WHICH WAS NOT SHOWN BY THE ASSESSEE IN HIS RETURN OF INCOME. THE ASSESSEE ENTERTAINED A BONAFIDE BELIEF THAT THE REIMBURSEMENT OF EXPENSES WAS NOT INCOME AT ALL INASMUCH AS IT REPRE SENTED THE RECEIVING BACK OF SUCH EXPENDITURE ALREADY INCURRED. EVEN BPCL WHO MA DE THE PAYMENT DID NOT TREAT IT AS ASSESSEES INCOME AS NO DEDUCTION OF TA X AT SOURCE WAS MADE THERE- AGAINST. RECENTLY THE HONBLE JURISDICTIONAL HIGH C OURT IN CIT VS. INFORMATION ARCHITECT [(2010) 322 ITR 1 (MUM.)] HAS HELD THAT THE REIMBURSEMENT OF EXPENSES IS NOT LIABLE TO TAX. SIMILAR VIEW HAS BEEN CANVASS ED BY THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF M/S.MAHINDRA & MAHINDRA VS. DCIT [(2009) 313 ITR (A T) 263 (MUM.) (SB)] . IN THE LIGHT OF THESE PRECEDENTS IT BECOMES PATEN T THAT THE REIMBURSEMENT OF EXPENSES CANNOT BE SUBJECTED TO TA X AS THERE IS UNDERLINING ITA NOS.5161 5162 & 5163/MUM/2009 SHRI DATTANAND B.KAMBALI. 3 PRESUMPTION IN THE REIMBURSEMENT THAT THE ELEMENT OF INCOME IS MISSING AND IT IS A SIMPLE CASE OF RECOUPING THE COST INCURRED BY THE A SSESSEE. ONCE IT IS HELD THAT THE REIMBURSEMENT OF EXPENSES IS OTHERWISE NOT CHARGEAB LE TO TAX EVEN IF THE ASSESSEE DID NOT ASSAIL THE ADDITION BEFORE THE APPELLATE AU THORITIES NO PENALTY CAN BE LEVIED U/S.271(1)(C) ON THIS SCORE. OVERTURNING THE IMPUGN ED ORDER ON THIS ISSUE WE ORDER FOR THE DELETION OF PENALTY. 5. BOTH THE SIDES ARE IN AGREEMENT THAT THE FACTS A ND CIRCUMSTANCES OF THE OTHER TWO YEARS ARE SIMILAR INASMUCH AS THE SAME AMOUNT O F REIMBURSEMENT OF MAINTENANCE EXPENSES OF RS.20 736 (A CAP PLACED BY BPCL ON THE REIMBURSEMENT OF MAINTENANCE COST) RECEIVED BY THE ASSESSEE WAS ADDED BY THE A.O. ON WHICH PENALTY OF RS.6 535 WAS LEVIED. FOLLOWING THE VIEW TAKEN HEREINABOVE WE ORDER FOR THE DELETION OF PENALTY IN OTHER TWO YEARS AS W ELL. 6. IN THE RESULT ALL THE APPEALS ARE ALLOWED. ORDER PRONOUNCED ON THIS 14 TH DAY OF MAY 2010. SD/- SD/- ( VIJAY PAL RAO ) ( R.S.SYAL ) JUDICIAL MEMBER ACCOUNTANT M EMBER MUMBAI : 14 TH MAY 2010 . DEVDAS* COPY TO : 1. THE APPELLANT. 2. THE RESPONDENTS. 3. THE CIT CONCERNED 4. THE CIT(A)-XXVI MUMBAI. 5. THE DR/ITAT MUMBAI. 6. GUARD FILE. ITA NOS.5161 5162 & 5163/MUM/2009 SHRI DATTANAND B.KAMBALI. 4 TRUE COPY. BY ORDER ASSISTANT REGISTRAR ITAT MUMBAI.