M/s. Mindarika Pvt. Ltd., New Delhi v. DCIT, New Delhi

ITA 5249/DEL/2011 | 2004-2005
Pronouncement Date: 13-02-2012 | Result: Allowed

Appeal Details

RSA Number 524920114 RSA 2011
Assessee PAN AAACM8583F
Bench Delhi
Appeal Number ITA 5249/DEL/2011
Duration Of Justice 2 month(s) 18 day(s)
Appellant M/s. Mindarika Pvt. Ltd., New Delhi
Respondent DCIT, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 13-02-2012
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted E
Tribunal Order Date 13-02-2012
Date Of Final Hearing 25-01-2012
Next Hearing Date 25-01-2012
Assessment Year 2004-2005
Appeal Filed On 25-11-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI K.D. RANJAN ITA NO. 5249/DEL/2011 ASSTT. YR: 2004-05 M/S MINDARIKA PVT. LTD. VS. DCIT CIR. 6(1) B-64/1 WAZIRPUR INDL. AREA NEW DELHI. DELHI-110052. PAN/GIR NO. AAACM8583F ITA NO. 5173/DEL/2011 ASSTT. YR: 2004-05 DCIT CIR. 6(1) VS. M/S MINDARIKA PVT. LTD. NEW DELHI. B-64/1 WAZIRPUR INDL. AREA DELHI-110052. (APPELLANT) ( RESPONDENT ) ASSESSEE BY : SHRI PRADEEP DINODIA & SHRI R.K. KAPOOR REVENUE BY : SHRI R.S. NEGI DR O R D E R PER R.P. TOLANI J.M : THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AS WELL AS THE REVENUE AGAINST THE ORDER OF CIT(A) DATED 12-8-2011 RELATIN G TO A.Y. 2004-05 REDUCING THE PENALTY IMPOSED BY AO U/S 271(1)(C). T HE ASSESSEE IS IN APPEAL AGAINST PART RETENTION OF PENALTY WHEREAS TH E REVENUE IS IN APPEAL AGAINST PART DELETION OF THE PENALTY. BOTH THE APP EALS ARE HEARD TOGETHER AND DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CO NVENIENCE. 2. BRIEF FACTS ARE: THE AO INITIATED PENALTY PROCEE DINGS U/S 271(1)(C) QUA FOLLOWING ADDITIONS/ DISALLOWANCES: ITA 5249 & 5173/DEL/11 M/S MINDARIKA PVT. LTD. 2 (I) MEMBERSHIP FEE PAID TO CLASSIC GOLF RESORT RS. 3 15 000 (II) MEMBERSHIP FEE PAID TO M/S DLF GOLF RESORT LTD . RS. 7 00 000 (III) DISALLOWANCE ON ACCOUNT OF SOFTWARE EXPENSE S RS.11 44 500 (IV) A REDUCTION IN THE CLAIM U/S 80-HHC RS. 1 8 1 730 TOTAL: RS.23 41 230 2.1. ASSESSEE FILED DETAILED REPLY WHICH DID NOT FI ND FAVOUR WITH THE AO WHO IMPOSED A PENALTY OF RS. 8 57 000/- U/S 271(1)( C) OF THE I.T. ACT. 2.2. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE TH E CIT(A) WHO UPHELD THE PENALTY IN RESPECT OF ADDITION/ DISALLOWANCE RE LATING TO MEMBERSHIP FEES FOR CLASSIC GOLF RESORT; MEMBERSHIP FEES FOR DLF GO LF RESORT; AND DEDUCTION U/S 88-HHC. CIT(A) HOWEVER DELETED PENALTY AGAINS T DISALLOWANCE ON ACCOUNT OF SOFTWARE EXPENSES. 2.3. AGGRIEVED BOTH THE ASSESSEE AS WELL AS THE RE VENUE ARE BEFORE US AGAINST THEIR RESPECTIVE GRIEVANCES. 3. LEARNED COUNSEL FOR THE ASSESSEE IN RESPECT OF MEMBERSHIP FEES PAID TO THE CLASSIC GOLF RESORT CONTENDS THAT THE PAYME NT WAS ACTUALLY MADE AND THE EXPENDITURE IS GENUINE AND INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. AS THE MEMBERSHIP WAS FOR TEN YEARS AO HELD THE EXPENDITURE TO BE ALLOCATABLE IN TEN YEARS WHICH RESULTED IN THIS DISALLOWANCE. IT IS PLEADED THAT THIS DOES NOT AMOU NT TO FURNISHING OF ANY INACCURATE PARTICULARS INASMUCH AS ALL THE DETAILS WERE FILED AND AO HELD A DIFFERENT VIEW THAN ASSESSEE. 3.1. IN RESPECT OF MEMBERSHIP FEE PAID TO M/S DLF G OLF RESORT LTD. IT IS CONTENDED THAT THE EXPENDITURE WAS GENUINE AND THE AMOUNT OF RS. 7 LACS WAS GIVEN TO THE M/S DLF GOLF RESORT LTD. INITIAL LY FOR CORPORATE MEMBERSHIP. LEARNED COUNSEL CONTENDS THAT THE OBSER VATION OF THE AO THAT FEE WAS PAID BY MR. N.K. MINDA IS NOT CORRECT. THE PAYMENT WAS MADE ON THE BASIS OF A BOARD RESOLUTION DATED 24-12-2003. H OWEVER WHILE APPROVING ITA 5249 & 5173/DEL/11 M/S MINDARIKA PVT. LTD. 3 THE PROPOSAL FOR MEMBERSHIP IT WAS DECIDED TO APPLY FOR INDIVIDUAL MEMBERSHIP; INCIDENTALLY THE AMOUNT OF DEPOSIT WAS REFUNDABLE IN CASE OF INDIVIDUAL MEMBERSHIP. THE ACCOUNTANT WHILE PASSING THE ENTRIES WITHOUT REALIZING THAT THE NATURE OF MEMBERSHIP WAS CHANGED AND THE DEPOSIT AMOUNT WAS REFUNDABLE DEBITED THE AMOUNT TO THE EXPENDITU RE ACCOUNT. IT IS NOT THE CASE OF THE DEPARTMENT THAT THE ASSESSEE TREATED TH IS AMOUNT AS REFUNDABLE IN THE BOOKS AND CLAIMED THE EXPENDITURE BOTH AT A TIM E. THE BOOKS OF THE ASSESSEE WILL REVEAL THAT NO RECOVERABLE AMOUNT WAS SHOWN IN THE BALANCE- SHEET. IT WAS A BONA FIDE ERROR COMMITTED BY THE AC COUNTANT ASSESSEE GAVE PROPER EXPLANATION TO THIS EFFECT. ALL THE RELEVANT PARTICULARS WERE FILED BY THE ASSESSEE. 3.2. APROPOS DEDUCTION U/S 80-HHC IT IS PLEADED TH AT THE ISSUE ABOUT ASSESSEES COMPUTATION OF DEDUCTION U/S 80-HHC WAS BASED ON THE CERTIFICATE GIVEN BY THE C.A. AN AGENCY PRESCRIBED BY THE ACT. IN APPEAL CIT(A) MODIFIED THE COMPUTATION MADE BY AO AND INCR EASED THE DEDUCTION. THE DIFFERENCE IN CALCULATION OF DEDUCTION U/S 80-H HC WAS CAUSED NOT BY ANY DISALLOWANCE OF ITEM BUT CALCULATION ON THE BAS IS OF EXPLANATION (BAA) TO SECTION 80HHC. THERE WAS A DIFFERENCE BETWEEN THE I NTERPRETATION HELD BY ASSESSEE AND AO IN RESPECT OF EXPLANATION TO SUB-C LAUSE (BAA) WHICH CANNOT BE HELD AS FURNISHING INACCURATE PARTICULARS OF INCOME OR CONCEALING PARTICULARS OF SUCH INCOME. 3.3. IN RESPECT OF REVENUES APPEAL IT IS PLEADED THAT CIT(A) DELETED THE PENALTY IN RESPECT OF SOFTWARE EXPENSES. THE ASSESS EE CLAIMED THE SAME ON REVENUE ACCOUNT AO HELD IT TO BE CAPITAL IN NATUR E AND ALLOWED 60% DEPRECIATION THEREON. BY NOW CATENA OF JUDGMENTS I S AVAILABLE HOLDING THAT SUCH EXPENSES ARE REVENUE IN NATURE. IN ANY CASE DISPUTE ABOUT THE REVENUE OR CAPITAL NATURE OF THE EXPENDITURE IS A MATTER OF JUDICIAL DEBATE AND CANNOT ITA 5249 & 5173/DEL/11 M/S MINDARIKA PVT. LTD. 4 BE HELD AS FURNISHING OF INACCURATE PARTICULARS. I N SUPPORT LEARNED COUNSEL RELIED ON THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. BRAHMPUTRA CONSORTIUM LTD. RENDERED IN ITA NO. 1582 OF 2010 VIDE ORDER DATED 3-8-2011 TO THE FOLLOWING EFFECT: 13. THE ASSESSING OFFICER WAS NOT CORRECT IN HOLDI NG THAT SUBMITTING INACCURATE CLAIM WOULD AMOUNT TO GIVING INACCURATE PARTICULARS. SUCH A CONTENTION OF THE DEPARTMENT IS SPECIFICALLY REJECTED BY THE SUPREME COURT IN A RECENT JUDGMENT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. (2010) 322 ITR 158. 3.4. FURTHER RELIANCE IS PLACED ON HONBLE SUPREME COURT JUDGMENT IN THE CASE OF RELIANCE PETRO PRODUCTS (SUPRA) TO THE EFFE CT THAT WHEN ALL DETAILS ARE FURNISHED ALONG WITH THE RETURN OF INCOME ANY ADDI TION OR DISALLOWANCE OUT OF THESE CONTENTS CANNOT BE CALLED FURNISHING OF IN ACCURATE PARTICULARS OF INCOME OR CONCEALING PARTICULARS OF SUCH INCOME. 4. LEARNED DR ON THE OTHER HAND RELIED ON THE ORD ER OF AO AND CONTENDS THAT IMPOSITION OF PENALTY SHOULD BE UPHEL D. 5. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THOUGH THE ADDITION OR DISALLOWANCE ON ACCO UNT OF MEMBERSHIP FEE PAID TO CLASSIC GOLF RESORT HAS BEEN ACCEPTED BY TH E ASSESSEE PENALTY PROCEEDINGS ARE DISTINCT AND SEPARATE FROM ASSESSME NT AND THE ASSESSEE CAN RAISE DISTINCT ISSUES IN PENALTY PROCEEDINGS. THE C LUB MEMBERSHIP FEE IS OTHERWISE ADMISSIBLE TO ASSESSEE AS REVENUE EXPENDI TURE IF THE SAME IS FOR BUSINESS PURPOSES. BESIDES THE ASSESSEE FILED DET AILS ALONG WITH THE RETURN ITA 5249 & 5173/DEL/11 M/S MINDARIKA PVT. LTD. 5 OF INCOME. IN VIEW OF THESE FACTS WE SEE NO JUSTIF ICATION IN RETAINING THE PENALTY IN THIS BEHALF. 5.1. APROPOS THE MEMBERSHIP FEE PAID TO M/S DLF GOL F RESORT LTD. ASSESSEE HAS EXPLAINED THAT INITIALLY THE ASSESSEE APPLIED FOR CORPORATE MEMBERSHIP AND THEREAFTER IT WAS CHANGED TO INDIVI DUAL MEMBERSHIP ON WHICH THE DEPOSIT WAS REFUNDABLE. DUE TO THE ACCOUN TANTS MISUNDERSTANDING THE AMOUNT WAS DEBITED TO EXPENDIT URE ACCOUNT. THE CLAIM OF THE ASSESSEE IS VERIFIABLE FROM THE FACT THAT IN BOOKS OF ACCOUNT NO AMOUNT WAS CLAIMED AS REFUNDABLE QUA THIS MEMBERSHIP. IN THESE FACTS THE ASSESSEES EXPLANATION SEEMS REASONABLE AND PLAUSIB LE. UNDER THESE CIRCUMSTANCES IN OUR VIEW THE PENALTY U/S 271(1)( C) IS NOT IMPOSABLE. 5.2. IN RESPECT OF DEDUCTION U/S 80-HHC ALSO THE AO WORKED OUT COMPUTATION OF DEDUCTION ON THE BASIS OF HIS INTERP RETATION OF EXPLANATION TO CLAUSE (BAA) TO SEC. 80-HHC WHICH WAS INCREASED BY CIT(A). IN OUR VIEW THE DIFFERENCE OF DEDUCTION DUE TO INTERPRETATION O F EXPLANATION TO CLAUSE (BAA) TO SEC. 80HHC CANNOT BE HELD TO BE FURNISHING OF INACCURATE PARTICULARS BESIDES THE ASSESSEE HAD FILED ALL DET AILS ALONG WITH THE RETURN. IN VIEW OF THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF BRAHMPUTRA CONSORTIUM LTD. (SUPRA) AND RELIANCE ON HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS (SUPRA ) WE SEE NO JUSTIFICATION FOR IMPOSITION OF PENALTY ON THIS COUNT. 5.3. COMING TO THE REVENUES APPEAL ALSO ASSESSEE S CLAIM OF SOFTWARE EXPENSES AS REVENUE EXPENDITURE IN OUR VIEW CANNOT BE CALLED A WRONG CLAIM. IN VIEW OF SUBSEQUENT CATENA OF JUDGMENTS T HE EXPENDITURE WAS HELD TO BE GENUINE. IT WAS ONLY CHANGED FROM REVENUE HEA D TO CAPITAL ACCOUNT AND ALLOWING DEPRECIATION IT CANNOT BE ATTRIBUTED AS FURNISHING OF INACCURATE PARTICULARS. IN VIEW OF THE FOREGOING JUDGMENTS W E ARE OF THE VIEW THAT ITA 5249 & 5173/DEL/11 M/S MINDARIKA PVT. LTD. 6 ASSESSEE CANNOT BE CHARGED FOR FURNISHING OF INACCU RATE PARTICULARS OF INCOME OR CONCEALING PARTICULARS OF SUCH INCOME. IN VIEW O F ABOVE WE CANCEL THE PENALTY LEVIED BY THE AO AND UPHELD BY THE CIT(A). 6. IN THE RESULT ASSESSEES APPEAL IS ALLOWED AND THAT OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 13-02-2012. SD/- SD/- ( K.D. RANJAN ) ( R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 13-02-2012. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR ITA 5249 & 5173/DEL/11 M/S MINDARIKA PVT. LTD. 7