PR. COMMISSIONER OF INCOME TAX, RAJKOT 3 vs. AJANTA MANUFACTURING LIMITED

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TAXAP/1132/2018HC GujaratGJHC24053883201811 September 2018Bench: HONOURABLE MR. JUSTICE AKIL KURESHI,HONOURABLE MR. JUSTICE B.N. KARIA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court agreed with the view of the Income Tax Appellate Tribunal. The Tribunal had held that the assessee had not concealed any particulars of its income. Regarding the receipts in the form of sales tax and excise duty concessions, the assessee had followed its own interpretation, believing them to be capital in nature and not chargeable for the computation of book profit under Section 115JB. The Tribunal was of the opinion that two views were possible, and the assessee had held a bona fide belief and acted accordingly. Therefore, there was no failure on the part of the assessee to conceal any particulars of income. The High Court found no case of law arising and dismissed the Tax Appeals.

What were the facts?

The Revenue, represented by the Principal Commissioner of Income Tax, Rajkot, is in appeal against an order of the Income Tax Appellate Tribunal (ITAT) dated April 19, 2018. The dispute concerns the cancellation of a penalty amounting to Rs. 3,42,08,425 imposed under Section 271(1)(c) of the Income Tax Act, 1961. The Assessing Officer had made additions to the assessee's income in respect of incentives received as excise duty refunds and sales tax exemption benefits. The Commissioner of Income Tax (Appeals) deleted these additions, classifying them as capital receipts not chargeable to tax, but included them for the computation of book profit under Section 115JB. The ITAT confirmed the CIT(A)'s view on the deletion of the penalty.

What were the issues?

1. Whether, on the facts and circumstances of the case and in law, the Appellate Tribunal was justified in upholding the cancellation of penalty under Section 271(1)(c) of the Income Tax Act, 1961, amounting to Rs. 3,42,08,425? Assessee's Contentions: The assessee contended that the receipts in the form of sales tax and excise duty concessions were treated as capital in nature. The assessee followed its own interpretation, believing these receipts were not chargeable for the computation of book profit under Section 115JB. The assessee held a bona fide belief and acted upon it, and there was no concealment of income particulars. Revenue's Contentions: The Revenue's appeal implicitly challenges the ITAT's decision to uphold the cancellation of the penalty, suggesting that the assessee's actions warranted the imposition of such a penalty.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 115JB

AI-generated summary — verify with the full judgment below

C/TAXAP/1131/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 1131 of 2018 With R/TAX APPEAL NO. 1132 of 2018 ========================================================== PR. COMMISSIONER OF INCOME TAX, RAJKOT 3 Versus AJANTA MANUFACTURING LIMITED ========================================================== Appearance: MRS MAUNA M BHATT(174) for the PETITIONER(s) No. 1 for the RESPONDENT(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MR.JUSTICE B.N. KARIA

Date : 11/09/2018 ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. Revenue is in appeal against the judgement of the Income Tax Appellate Tribunal dated 19.04.2018. Following question is raised for our consideration: “Whether on facts and circumstances of the case and in law the Appellate Tribunal was justified in upholding the cancellation of penalty u/s. 271(1)(c) of the I.T.Act, 1961 by the CIT(A) amounting to Rs. 3,42,08,425/-?” 2. Issue pertains to penalty imposed by the Assessing Officer under section 271(1)(c) of the Income Tax Act, 1961 ['the Act' for short]. The Assessing Officer had made additions in respect of incentives received by the assessee in the form of Page 1 of 2

C/TAXAP/1131/2018 ORDER excise duty refunds and sales tax exemption benefits. CIT(A) deleted such addition holding that the same were capital receipts and not chargeable to tax. He however, was of the opinion that for the purpose of computation of book profit under section 115JB of the Act, the same had to be included. The Income Tax Appellate Tribunal also confirmed this view. The penalty was levied by the Assessing Officer with respect to such amounts. While confirming the view of CIT(A) deleting such penalty, the Tribunal, in the impugned judgement, held and observed that the assessee had not concealed any particulars of his income. To the receipts in the form of sales tax and excise duty concessions, the assessee had followed his own interpretation believing that the receipts being capital in nature were not chargeable for computation of book profit under section 115JB of the Act. The Tribunal was of the opinion that clearly two views were possible and the assessee had held the bona fide belief and acted on the same. In any case, there was no failure on part of the assessee to conceal any particulars of income. We are broadly in agreement with the view of the Tribunal. 3. No case of law arises. Tax Appeals are dismissed. (AKIL KURESHI, J) (B.N. KARIA, J) JYOTI V. JANI Page 2 of 2

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