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Income Tax Appellate Tribunal, MUMBAI BENCH “C”, MUMBAI
Before: SHRI C.N. PRASAD, HONBLE & SHRI G. MANJUNATHA, HONBLE
O R D E R PER C.N. PRASAD (JM) 1. All these appeals are filed by the revenue against different orders of the Learned Commissioner of Income Tax (Appeals)–21, Mumbai [hereinafter in short “Ld.CIT(A)”] dated 09.12.2013, 10.12.2013 & 10.12.2013 for the A.Ys. 2005-06, 2006-07 & 2007-08 respectively in deleting the penalty levied u/s. 271(1)(c) of the Act.
At the outset, Learned Counsel for the assessee submitted that in all these three orders penalty u/s. 271(1)(c) of the Act was levied on the 2 ITA.NOs. 1631, 1632 & 1633/MUM/2014 M/s. Infrastructure Leasing & Financial Services Ltd., additions/disallowance made and most of the additions/disallowance were either deleted or set-aside by the Tribunal and in some cases the Assessing Officer himself did not impose penalty on similar additions made in earlier Assessment Years. Learned Counsel for the assessee submitted that there is no concealment of income or furnishing of inaccurate particulars by the assessee in making such claims. Ld. Counsel for the assessee further submitted that considering the facts the Tribunal either deleted or set-aside the quantum addition. The Ld.CIT(A) deleted the penalties levied by the Assessing Officer and in some instances since the Assessing Officer himself did not impose penalties on identical additions/disallowance made in earlier assessment years following the consistency rule the Ld.CIT(A) deleted the penalty levied u/s. 271(1)(c) of the Act. Ld. Counsel for the assessee strongly supported the order of the Ld.CIT(A) in deleting the penalties.
Ld. DR vehemently supported the orders of the Assessing Officer.
We have heard the rival submissions, perused the orders of the authorities below. In the course of hearing the Ld. Counsel for the assessee submitted a chart showing the details of quantum additions/disallowance either deleted by the Tribunal or set aside to the Assessing Officer and also not levying of penalty on identical addition/disallowance made by the Assessing Officer in earlier assessment years. The details are as under: -
3 ITA.NOs. 1631, 1632 & 1633/MUM/2014 M/s. Infrastructure Leasing & Financial Services Ltd., Penalty under Commissioner (Appeals) Assessment Year section order 271 (1)(c) of the Act Assessee's submissions AY AY AY 2005- 06 2006-07 2007-08 in respect of 2005-06 2006-07 2007-08 addition / disallowance 1. 1(a) - Amortization of page 4, page 4, - Tribunal deleted penalty in AY lease premium para 3.2 para 3.2 2003-04 [page 15, para 5]. No penalty levied by AO in AYs 2004-05 and 2007- 08 on identical facts. Amortisation of lease premium reflected separately in computation of income filed alongwith return of income. Issue of allowability of lease premium also referred to and adjudicated by Special Bench of Tribunal (dated 15 February 2007) in case of Mukund Limited. Sun Pharmaceuticals Limited, Gujarat High Court and Lupin Limited, Mumbai Tribunal held in favour of assessee. 2 1(b) 1 Depreciation on page 5, page 5, page 3, Tribunal held in favour of IL&FS residential para 4.2 para 4.2 para 3.2 in AY 2004-05 [page 4, para 3.2] premises and in AYs 2005-06 to 2007-08 [page 9, para 9]. Thereafter, AO allowed depreciation in AY 2004-05 vide order dated 31 December 2018. No penalty levied by AO in AYs 2003-04 and 2004- 05 on identical facts. No appeal filed by Department against CIT(A) order deleting penalty in AY 2002-03 on same issue.
3 1(c) 2 Deduction of page 9, page 9, page 6, Tribunal in AY 2004-05 [page 12, para 7.2] and in AYs 2005-06 to lease para 5.2 para 5.2 para 5.2 2007-08 [page 17, 18, para 24, 25] equalization held in favour of IL&FS. reserve Thereafter, AO allowed deduction for lease equalization in AY 2004- 05 vide order dated 31 December 2018 [page 24, para 5.3]. Bombay High Court has dismissed Revenue's appeal for AYs 1994-95 to 1998-99. Supreme Court in Virtual Soft System Limited's case held in favour of assessee.
4 ITA.NOs. 1631, 1632 & 1633/MUM/2014 M/s. Infrastructure Leasing & Financial Services Ltd., Penalty under Commissioner (Appeals) Assessment Year section order 271 (1)(c) of the Act Assessee's submissions AY AY AY 2005- 06 2006-07 2007-08 in respect of 2005-06 2006-07 2007-08 addition / disallowance 1(d) --- Deduction --- page 10, --- No penalty levied by AO in AYs 2004-05, 2005-06 and 2007-08 on under section para 6.2 identical facts. 35D Tribunal restored the issue back to AO's file in AYs 2005-06 to 2007- 08 [page 24, para 36]. Tribunal remitted the issue to AO's file in AYs 1996-97 and 1997-98 [page 7, para 14]. 1(e) --- Depreciation on --- page 11 , --- Tribunal in AY 2004-05 [page 25, para 11.12] and in AYs 2005-06 to toll road para 7.2 2007-08 [page 22, para 31] held in favour of IL&FS. Thereafter, AO allowed depreciation on toll road in AY 2004-05 vide order dated 31 December 2018 [page 27, para 8.2]. No penalty levied by AO in AYs 2005-06 and 2007-08. 1(f) --- Deduction --- page 13, --- Tribunal in AYs 2005-06 to 2007-08 has held in favour of IL&FS in under section para 9.2 respect of Tamil Nadu Road 10(23G) Development Company [page 31, para 53]. No penalty levied by AO in AYs 2004-05, 2005-06 on identical facts. Deduction under section 10(23G) of the Act reflected separately in computation of income filed alongwith return of income. 1(g) --- Disallowance --- page 14, --- Supreme Court in case of Reliance Petroproducts Private Limited held under section para 10.2 that merely because assessee's 14A claim was not accepted by Revenue, that itself would not attract penalty. Tribunal in AY 2004-05 [page 10, para 6.2] and AYs 2005-07 to 2007-08 [page 14, para 19] set aside matter to AO's file. Tribunal set aside to AO's file for determination of average value of investment and quantum of disallowance of interest and other expense considering SC's decision in Maxopp Investment Limited's case (AYs 2005-06 to 2007-08). Various decisions have held that only those investments from which dividend is earned during the year are to be considered for the purpose of disallowance under section 14A of the Act. No penalty is initiated in AYs 2003-04 and 2004-05 and no penalty levied in AYs 2005-06 and 2007-08
5 ITA.NOs. 1631, 1632 & 1633/MUM/2014 M/s. Infrastructure Leasing & Financial Services Ltd., Penalty under Commissioner (Appeals) Assessment Year section order 271 (1)(c) of the Act Assessee's submissions AY AY AY 2005- 06 2006-07 2007-08 in respect of 2005-06 2006-07 2007-08 addition / disallowance --- 1(h) 3 Disallowance of --- page 14, page 9, No penalty initiated by AO in AYs income/ loss para 11.2 para 5.2 2004-05 and 2005-06 on identical from other facts. sources --- 1(i) --- Disallowance --- page 16, --- Tribunal in AY 2004-05 and in AYs under section para 12.2 2005-06 to 2007-08 [page 28, para 14A while 49] restored issue to AO's file. computing book Vireet Investments Private Limited profits and Bengal Finance Investment Limited have held in favour of assessee -no disallowance under section 14A of the Act under minimum alternate tax ('MAT'). IL&FS taxable under normal provisions, hence no penalty leviable for disallowance under MAT. No penalty initiated by AO in AYs 2005-06 and 2007-08.
As could be seen from the above, most of the additions/disallowance made by the Assessing Officer were either deleted or set-aside by the Tribunal to the Assessing Officer. In some of the cases the Assessing Officer himself not initiated penalty proceedings in earlier assessment years where similar additions/disallowance were made. The Ld.CIT(A) has rightly appreciated the submissions of the assessee and taking note of the fact that additions/disallowances were either deleted or set aside, he held that there was no concealment of income or furnishing of inaccurate particulars by the assessee in making its claims and the penalty was levied on mere change of opinion and the Ld.CIT(A) has rightly deleted the penalty levied for all these three assessment years. We further observed that Assessing Officer levied penalty on the disallowance
6 ITA.NOs. 1631, 1632 & 1633/MUM/2014 M/s. Infrastructure Leasing & Financial Services Ltd., made u/s. 14A of the Act while computing income under normal provisions of the Act as well as under book profits computation. Penalty cannot attract simply when there is an addition/disallowance is made. There is no concealment of income or furnishing of inaccurate particulars in making claim u/s. 14A of the Act. Thus, no penalty is attracted on disallowance made u/s. 14A of the Act. Thus, we sustain the order of the Ld.CIT(A) and reject the grounds raised by the revenue.
In the result, appeals of the Revenue are dismissed.
Order pronounced in the open court on the 07th February, 2020