LAFFANS PETROCHEMICALS LTD,MUMBAI vs. DCIT 8(2), MUMBAI

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ITA 666/MUM/2015Status: DisposedITAT Mumbai22 July 2016AY 2008-094 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since the quantum appeal was allowed in favour of the assessee, the penalty appeal did not survive. Consequently, the penalty order was set aside.

What were the facts?

The assessee appealed against a penalty levied under Section 271(1)(c) for depreciation claimed on building and electrical fittings. The quantum appeal concerning these disallowances had already been allowed by a coordinate bench of the ITAT.

What were the issues?

Whether a penalty under Section 271(1)(c) can be sustained when the underlying disallowance has been deleted in the quantum appeal. The applicability of Section 40(a)(ia) regarding disallowances for payments made to foreign shipping companies.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 40(a)(ia)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCHES “D”, MUMBAI

Before: SHRI B.R.BASKARAN (AM) & SHRI RAM LAL NEGI (JM)

For Appellant: Shri. Shekhar Gupta
For Respondent: Shri. B.S.Bist
Hearing: 19/07/2016Pronounced: 22/07/2016

This is an appeal preferred by the assessee against order dated 18/12/2014 passed by the Ld. CIT(Appeals)-17 Mumbai for the Asst. Year 2008-09, whereby the Ld. CIT(A) confirmed the penalty levied on the assessee u/s 271(1)(c) of the Income Tax Act, 1961 (in short ‘the Act’) with regard to depreciation claimed by the assessee on building and electrical fittings.

2.

The appellant/assessee has challenged the impugned order on the following effective grounds:-

1.

The Learned CIT(Appeals) has erred in law and on the facts of the case in sustaining the penalty u/s 271(1)(c) although the quantum appeal was pending before the Tribunal.

2. The Learned CIT(Appeals) has erred in law and on the facts of the case in sustaining the penalty u/s 271(1)(c) with regard to depreciation claimed by the assessee on building and electrical fittings.

3.

At the very outset the Ld. authorised representative (AR) of the assessee submitted that the quantum appeal in this case has been allowed by the “A” Bench of the Mumbai ITAT and since the same has been decided in favour of the assessee, the penalty appeal does not survive. Therefore the present appeal deserves dismissal on this score only. The assessee also filed the copy of order dated 20/02/2015 passed by the co-ordinate Bench in quantum appeal, Laffans Petrochemicals Ltd. vs. Dy. CIT Cir. 8(2) for A.Y. 2008-09 placed on record.

4.

We have gone through the record, we notice that the co-ordinate bench has allowed the quantum appeal of the assessee holding as under:-

6. We found that the payment of Rs. 1,00,940/- to Scientific Sales Corporation was made on account of cooling bath which involves replacement of compressor, thermostat and refilling of gas. We have verified invoice No. JKM/24243/07 dated 06/08/2007 issued by M/s. Sceintific Sales Corporation placed on record and found that payment was made on account of purchase of these items on which CST at 3% was paid, accordingly it did not require any deduction of tax at source. We therefore direct to A.O. to delete the disallowance of Rs. 1,00,940/- which was on account of purchase of cooling bath.

7.

In respect of payment made to Exodus Chemtank Pvt. Ltd., we found that the payment was made to a foreign shipping company through an agent, hence provisions of section 194-C of the Act is not applicable. For this purpose, a certificate form Asstt. Director of Income Tax (International Taxation) was also produced as required u/s 172 of the Act. Accordingly we do not find any merit for the disallowance of payment made on account of freight, forwarding and clearing charges paid to the foreign shipping company through its agent. The A.O.is directed to delete the disallowance so made u/s 40(a)(ia) of the Act.

5.

In view of the fact that the Tribunal has allowed the appeal filed by the appellant/assessee against the order of the CIT(A) and directed the A.O. to delete the disallowances made u/s 40(a)(ia) of the Act, the impugned penalty order does not survive. Accordingly we set aside the impugned order passed by the Ld. CIT(A) and allow the appeal filed by the assessee.

6.

In the result appeal filed by the assessee for A.Y. 2008-09 is allowed.

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