DCIT 7(2), MUMBAI vs. SKY LITE ELECTRO FIXTURES P.LTD, MUMBAI

अपीलाथ� क� ओर से /By Appellant : Shri Vachaspati Tripathi, D.R. ��यथ� क� ओर से/By Respondent : None सुनवाई क� तार�ख/Date of Hearing : 06.06.2016 घोषणा क� तार�ख/Date of Pronouncement : 24.06.2016 ORDER PER SHAILENDRA KUMAR YADAV, J.M: This appeal has been filed by Revenue against the order of Commissioner of Income-Tax (Appeals)-13, Mumbai, dated A.Y. 07-08 [DCIT vs. M/s. Sky Lite Electro Fixtures Pvt. Ltd.] Page 2 07.03.2013 for A.Y. 2007-08 on the issue of penalty u/s. 271(1)(c) of the Act.

2.1 Same has been opposed on behalf of Revenue inter alia submitting that CIT(A) erred in deleting the penalty levied by Assessing Officer u/s. 271(1)(c) of the Act without appreciating the fact that assessee has claimed higher value of cost (WDV) of asset sold and thereby had suppressed its capital gain and thus furnished the inaccurate particulars of income. Accordingly, ld. Departmental Representative submitted that the order of CIT(A) be set aside and that of order of Assessing Officer be restored.

2.2 On the other hand, none appeared on behalf of assessee. Therefore, we proceed to decide the case ex parte on the basis of submission of ld. Departmental Representative and material available on record.

2.3 After going through the submission of ld. Departmental Representative and perused the material on record, we find that basically foundation of penalty is wrong claim of capital gain. The stand of assessee has been that while making a claim, assessee committed a mistake inadvertently while filing the return of income. As stated above, WDV of factory building was claimed to be wrongly taken at Rs.3,22,897/- against A.Y. 07-08 [DCIT vs. M/s. Sky Lite Electro Fixtures Pvt. Ltd.] Page 3 Rs.25,25,514/-, as a result thereof capital gain was also worked out wrongly. This came to the notice while making submission before the Assessing Officer and the tax thereon has been paid.

2.4 The second issue was on account of adoption of full value of consideration u/s.50C of the Act. In fact, assessee has shown relevant facts with regard to this issue are as under:

“Short Term Capital Gain:

The assessee has shown short term capital gain of Rs.64,74,486/- on sale of factory building. During the course of the assessment proceedings, the assessee was asked to furnish the working of the same. The assessee vide letter dt. 04.11.2009 has submitted as under:

"While filing I.T. return online in October 2007, there was an advertent clerical error. The WDV of factory building was wrongly taken as Rs. 25,25,514/-. The short term capital gain was calculated by deducting Rs. 25,25,514/- from the sale consideration of Rs. 90,00,000/- the resultant capital gain was then adjusted against business loss of that year and brought forward loss of earlier years. The net result was Rs. 12, 85,473/- Since the tax liability on this amount was less than 10% of the Book Profits, provisions of section 115JB were applied and tax liability of Rs.4,98,540/- was worked out. Accordingly the assessee has paid Rs. 5,00,000/- and filed the I.T. Return.”

From the derails submitted it is noticed that as per the Income Tax Act, 1961 the WDV as on 31.03.2006 of the said block of assets is Rs. 3,22,897/-, while the assessee has wrongly taken the same at Rs. 25,25,514/-. Also, on perusal of the agreement, it is noticed that the market A.Y. 07-08 [DCIT vs. M/s. Sky Lite Electro Fixtures Pvt. Ltd.] Page 4 value of the factory building is Rs. 1,08,73,500/- against the agreement value of Rs. 90,00,000/-.

Hence, the assessee vide this office letter dt. 24.11.2009 was asked to show cause as to why the claim of WDV of Rs. 25,25,514/- as per return of income should not be disallowed and taken as Rs. 3, 22,897/- and also why the value of consideration should not be taken at Rs. 1,08, 73,500/- instead of Rs. 90,00,000/- u/s.50C of the I.T. Act, for computing income from capital gains.

However, till date, the assessee has submitted its explanation in this regard.

In view of the above, income from short term capital gains is worked out as under:-

Sate Consideration as per section 50C of the Income Tax Act 1961 1, 08,73,500 Less: W.D.V of the block of assets as on 31.03.2006 3, 22,897 ------------------- Balance (S.T.C.G.) 1, 05, 50,603”

The difference in income i.e. Rs.85,91,248/- less Rs.12,85,473/- i.e. Rs.73,05,775/- was taken by Assessing Officer as income sought to be evaded for working out minimum penalty leviable at Rs.14,61,155/-. The stand of assessee has been that issue of applicability of Section50 vis-à- vis 50C was decided holding that where assessee had claimed depreciation in respect of its office premises and therefore section 50 was applicable and thus Assessing Officer was not justified in adopting stamp duty valuation in place of amount shown in sale deed. There is also a view on the point that according to which the provisions of Section 50C are applicable A.Y. 07-08 [DCIT vs. M/s. Sky Lite Electro Fixtures Pvt. Ltd.] Page 5 to the short term capital gain calculated on sale of depreciable assets u/s.50C of the Act. As regards the claim regarding brought forward business losses whether they can be set off against income in the nature of capital gain computed u/s.50 of the Act, assessee has placed reliance on certain case laws to show the situation in his favour. In facts and circumstances, CIT(A) observed that though income was reflected at a lesser figure in the return of income filed, same happened due to inadvertent mistake and understanding of the provisions and also divergent view on the issue has been taken. The stand of assessee has been that penalty will not apply merely if an incorrect/inadmissible claim has been made in the return when all material facts have been disclosed in the return of income. It is not in dispute that assessee had not placed any material fact and it was only a question of interpretation made by them differently which led to higher claim of depreciation. There is nothing on record that assessee’s claim was not bonafide. Even though, same was not different interpretation of provisions or by adopting the opposite view taken by various authorities, in such a situation, assessee cannot be held guilty for furnishing inaccurate particulars or concealing the income. Thus on both the accounts i.e. addition made on account of application of provisions of section 50C of the Act as well as application of section 72 of the Act, even though income has been assessed at higher figure, same does not amount to furnishing of any inaccurate particulars or concealment of income on the part of assessee. Accordingly penalty has rightly ITA No.3867/Mum/14 A.Y. 07-08 [DCIT vs. M/s. Sky Lite Electro Fixtures Pvt. Ltd.] Page 6 been deleted by CIT(A). This reasoned finding of CIT(A) needs no interference from our side. We uphold the same.

Pronounced in the open Court on this the 24th day of June, 2016.

Sd/- Sd/- (RAJESH KUMAR) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai: Dated 24/06/2016 True Copy S.K.SINHA आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. राज�व / Revenue 2. आवेदक / Assessee 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त- अपील / CIT (A) 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, मुंबई / DR, ITAT, Mumbai 6. गाड� फाइल / Guard file. By order/आदेश से,

उप/सहायक पंजीकार, आयकर अपील�य अ�धकरण, मुंबई ।