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Income Tax Appellate Tribunal, AHMEDABAD “C” BENCH
Before: Shri S. S. Godara & Shri Amarjit Singh
आदेश/ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:-
This Revenue’s appeal for A.Y. 2003-04, arises from order of the CIT(A)-5, Ahmedabad dated 02-02-2015, in proceedings under section 271(1)(c) of the Income Tax Act, 1961; in short “the Act”.
I.T.A No. 1742/Ahd/2015 A.Y. 2003-04 Page No 2 The Dy. CIT vs. M/s. Fine Line Circuits Company
In this case, return of income declaring income of Rs. nil was filed on 30th November, 2003. Subsequently, the assessment was completed u/s. 143(2) r.w.s. 147 of the act on 24th December, 2010. In the re-assessment proceedings, the assessing officer has noticed that assessee has claimed deduction u/s. 10B of export of CCGL sheets. In this connection, the assessing officer observed that since assessee was not doing any manufacturing of CCGL sheets, therefore, the turn-over of such export was not fallen within the ambit of deduction u/s. 10B. The assessing officer has also noticed that assessee had not adjusted brought forward unabsorbed depreciation of Rs. 87,46,089/- from the business income before claiming deduction u/s. 10B of the act. Consequently, the assessing officer has allowed the unabsorbed depreciation of Rs. 87,46,089/- before allowing deduction u/s. 10B of the act. It resulted in restricting the deduction u/s. 10B to the business profit available of Rs. 60,67,720/-. Thereafter, the assessing officer has initiated penalty u/s. 271(1)(c) of the act for furnishing inaccurate particulars of income. The assessee preferred appeal before the ld. CIT(A) and ld. CIT(A) dismissed the appeal of the assessee. Subsequently, in the case of the assessee, an order u/s. 263 of the act was passed by the Principal CIT-1, Baroda on 28th March, 2013 wherein brought forward unabsorbed business loss of Rs. 21,06,221/- was reduced from business profit for the purpose of working out the deduction u/s 10B thereafter the deduction was worked out to the amount of Rs. 29,84,208/-. The assessing officer has also initiated penalty proceedings u/s. 271(1)(c) for furnishing inaccurate particulars of
I.T.A No. 1742/Ahd/2015 A.Y. 2003-04 Page No 3 The Dy. CIT vs. M/s. Fine Line Circuits Company
income. The assessing officer has observed that assessee had claimed deduction u/s. 10B of Rs. 1,28,96,289/- including claim on export unabsorbed of CCGL sheets which was not eligible for 10B deduction. Further, in addition to above, the assessing officer stated that assessee has also claimed the deduction u/s. 10B without reducing brought forward business loss and unabsorbed depreciation. As a result, the 10B deduction in the case of the assessee was recomputed at Rs. 60,67,720/-. Subsequently, this deduction was further reduced to Rs. 29,84,208/- after giving effect to the order u/s. 263 of the IT act. The assessing officer concluded that above facts established that assessee has furnished inaccurate particulars of income in the form of excess claim of deduction u/s. 10B to the extent of Rs. 99,12,079/-. Consequently, the assessing officer has levied penalty of Rs. 36,43,000/- u/s. 271(1)(c) for furnishing inaccurate particulars of income.
Aggrieved against the penalty order, the assessee preferred appeal before the ld. CIT(A). The ld. CIT(A) has allowed the appeal of the assessee and deleted the penalty levied by the assessing officer by observing as under:- “3.3.2. So far as levy of penalty on the adjustment of brought forwarded losses and grant of deduction under section 10B before or after adjusting unabsorbed depreciation, is concerned, the Assessing Officer while making the adjustment in assessment order has relied on the judgments of the ITAT, Mumbai Tribunal in the case of Jewellery Solutions International (P) Ltd. [2009] 28 SOT 405 (Mum), In this decision it has been held that deduction u/s. 10B is to be allowed from the total income of the assessee after adjusting unabsorbed depreciation. On the other hand, it has been submitted by the Ld. Authorized Representative before the Assessing Officer that subsequent to the said decision the Mumbai High Court in the case of CIT v. Black & Veatch Consulting Pvt. Ltd. TS-260-HC- 2012-BOM has held that deduction u/s. 10A should be allowed before adjusting the unabsorbed depreciation and losses. I fully agree with the Authorized Representative that there are various conflicting judgments on this issue including Hirnatsingika Seida Ltd. Vs
I.T.A No. 1742/Ahd/2015 A.Y. 2003-04 Page No 4 The Dy. CIT vs. M/s. Fine Line Circuits Company
ACIT [1997] 63 ITD 290 (Bang.) and Patspin India Ltd. Vs CIT [2010] 38 SOT 369 (Cochin) at the time of framing of assessment. The controversy did not stop and in case of Hirnatsingika Seida Lld.(Supra), Karnataka High Court reversed the decision of Tribunal on a subsequent date (after the date of assessment in the case of appellant). However, there were many decisions in favour of the appellant and as held by in the case of CIT Vs Vegetable Products Ltd. [1973] 88 ITR 192 (SC), even if it be that two different interpretations equal in force are available with regard to the meaning of a particular section appearing in the statute, the interpretation which is more favorable to the assessee will have to be taken recourse to. In the present case, the interpretation which actually favours the case of the assessee was ignored by the Assessing Officer. Hon'ble Gujarat High Court in case of CIT v. Sambhav Media Ltd. [2013] 32 taxmann.com 371 (Guj) has held that when it was found that there existed bonafide difference of opinion between the Revenue and the Assessee regarding the allowability of a claim, no penalty should be levied. Similar view has been taken by the judicial authorities in the cases of Millennium International v. ACIT [2013] 38 taxmann.com 16 (Delh Trib), CIT v Amtek Auto Ltd. [2013] 352 ITR 394 (P&H) and Devsons (P) Ltd. v. CIT [2011] 329 ITR 483 (Delhi). The gist of these cases is that when a legal issue arises for consideration, which is debatable but the claim made by the assessee is not accepted, there is no justification to invoke the penalty provisions u/s. 271(1)(c). Divergent legal views on legal interpretation of a statute can take place, but it is not necessary that there should be uniformity or consensus of opinion on the aspects of law. The assessee cannot be faulted and penalty should not be imposed because the assessee had taken a particular standpoint, unless there are grounds or reasons to show that the assessee had not disclosed all the facts before the Departmental authorities concerned. In the case of the appellant it is not a case of furnishing of inaccurate particulars of income. Ail particulars regarding the claim of deduction u/s. 10B are on record and were duly produced and verified by the Assessing Officer. There is no allegation that the losses set off by the appellant are bogus or not genuine. It is also not a case that the particulars filed are false. In view of the same I agree with the AR that penalty levied is required to be deleted as the Assessing Officer has taken a different view of the matter relying on same particulars as the appellant did. Accordingly, the penalty levied by the Assessing Officer is deleted on both the grounds.”
During the course of appellate proceedings before us, the ld. departmental representative has supported the order of the assessing officer. On the other hand, ld. counsel has contended that Co- ordinate Bench of the ITAT has set aside the quantum proceedings in the case of the assessee for the year under consideration on the basis of which penalty was levied.
We have heard both the sides and perused the material on record. We have noticed that Co-ordinate Bench of the ITAT vide ITA
I.T.A No. 1742/Ahd/2015 A.Y. 2003-04 Page No 5 The Dy. CIT vs. M/s. Fine Line Circuits Company
No. 786 & 1059/Ahd/2013 dated 31/03/2017 has restored the quantum proceedings for deciding afresh to the file of the assessing officer, therefore, we observed the penalty levied in the case of the assessee has become infructuous, therefore, appeal of the revenue is dismissed.
In the result, the appeal of the revenue is dismissed.
Order pronounced in the open court on 18-09-2017
Sd/- Sd/- (S.S. GODARA) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad : Dated 18/09/2017 आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद