Income Tax Appellate Tribunal - Ahmedabad
Accurate Finstock Pvt. Ltd.,, ... vs The Acit, Circle-1(3),, Ahmedabad on 2 August, 2017
आयकर अपीलीय अिधकरण,
अिधकरण अहमदाबाद यायपीठ 'बी' अहमदाबाद।
IN THE INCOME TAX APPELLATE TRIBUNAL
"B" BENCH, AHMEDABAD
BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER
AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER
ITA No. 3177/Ahd/2014 & CO No. 329/Ahd/2014
नधारण वष/Assessment Year: 2008-09
ACIT, Vs. Accurate Finstock Pvt. Ltd.,
Circle-1(3), 9th Floor, Shikhar,
Ahmedabad Nr. Mithakhali Char Rasta,
Navrangpura, Ahmedabad
PAN: AABCA 9976 B
अपीलाथ / (Appellant) यथ / (Respondent/Cross-
Objector)
Revenue by : Shri Mudit Nagpal, Sr. DR
Assessee by : Shri P.M. Mehta, AR
सु न वा ई क ता र ख/ Date
of Hearing : 01/08/2017
घोषणा क तार ख / Date of Pronouncement: 02/08/2017
आदे श/O R D E R
PER RAJPAL YADAV, JUDICIAL MEMBER:
The Revenue is in appeal before the Tribunal against the order of the ld. Commissioner of Income-tax (Appeals)-6, Ahmedabad dated 10.09.2014 passed for Assessment Year 2008-09. On receipt of notice in the Revenue's appeal, the assessee has filed Cross-Objection bearing No. 329/Ahd/2014.
2. The solitary grievance of the Revenue is that the ld. CIT(A) has erred in deleting the penalty of Rs.13,29,986/- imposed by the Assessing Officer under Section 271(1)(c) of the Income-tax Act, 1961 (hereinafter referred to as "the Act").
3. The brief facts of the case are that the assessee has filed its return of income for the year under consideration on 25.08.2008 declaring total loss of ITA No. 3177 & CO No.329/Ahd/2014 Assessee : Accurate Finstock Pvt Ltd For AY: 2008-09 2 (-)Rs.76,71,160/- under the normal provisions of the Act and shown the book profits under Section 115JB of the Act at Rs.6,85,04,787/-. The assessee had included Long Term Capital Gain of Rs.45,12,874/- which arose to it on account of redemption of preference shares of Essar Steel Ltd. This claim of Long Term Capital Gain was included in the exempt income; however, when the Assessing Officer confronted the assessee with regard to non-admissibility of this claim, then the assessee surrendered it and accordingly an addition of Rs.45,12,874/- was made to the total income of the assessee. Ld. Assessing Officer has initiated the penalty proceedings under Section 271(1)(c) of the Act and ultimately he imposed a penalty of Rs.13,29,986/-.
4. On appeal, it was contended by the assessee that it has shown book profit for the purpose of Section 115JB of the Act of Rs.6,85,04,787/-. The Assessing Officer has computed the book profit at Rs.8,03,26,050/-, whereas the assessed income under the normal provisions is at Rs.86,62,977/- as against the returned loss of Rs.76,71,160/-. The taxes payable as per Section 115JB of the Act is more than the provision other than Section 115JB of the Act; hence the Assessing Officer has applied MAT in this year. It was further contended that the moment taxes were levied on MAT provision, i.e., on book profit, then the assessee cannot be visited with penalty qua the additions to the income assessed under the regular provisions. In support of its contention, the assessee has relied upon the judgment of the Hon'ble Delhi High Court in the case of CIT vs. Nalwa Sons Investments Ltd, reported in [2010] 327 ITR 543 (Delhi).
5. Ld. First Appellate Authority has accepted the contention of the assessee and deleted the penalty.
ITA No. 3177 & CO No.329/Ahd/2014 Assessee : Accurate Finstock Pvt Ltd For AY: 2008-09 3
6. Before us it was contended that the Board has accepted the position of law declared by the Hon'ble Delhi High Court in the case of Nalwa Sons Investments Ltd (supra) and a Circular bearing No.25/2015 has been issued in this connection. The said circular reads as under:-
"CIRCULAR NO. 25/2015F.No.279/Misc./140/2015/ITJ Government of India Ministry of Finance Central Board of Direct Taxes New Delhi, 31st December, 2015 Subject: Penalty u/s 271(1)(c) wherein additions/disallowances made under normal provisions of the Income Tax Act, 1961 but tax levied under MAT provisions u/s 115JB/115JC, for cases prior to A.Y. 2016-17-reg.-
Section 115JB of the Act is a special provision for levy of Minimum Alternate Tax on Companies, inserted by Finance Act 2000 with effect from 1-4-2001.
2. Under clause (iii) of sub-section (1) of section 271 of the Act, penalty for concealment of income or furnishing inaccurate particulars of income is determined based on the "amount of tax sought to be evaded" which has been defined inter-alia, as the difference between the tax due on the income assessed and the tax which would have been chargeable had such total income been reduced by the amount of concealed income or income in respect of which inaccurate particulars had been filed.
3. In this context, Hon'ble Delhi High Court in its judgment dated 26.8.2010 in ITA No.1420 of 2009 in the case of Nalwa Sons Investment Ltd. (available in NJRS as 2010-LL-0826-2), held that when the tax payable on income computed under normal procedure is less than the tax payable under the deeming provisions of Section 115JB of the Act, then penalty under section 271(1)(c) of the Act could not be imposed with reference to additions /disallowances made under normal provisions. The judgment has attained finality.
4. Subsequently, the provisions of Explanation 4 to sub-section (1) of section 271 of the Act have been substituted by Finance Act, 2015, which provide for the method of calculating the amount of tax sought to be evaded for situations even where the income determined under the general provisions is less than the income declared for the purpose of MAT u/s 115JB of the Act.
The substituted Explanation 4 is applicable prospectively w.e.f. 01.04.2016.
ITA No. 3177 & CO No.329/Ahd/2014 Assessee : Accurate Finstock Pvt Ltd For AY: 2008-09 4
5. Accordingly, in view of the Delhi High Court judgment and substitution of Explanation 4 of section 271 of the Act with prospective effect, it is now a settled position that prior to 1/4/2016, where the income tax payable on the total income as computed under the normal provisions of the Act is less than the tax payable on the book profits u/s 115JB of the Act, then penalty under 271(1)(c) of the Act, is not attracted with reference to additions /disallowances made under normal provisions. It is further clarified that in cases prior to 1.4.2016, if any adjustment is made in the income computed for the purpose of MAT, then the levy of penalty u/s 271(1)(c) of the Act, will depend on the nature of adjustment.
6. The above settled position is to be followed in respect of section 115JC of the Act also.
7. Accordingly, the Board hereby directs that no appeals may henceforth be filed on this ground and appeals already filed, if any, on this issue before various Courts/Tribunals may be withdrawn/not pressed upon. This may be brought to the notice of all concerned.
(Ramanjit Kaur Sethi) DCIT (OSD) (ITJ), CBDT, New Delhi"
In view of above circular, the appeal of the Revenue deserves to be dismissed.
7. The ld. Departmental Representative, on the other hand, was unable to controvert this contention of the ld. Counsel for the assessee.
8. We have duly considered rival contentions and gone through the record carefully. It is pertinent to observe that penalty was not initiated or imposed to any addition made to the book profit of the assessee. The penalty was initiated for the addition made to the income determined in normal provisions of the Act. Since ultimate taxes have been levied from the assessee on the basis of book profit computed by the Assessing Officer, the penalty imposed for the addition made to the income determined under the normal provisions is not sustainable, because there cannot be any allegation of evasion of tax qua that addition because no taxes were levied on that computation. The Circular issued by the CBDT makes this position ITA No. 3177 & CO No.329/Ahd/2014 Assessee : Accurate Finstock Pvt Ltd For AY: 2008-09 5 very clear and therefore, respectfully following the judgment of the Hon'ble Delhi High Court in the case of Nalwa Sons Investments Ltd (supra) as well as the aforesaid Circular, we do not find any merit in the appeal of the Revenue and the appeal of the Revenue is thus dismissed.
9. So far as the cross-objection is concerned, it is in support of the ld. CIT(A)'s order. Sub-clause (4) of Section 253 authorizes a respondent to file the cross-objection within 30 days from the receipt of the notice against any part of the impugned order. The assessee has not shown its grievance against the impugned order and therefore it is not maintainable. Accordingly the appeal of the Revenue and the cross-objection of the assessee, both are dismissed.
10. In the result, the appeal filed by the Revenue and the Cross-objection filed by the assessee, both are dismissed.
Order pronounced in the Court on 2nd August, 2017 at Ahmedabad.
Sd/- Sd/-
(AMARJIT SINGH) (RAJPAL YADAV)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad; Dated 02/08/2017
Biju T., Sr.PS
आदे श क त ल प अ!े षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent.
3. संबं धत आयकर आयु"त / Concerned CIT
4. आयकर आयु"त(अपील) / The CIT(A)
5. %वभागीय त न ध, आयकर अपील य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड फाईल / Guard file.
/ BY ORDER,
आदे शानुसार
TRUE COPY
उप/सहायक पंजीकार (Dy./Asstt.Registrar)
/ ITAT, Ahmedabad
आयकर अपील य अ'धकरण, अहमदाबाद