Income Tax Appellate Tribunal - Mumbai
Skil Infrastructure Ltd., Mumbai vs Department Of Income Tax on 10 July, 2014
ुं ई यायपीठ "ई" मब
आयकर अपील य अ धकरण, मब ुं ई
IN THE INCOME TAX APPELLATE TRIBUNAL "E" BENCH, MUMBAI
BEFORE HON'BLE S/SHRI H.L. KARWA, PRESIDENT AND B.R.BASKARAN (AM)
सव ी एच.एल. कावा, अ य एवं बी.आर.बा करन, लेखा सद य
आयकर अपील सं./I.T.A. No.2725/Mum/2013
( नधारण वष / Assessment Year :2008-09 )
Asstt. Commissioner of Income बनाम/ M/s SKIL Infrastructure Ltd.,
Tax, CC-38, Vs. SKIL House,209,
Room No.31(1), Ground floor, Bank Street cross Lane,
Aayakar Bhavan, M K Road, Fort,
Mumbai-400020 Mumai-400023
(अपीलाथ /Appellant) .. ( यथ / Respondent)
थायी ले ख ा सं . /जीआइआर सं . /PAN/GIR No. : AABCS7689E
अपीलाथ ओर से / Appellant by : Cap.Pradeep Shorya Arya
यथ क ओर से/Respondent by : Shri Ruturaj H Gunjan
सन
ु वाई क तार ख / Date of Hearing : 10.7.2014
घोषणा क तार ख /Date of Pronouncement : 10.7.2014
आदे श / O R D E R
Per B.R.BASKARAN, Accountant Member:
The appeal filed by the revenue is directed against the order dated 23.01.2013 passed by Ld CIT(A)-39, Mumbai and it relates to the assessment year 2008-09.
2. The revenue is assailing the decision of Ld CIT(A) in deleting the penalty of Rs.36,30,472/- levied by the AO u/s 271(1)(c) of the Act.
2 I.T.A. No.2725/Mum/2013
3. The facts that led to levy of penalty are set out in brief. The assessee company is engaged in the business of developing infrastructure facilities. In its return of income, the assessee claimed an amount of Rs.24,81,000/- relating to amortization of preliminary expenses as deduction u/s 35D of the Act. During the year under consideration, the deduction u/s 35D was allowable only to an Industrial Undertaking. The AO took the view that the assessee company does not fall in the category of "Industrial Undertaking" and hence disallowed the said Claim. The assessee had also claimed a sum of Rs.1.55 crores as legal expenses, which included a sum of Rs.82,00,000/- paid to M/s Ernst & Young towards Professional fees for services rendered in listing of the shares of the assessee company. The AO took the view that the amount paid towards listing of shares of the company would be covered by the deduction prescribed u/s 35D of the Act. Since the assessee company does not fall in the category of "Industrial Undertaking" and hence disallowed the said claim also. Though the assessee contended before the AO that the term "industrial" has been omitted from sec. 35D of the Act by the Finance Act 2008, yet the AO took the view that the said amendment takes effect from AY 2009-10 only and accordingly held that the said amendment does not apply to the year under consideration.
4. The AO levied a penalty of Rs.36,30,472/- u/s 271(1)(c) calculated @ 100% of the tax sought to evaded by claiming the above said two amounts. In the appeal filed by the assessee, the ld CIT(A) deleted penalty on the reasoning that the impugned additions have resulted due to wrong interpretation of law. Aggrieved, the revenue has filed this appeal before us.
3 I.T.A. No.2725/Mum/2013
5. The Ld D.R placed strong reliance on the order passed by the AO. He submitted that wrong claim of deduction would also amount to concealment of particulars of income, since the disallowance of the said claim would increase the total income.
6. On the contrary, the Ld A.R submitted that the assessee was under
bonafide belief that the amendment brought out by the Finance Act 2008 have retrospective application. Accordingly he submitted that the impugned disallowances have resulted due to difference of opinion on interpretation of law. Accordingly he contended that the Ld CIT(A) was justified in deleting the penalty levied by the AO.
7. We have heard the rival contentions and perused the record. We notice that the assessee has amortized preliminary expenses and accordingly claimed a sum of Rs.24,81,000/- u/s 35D of the Act. Out of the legal and professional fee claimed by the assessee, the AO took the view that a sum of Rs.82.00 lakhs is covered by sec. 35D of the Act. However, the AO took the view that the assessee is not entitled to claim deduction u/s 35D of the Act, since the assessee cannot be considered as falling in the category of "industrial undertaking". The assessee's contention that the amendment brought out by Finance Act, 2008 w.e.f. 1.4.2009, whereby the term "industrial" was omitted is curative in nature and hence it shall have retrospective effect, was not accepted by the assessing officer. The AO took the view that the said amendment is substantive in nature and hence it shall have prospective effect. The Ld CIT(A) has noticed that the explanation offered by the assessee is a bonafide one. Before Ld CIT(A), the assessee had placed reliance on the decision rendered by Hon'ble Supreme Court 4 I.T.A. No.2725/Mum/2013 in the case of Alom Extrusions Ltd (319 ITR 306)(SC), wherein the Apex Court had held that the amendment brought out in sec. 43B of the Act is retrospective in nature.
8. The explanations offered by the assessee would show that the assessee was under bonafide belief that the amendment brought out by Finance Act, 2008 is retrospective in nature. The said belief was not found to be false by the assessing officer. Thus, we find merit in the contentions of the assessee that the impugned disallowances have occurred due to difference of opinion about the interpretation of law. Though the Ld D.R would contend that the amendment was made effective from 1.4.1989 and hence there is no scope for two interpretation, yet we are unable to accept the said contentions. In our view, the belief entertained by the assessee cannot be considered as altogether wrong. Accordingly, in our view, the Ld CIT(A) was justified in deleting the penalty levied u/s 271(1)(c) of the Act. Accordingly we uphold his order.
9. In the result, the appeal filed by the revenue is dismissed.
The above order was pronounced in the open court on 10th July, 2014. घोषणा खुले यायालय म दनांकः 10th July, 2014 को क गई ।
Sd sd
(एच.एल. कावा/ H.L. KARWA) (बी.आर. बा करन,/ B.R. BASKARAN)
अ य / PRESIDENT लेखा सद य/Accountant Member
th
मब
ुं ई Mumbai: 10 July,2014.
व. न.स./ SRL , Sr. PS
5 I.T.A. No.2725/Mum/2013
आदे श क त ल प अ े षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent.
3. आयकर आयु त(अपील) / The CIT(A)- concerned
4. आयकर आयु त / CIT concerned
5. वभागीय त न ध, आयकर अपील य अ धकरण, मब
ुं ई /
DR, ITAT, Mumbai concerned
6. गाड फाईल / Guard file.
आदे शानस
ु ार/ BY ORDER,
True copy
सहायक पंजीकार (Asstt. Registrar)
आयकर अपील य अ धकरण, मुंबई /ITAT, Mumbai