Calcutta High Court
Principal Commissioner Of Income Tax vs M/S.Rohit Ferro Tech Limited on 2 February, 2018
Author: Aniruddha Bose
Bench: Aniruddha Bose, Amitabha Chatterjee
ORDER SHEET
GA No.2782 of 2016
ITAT No.324 of 2016
IN THE HIGH COURT AT CALCUTTA
Special Jurisdiction(Income Tax )
ORIGINAL SIDE
PRINCIPAL COMMISSIONER OF INCOME TAX, KOLKATA-I,KOLKATA
Versus
M/S.ROHIT FERRO TECH LIMITED.
BEFORE:
The Hon'ble JUSTICE ANIRUDDHA BOSE
The Hon'ble JUSTICE AMITABHA CHATTERJEE
Date : 2nd February, 2018.
Appearance:
Ms.Smita Das Dey,Adv.
..for Appellant.
Mr.Abhratosh Majumder,Sr.Adv.
Mr.Avra Majumder,Adv.
..for Respondent.
The Court:-We heard learned Counsel for the Appellant.
The appeal is founded on two questions, which according to the Revenue involves substantial points of law. These questions, as suggested by the Revenue are:-
"(i) Whether on the facts and in the circumstances of the case the Learned Tribunal was justified in law in deleting the penalty of Rs.6,66,66,190/- ignoring the assessee's unsubstantiated claim of deduction under Section 80-IB from the DEPB benefits since the said benefit were lawfully not a part of the net profit of the eligible industrial undertaking for the purpose of the said section.
(ii) Whether on the facts and in the circumstances of the case the Tribunal was justified in law in allowing the carry forward of unabsorbed depreciation of Rs.3,27,26,923/- when there was no such unabsorbed depreciation 2 determined nor allowed to be carried forward in the assessment of the immediately preceding year i.e. assessment year 2007-08."
On both these counts the Commissioner of Income Tax (Appeals) and the Tribunal have decided in favour of the Assessee. On the first question, the Tribunal has held:-
"(8). We have given a very careful consideration to the rival submissions. As far as imposition of penalty on the claim of the Assessee that export incentives were received on export of ferro alloys manufacture in dwarika unit and therefore such incentive should also be considered as profit derived from the business of manufacture of ferro alloys and deduction u/s 80IB of the Act should be allowed, we find that the issue was debatable when the Assessee filed its return of income for the AY 2008-09 i.e., on 30.9.2008. The decision of the Hon'ble Supreme Court in the case of Liberty India Vs. CIT 183 Taxman 349 (SC) rendered in the year 2009 ultimately settled the issue as to whether deduction u/s.80-IB of the Act can be on export incentives or not. The Hon'ble Supreme Court held that export incentives cannot be considered as profits derived from the business of manufacture and it was traceable only to the scheme of incentive under which the Assessee received export incentive. Prior to this decision, there were conflicting decisions of various High Courts and ITAT. Therefore the claim made by the Assessee cannot be held to be an act of concealment of income or furnishing of inaccurate particulars of income. the Hon'ble Delhi High Court in the case of CIT Vs. Harshvardhan Chemicals & Minerals 259 ITR (Del) held that where an arguable, controversial or debate deduction is claimed, the claim cannot be said to be false, otherwise it would become impossible for any assessee to raise any claim or deduction which might be debatable. In view of the aforesaid legal position, we are of the view that the CIT(A) was fully justified in 3 cancelling the order of the AO in imposing penalty on the disallowance of deduction u/s.80-IB of the Act on export incentives.
9.As far as claim of the Assessee for deduction u/s.80-IB of the Act on the interest of Rs.73,76,953/- on FDs is concerned, it is no doubt true that the Hon'ble Supreme Court in the case of Pandian Chemiclas 262 ITR 278 took the view in the context of Sec.80HH of the Act that interest earned on the deposit made with the Electricity Board for the supply of electricity to the appellant's industrial undertaking cannot be treated as income derived from the industrial undertaking within the meaning of s.80HH. This decision of the Hon'ble Supreme Court was rendered on 24.4.2003 and the assessee filed its return of income on 30.9.2008. Hence it is clear in the present case on interest issue on fixed deposits, the decision of the Hon'ble Supreme Court mentioned (supra) laid down the law that was already available at the time of filing return of income by the assessee. The claim of the assessee established on this issue was patently wrong and penalty imposed thereon was rightly levied. The Cross-Objection, according to us, is liable to be dismissed. Respectfully following the principle laid down by the Hon'ble Supreme Court in the case of Pandian Chemicals (supra), we therefore hold that imposition of penalty on the disallowance of deduction u/s.80-IB of the Act on interest on fixed deposit is sustained. We therefore dismiss the Cross Objection of the assessee in this regard."
So far as second question is concerned, the paragraph 10 of the Tribunal's order reads: -
"10. As far as imposition of penalty on the claim of set of carry forward business loss is concerned, the finding of the CIT(A) is that carry forward business loss was claimed in AY 2007-08 and the assessment u/s. 143(3) of the Act was completed only after the filing of return of income by the Assessee for AY 2008-09. There is no dispute that there was a carry forward business loss to the tune of Rs.3,27,26,923/-. Therefore the claim for set off of carry forward business loss as made in the return of income, in our view cannot be said to be an act of either concealing particulars of income or furnishing inaccurate particulars of income. We therefore uphold the order of the CIT(A) in this regard."4
On the first question, we are of the view that the Tribunal's opinion reflects of plausible view on the subject controversy. In the judgement of the Hon'ble Supreme Court of India in the case of Commissioner of Income Tax, Ahmedabad Vs. Reliance Petroproducts Private Ltd. [(2010)11 SCC 762], it has held:-
"18. We must hasten to add here that in this case, there is no finding that any details supplied by the assessee in its return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under Section 271(1)(c) of the Act. A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the return cannot amount to inaccurate particulars."
On the two questions we have referred to earlier, we do not find any error of law having been committed by the Tribunal in affirming the order of Commissioner of Appeals. None of these two questions involved any substantial legal point. The appeal and the stay petition are, accordingly, dismissed.
(ANIRUDDHA BOSE, J.) (AMITABHA CHATTERJEE, J.) nm