Contact us   Feedback   Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2015 (3) TMI 567 - ITAT MUMBAI

2015 (3) TMI 567 - ITAT MUMBAI - TMI - Penalty order passed u/s 271(1)(c) - disallowance of ROC fees - Held that:- ROC fees is not allowable as expenditure. The position of law in this regard is very clear. Ld. AR also did not make any submission. Thus, it was a clear cut disallowable amount, which has been claimed as revenue expenditure. So the levy of concealment penalty to this extent is confirmed. - Decided against assessee.

Trade mark and patent expenses - Held that:- On this iss .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ee is that it has been described under Companies Act. Keeping in view the smallness of the claim and disclosures of particulars of assets and rate of depreciation and also the returned income of ₹ 8.90 crores, we are of the opinion that this could be an inadvertent mistake for which the assessee should not be held liable for concealment penalty. We, therefore, delete the penalty. - Decided in favour of assessee.

Disallowance under section 14A r.w.r. 8D - Held that:- In the year .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rmula has been prescribed in Rule 8D. In the present case, since assessee did not make any disallowance and even could not substantiate its explanation that no expenditure was incurred for earning exempted income, therefore, we donít see any force in the claim of the assessee that disallowance on account of expenditure cannot be made as per Rule 8D.

However, so far as it relates to component of interest which is a sum of ₹ 9,403/-, we are of the opinion that same is not sustain .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t made by the assessee in tax free shares and securities would be out of the own funds of the assessee. Therefore, disallowance to the extent of ₹ 9403/- is deleted. disallowance of ₹ 12,70,726/- is upheld. - Decided partly in favour of assessee.

Depreciation on goodwill - Held that:- Since the issue is covered by the Honíble Supreme Court in the case of Smifs Securities Ltd. (2012 (8) TMI 713 - SUPREME COURT), as accepted by either parties, the ground is allowed. Hence, t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y Ld. CIT(A)-20, Mumbai dated 18/10/2012 for assessment year 2006-07. ITA No.2660/Mum/2013 is directed against order passed by Ld. CIT(A)-20, Mumbai dated 23/1/2013 for assessment year 2007-08 and ITA No.2659/Mum/2009-10 is directed against order passed by Ld. CIT(A)-20 Mumbai dated 07/01/2013 for assessment year 2009-10. ITA NO.289/MUM/2013:A.Y.2006-07: Grounds of appeal: 1. On the facts and in the circumstances of the case and in law, the penalty order passed u/s 271(1)(c) of the I.T. Act is i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f inaccurate particulars of income. 3. In the details furnished at page 1 & 2 of the paper book the additions which have been made in the assessment order and the position of the quantum are described in the following chart. For the relevant A.Y 2006-07 the date of hearing for quantum addition made was 06/02/2014 and the order was pronounced on 28/02/2014. Following is the summary of ITAT orders passed relevant for penalty levied by the learned CIT(A): S.No. Pariculars of penalty levied Amou .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

xpenses 38,56,361 In favour of appellant ITAT order Pg. No.6- 11 para 30 to 45 Penalty N.A 5 ROC fees 15,000 Not Pressed ITAT order Pb. No.2 para 2 Not Pressed 6 Franchisee termination expenses 18,50,000 ITAT has directed the AO to verify the claim in the light of agreements, evidence and case laws after allowing opportunity to JDL abeyance ITAT order Pg. No.11-12 Para 52 to 53 Leviability of penalty stay in abeyance 7. Trademark & patent 11,235 Not pressed ITAT order Pg. No. 2- Para 2 Not p .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d at Sl.No.2 in the above chart ) franchisee transaction expenses(Item mentioned at Sl.No.6 of the chart), the issues have been restored back to the file of AO and it was requested that the issue regarding levy of penalty on these items may also be restored back to the file of AO with a direction reconsider the same after passing the order as per directions given by ITAT. 3.2 Ld. DR did not raise any objection on this submission of Ld. AR. Therefore, keeping in view the aforementioned submission .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed by the assessee relating to these additions are considered to be allowed for statistical purposes. 3.3 Keeping in view the aforementioned chart, so far as it relates to levy of concealment , on the following addition penalty is deleted in view of deletion in the quantum proceedings by the aforementioned order of the Tribunal. (i) Deferred Revenue disallowance - ₹ 9,13,635/- (ii) Gratuity - ₹ 13,08,005/- (iii)Renovation/Civil expenses - ₹ 38,56,361/- 3.4 So far as it relates .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

and levy of concealment penalty on this amount is also confirmed. 3.6 Now the issue remain only with respect to excess depreciation claimed in the return. It was submitted by Ld. AR that on Air Conditioners and Office Equipments instead of 15% depreciation the assessee inadvertently claimed depreciation @25% as per Companies Act and this was only an inadvertent mistake and assessee surrendered the same in the assessment itself and did not file any appeal against the said disallowance. It was sub .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ate particulars attracting penalty. In case of Commissioner of Income Tax vs. Skyline Auto Products (P) Ltd., (2005) 193 CTR (MP) 72: (2004) 271 ITR 335 (MP): (2005) 142 Taxman 558 it was held that mistake committed by assessee while calculating depreciation was a bonafide mistake and not a deliberate act on the part of the assessee and cancelled the penalty under section 271(1)(c). In judicial decision of CIT vs. Somany Evergree Knits Ltd. (ITA No.1332 of 2011)(Bombay High Court Court) it was h .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

preciation and it cannot be said to an inadvertent mistake as assessee is assisted by a team of professionals who cannot make such mistake. 3.8 We have heard both the parties and their contentions have carefully been considered. This claim is disallowed by the AO as per following observations: 11. Excess depreciation: 11.1 From the perusal of depreciation chart, it is observed that assessee company had claimed depreciation on air conditioner and office equipment 25%. The correct rate of deprecia .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

as inadvertently made. The fact regarding the assets were duly disclosed in the return and only rate of depreciation was wrongly claimed. The basis of claim made by the assessee is that it has been described under Companies Act. Keeping in view the smallness of the claim and disclosures of particulars of assets and rate of depreciation and also the returned income of ₹ 8.90 crores, we are of the opinion that this could be an inadvertent mistake for which the assessee should not be held lia .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ct and that too without appreciating fully and properly the facts of the case. 3. On the facts and in the circumstances of the case and in law, the learned CIT. (A) erred in partly confirming the penalty levied u/s 271(1)(c) of the I.T. Act although there has been neither any concealment of income nor furnishing of inaccurate particulars of income. 4. The impugned concealment penalty of ₹ 12,14,665/- imposed on the addition made in respect of loss claimed on sale of PMS sale of shares whic .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ter requesting for adjournment on the ground that quantum appeal filed before the Hon ble ITAT, Mumbai is pending for decision, hence, penalty proceedings might be kept in abeyance till the disposal of appeal. This reason for seeking adjournment was not found acceptable and reasonable, therefore, appellant was asked to represent the case so that appeal could be decided on merit. Mr. Nitil D. Chotalia, Executive-Taxation, has appeal and on 09.01.2013 and has requested to give one more date for re .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

djournment application. Thus, it is very clear that appellant is not interested in prosecuting its appeal, therefore, case is decided on merit. 4.2 As it can be seen from the above observations of Ld. CIT(A) that despite filing of adjournment application he has proceeded to decide the impugned appeal. We are of the opinion that it will serve the interest of justice if the matter is restored back to the file of Ld. CIT(A) with a direction to re-adjudicate the same after giving a reasonable opport .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s treated to be allowed for statistical purposes. ITA NO.2659/MUM/2013,A.Y.2009-10:. Grounds of appeal: 1. On the facts and in the circumstances of the case and in law, the learned C.I.T. (A) erred in disposing of the appeal and that too without fully and properly considering the written submission as well as the evidence submitted during the course of hearing proceedings 2. On the facts and the circumstances of the case and in law, the learned C.I.T. (A) erred in approving the action of the A.O .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

,93,98,075/-, which was claimed as exempt. However, assessee did not make disallowance under section 14A of the Income Tax Act, 1961(the Act) in the return of income or during the course of assessment proceedings. The AO invoked section 14A r.w. Rule 8D and calculated the disallowance as per following table : S.No. Pariculars Amount 1 The particulars of expenditure directly relating to income which does not form part of total income- Rule 8D(2)(i) Nil 2 Expenditure by way of interest during the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e first day and the last day of the previous year. C= the average of total assets as appearing in the balance sheet of the assessee, on the first day and the last day of the previous year - Rule 8D(2)(ii) 1331466734 1331466734 3 i)Average value of investments - Opening balance of investments + closing balance of investments /2 207036460 + 301254224 = ₹ 254145342 -8D (2)(iii) (ii) Disallowance An amount equal to one half per cent of the average of the value of investment income from which d .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

le, it is the submission of Ld. AR that no disallowance was called for as the assessee s own funds were much more than the investment made in the shares and securities, out of which the assessee has earned tax free dividend. To substantiate such contention, Ld. AR referred to the balance sheet, copy of which is placed at page 48 of the paper book. According to the said balance sheet share capital of the assessee including reserves and surplus is a total sum of ₹ 72,84,85,240/- as against i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

iture, particularly in view of the technology which enable the assessee make the investment by click to mouse and does not require any expenditure for the same. It is further the submission of Ld. AR that before making the disallowance the AO bound to record his satisfaction that the claim of the assessee that no expenditure sbeen incurred is incorrect. It is further the submission of the Ld. AR that Hon ble Karnataka High Court in the case of Canara Bank in Income Tax Appeal No.382 of 2010 has .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

direct expenses being incurred for earning exempt income was unjustified. Ld. AR also relied upon the decision in the case of Raj Shipping Agencies Ltd. vs. Addl. CIT, 38 Taxman 345 to contend that it is imperative for the AO to examine the accounts of the assessee first and if he is not satisfied with correctness of the claim, then only he can invoke Rule 8D. Ld. AR also relied upon the decision in the case of Justice Sam p. Barrocha vs. Addl. CIT, 25 taxman 381, to contend that principle of ap .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

heard both the parties and their contentions have carefully been considered . The copy of profit and loss account of the assessee has been placed at page 49 of the paper book. In the said profit and loss account, employee remuneration and benefits are described in Schedule-N and which are a sum of ₹ 49,76,56,158/- and total expenditure incurred in respect of directors remuneration out of the above mentioned total amount is a sum of ₹ 95,95,926/-. The administrative and other expenses .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ments have been made during the year under consideration except investment of ₹ 5.00 crores in Templeton Fixed Horizon Fund Series and investment in Equity share of shares of Just Dial Inc. (100% subsidiary) of ₹ 1.36 crores. Thus, in the year under consideration the assessee has made substantial investment and for making such investment decision have to be taken and it cannot be said that assessee did not incurred any expenditure to earn dividend income which is substantial. Therefo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

, since assessee did not make any disallowance and even could not substantiate its explanation that no expenditure was incurred for earning exempted income, therefore, we don t see any force in the claim of the assessee that disallowance on account of expenditure cannot be made as per Rule 8D. 5.6 However, so far as it relates to component of interest which is a sum of ₹ 9,403/-, we are of the opinion that same is not sustainable for the reason that assessee s own funds are much more the f .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version