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Asstt. Commissioner of Income Tax, Circle – 1, Nashik Versus Haldex India Limited

2015 (8) TMI 1033 - ITAT PUNE

Penalty u/s. 271(1)(c) - Disallowance made u/s. 40(a)(ia) - CIT(A) deleted penalty - Held that:- The Hon'ble Supreme Court of India in the case of GE India Technology Centre P. Ltd. Vs. CIT (2010 (9) TMI 7 - SUPREME COURT OF INDIA) has held that if the remittances are not assessable to tax under the provisions of Act, there is no question of deducting tax at source. The services were admittedly rendered outside India by the foreign entities. The said foreign entities were having no PE in India. .....

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The Hon'ble Supreme Court of India in the case of CIT Vs. Reliance Petro Products P. Ltd. (2010 (3) TMI 80 - SUPREME COURT) has held that a mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing of inaccurate particulars. In the present case, the assessee is rather on a better footing. The assessee is eligible to claim deduction u/s. .....

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antile system of accounting and has been making provision for the aforesaid incentives. It has come on record that the incentives are paid to the assessee in the subsequent year, if they are not claimed by the employees in the year in which provision is made. The assessee has been consistently following this method of creating provision and making payments in respect of aforesaid incentives. The assessee has brought on record ledger extracts to show that the liability has been paid in the subseq .....

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nd (PF) and ESIC on account of delay - CIT(A) deleted the addition - Held that:- This issue has already been settled by the Hon'ble Supreme Court of India in the case of Alom Extrusions Ltd. [2009 (11) TMI 27 - SUPREME COURT]. The Hon'ble jurisdictional High Court in the case of Hindustan Organics Chemicals Ltd. (2014 (7) TMI 477 - BOMBAY HIGH COURT) and in the case of CIT Vs. Ghatge Patil Transport Ltd. [2014 (10) TMI 402 - BOMBAY HIGH COURT] following the law laid down by the Hon'ble Supreme C .....

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) deleted the addition - Held that:- CIT(Appeals) has admitted the contentions of assessee without verification of the bills/invoices in respect of newly acquired assets. The Assessing Officer has categorically observed in his order that the assessee has failed to produce bills in respect of assets amounting to ₹ 94,51,713/-. Whereas, the Commissioner of Income Tax (Appeals) in his order has reduced this amount to ₹ 15,95,990/- without recording the reasons. It is not clear from the .....

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ck to the Assessing Officer for reconsideration of the bills/invoices. - Decided in favour of assessee for statistical purpose. - ITA Nos. 638 & 639/PN/2014 - Dated:- 19-8-2015 - SHRI R.K. PANDA AND SHRI VIKAS AWASTHY, JJ. For The Assessee : Shri R. D. Onkar For The Revenue : Shri Hitendra Ninave ORDER PER VIKAS AWASTHY, JM : ITA No. 638/PN/2014 has been filed by the Revenue against the order of Commissioner of Income Tax (Appeals)-I, Nashik dated 30-01-2014 for the assessment year 2004-05. In a .....

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lay in deposit of Employees share of contribution towards Provident Fund and ESIC ₹ 98,061/-. iii. Depreciation claimed on unproved assets ₹ 16,99,760/-. ITA No. 638/PN/2014 (A.Y. 2004-05) 2. The assessee is a company registered under the provisions of Companies Act, 1956 and is engaged in manufacturing of brake adjuster (AMBA and SABA). For the assessment year 2004-05 the income of the assessee was assessed at ₹ 5,28,58,006/- vide order dated 28-12-2006 passed u/s. 143(3) of t .....

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ound that export sales to the extent of ₹ 13,39,318/- were not realized from export debtors. However, the assessee had included the said amount while computing deduction u/s. 80HHC of the Act. The Assessing Officer disallowed the proportionate deduction of ₹ 1,96,381/- claimed by the assessee u/s. 80HHC of the Act. On account of these additions penalty proceedings were initiated against the assessee. The Assessing Officer vide order dated 28-06-2011 levied penalty of ₹ 3,19,860 .....

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s entities were not in the nature of managerial, technical or consultancy services within the meaning of section 9(1)(vii) of the Act. The provisions of Income Tax Act are not applicable on the payment of sales commission to the overseas parties, hence, no TDS was liable to be deducted. The Commissioner of Income Tax (Appeals) in the light of un-rebutted facts, deleted the penalty on account of addition made u/s. 40(a)(ia). In respect of disallowance u/s. 80HHC, it was observed that the total in .....

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duction. It was further pointed out that unrealized export debtors were discovered during the reassessment proceedings. It is not a case where any facts were suppressed dishonestly or the income was concealed deliberately. The Commissioner of Income Tax (Appeals) deleted the penalty on the aforesaid amount by placing reliance on the decision of Hon'ble Supreme Court of India in the case of CIT Vs. Reliance Petro Products P. Ltd. reported as 322 ITR 158 (SC). The Commissioner of Income Tax (A .....

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the Department submitted that the Commissioner of Income Tax (Appeals) has erred in deleting the penalty. The ld. DR submitted that the assessee had claimed higher deduction u/s. 80HHC in a wrongful manner. The ld. DR vehemently supported the order of Assessing Officer in levying penalty and prayed for setting aside the impugned order. 5. On the other hand Shri R. D. Onkar appearing on behalf of the assessee supported the order of Commissioner of Income Tax (Appeals). The ld. AR reiterated the s .....

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. reported as 367 ITR 155 (Madras). The ld. AR further submitted that penalty for disallowance of claim u/s. 80HHC cannot be levied, as the assessee had complied with all the formalities. It is not a case where the assessee has not exported the goods worth the amount. It was due to oversight that the assessee claimed deduction on unrealized export sales of ₹ 13,39,318/-. The ld. AR further submitted that as per the provisions of section 155(13), if deduction u/s. 80HHC is not allowed on th .....

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e order of Commissioner of Income Tax (Appeals) in deleting the penalty levied u/s. 271(1)(c). The penalty has been levied on account of disallowance made u/s. 40(a)(ia) and restricting the claim of deduction u/s. 80HHC. 7. The Assessing Officer made disallowance u/s. 40(a)(ia) for nondeduction of tax on the payment of sales commission amounting to ₹ 7,47,155/- to overseas entities. The said commission was paid to foreign entities for carrying out marketing activities and soliciting export .....

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The said foreign entities were having no PE in India. Therefore, payment of sales commission were not assessable to tax in India. We find that the issue in present appeal is squarely covered by the judgment of Hon'ble Madras High Court in the case of Faizan Shoes P. Ltd. (supra). The Hon'ble Court in similar circumstances has held, that disallowance on payment of sales commission without TDS to foreign parties for procuring export orders, u/s. 40(a)(i) is not sustainable. Hence, no pena .....

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unrealized exports of ₹ 13,39,318/-. It is not the case of Revenue that the assessee has not exported the goods worth the amount. The amount of excess deduction claimed only is a miniscule part of the total deduction claimed u/s. 80HHC. It seems to be bonafide error in calculating the deduction. The Hon'ble Supreme Court of India in the case of CIT Vs. Reliance Petro Products P. Ltd. (supra) has held that a mere making of a claim, which is not sustainable in law, by itself, will not am .....

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come Tax (Appeals) on the issue. 9. The impugned order of the Commissioner of Income Tax (Appeals) in deleting the penalty levied u/s. 271(1)(c) is well reasoned and warrants no interference. The appeal of the Revenue is dismissed being devoid of any merits. ITA No. 639/PN/2014 (A.Y. 2008-09) 10. In appeal, the Revenue has raised following grounds: 1. Whether on the facts and in the circumstances of the case, the Ld. CIT(A)- I, Nashik was justified in deleting the addition of ₹ 2,86,964/-o .....

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,760/-on account of depreciation, ignoring the fact that the assessee failed to produce documentary evidence to support it ? 4. The appellant prays the order of the Assessing Officer may be restored. 5. The appellant prays to adduce such further evidence to substantiate his case. 6. The appellant prays leave to add, alter, clarify, amend and or withdraw any grounds of appeal as and when the occasion demands. 11. In the first ground, the Revenue has impugned the order of Commissioner of Income Ta .....

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and definite and the amounts have been paid in full in the succeeding year. It is an admitted position that the assessee is following mercantile system of accounting and has been making provision for the aforesaid incentives. It has come on record that the incentives are paid to the assessee in the subsequent year, if they are not claimed by the employees in the year in which provision is made. The assessee has been consistently following this method of creating provision and making payments in .....

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e date . The Hon'ble Apex Court further held, What should be certain is the incurring of the liability. It should also be capable of being estimated with reasonable certainty though the actual quantification may not be possible. If these requirements are satisfied the liability is not a contingent one. The liability is in praesenti though it will be discharged at a future date. It does not make any difference if the future date on which the liability shall have to be discharged is not certai .....

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rovisions of respective Acts. However, the amount was deposited well before the due date of filing of return u/s. 139 of the Act. The ld. AR submitted that the issue is squarely covered in favour of the assessee by the recent decision of Bombay High Court in the case of Hindustan Organics Chemicals Ltd. reported as 366 ITR 1. 13. The Revenue has not disputed that the payment of Employees contribution towards PF and ESIC were deposited by the assessee before the due date of filing of return under .....

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on to the employee welfare funds, if the amount has been credited on or before the due date of filing of the return. We do not find any infirmity in the impugned order in deleting the addition on this count. Accordingly, this ground of appeal of the Revenue is dismissed. 14. The third ground in the appeal of the Revenue is with regard to deleting the addition of ₹ 16,99,760/- on account of depreciation. The assessee had claimed depreciation of ₹ 4,20,10,089/- on additions made to mac .....

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le to furnish the bills for assets amounting to ₹ 15,95,990/- which is only 1.64% of the total assets on which depreciation has been claimed. The Commissioner of Income Tax (Appeals) further held that the Assessing Officer has not brought on record that the assessee had inflated its purchase of fixed assets or has claimed excessive depreciation. The ld. DR submitted that the Assessing Officer had disallowed depreciation on assets, the purchase of which were not proved by the assessee. It w .....

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ssessing Officer for comments or report. On the other hand the ld. AR vehemently supported the findings of the Commissioner of Income Tax (Appeals) on this issue. The ld. AR submitted that the assessee had produced the copies of purchase orders raised on suppliers were the bills/invoices were missing. 15. From the perusal of records, we find that the Commissioner of Income Tax (Appeals) has admitted the contentions of assessee without verification of the bills/invoices in respect of newly acquir .....

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