TMI Blog2011 (6) TMI 998X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee-company had filed its return on 2.12.2003 declaring total income of ₹ 3,27,62,12,719/-. This return was processed u/s 143(1) on 22.3.2004. Subsequently, the case was taken up for scrutiny by issuing notice u/s 143(2) on 13.10.2004. It was found that the assessee is a public sector undertaking (PSU), functioning under the Ministry of Railways. It is engaged in the business of handling and transporting container-cargo. The activities are primarily carried out from Internal Container Depots (ICD) and container freight stations (CFS) spread all over the country. The wagons required by it form part of the railway system. These wagons are used for the carriage of container-cargo. 2.1 In the return, the assessee had claimed deduction of ₹ 47,45,91,484/- u/s 80-IA in respect of the profits of the ICD on the ground that they form inland ports. The AO did not accept this contention and disallowed the claim of the assessee. The findings of the AO were confirmed by the CIT(Appeals) and the Tribunal. 2.2 Penalty proceedings were also initiated u/s 271(1)(c) of the Act. These proceedings were completed on 31.3.2009 by levying minimum penalty of ₹ 5,30,39,074/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ility of a similar nature as may be notified by the Board in this behalf in the official gazette. The ICD was earlier notified by the Board under the residuary part of the aforesaid sub-clause. This section underwent amendment by Finance Act, 2001, and the deduction is covered under sub-section (4). The Explanation under this sub-section contains four entries. Clause (d) is- a port, airport, inland waterway or inland port. The Explanation has been further amended by Finance Act, 2007, with effect from 01.04.2008 to include in this clause an additional item, i.e., navigational channel in the sea. The case of the ld. counsel is that earlier the words used in sub-section (12) were inland waterways and inland ports , which have been substituted by the words inland waterway or inland port . This does not change the contents and, therefore, even in absence of Board notification under the old provision, the ICD constitutes an inland port and, therefore, an infrastructure facility. However, the Tribunal came to a different interpretation in the quantum appeal. It held that since the ICD is not an inland port and, therefore, the ICD was notified under the residuary clause. The residuary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duction under section 80-IA. In the light of these legal provisions, I hold that the appellant was not entitled for any deduction under section 80-IA against income derived from aforesaid 5 ICDs mentioned in preceding para. Thus, the question of notification by Custom Authorities is no more relevant for the deduction under section 80-IA in the assessment year 2003-04 (under appeal). Hence, I direct the AO not to allow deduction under section 80-IA against the income derived from the aforesaid 5 ICDs. 38. Thus, after amendment of the section vide Finance Act, 2001 with effect from 1.4.2002 there is certain change in the definition of infrastructure facility given in the Explanation. Prior to the said amendment, sub-section (12) (ca) provided that Infrastructure facility means (i) a road, bridge, airport, port, inland waterways and inland ports, rail system or any other public facility of similar nature as may be notified by the Board in this behalf in the Official Gazette. But Explanation (a) and (d) to sub-section (4)(c) provides that For the purpose of this clause infrastructure facility means- (a) a road including toll road, a bridge or a rail system, .(d) a port, airpor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and his reasons read as under:- In view of the facts and reasons discussed in detail, since the assessee corporation tried to conceal the taxable income by claiming deduction u/s 80IA to which it was not entitled, penalty proceedings u/s 271(1 )(C) of the I.T.Act, 1961 have been initiated separately. The reasons described above may be treated as satisfaction note for initiating penalty proceedings u/s 271(1)(C) of the I.T.Act, 1961. 3.4 It is argued that the assessee had made full and true disclosure of particulars regarding the claim. The deduction was quantified in the audit report. Thus, it cannot be said that the assessee suppressed any material fact in respect of the claim. It is further argued that the view taken by the assessee was not only a possible view but a plausible view in law. Therefore, there is a bona fide difference of opinion between it and the revenue authorities regarding the admissibility of the claim. Even if the claim is found to be erroneous, that by itself is not enough for levy of penalty in the circumstances narrated above. 4. In reply, the ld. CIT, DR submitted that the provision underwent material change after its amendment by Finance Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it can be said that the claim is bogus or false. 6. We have considered the facts of the case and submissions made before us. We may deal with the assumption of jurisdiction at the outset as this involves a preliminary objection taken by the assessee. The AO had recorded detailed reasons for denying deduction u/s 80IA. Thereafter, it is recorded that in view of facts and reasons, the assessee tried to conceal the taxable income by claiming deduction u/s 80IA to which it is not entitled. The reasons recorded as above may be treated as satisfaction note for initiating the penalty proceedings. Thereafter, a direction has been given to initiate the penalty separately. From the recorded reason, it will be clear that the penalty has been initiated because in the view of the Assessing Officer the assessee-company claimed deduction u/s 80IA, to which it was not entitled. This is the ground on which the penalty has been levied. Therefore, the reason for initiating penalty and levy of penalty are same. There may be some verbal change in respect of use of the word conceal and the words inaccurate particulars in the penalty order. According to us, in view of the reasons given for initiat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest in avoiding or evading the payment of legitimate tax. But that is not the relevant consideration for deciding the levy of penalty. The same has to be decided in the light of statutory language and decisions rendered by the courts in the matter. 6.3 With the aforesaid remarks, we may now discuss the rival submissions on merits. The first argument of the ld. counsel is that the assessee made full and true disclosure of facts regarding the claim before the ld. Commissioner of Income-tax, at the time of filing return and in the course of assessment proceedings. We find that the orders of the lower authorities have mentioned about the falsity of the claim but no averment or fact exists to show that any detail or particular, filed in support of the claim, was untrue or false. The ld. DR has also not been able to point out towards the falsity in the particulars or details filed by the assessee. She has also not been able to show that any material fact has been suppressed by the assessee. In the case of CIT Vs. Reliance Petro Products Pvt. Ltd., (2010) 322 ITR 158, the Hon ble Court inter-alia observed that in view of the decision in the case of Union of India Vs. Dharmendra T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rebuttal has been made by the ld. DR in this respect. In the case of CIT Vs. S. Dhanabal, (2009) 309 ITR 268, the Hon ble Court mentioned that the finding of the Tribunal is that it is not in dispute as to whether the assessee is entitled to claim deduction u/s 80HHE. The only thing disputed is with regard to quantum of deduction. It also noted that the claim has been duly certified by the chartered accountant and, therefore, the plea of the assessee that the claim was made under a bona-fide mistake deserves to be accepted. The Tribunal also noted that all primary facts were there before the Assessing Officer. In such circumstances, it has been held by the Tribunal that the assessee cannot be said to have furnished inaccurate particulars of income. This finding has been upheld by the Hon ble Court. The relevant portion of the decision, contained in paragraph nos. 8 and 9, are reproduced below:- 8. We see no reason to interfere with the Tribunal s decision. As observed in Dilip N. Shroff v. Jt. CIT Anr. (2007) 291 ITR 519 (SC), before penalty can be levied under section 271(1)(c), the assessing officer, in view of the provisions of clause (B) of Explanation 1, must return a fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the revenue regarding deduction u/s 80IA on the ICD. Mere difference of opinion does not lead to inference of concealment of income or furnishing inaccurate particulars of income. On the other hand, the case of the ld. DR is that the decision of the Tribunal in quantum appeal shows that the claim of deduction is bogus and false. Therefore, it is for the assessee to explain the reasons and circumstances leading to making a false claim and who made the mistake of making a false claim. Coming to the facts of the case and the law existing at different points of time, it is a fact that under the old law, the Board had notified the ICD to be an inland port and, therefore, an inland port amounted to infrastructure facility. The operation of this notification came to an end after amendment in the section, under which the residuary clause in the definition was deleted, which empowered the Board to notify a similar facility as infrastructure facility. Although the matter has been decided against the assessee by taking into account the effect of the amendment, the fact stays that the words inland port have not been defined under the Act. When a term used in a statute is not defined under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st house. The Hon ble court mentioned that such point was not raised by the revenue. The reasons given for setting aside the wrong claim u/s 80P will also apply to wrong claim of the depreciation on guest house. Making of a wrong claim is not at par with concealment of income or furnishing inaccurate information, which may call for the levy of penalty. Such view also emerges from the decision of Hon ble Supreme Court in the case of Reliance Petro Products Pvt. Ltd. 6.6 It is also the case of the ld. counsel that even if the claim was erroneous, the only thing which could be done was to disallow the same, but it did not entail the levy of penalty. In the case of CIT Vs. Lakhani India Ltd., (2010) 324 ITR 73, the Tribunal returned a finding that the whole problem started due to the difference of opinion and it could not be said that the assessee furnished inaccurate particulars of income. The claim of the assessee was duly certified by the certificate of a chartered accountant. Therefore, it was held that penalty cannot be levied. The Hon ble Court mentioned that the concurrent findings recorded by the CIT(Appeals) and the Tribunal showed that there was no concealment of income or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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