w w w . L a w y e r S e r v i c e s . i n



Bhuvan Leasing & Infrastructures ITO, Ward 7(1)(2), P.Ltd. v/s Mumbai


Company & Directors' Information:- C K INFRASTRUCTURES LIMITED [Active] CIN = U70200DL1997PLC089706

Company & Directors' Information:- D B INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U04520MP2006PTC018493

Company & Directors' Information:- R S INFRASTRUCTURES LIMITED [Active] CIN = U45201PB1997PLC020316

Company & Directors' Information:- K R INFRASTRUCTURES LIMITED [Active] CIN = U73100TG1992PLC013995

Company & Directors' Information:- A R T LEASING LIMITED [Active] CIN = U65910KL1990PLC005904

Company & Directors' Information:- LEASING CORPORATION OF INDIA LIMITED [Strike Off] CIN = U65910MH1985PLC036022

Company & Directors' Information:- G A LEASING PRIVATE LIMITED [Active] CIN = U74899DL1992PTC051023

Company & Directors' Information:- H S B LEASING LTD [Active] CIN = U65921CH1992PLC012470

Company & Directors' Information:- P S S LEASING PRIVATE LIMITED [Active] CIN = U65910PB1990PTC010922

Company & Directors' Information:- I M B INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U70102DL2009PTC195079

Company & Directors' Information:- Y K M INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U45202CH2006PTC029960

Company & Directors' Information:- R 3 INFRASTRUCTURES LIMITED [Active] CIN = U45400DL2014PLC268953

Company & Directors' Information:- J B LEASING PRIVATE LIMITED [Active] CIN = U74999WB2009PTC210292

Company & Directors' Information:- P G M INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U01119AP2007PTC054326

Company & Directors' Information:- N H INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U45209CH2010PTC032243

Company & Directors' Information:- J F C LEASING PRIVATE LIMITED [Active] CIN = U74899DL1988PTC031049

Company & Directors' Information:- K C LEASING LIMITED [Active] CIN = U65921PB1991PLC011768

Company & Directors' Information:- R K L LEASING PVT LTD [Active] CIN = U67120WB1986PTC040200

Company & Directors' Information:- Y D INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U70102UP2009PTC037603

Company & Directors' Information:- C 4 INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U45201MH2013PTC242843

Company & Directors' Information:- J D LEASING PRIVATE LIMITED [Strike Off] CIN = U65910TG1994PTC018792

Company & Directors' Information:- B S V R INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U45209TG2009PTC064901

Company & Directors' Information:- A R M LEASING LIMITED [Dissolved] CIN = U65993WB1980PLC032506

Company & Directors' Information:- V AND K INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U45200TG2001PTC036581

Company & Directors' Information:- K M LEASING LIMITED [Active] CIN = U65910UP1984PLC006489

Company & Directors' Information:- BHUVAN LEASING AND INFRASTRUCTURES PRIVATE LIMITED [Converted to LLP and Dissolved] CIN = U51900MH1992PTC065122

Company & Directors' Information:- J L INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U45200TN2008PTC066965

Company & Directors' Information:- T & C INFRASTRUCTURES PRIVATE LIMITED [Strike Off] CIN = U70102TG2008PTC060995

Company & Directors' Information:- U R C INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U45200TG2008PTC058894

Company & Directors' Information:- R V A INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U70102UP2013PTC056289

Company & Directors' Information:- P R LEASING PRIVATE LIMITED [Strike Off] CIN = U74899DL1995PTC064947

Company & Directors' Information:- S R G INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U74110DL2005PTC134967

Company & Directors' Information:- S R G INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U70101DL2005PTC134967

Company & Directors' Information:- N. C. R. INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U45400UP2008PTC034623

Company & Directors' Information:- K P S LEASING PRIVATE LIMITED [Active] CIN = U65910DL1997PTC089971

Company & Directors' Information:- K G A C LEASING PRIVATE LIMITED [Strike Off] CIN = U65910TZ1988PTC002222

Company & Directors' Information:- M M LEASING LTD [Active] CIN = U65921CH1986PLC007137

Company & Directors' Information:- C S LEASING PRIVATE LIMITED [Active] CIN = U74899DL1991PTC046382

Company & Directors' Information:- P T INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U51909DL2007PTC159635

Company & Directors' Information:- S. L. INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U45203PB2007PTC031300

Company & Directors' Information:- V C H INFRASTRUCTURES PRIVATE LIMITED [Under Process of Striking Off] CIN = U45203KL2011PTC028762

Company & Directors' Information:- P A INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U45208TN2009PTC071929

Company & Directors' Information:- A E K INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U45309TN2009PTC071702

Company & Directors' Information:- K G N INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U74200DL2007PTC167982

Company & Directors' Information:- M A M INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U70109KA2012PTC062160

Company & Directors' Information:- P N INFRASTRUCTURES PRIVATE LIMITED [Strike Off] CIN = U45201OR2010PTC012647

Company & Directors' Information:- R S INFRASTRUCTURES INDIA PRIVATE LIMITED [Strike Off] CIN = U45206TN2013PTC091533

Company & Directors' Information:- J S K INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U45200MH2005PTC156097

Company & Directors' Information:- S A INFRASTRUCTURES PRIVATE LIMITED [Strike Off] CIN = U45400WB2013PTC192691

Company & Directors' Information:- L & W INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U45200DL2008PTC182372

Company & Directors' Information:- U AND V LEASING PRIVATE LIMITED [Strike Off] CIN = U71290DL1985PTC021145

Company & Directors' Information:- K R R INFRASTRUCTURES PRIVATE LIMITED [Strike Off] CIN = U70102TG2008PTC061194

Company & Directors' Information:- INFRASTRUCTURES PRIVATE LIMITED [Under Process of Striking Off] CIN = U45200JH2007PTC012792

Company & Directors' Information:- S AND A INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U45206UR2012PTC000345

Company & Directors' Information:- J & K INFRASTRUCTURES LIMITED [Active] CIN = U40101JK2009PLC003034

Company & Directors' Information:- V. J. S. INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U74999UP2008PTC035636

Company & Directors' Information:- K R M INFRASTRUCTURES (INDIA) PRIVATE LIMITED [Strike Off] CIN = U45209TG2011PTC073850

Company & Directors' Information:- M D INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U45201CH2001PTC024224

Company & Directors' Information:- S B LEASING PRIVATE LIMITED [Active] CIN = U74899DL1987PTC028630

Company & Directors' Information:- M G LEASING PVT LTD [Strike Off] CIN = U65921CH1987PTC007342

Company & Directors' Information:- V K INFRASTRUCTURES PRIVATE LIMITED [Strike Off] CIN = U45400UP2008PTC034415

Company & Directors' Information:- K Y INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U45201DL2004PTC127815

Company & Directors' Information:- A K C INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U45200KL2010PTC025716

Company & Directors' Information:- D N D INFRASTRUCTURES PRIVATE LIMITED [Strike Off] CIN = U45203PN2008PTC133243

Company & Directors' Information:- G V R INFRASTRUCTURES INDIA PRIVATE LIMITED [Strike Off] CIN = U45209AP2008PTC059504

Company & Directors' Information:- R B S LEASING PRIVATE LIMITED [Strike Off] CIN = U65910KA1984PTC005947

Company & Directors' Information:- K & K INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U74120KA2006PTC040900

Company & Directors' Information:- P R R LEASING COMPANY PRIVATE LIMITED [Active] CIN = U74899DL1994PTC059944

Company & Directors' Information:- A & G INFRASTRUCTURES PRIVATE LIMITED [Strike Off] CIN = U31900PB2012PTC036358

Company & Directors' Information:- Y R INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U45201RJ2015PTC047298

Company & Directors' Information:- U D INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U45400MH2010PTC203382

Company & Directors' Information:- J W INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U74120MH2015PTC268554

Company & Directors' Information:- G AND G INFRASTRUCTURES PRIVATE LIMITED [Strike Off] CIN = U45200MH2004PTC147316

Company & Directors' Information:- A. N. Y. INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U45206MH2013PTC243735

Company & Directors' Information:- J V S M S INFRASTRUCTURES PRIVATE LIMITED [Strike Off] CIN = U45200TG2010PTC070371

Company & Directors' Information:- K S V V INFRASTRUCTURES PRIVATE LIMITED [Strike Off] CIN = U45209TG2010PTC069359

Company & Directors' Information:- A V R INFRASTRUCTURES PRIVATE LIMITED [Strike Off] CIN = U45400DL2009PTC186399

Company & Directors' Information:- A P S INFRASTRUCTURES PRIVATE LIMITED [Strike Off] CIN = U70109DL2013PTC248564

Company & Directors' Information:- R R INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U70109DL2006PTC150324

Company & Directors' Information:- S D P INFRASTRUCTURES PRIVATE LIMITED [Strike Off] CIN = U45200HR2013PTC048666

Company & Directors' Information:- B P K INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U45203KA2009PTC049331

Company & Directors' Information:- T M R INFRASTRUCTURES PRIVATE LIMITED [Strike Off] CIN = U45400TG2007PTC054647

    ITA No. 587/Mum/2012

    Decided On, 08 February 2013

    At, Income Tax Appellate Tribunal Mumbai

    By, THE HONOURABLE MR. JUSTICE B.R. MITTAL (JUDICIAL MEMBER) & THE HONOURABLE MR. SANJAY ARORA (ACCOUNTANT MEMBER)

    For the Appellant: Rakesh Joshi, Advocate. For the Respondent: Mohit Jain, Advocate.



Judgment Text

B.R. Mittal, JM:

1. The assesee has filed this appeal for assessment year 2003-04 against order dated 24.10.2011 of ld CIT(A)-13, Mumbai confirming the levy of penalty u/s.271(1)(c) of the Act of Rs.4,22,164 on account of addition of Rs.11,48,746/-.

2. The relevant facts are that assessee filed return of income declaring income at Rs. Nil. The AO completed assessment u/s.143(3) assessing the loss of Rs.72,34,415 after setting off brought forward unabsorbed depreciation of Rs.94,70,234 under the normal provisions of the Act. Since the profit as per profit and loss account is of Rs.5,30,693/-, AO computed the book profit u/s.115JB of the Act at Rs.41,792/-. Thus, the computation was made u/s.115JB of the Act. Since in the normal computation of income under the provisions of the Act, AO made disallowance of Rs.10,88,746/- claimed by the assessee on account of fee paid to Rochester Institute of Technology, New York State, USA on the computer course pursued by Mr Naval Kumar, S/O Shri B.R. Kumar who holds 99% shares of the assessee company and other 1% being held by his wife Mrs Pushpa Kumar and stated that said amount of Rs.10,88,746/- spent on account of training of Mr Naval Kumar by deputing him for computer related studies in printing to Rochester Institute of Technology, New York is not allowable as this amount has not been wholly incurred for the purpose of business as per section 37(1) of the Act. Besides above, assessee company also claimed an amount of Rs.60,000/- paid to Mr Naval Kumar towards salary as Executive of the assessee company and AO disallowed the same. AO stated that Mr Naval Kumar is not working for the company as there is no contribution by Mr Naval Kumar for running of the assessee company.

3. On account of above disallowances made, AO initiated penalty proceedings u/s.271(1)(c) of the Act. AO stated that assessee by claiming aforesaid expenses, which were not related to the business of the assessee company, thereby inflated expenses and reduced taxable income. AO stated that it is clear cut case of furnishing inaccurate particulars and, accordingly, levied penalty @ 100% of tax sought to be evaded u/s.271(1)(c) of the Act, which works out to Rs.4,21,164/-.

4. In the first appeal, ld CIT(A) confirmed the action of AO. It is relevant to state that ld CIT(A) placed reliance on the decision of Hon'ble Kerala High Court in the case of CIT vs. Gates Farm and Rubber C,91 ITR 467 (Ker) and stated that assessee made false claim which would amount to concealing the income. Ld CIT(A) also placed reliance on the decision of Hon'ble Gujarat High Court in the case of CIT vs. Vidyagauri Natverlal & Ors, 238 ITR 91(Guj). Hence, this appeal by assessee.

5. At the time of hearing, ld A.R. submitted that similar kind of expense was made in assessment year 2001-02, which was allowed by the AO himself. He referred pages 2 to 8 of PB, which contain copy of assessment order and profit and loss account for the said assessment year. He further submitted that in assessment year 2005-06, similar expenses were incurred and claimed by assessee. AO disallowed the claim on similar facts and initiated penalty proceedings. However, AO subsequently dropped the penalty proceedings and ld counsel referred page 17 of PB, which is copy of letter dated 29.3.2011 of AO to drop the proceedings initiated u/s.271(1)(c) of the Act. Ld A.R. further submitted that if the assessment is finally made u/s.115JB of the Act because the total income computed as per normal provisions of the Act is less than book profit computed u/s.115JB of the Act, penalty u/s.271(1)(c) cannot be imposed because disallowance so made and alleged concealment had no role to play. He submitted that similar issue was decided by the Tribunal in the case of M/s. Ruchi Strips & Alloys Ltd vs. DCIT (I.T.A. No.6940/M/2008) vide order dated 21.1.2011 by following the decision of Hon'ble Delhi High Court in the case of CIT vs. Nalwa Sons Investments Ltd., 327 ITR 543(Del). Ld A.R. filed a copy of the said order of the Tribunal in the case of Ruchi Strips & Alloys Ltd (supra) as well as the decision of Hon'ble Delhi High Court in the case of Nalwa Sons Investments Ltd (supra) to substantiate his above submission. Ld A.R. submitted that said decision of Hon'ble Delhi High Court (supra) squarely applies to the case of the assessee and, therefore, levy of penalty is not justified on the facts of the case of the assessee.

6. On the other hand, ld D.R. supported orders of authorities below. He submitted that Mr Naval Kumar was only 19 years old in 1999 when he completed his B.Sc and immediately he was employed and sent for the computer course to Rochester Institute of Technology, New York. He submitted that assessee company was promoted by parents of Mr Naval Kumar as 99% of shares are held by Mr B.R.Kumar and 1% share held by Mrs Pushpa Kumar wife of Mr B.,R.Kumar. He further submitted that only Mr Naval Kumar was sent for such training programme after executing an agreement and no other employee was sent. He further submitted that at the time when Mr Naval Kumar was sent for pursuing said computer course, assessee company was not in the business of any computer related activity. He further submitted that said computer course is a period of 5 years from 30.11.2000 to 31.5.2005. ld D.R. submitted that said expenses claimed were not for business of assessee company but was an inflated claim. Therefore, levy of penalty on account of said payment of Rs.10,88,746/- as well as payment of salary of Rs.60,000/- are nothing but furnishing inaccurate particulars of income by claiming said expenses as business expenditure. He submitted that levy of penalty be confirmed.

7. We have considered submissions of ld representatives of parties and orders of authorities below. We have also considered decisions cited before us.

8. We agree with ld D.R. that on the facts of the case, claim of the assessee is not bonafide as said claim of the assessee cannot be considered as business related expenses or for business purposes. On the other hand, said expenses claimed by the assessee are personal in nature of the promoters of the assessee company considering that 100% of shares of the assessee company are held by parents of Mr Naval Kumar. We, on the facts of the case, find merits in the submission of ld D.R. that these expenses were wrongly claimed to the knowledge of the promoters of the assessee company and, accordingly, claim was false.

9. Be that as it may, it is also a fact that income of the assessee was finally computed under the provisions of section 115JB of the Act as the total income computed as per normal provisions of the Act was less than the book profits computed u/s.115JB of the Act. The Hon'ble Delhi High Court in the case of Nalwa Sons Investments Ltd (supra) has considered similar issue, wherein, it was held that while considering levy of penalty u/s.271(1)(c) of the Act, it has to be considered as to whether furnishing of such wrong particulars had any effect on the amount of tax sought to be evaded. It was held that under the scheme of the Income-tax Act, 1961, the total income of the assessee is first computed under the normal provisions of the Act and tax payable on such total income is compared with the prescribed percentage of the book profits computed under section 115JB of the Act. The higher of the two amounts is regarded as total income and tax is payable with reference to such total income. If the tax payable under the normal provisions is higher, such amount is the total income of the assessee, otherwise, 'book profits' are deemed as the total income of the assessee in terms of section 115JB of the Act. It is stated that the income was computed as per the normal procedure was less than the income determined by legal fiction, namely, the book profits under section 115JB of the Act, the income of the assessee was assessed under section 115JB and not under the normal provisions. Therefore, even if there is concealment but that had it repercussions only when the assessment was made under the normal procedure. Since the assessment as per normal procedure was not acted upon, on the contrary it is the deemed income assessed u/s.115JB of the Act, which has become the basis of assessment as it was higher of the two, tax is thus paid on the income assessed under section 115JB of the Act. Hence, when the computation was made under section 115JB of the Act, concealment had no role to play and was totally irrelevant. It was held that concealment did not lead to tax evasion at all. Therefore, penalty could not have been imposed even in respect of false claim made by assessee. Hon'ble Delhi High Court also distinguished the case of Hon'ble Apex Court in the case of CIT vs. Gold Coin Health Food (P) Ltd.,304 ITR 308(SC). The said decision of Hon'ble Delhi High Court was followed by the ITAT Mumbai

Please Login To View The Full Judgment!

Bench in the case of M/s. Ruchi Strips & Alloys Ltd(supra) and penalty levied u/s.271(1)(c) of the Act was cancelled on the ground that total income of the assessee was determined on the basis of book profits u/s.115JB of the Act as there was no tax sought to be evaded because the addition in respect of which penalty was imposed was made while computing the total income under the normal provisions of the Act and ultimately, total income of the assessee was determined on the basis of book profits u/s.115JB of the Act. Therefore, the said concealment has no effect on evasion of tax. Since above decisions squarely apply to the facts of the assessee under consideration before us, respectfully following the decision of the Hon'ble Delhi High Court (supra) and also the decision of coordinate bench (supra), we cancel the penalty levied u/s.271(1)(c) of the Act. Hence, grounds of appeal taken by assessee is allowed. 10. In the result, appeal filed by assessee is allowed.
O R