Technvision Ventures Ltd ( Formelry ... vs Assessee

सर्वश्री आय.सी.शभमव, रेखम सदस्म एवुं सश्र ु ी सष ु भम चमर्रम, न्ममयमक सदस्म BEFORE SHRI R.C.SHARMA, AM & MS. SUSHMA CHOWLA, JM आमकय अऩीर सं./ITA No.1287/Mum/2013 ( नििाारण वषा / Assessment Year :2002-03) TechNVision Ventures Ltd. Vs. DCIT Rg.8(3), Mumbai -20 (formerly Solix Technologies Ltd.) 1486 (12-13-522), Lane No.13, Street No.14, Tarnaka, Secunderabad-500017 (AP) स्थममी रेखम सं ./ जीआइआय सं ./ PAN/GIR No. : AACCA 5943 R (अऩीरमथी /Appellant) .. (प्रत्मथी / Respondent)

यनधमवरयती की ओर से /Assessee by : Shri Jitendra Singh यमजस्र् की ओर से /Revenue by : Shri Neil Philip

सुनर्मई की तमयीख / Date of Hearing : 01/06/2015 घोषणम की तमयीख/Date of Pronouncement 10/06/2015

आदे श / O R D E R

PER R.C.SHARMA (A.M):

This is an appeal filed by the assessee against the order of CIT(A)-

18, Mumbai, dated 10-12-2012 for the assessment year 2002-03, in the

matter of imposition of penalty u/s.271(1)(c) of the I.T. Act.

2. Rival contentions have been heard and record perused. In this

case, penalty has been levied for revision in the amount of deduction

claimed u/s.10A. While framing the assessment the AO has excluded the

income on account of foreign exchange fluctuation for computing eligible

income for deduction u/s.10A. In the appeal, the CIT(A) has reversed the

order of AO and held that this income is eligible for claim of deduction 2 ITA No.1287/13

u/s.10A. The Tribunal confirmed the order of the CIT(A) on this ground.

However, the CIT(A) has enhanced the income by Rs.50 lakhs on the

plea that assessee has claimed expenditure of this unit against other unit

not eligible for deduction u/s.10A, thereby profit of eligible unit was

increased for claiming higher deduction.

3. Similarly while computing total turnover the STPI link charges

amounting to Rs.8,03.258/- was reduced from export turnover treating the

same as being telecommunication charges as per explanation to Section

2(iv) of the Act.

4. By the impugned order, the CIT(A) modified the order of the AO by

observing that STPI link charges cannot be part of export turnover and

held that same should also be excluded from the total turnover.

5. With respect to the additions discussed above, the AO levied

penalty u/s.271(1)(c) of the Act and the same was confirmed by the

CIT(A) on the plea that assessee has wrongly claimed expenditure of

eligible unit against other unit. Against the order of CIT(A) assessee is in

further appeal before us.

6. It was contended by the ld. AR that mainly penalty is imposed with

reference to income of Rs.50 lakhs enhanced by the AO by revising the

claim of deduction u/s.10A. He contended that since the enhancement

was done by CIT(A), therefore, he should initiate the penalty and record

his satisfaction for the same, however, the CIT(A) has not initiated penalty

in his order, therefore, penalty imposed by the AO with reference to the

enhancement made by the CIT(A) was not justified. 3 ITA No.1287/13

7. With regard to merit of the penalty ld. AR contended that in view of

the decision of the Hon'ble Supreme Court in the case of Reliance

Petroproducts ltd.322 ITR 158, decline of claim of deduction will not be

sufficient to levy of penalty u/s.271(1)(c) of the Act.

8. On the other hand, the contention of ld. DR was that assessee has

wrongly claimed expenditure of eligible unit against non-eligible unit so as

to claim higher deduction u/s.10A, accordingly the AO was justified in

levying penalty for such a wrongful claim.

9. We have considered rival contentions, carefully gone through the

orders of the authorities below and found that penalty has been levied

with reference to variation in the claim of deduction u/s.10A. In the

quantum proceedings the AO has disallowed the claim on some

income/expenditure which was partly allowed by the CIT(A). However, the

CIT(A) has reduced the claim u/s.10A by allowing certain expenditure

which were claimed by assessee against other unit. On the issue of

imposition of penalty for wrong claim of expenditure, the Hon'ble Supreme

Court in the case of Reliance Petroproducts Ltd. (supra) held as under :-

"Merely because the assessee had claimed the expenditure, where claim was not accepted or was not acceptable to the revenue, that by itself would not, in our opinion attract the penalty under Section 271(1)(c). If we accept the contention of the Revenue then in case of every return where the claim made is not accepted by Assessing officer for any reason, the assessee would invite penalty under Section271(1)(c). That is clearly not the intendment of the Legislature."

10. In the instant case before us, the enhancement of Rs.50,00,000/-

was made by CIT(A). the penalty proceedings should be commenced in

the course of, and before the completion of the proceedings in which the 4 ITA No.1287/13

income tax authority is satisfied about the default which attracts the

penalty. Here in this case the CIT(A) was satisfied and completed the

proceedings by making enhancement. However, ,he has not initiated any

penalty proceeding.

11. In view of the above discussion, we do not find any merit in the

penalty levied with reference to variation in the amount of claim for

deduction u/s.10A of the Act.

12. In the result, appeal of the assessee is allowed.

Order pronounced in the open court on this 10/06/2015.

Sd/- Sd/- (सष ु भम चमर्रम) (आय.सी.शभमव) (SUSHMA CHOWLA) (R.C.SHARMA) न्यानयक सदस्य / JUDICIAL MEMBER ऱेखा सदस्य / ACCOUNTANT MEMBER भंफ ु ई Mumbai; ददनमंक Dated 10/06/2015 प्र.कु.मभ/pkm, यन.स/ PS

आदे श की प्रनिलऱपप अग्रेपषि/Copy of the Order forwarded to :

1. अऩीरमथी / The Appellant

2. प्रत्मथी / The Respondent.

3. आमकय आमक् ु त(अऩीर) / The CIT(A), Mumbai.

4. आमकय आमुक्त / CIT

5. वर्बमगीम प्रयतयनधध, आमकय अऩीरीम अधधकयण, भुंफई / DR, ITAT, Mumbai

6. गमर्व पमईर / Guard file.

आदे शािसार/ BY ORDER, सत्ममवऩत प्रयत //True Copy/

उप/सहायक पुंजीकार (Asstt. Registrar) आयकर अपीऱीय अधिकरण, भुंफई / ITAT, Mumbai