IN THE HIGH COURT OF DELHI AT NEW DELHI
ITA 114/2009
THE COMMIISONER OF INCOME TAX,
DELHI-I, NEW DELHI ?..
Appellant
Through: Ms Prem Lata Bansal, Advocate
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Versus
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BECTON DICKINSON INDIA LTD ?.. Respondent
Through: Mr Prakash Kumar, Advocate
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CORAM
HON?BLE MR JUSTICE VIKRAMAJIT SEN
HON?BLE MR JUSTICE RAJIV SHAKDHER
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O R D E R
12.03.2009
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1. The Revenue has preferred this appeal under Section 260-A of the Income
Tax Act, 1961 (hereinafter referred to as the ?Act) against judgment dated
04.07.2008 passed by the Income Tax Appellate Tribunal (hereinafter referred to
as the ?Tribunal?) in ITA No 3366/Del/2006 pertaining to assessment year 2001-
02.
2. The Revenue is aggrieved on account of the fact that the Tribunal has
dismissed their appeal with respect to sustainability of imposition of penalty
by it under Section 271(1)(c) of the Act both on the point of law, as well as,
on merits. On the point of law, the Tribunal has followed the judgment of the
Supreme Court in the case of Virtual Soft Systems Ltd vs Commissioner of Income
Tax: (2007) 289 ITR 83. It is contended by the learned counsel for the Revenue,
Ms Prem Lata Bansal that the said judgment of the Supreme Court has been
reversed by a larger bench judgment of the Supreme Court in the case of
Commissioner of Income Tax vs Gold Coin Health Food Pvt Ltd: (2008) 304 ITR 308.
On merits the learned counsel submits that the Tribunal failed to appreciate
that a Special Leave Petition was pending with respect to deletion of the
additions.
3. In this case the brief facts which require to be noticed are:-
3.1 The assessee had filed on 30.10.2001 a return of income declaring a
loss of Rs 21,77,21,692/-. The assessee?s case was picked up for scrutiny. The
Assessing Officer after making suitable enquiries assessed the income of the
assessee under Section 143(3) of the Act at a loss of Rs 19,10,60,972/-.
Amongst various additions made the Assessing Officer had also made an addition
on account of loss claimed by the assessee due to foreign exchange fluctuation
in respect of its foreign debt outstanding at the end of the relevant previous
year. The addition on this account amounted to Rs 1,85,03,817/-. In addition
to the above disallowance was also made with regard to contributions by the
assessee towards provident fund amounting to approximately Rs 9 lacs. As is
noted from the order of the authorities below, the total disallowances were to
the extent of Rs 2.66 crores. It is undisputed that out of the said
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disallowances in appeal proceedings disallowances to the extent of Rs 2.57
crores have been deleted. The Tribunal has also noted that in so far as the
remaining disallowances of approximately Rs 9 lacs are concerned, those relate
to only difference of opinion between assessee and the Assessing Officer and do
not arise out of the assessee furnishing inaccurate particulars or concealing
particulars of its income.
4. In view of the aforesaid facts and circumstances, we are of the view,
that the contention of the learned counsel for the Revenue on the point of law
that a penalty under Section 271(1)(c) of the Act can be levied even when the
assessed income is a loss and no tax is payable on the assessed income, will
have to be accepted. It will also have to be accepted that the amendment
brought in by virtue of insertion of Explanation 4 to Section 271(1)(c) is
clarificatory in nature and hence, operates retrospectively. In this regard she
correctly places reliance on the judgment of the Supreme Court in Gold Coin
Health Food Pvt Ltd (supra). The Tribunal, as correctly urged by the learned
counsel for the Revenue, decided the point of law against the Revenue placing
reliance on an earlier judgment of the Supreme Court in Virtual Soft Systems Ltd
(supra), which stands reversed and is no longer a good law.
5. This, however, does not obviate the difficulties of the Revenue in view
of the fact that on merits a substantial part of the additions which was the
reason that the penalty had been imposed stands deleted. The pendency of the
Special Leave Petition by itself would not come to the aid of the Revenue. As
noted by the Tribunal, with which we concur, the remaining deletions in the sum
of Rs 9 lacs emanate due to a difference of opinion and not on account of the
assessee?s furnishing inaccurate particulars. In these circumstances the
penalty proceedings are bound to fail.
6. We may also note in the passing that the addition made on account of
fluctuation in foreign exchange stands covered by a judgment of the Division
Bench of this Court in CIT vs Woodward Governor: (2007) 294 ITR 451(Del).
7. In view of the above, we are of the opinion that the appeal does not
call for interference by us. No substantial question of law arises for our
consideration. Resultantly, the appeal is dismissed.
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VIKRAMAJIT SEN, J
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RAJIV SHAKDHER, J
March 12, 2009/mb
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ITA 114-2009 Page 4 of 4
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