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* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ INCOME TAX APPEAL NO. 89/2013
Date of decision: 10th October, 2013
UNISON HOTELS LTD.
..... Appellant
Through Mr. Siddharth Shankar Dev,
Advocate.
versus
DEPUTY COMMISSIONER OF INCOME TAX
..... Respondent
Through Ms. Suruchi Aggarwal, Sr. Standing
Counsel.
CORAM:
HON'BLE MR. JUSTICE SANJIV KHANNA
HON'BLE MR. JUSTICE SANJEEV SACHDEVA
SANJIV KHANNA, J. (ORAL):
This appeal by the assessee under Section 260A of the Income
Tax Act, 1961 (Act, for short), relates to Assessment Year 2005-06 and
arises out of order of the tribunal dated 23rd March, 2012.
2. By order dated 10th July, 2013, the following substantial
question of law was framed:-
"Whether the order of the Income Tax
Appellate Tribunal confirming penalty under
Section 271(1)(c) of the Income Tax Act, 1961
is justified as the appellant-assessee was
assessed and had paid tax under MAT
ITA No. 89/2013 Page 1 of 4
provisions?"
3. As is apparent from the question itself, income of the appellant-
assessee has been assessed under Section 115JB of the Act. As per the
income tax return filed on 31st October, 2005, the appellant-assessee
had suffered loss of Rs.12.28 crores under the normal provisions. The
Assessing Officer while examining the profit and loss account and
statement of income prepared under the normal provisions, disallowed
donation of Rs.50,98,500/-, which had been claimed as expenditure in
the profit and loss account. Under the heading "operating and general
expenses" schedule (xviii) the appellant-assessee had specifically
under "donation" mentioned this amount. However, the Assessing
Officer computed the income on book profits under Section 115JB
after noticing that the assessee had earned profit of Rs.14,47,91,067/-
in the said assessment year. No adjustment towards book profits was
made, except on account of provision for wealth tax and excess
depreciation charged on electrical fittings. Accordingly, minimum
alternative tax was computed.
4. The Assessing Officer thereafter initiated penalty proceedings
under Section 271(1)(c) of the Act and imposed penalty of
Rs.24,94,596/-. While calculating the penalty, the Assessing Officer
records that the returned income was at loss of Rs.12,27,93,403/- and
the assessed income was at the positive figure of Rs.14,47,91,067/-.
ITA No. 89/2013 Page 2 of 4
The amount in respect of which inaccurate particulars were furnished
was taken at Rs.50,98,500/- plus foreign commission of Rs.18,89,158/-
(addition towards foreign commission was deleted by the tribunal and,
therefore, is not subject matter of the present appeal and penalty has
not been sustained by the tribunal on the said amount).
5. In the first appeal filed before the Commissioner (Appeals), it
was stated that donation of Rs.50,98,500/- was given to charitable
organisations and deduction under Section 80G of the Act was
assessable. This amount was shown as an expense under the head
"administrative expenses" in the profit and loss account and the
relevant schedule of the balance sheet. It was stated that by mistake,
the appeallant-assessee inadvertently had failed to add back or disallow
Rs.50,98,500/- while computing the taxable income in the statement of
accounts. This was an inadvertent error as the amount paid was clearly
disclosed under the entry "donation" in the heading "administrative
expenses". There was no concealment.
6. The Commissioner (Appeals) confirmed the said penalty and by
the impugned order penalty imposed has been sustained by the
tribunal.
7. Learned counsel for the appellant has relied upon decision of the
Supreme Court in Price Water House Coopers Private Limited versus
Commissioner of Income Tax, (2012) 348 ITR 306(SC), but we need
ITA No. 89/2013 Page 3 of 4
not examine the said aspect as the appellant is entitled to succeed in
view of the decision of the Delhi High Court in Commissioner of
Income Tax versus Nalwa Sons Investments Limited, (2010) 327 ITR
543 (Delhi) wherein it has been held that when taxable income is
computed on book profits under Section 115JB and not under the
normal provisions, Explanation (4) has to be accordingly applied. In
view of the said Explanation, the additions made by the Assessing
Officer under the normal provisions are totally irrelevant. Thus, there
cannot be imposition of penalty under Section 271(1)(c) of the Act for
addition made under the normal provisions.
8. Question of law is accordingly answered in favour of the
appellant-assessee and against the respondent-Revenue. The appeal is
disposed of. No order as to costs.
SANJIV KHANNA, J.
SANJEEV SACHDEVA, J.
OCTOBER 10, 2013
VKR
ITA No. 89/2013 Page 4 of 4
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