ITO-8(3)(3), Mumbai v. M/s. Technonet Technologies Ltd - 2016-LL-1017-18

Citation	2016-LL-1017-18
Appellant Name	ITO-8(3)(3), Mumbai
Respondent Name	M/s. Technonet Technologies Ltd.
Court	ITAT-Mumbai
Relevant Act	Income-tax
Date of Order	17/10/2016
Assessment Year	2003-04
Judgment	View Judgment
Keyword Tags	deferred revenue expenditure • waiver of penalty
Bot Summary:	During the course of assessment proceedings, the Assessing Officer noticed that the assessee has claimed a sum of 63.97 lakhs under the head deferred revenue expenses. Since the expenses were incurred in the earlier year, the 2 M/s. Technonet Technologies Ltd. Assessing Officer took the view that the said claim of the assessee is not allowable. On the contrary, learned AR submitted that the assessee had booked expenditure as deferred revenue expenditure as per the Accounting Principle and hence the same would not amount to furnishing of inaccurate particulars of income. Having heard the rival submissions, we find merit in the submissions made by learned AR. The expenditure incurred by the assessee in the earlier years has been booked as deferred revenue expenditure in the books of accounts as per the Accounting principles. The assessee appears to have claimed the expenditure in installments as accounted for in the books of account. Accordingly, a part of the expenditure was claimed by the assessee as deduction during the year under consideration. In the instant case also, the assessee has claimed impugned expenditure as per the Accounting Principles but the same came to be disallowed on the reasoning that the said claim is not sustainable in law.

IN INCOME TAX APPELLATE TRIBUNAL E Bench, Mumbai Before Shri B.R. Baskaran (AM)& Ramlal Negi (JM) I.T.A. No. 4281/Mum/2013 (Assessment Year 2003-04) ITO 8(3)(3) M/s. Technonet Room No. 202 Vs. Technologies Ltd. Aayakar Bhavan 13 t h Floor, One M.K. Road Indiabulls Centre Mumbai-400 020. 841, Senapati Bapat Marg, Elphinstone Road Mumbai-400 013. (Appellant) (Respondent) PAN No.AABCT1213A Assessee by Dr. K. Shivram & Ms. Neelam Jadhav Department by Shri Nitin Waghmode Date of Hearing 17.10.2016 Date of Pronouncement 17.10.2016 ORDER Per B.R. Baskaran (AM) :- Revenue has filed this appeal challenging order dated 11.3.2013 passed by learned CIT(A)-18, Mumbai deleting penalty levied by Assessing Officer u/s. 271(1)(c) of Act for A.Y. 2003-04. 2. We have heard parties and perused record. facts relating to issue are discussed in brief. During course of assessment proceedings, Assessing Officer noticed that assessee has claimed sum of ` 63.97 lakhs under head deferred revenue expenses . assessee had incurred this expense in earlier year and treated same as Deferred revenue expenditure in books of account. It appears that assessee did not claim expenditure fully in year in which it was incurred. Accordingly it claimed remaining portion of expenditure during year under consideration. Since expenses were incurred in earlier year, 2 M/s. Technonet Technologies Ltd. Assessing Officer took view that said claim of assessee is not allowable. Accordingly he disallowed claim of ` 63,97,837/- referred above. Later Assessing Officer levied penalty u/s. 271(1)(c) of Act on above said disallowance by holding same as furnishing of inaccurate particulars of income. learned CIT(A) deleted same and hence Revenue has filed this appeal before us. 3. Learned Departmental Representative submitted that assessee has submitted inaccurate particulars of income by making this claim and hence Assessing Officer was justified in levying penalty u/s. 271(1)(c) of Act. 4. On contrary, learned AR submitted that assessee had booked expenditure as deferred revenue expenditure as per Accounting Principle and hence same would not amount to furnishing of inaccurate particulars of income. In support of same learned AR placed reliance on decision rendered by Hon'ble Gujarat High Court in case of Amol Dicalite Ltd. (231 Taxman 663) and also decision rendered by Hon'ble Supreme Court in case of Reliance Petro Products P. Ltd. (322 ITR 158). 5. Having heard rival submissions, we find merit in submissions made by learned AR. expenditure incurred by assessee in earlier years has been booked as deferred revenue expenditure in books of accounts as per Accounting principles. assessee appears to have claimed expenditure in installments as accounted for in books of account. Accordingly, part of expenditure was claimed by assessee as deduction during year under consideration. It is not case of AO that assessee has made double deduction of same item of expenditure. 6. Thus, it is case of deduction as per accounting principles, but same came to be disallowed by AO, since AO felt that claim of assessee is not admissible during year under consideration. In case of Reliance Petro Products Pvt. Ltd. (supra), Hon'ble Supreme Court has held that making of claim, which is not sustainable in law, would not give rise to 3 M/s. Technonet Technologies Ltd. furnishing of inaccurate particulars of income. In instant case also, assessee has claimed impugned expenditure as per Accounting Principles but same came to be disallowed on reasoning that said claim is not sustainable in law. Accordingly, we are of view that learned CIT(A) was justified in deleting penalty on above said disallowance by following decision rendered by Hon'ble Supreme Court in case of Reliance Petro Products Pvt. Ltd. (supra). Accordingly, we do not find any infirmity in order passed by learned CIT(A). 7. In result, appeal filed by Revenue is dismissed. Order has been pronounced in Court on 17.10.2016 Sd/- Sd/- (RAMLAL NEGI) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated : 17/10/2016 Copy of Order forwarded to : 1. Appellant 2. Respondent 3. CIT(A) 4. CIT 5. DR, ITAT, Mumbai 6. Guard File. BY ORDER, //True Copy// (Dy./Asstt. Registrar) PS ITAT, Mumbai ITO-8(3)(3), Mumbai v. M/s. Technonet Technologies Ltd

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