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UNISON HOTELS LTD. Vs. aDEPUTY COMMISSIONER OF INCOME TAX
October, 23rd 2013
$~23.
*       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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