TMI Blog2022 (5) TMI 1340X X X X Extracts X X X X X X X X Extracts X X X X ..... rate particulars or concealment of details. All details were furnished, including audited accounts and impugned addition is a result of change in method/manner of allocation of expenses to the different units, which was a difference of opinion. CIT(A) by following the decision of Hon'ble Supreme Court in the case of Reliance Petroproducts [ 2010 (3) TMI 80 - SUPREME COURT] and Shri Rama Multi Tech [ 2013 (1) TMI 800 - GUJARAT HIGH COURT] Gujarat Insecticides Ltd. [ 2013 (10) TMI 159 - GUJARAT HIGH COURT] had deleted the penalty levied by the Assessing officer. No new facts and circumstances has been brought on record by the ld. CIT-DR to controvert the findings so recorded by the ld. CIT(A), therefore, considering the totality of facts and circumstances, we do not find any reason to deviate from the findings of the ld. CIT(A), which we affirms the same. Addition of club expenses - CIT(A) had deleted the penalty levied with regard to club expenses. No new facts and circumstances has been brought on record by the ld. CIT-DR to controvert the findings so recorded by the ld. CIT(A), therefore, considering the totality of facts and circumstances, we do not find any reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. The appeal by the Revenue is directed against the order of the Commissioner of Income Tax (Appeals)-1, Surat [in short ld. CIT(A)] dated 28/01/2020 which in turn arise from the order of penalty dated 26.03.2018 levied under Section 271(1)(c) of the Income Tax Act, 1961 (in short, the Act) for the Assessment Year (AY) 2012-13. The Revenue in its appeal has raised the following grounds of appeal: 1. Whether on the facts and circumstances of the case and law, the Ld. CIT(A) is justified in deleting penalty of Rs.4,21,36,403/-levied on the technical ground that the A.O while initiating and levy of the penalty has not struck off the inapplicable limbs of sec.271(l)(c) of the Act, ignoring that sec.292B would apply in the facts of the case, as assessee did not raise this technical ground before the A.O, during penalty proceedings showing that the assessee understood the purport and import of notice U/s 274 r.w.s 271 of the IT Act and therefore ratio of case law of Madras High Court, in the case of Sundram Finance Pvt Ltd (2018)(93 taxmann.com250) would apply in this case, wherein the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessing officer may be restored to the above extent. 2. Brief facts of the present case are that the assessee while filing return of income for the year under consideration, declared income of Rs. 23.21 crores and book profit under Section 115JB of the Act of Rs. 52.54 crores. The case of the assessee was selected for scrutiny and assessment was completed under Section 143(3) of the Act on 13/03/2015 determining total income of Rs. 42.62 crores and book profit of Rs. 53.91 crores. The Assessing Officer while passing the assessment order made following additions: 1. Disallowance of expenses claimed on account of social forestry expenses and depreciation on assets used for social forestry. Rs. 89,22,235/- 2. Disallowance of claim of expenses against liability written back Rs. 87,498/- 3. Addition on account of adjustment u/s 145A Rs. 14,35,104/- 4. Addition on account of unexplained sundry creditors Rs. 9,85,463/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nses claimed on account of social forestry expenses and depreciation on assets used for social forestry (Restricted) Rs. 4,23,000/- 2. Prior period expenses Rs. 87,498/ 3. Adjustment u/s 145A of the I.T. Act Rs. 14,35,104/- 4. Disallowance u/s 14A of the I.T. Act Rs. 14,57,500/- 5. Reduction deduction claimed u/s 80IA Rs. 2,52,99,629/- 6. Income on deployment of FCCB funds Credited to Capital Work in progress Account Rs. 10,36,47,628/-. 4. On receipt of order of ld. CIT(A) in quantum assessment, the Assessing Officer issued fresh notice under Section 274 r.w.s. 271(1)(c) of the Act vide his notice dated 14/02/2018. The assessing officer identified the following addition/ disallowance; 1. Disallowance of expenses claimed on account of social forestry expenses and depreciation on assets used for social forest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liance Petroproducts (322 ITR 158 SC) and Hon ble Sri Rama Multi teck 32 taxmann.com 127 (Guj) Gujarat Insecticides Ltd 35 taxmann.com 35 taxmann.com 313 (Guj). On his above observation, the ld CIT(A) deleted the penalty on disallowance of deduction under section 80IA. 8. With regard to income on deployment of funds credited, it was contended by the assessee that there was no concealment of facts as all the disclosure/facts are duly reflected in annual accounts for the year under consideration. Since two views are possible for treatment of income from deployment of funds credited to capital work in progress (CWIP) Account, this is not the case of concealment of income or inaccurate particular merely because of difference of opinion as held by various judicial pronouncements including the judgment of Hon'ble Apex court in the case of Diiip N Shroff Vs. JCIT reported in 291 ITR 519. He also contended that there was no tax leakage as on one hand income is treated as revenue receipt in the impugned order passed u/s 143(3) of the Act and on the other hand, depreciation has been allowed by A.O on enhanced project cost in order passed u/s 143(3) of the Act for A.Y 2015-16. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supra) and Gujarat High Court in Subhash Trading Co. 221 ITR 110 (Guj) and deleted the penalty on this issue/ addition. 12. With regard to disallowance under Section 40(a)(ia) of the Act for non deduction of tax at source, it was contended by the assessee that for the year under consideration, there was no concealment of facts as all the disclosure/facts stands made during the course of assessment proceedings. It was also contended that where two views are possible, this is not the case of inaccurate particulars merely because of difference of opinion as held by various judicial pronouncements including the judgment of Hon'ble Apex court in the case of Dilip N . Shroff Vs. JCIT reported in 291 ITR 519. 13. The ld CIT(A) after considering the submissions of the assessee held that disallowance was made solely on the ground that no TDS was made. The assessing officer has not questioned the genuineness of the expenses or questioned the purpose of expenses. The assessee explained that that they believed that no TDS to be made as per ration of decision of Hon ble Supreme Court in CIT Vs Kotak Securities Ltd (CA No.3141 of 2016). The ld CIT(A) also relied on decision of Guja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions which were upheld by ld CIT(A) in quantum assessment, the assessing officer levied the penalty only on such additions and disallowances. 18. On the other hand, the ld. Sr. Counsel appearing on behalf of the assessee has relied on the order of the ld. CIT(A). The ld Senior Counsel for the assessee submits that the addition or disallowance on which the assessing officer levied penalty is covered by the decisions of various High Court or Supreme Court or by Tribunal. The ld CIT(A) deleted the penalty by following the decisions either in case of assessee or by the decision of Higher Courts. On first issue of social forestry expenses, the ld Senior Counsel for assessee submits that in all earlier years the similar disallowances were either substantially deleted or restricted on ad-hock basis, on the issue of reduction of claim under section 80IA, the ld Senior Counsel submits that this issue is covered by the decision of Gujarat High Court in CIT Vs Shah Alloys Limited (Tax Appeal No. 2092/2010 dated 22/11/2011), disallowance of section 40(a)(ia) is covered by the decision of Supreme Court in Kotak Securities (supra), the additions of club expenses were made on ad-hock basis a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A), which we affirms the same. 21. We find that ld CIT(A) also deleted the penalty levied on account of club expenses. The ld CIT(A) observed that the assessee company had claimed club expenses of Rs. 16.25 lacs in various clubs, the assessee company had stated that the club membership was taken for business purpose. The Assessing Officer disallowed 75% of the impugned expenses. The ld. CIT(A) held that the membership fees and subscription fee are allowable expenditure as held by the Hon'ble Madras High Court in the case of Gujarat State Export Co Op. Ltd. 209 ITR 335 (Mad.). The ld. CIT(A) has also observed that the Assessing Officer disallowed estimated figure of Rs. 5 lacs paid towards food and other facilities in the clubs because no specific business purpose was pointed out by the assessee. The ld.CIT(A) by following the decisions of various Hon'ble Courts i.e. decision in the case of Reliance Petroproducts (supra), Subash Trading Co. 221 ITR 110( Guj), Surat Fashion Ltd. ITA No. 3368/Ahd/2008 dated 27/05/2011, Cadila Pharmaceuticals Ltd. in ITA No. 0852/Ahd/2015 dated 04/04/2018, Deshman Pharmaceuticals in ITA No. 138 189/Ahd/2017 dated 07/09/2018 had deleted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, considering the totality of facts and circumstances, we do not find any reason to deviate from the findings of the ld. CIT(A), which we affirms the same. 23. We find that the penalty levied on disallowance under Section 40(a)(ia) was deleted by CIT(A) by holding that the disallowance is made solely for not making TDS. The Assessing Officer has not questioned genuineness of expenses or questioned the purpose of expenses. The explanation of the assessee was that they believed that no TDS to be made as per ratio lay down by Hon'ble Supreme Court in CIT v. Kotalc Securities Lid. (supra). The ld. CIT(A) has further held that the assessee s case is squarely covered by decision of Hon'ble jurisdictional High Court in case of Dahyabhai Veliibhc Patel, (supra) where in the Hon'ble High Court has approved of the decision of ITAT Ahmedabad Being in the case of Dahyabhai Veljibhai Patel in ITA No. 2481 /Ahd/2012 dated 04.01.2013 wherein Tribunal held that when genuineness of expenditure is not questioned disallowance made merely on ground that TDS is not deducted penalty u/ 271(1)(c) cannot be imposed. No new facts or law is brought to our notice to take other vi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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