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2010 (2) TMI 644 - AT - Income TaxPenalty – Claiming expenditure without showing income corresponding to such expenditure - Management Service Fee - the fact that the disallowance made in the assessment on account of its claim for managerial fees was accepted by the assessee has also been taken against the assessee by the authorities below in the matter of imposition of penalty u/s. 271(l)(c). - However, while disallowing the deduction claimed by the assessee on this issue in the year under consideration, the following observation was made by the A.O. in his assessment order, “the assessee may claim this expenditure in the year in which the corresponding income is received with this view the assessee’s”. - Held that: - the claim of the assessee company for deduction on account of managerial fees was a bona fide claim made by it in the year under consideration and the assessee having been able to support and substantiate the same by showing the legitimate basis on which it was claimed, it was not a fit case for imposition of penalty u/s 271(l)(c) in respect of the addition made on account of disallowance of the said claim. - Penalty cancelled - Decided in favor of assessee.
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