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2013 (5) TMI 390 - AT - Income TaxPenalty u/s 271(1)(c) – Whether penalty can be levied if the returned income is a loss? - As per ld. CIT (A) levy of penalty on addition to the returned loss which result in reduction of loss was not on statute in the year under consideration as it was introduced w.e.f. 01.04.2003 therefore deleted. Revenue made addition in income on account of interest paid by the appellant company on the bank borrowing which was partly utilized for advancing security deposit of Rs.1 crore to M/s Concast India Ltd for use of their premises as per agreement by the appellant company. Revenue appeal against the order. Held that:- As rightly considered by the learned CIT (A) Just because an addition was confirmed in assessment, that itself does not lead to levy of penalty under section 271(1)(c) as held by the Hon'ble Supreme Court in the case of Reliance Petroproducts Ltd [2010 (3) TMI 80 - SUPREME COURT]. The Revenue is contesting only on legal principles. Even though the legal principle relied on by the learned CIT (A) was no longer valid consequent to the decision of the Hon'ble Supreme Court in the case of CIT vs. Gold Coin Health Food (P) Ltd. [008 (8) TMI 5 - SUPREME COURT] that even in loss cases penalty is leviable as Explanation 4 will apply, the CIT (A) deleted the penalty also on merits which was not contested. Thus, the findings of the CIT (A) was upheld. AO was not justified in his action.
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