Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2018 (2) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (2) TMI 2104 - AT - Income TaxLevy of penalty u/s 271(1)(c) - disallowance on account of expenses on increase in the authorized share capital - bonafide Belief or deliberate intention - whether the fees paid for increasing the authorized capital, particularly when the same is to meet the working capital requirement is a capital expenditure or not? - HELD THAT:- As in the penalty proceedings, assessee has categorically stated that the increase in the authorized share capital was with a view to expand the capital base of the company for availing more credit facility from the bank for its working capital requirement. This is also evidenced by the loan sanction letter issued by the assessee’s bank for working capital requirement (due to proposed increase in sales) wherein the assessee was required to increase the share capital from Rs. 9 crores to Rs. 11 crores before release of enhanced limits - Revenue has not controverted the said explanation of the same submitted during the course of penalty proceedings. Bonafide of the said explanation is therefore not under challenge especially in light of the plausible view which can be taken in respect of share issue expenditure which has been claimed as revenue expenditure. Given that all necessary facts are on record regarding claim of the share issue expenditure and the explanation of the assessee has been found to be bonafide, merely because the expenditure so claimed is disallowed and treated as capital expenditure, the same cannot be basis for levy of penalty for furnishing inaccurate particulars of income u/s 271(1)(c) - A similar view has been taken in case of JKP Auto parts [2017 (5) TMI 1617 - ITAT DELHI] In the result, the penalty so levied and confirmed by the ld CIT(A) is hereby deleted. Decided in favour of assessee.
|