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2016 (6) TMI 845 - HC - Income TaxLevy of penalty under Section 271(1)(c) - disallowance on account of capitalization of interest related to capital work in progress under Section 36(i)(iii) - ITAT deleted penalty - Held that:- Tribunal held that the disallowance on account of capitalization of interest related to capital work in progress under Section 36(1)(iii) of the Act, the Distillery Division of the assessee had already started functioning and since the details of funds utilized for individual projects were not reconcilable, the assessee had agreed for disallowance of proportionate interest for which the assessee cannot be held liable for either concealing particulars of income or furnishing inaccurate particulars of income. Similarly, though the issue of disallowance of proportionate interest under Section 14A of the Act was not agitated before the Tribunal due to smallness of amount of ₹ 27,562/- but due to the factum that interpretation of this provision had not been settled finally, therefore, no penalty under Section 271(1)(c) of the Act was exigible. Equally the disallowance on account of repair and maintenance under Section 40(a)(ia) of the Act was made on estimate basis and finally the disallowance had been restricted by the Tribunal at ₹ 1 lac during quantum proceedings. Regarding deletion of penalty by the CIT(A) on addition made on account of deferred tax computed on book profits under Section 115JB of the Act, the Tribunal had observed that clause (viii) was inserted to Explanation 1 below Section 115JB(1) by Finance Act, 2008 but was made retrospective. Since the present case pertained to the assessment year 2007-08, the assessee would not know that retrospective amendment was likely to come later. No illegality or perversity could be demonstrated by learned counsel for the revenue that the findings of the CIT(A) and the Tribunal were erroneous or perverse in any manner. In CIT v. Reliance Petroproducts (P) Limited (2010 (3) TMI 80 - SUPREME COURT) the Apex Court had held that under Section 271(1)(c) of the Act, there has to be concealment of income of the assessee or the assessee must have furnished inaccurate particulars of his income. In the present case, the claim made by the assessee has not been shown to be suffering from any of these conditions. In the absence of any finding recorded by the CIT(A) or the Tribunal with regard to the claim of the assessee that it was malafide, there is no error in cancelling the penalty imposed by the Assessing Officer. - Decided in favour of assessee
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