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2017 (11) TMI 1603 - AT - Income TaxPenalty u/s. 271(1)(c) - allowability of expenses on year to year basis or in the year of completion of project - assessee has claimed expenses and consequently business losses to be carried forward in the previous year relevant to the assessment year while the project was not completed in the previous year under consideration and since the assessee is following project completion method, these expenses could not have been claimed in the year under consideration - Held that:- It is possible to form a bonafide belief on the date of filing return of income i.e. on 31.10.2005 that the expenses could be allowed from year to year basis. The Learned AR has also submitted that the assessee had no other income even till today and therefore there was no advantage to the assessee in claiming expenses and declare losses from year to year as the losses could be carried forward only for a limited number of years. In such a situation claiming the expenses in the year of completion would have been advantages to the assessee as in that case all the expenses could have been allowed. Considering all explanation of the assessee that the claim had been made under bonafide belief has to be accepted and it will not be appropriate to levy penalty under section 271(1)(c) in this case. Accordingly we set aside the order of CIT(A) and delete the penalty levied. SEE Chaitra Reality Ltd. v. DCIT [2011 (3) TMI 1746 - ITAT MUMBAI] - Decided in favour of assessee.
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