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2018 (3) TMI 50 - AT - Income TaxPenalty u/s. 271(1)(c) - false claim of deduction u/s. 80IC - Held that:- The assessee has been able to demonstrate that although claim for deduction u/s. 80IC as lodged by the assessee with the revenue was not tenable but the assessee made a bona-fide claim as the loan license issued by Licesning authority was held in the name of the assessee to manufacture pharma products at Vaibhav’s unit at Baddi, HP, manufacturing was done under assessee’s supervision and control to utilise the spare capacity of Vaibhav unit at Baddi, HP under contract manufacturing agreement, raw material and packing material was supplied by the assessee to Vaibhav and even sale orders were issued by it. Ultimately it was also proposed to merge the said sister/associated concern namely M/s Vaibhav with assessee under a scheme of merger approved by Hon’ble Bombay High Court w.e.f. 01-01-2006 which falls within the impugned assessment year, which date of merger was later advanced to 01-04-2006. It is also demonstrated by the assessee that Vaibhav unit at Baddi, HP was entitled for deduction u/s 80IC. Thus, it is a case where legal claim was raised by the assessee as to deduction u/s 80IC w.r.t. manufacturing done by the assessee at Vaibhav’s unit at Baddi, HP which ultimately did not found favour with the Revenue and the issue is squarely covered by decision in the case of Reliance Petroproducts Private Limited (2010 (3) TMI 80 - SUPREME COURT) wherein it is held that just making of legal claim which does not found favour with Revenue will not make the taxpayer automatically liable for penalty. - Decided against revenue.
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