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2019 (8) TMI 931 - AT - Income TaxPenalty u/s 271(1)(c) - transfer pricing addition - ALP determination - HELD THAT:- Tribunal in its order passed in quantum proceedings, it can be seen that the assessee computed the ALP of the international transaction as per the manner prescribed in the section. Such computation was done in good faith and due diligence. Simply because now there remains some difference in the manner of determination of the ALP, it cannot be held that the assessee either concealed the particulars of its income or furnished inaccurate particulars of income. CIT(A) was justified in deleting the penalty on this issue. Similar view has been taken by the Delhi Bench of the Tribunal in Mitsui Prime Advanced Composites India (P) Ltd. Vs. DCIT [2016 (6) TMI 588 - ITAT DELHI] . Respectfully following the precedent, we uphold the impugned order on this score. Penalty for disallowance u/s 35DD - expenses incurred for increase in share capital after amalgamation - quantum addition deleted by Tribunal - HELD THAT:- Since the very foundation for the imposition of penalty, being the addition made in the assessment, ceases to exist, there can be no question of imposition of any penalty thereon. We, therefore, accord our imprimatur to the view taken by the CIT(A) on the above issue. Penalty for disallowance of Miscellaneous Expenses - these expenses included Software development expenses, expenses on premises, warranty expenses, Gifts and Donation etc. - HELD THAT:- Tribunal allowed full deduction towards software expenses and fees for handling share record and made full disallowance for warranty expenses, Gifts and Donation and restricted the addition to 15% of the balance expenses. From the above narration of facts, it is clear that the authorities below have made disallowance primarily on ad hoc basis. Even in respect of certain specific expenses for which the CIT(A) and the Tribunal sustained the disallowances, the reason is not the concealment by the assessee or furnishing of any inaccurate particulars by the assessee, but non-availability of relevant evidence to substantiate the claims. In such circumstances, we are satisfied that no fault can be found with the CIT(A) in deleting the penalty on addition towards disallowance out of Miscellaneous expenses. Penalty for addition towards expenses on premises - addition made by AO and confirmed in the first appeal @40% of expenses on premises - HELD THAT:- Tribunal confirmed capitalization of expenses in relation to premises @ 40% but directed to allow depreciation on such capitalized account. It is observed that the addition has been made on estimate basis which again came to be reduced in the first appeal on estimate basis. Where income is estimated or disallowance of expenses is made on estimate basis, there can be no penalty. The reason for non-imposition of penalty in both the situations is that there is a lack of precision as to concealment of income or furnishing of inaccurate of particulars of income. It is only an estimation shorn of any certainty or accuracy. Reverting to the facts of the instant case, it is clearly established that sustenance of disallowance of expenses @ 40% is merely an estimation, which is devoid of any proper authentication. As such, it does not call for imposition of any penalty.
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