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2024 (1) TMI 488 - ITAT MUMBAILevy of penalty u/s 271(1) (c) - disallowance made by restricting the claim u/s 80IB in respect of Vicks Vaporub (Tins) Line which was allowed by the ld. AO @ 30% as against the claim of 100% by the assessee - Tribunal upholding the disallowance made by the AO is that assessee has failed to establish that unit which has been set up by transfer of old plant and machinery was less than threshold limit of 30% - HELD THAT:- Though the matter has been adversely viewed by the Tribunal on the ground that assessee was not able to establish the transfer of old plant and machinery less than threshold limit of 20% however, assessee’s claim was based on audit report certifying the plant and machinery which was set up in A.Y. 2001-02 though the bills were not available at the time of assessment proceedings for A.Y. 2004-05. Thus, it cannot be claimed that assessee has furnished any inaccurate particulars of income when the claim was based on audit report. Thus, for the purpose of levying penalty u/s. 271(1)(c) finding given in quantum proceedings cannot be conclusive for the purpose of penalty proceedings, because the assessee claim was based on auditor’s report and the earlier year claim made from the basis of audit report of 10CCB has not been disturbed. Thus, there cannot be case of furnishing of inaccurate particulars and accordingly, penalty levied by the ld. AO is deleted. Deduction claimed as based on Auditor’s report in Form 10CCAC and only issue is of the other income of which was not considered for deduction by the assessee - This other income was in the form of foreign exchange having direct nexus with its operating business income. Since it is a debatable issue and assessee’s claim was based on Auditor’s report, therefore, penalty cannot be levied for furnishing of inaccurate particulars of income. Accordingly, the same is deleted. Levy of penalty u/s. 80HHC by reducing the profits determined u/s. 80IB - This issue decided in favour of the assessee by the Tribunal held Section 80IA(9) of the Act curtails the allowance of deduction and not the computation of deduction under any other provisions under Heading C of Chapter VIA of the Act dealing with 'Deductions in respect of certain incomes'. Accordingly, we hold that the reduction of the amount of deduction computed under Section 80HHC made by the Assessing Officer cannot be sustained and therefore, the Assessing Officer directed to re-compute the deduction under Section 80HHC of the Act as per the judgment of the Hon’ble Bombay High Court in the case of Associated Capsules Pvt. [2011 (1) TMI 787 - BOMBAY HIGH COURT] TP Adjustment - during the course of TP study proceedings, the assessee has disclosed all the relevant facts and duly explained and justified the manner of benchmarking in the TP study report to substantiate that the same was done with due diligence in accordance with the rules. It is not the case of the ld. AO that computation of arm’s length was not done in good faith and not with due diligence in terms of Explanation 7 to section 271 (1) (c). Thus, the penalty cannot be levied on TP addition in absence of any overt act by the assessee, which discloses any conscious and material suppression as held by the Delhi High Court in the case of PCIT vs. Verizon India Pvt. Ltd [2016 (8) TMI 1287 - DELHI HIGH COURT] Thus, on this ground also penalty levied by the ld. AO is directed to be deleted. Appeal of the assessee is allowed.
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