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2019 (3) TMI 70 - AT - Income TaxPenalty u/s 271(1)(c) - deduction u/s. 36(1)(iii) on the interest expenses on borrowed funds utilized for purchase of inventories / stock in trade - AO held that interest expenses cannot be allowed as deduction - complete disclosure of the details of the transactions - HELD THAT:- No infirmity in the order passed by the CIT(A) in deleting the penalty levied u/s. 271(1)(c) as the assessee has made complete disclosure of details with regard to the claim for deduction u/s. 36(1)(iii) on the interest expenses in respect of the flats purchased and shown in the Books of Accounts as well as in the return of income. Further, whether the assessee is entitled for deduction U/s. 36(1)(iii) of the Act on the interest expenses on borrowed funds utilized for purchase of inventories / stock in trade is a debatable issue. Thus, we hold that there is neither concealment of income nor furnishing of inaccurate particulars of income by the assessee in respect of its claim for interest expenses. Hence no penalty is leviable u/s. 271(1)(c) of the Act - Decided in favour of assessee. Loss incurred by the assessee on account of debiting the interest expenses to the Profit and Loss Account, is not allowable to carry forward - assessee filed belated return of income - There is no taxes ought to be evaded by the assessee as the assessee has not carried forward loss to the subsequent years. - HELD THAT:- loss arising out of claim of interest could also be not carried forward as the assessee filed belated return of income and therefore there is no loss to the Revenue. Hence no penalty is leviable u/s. 271(1)(c) of the Act - Decided in favour of assessee.
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