TMI Blog2012 (12) TMI 602X X X X Extracts X X X X X X X X Extracts X X X X ..... the said amount in the total income and impose penalty u/s 271(1)(c) thereon – Held that:- As similar income was offered for taxation in earlier AY on which the AO chose not to impose penalty u/s 271(1)(c). AO could not place any material on record to show that the assessee came forward to offer the said income for taxation only due to his corner in this regard. There is nothing in assessment order to divulge that the assessee offered income pursuant to any detection by the Revenue. Rather it is suo moto offering by the assessee. Issue decides in favour of assessee Penalty u/s 271(1)(c) - Imposed on disallowance of depreciation on the Ozone grant – During course of proceedings the assessee surrendered its claim of depreciation on capita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of assessment proceedings. The Assessing Officer framed assessment making additions, inter alia, on account of curtailment of deduction u/s 80-IB and disallowance u/s 14A. The assessee, during the course of assessment proceedings, offered income in respect of duty draw back and dividend from foreign companies, which was also subjected to penalty. Similarly, the assessee had earlier claimed depreciation on the amount of Ozone grant, in the nature of subsidy allowed by the State Government, which was given up by the assessee during the course of assessment proceedings. The A.O. imposed penalty u/s 271(1)(c) on the above amount as well. The learned CIT(A) got convinced with the submissions advanced on behalf of the assessee and deleted the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ployed interest bearing funds utilized for making investment in shares, from which exempt income was earned. The assessee contended that no interest bearing funds were invested in shares. Eventually disallowance u/s 14A was made by rejecting the assessee s contention on which penalty has been imposed by the A.O. The question of disallowance u/s 14A in the present case revolves around the determination of the interest-bearing or interest-free funds utilized for the purposes of making investment in shares from which exempt income was earned. The Mumbai Bench of the Tribunal in Sunash Investment Co. v. ACIT [(2007) 106 TTJ 855] has held that no penalty u/s 271(1)(c) can be levied on account of disallowance of pro-rata interest expenditure by i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Courts justified the imposition of penalty. Adverting to the facts of the instant case we find that there is nothing in assessment order to divulge that the assessee offered income pursuant to any detection by the Revenue. Rather it is suo moto offering by the assessee. In view of the foregoing discussion we are of the considered opinion that the penalty was rightly deleted by the learned CIT(A) on this issue. We, therefore, uphold the impugned order. 6. The last issue on which penalty has been imposed is towards disallowance of depreciation on the Ozone grant. The assessee claimed depreciation amounting to Rs.76,433 in respect of the amount capitalized on Ozone grant. On being called upon to justify the claim of depreciation on such amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O. In the light of the above discussion, we are of the considered opinion that the learned CIT(A) was justified in deleting the penalty on this issue. 8. In the result, the appeal of the Revenue is dismissed. Assessment Year 2002-2003 9. It has been candidly admitted by both the sides that the facts and circumstances of this appeal in respect of penalty on curtailment of deduction u/s 80-IB, disallowance u/s 14A and disallowance of depreciation on Ozone grant are mutatis mutandis similar to those for assessment year 2001-2002. In fact, no separate argument was advanced by the either side. Following the view taken hereinabove, we hold that the learned CIT(A) was justified in deleting the penalty on these three issues. 10. The o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s against the deletion of penalty on curtailment of deduction u/s 80M. The learned Counsel for the assessee contended that the Tribunal, in the quantum proceedings, decided this issue in assessee s favour and the Department did not file any further appeal against this order before the Hon ble High Court. In view of the fact that the deduction u/s 80M has been allowed by the Tribunal, obviously, there can be no foundation for creating the structure of penalty on this issue. We, therefore, uphold the impugned order. 14. In the result, the appeal is dismissed. Assessment Year 2004-2005 15. In this year the Revenue is aggrieved against the deletion of penalty on the curtailment of deduction u/s 80-IB and curtailment of deduction u/s 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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