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2015 (6) TMI 178 - ITAT DELHI

2015 (6) TMI 178 - ITAT DELHI - TMI - Deduction u/s 36(1)(viii) - income derived from providing long term finance - CIT(A) deleted addition - Held that:- The CIT(A) had accepted and followed the order of his predecessor for previous assessment year i.e. 2003-04 which is the year under consideration in these appeals. The CIT(A) deleted the addition by following the order for preceding year and directed the AO to allow deduction to the assessee as per provisions of section 36(1)(viii) of the Act. .....

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l purposes.

Addition of filing fees paid to Registrar of Companies (ROC) amounting - Held that:- The facts and circumstances of the present case are similar to the facts and circumstances of the cases as relied by both the AO as well as the CIT(A) viz. judgment of Hon’ble Supreme Court viz. Punjab State Industrial Corporation (1996 (12) TMI 6 - SUPREME Court) and Brooke Bond (India) Pvt. Ltd. vs CIT (1997 (2) TMI 11 - SUPREME Court) and the issue is squarely covered in favour of the r .....

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merely because the claim of the assessee which was fully disclosed in the statement of income was not found to be acceptable by the department but it cannot be held that the assessee either furnished wrong particulars of its income or has concealed particulars of its income to attract penalty u/s 271(1)(c) of the Act. Hence, impugned penalty levied on the assessee is not sustainable - Decided in favour of assesse.

Penalty u/s 271(1) (c) - disallowance of deduction u/s 36(1) (vii) (c) .....

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f assesse. - I.T.A.No.1183/Del/2010, I.T.A.No.542/Del/2013, I.T.A.No.1110/Del/2010, I.T.A.No.371/Del/2013 - Dated:- 29-5-2015 - SHRI S.V. MEHROTRA AND SHRI CHANDRA MOHAN GARG, JJ. For the Appellant: S/Shri S. Krishnan, V. Raja Kumar, Adv. For the Respondent : Shri R.I.S. Gill, CIT DR ORDER PER CHANDRA MOHAN GARG, JUDICIAL MEMBER These appeals have been preferred against the order of CIT(A)-LTU, New Delhi dated 14.01.2010 in Appeal No. 02/08-09 for AY 2003-04. Since both the appeals have arisen .....

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e of filing fees paid to ROC - ₹ 64,00,000 The Ld.CIT(A)-LTU has wrongly upheld that the filing fees paid to ROC amounting to ₹ 64,00,000 is of the capital nature. This filing fees was paid to enhance financial business of IREDA and was fully allowable. Accordingly, the filing fees paid to ROC is required to be allowed as revenue expenditure. 2. Decrease in the deduction u/s 36(1)(viia)(c) of the Income tax Act, 1961 from Rs.l,79,29,080 to ₹ 93,53,978 resulting in an disallowan .....

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, ld. Counsel of the assessee submitted a copy of the order of ITAT Delhi C Bench dated 21.11.2014 in assessee s own cases/appeals in ITA No. 3742/D/2001 for AY 1998-99 and other 16 appeals and submitted that the issue of deduction u/s 36(1)(vii) & 36(1)(viia)(c) of the Income Tax Act, 1961 (for short the Act) have been sent back to the AO for taking a fresh decision for subsequent AY 2004- 05, therefore, sole ground no.1 of the revenue and ground no. 2 of the assessee may kindly be restored .....

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adjudication as per law. 5. On careful consideration of above submissions, we note that ITAT C Bench Delhi in assessee s own case for AY 2004-05 has restored the same issue to the file of AO with following observations and conclusion:- There are two cross appeals - one by the assessee and the other by the Revenue - which arise out of the order passed by the amounting to CIT(A) on 14.12.2007. First ground raised by the Revenue is against the direction given to the AO for calculating disallowance .....

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e is about the computation of deduction u/s 36(1)(viia)(c). The first ground about the filing of revised return not bearing any acknowledgement of department, was not pressed by the Id. AR. 11. After considering the rival submissions and perusing the relevant material on record, we find that the authorities below have followed the view taken by them on this issue in earlier years without any elaborate discussion about the nature of items of income considered as 'Income from other sources' .....

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incurred in relation to the exempt income. The decision about the deduction u/s 36(1)(viii) and 36(1)(viia)(c) is, again, dependent on the nature of the items of income as discussed above. This matter is, therefore, sent back to the AO for taking a decision as per law, after allowing a reasonable opportunity of being heard to the assessee. 6. On careful consideration of facts and circumstances of the present case, we note that the AO also made addition of ₹ 85,75,102 to the total income o .....

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of the revenue is related to the addition made by the AO u/s 36(i)(viii) of the Act wherein the AO held that the deduction under said section is admissible to a financial corporation which is engaged in providing long term finance for industrial or agricultural development or development of infrastructure facility in India or by a public company formed and registered in India with the main object of carrying on the business of providing long term finance for construction or purchase of houses i .....

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04 which is the year under consideration in these appeals. The CIT(A) deleted the addition by following the order for preceding year and directed the AO to allow deduction to the assessee as per provisions of section 36(1)(viii) of the Act. We also note that the ITAT C Bench Delhi in the order passed for AY 2004-05 in assessee s own appeal has also restored this issue to the file of AO for fresh consideration with the directions as reproduced hereinabove. The impugned order of the CIT(A) in the .....

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affording due opportunity of hearing for the assessee and without being influenced with the earlier assessment and impugned order. Ground no.1 of the assessee in ITA NO.1183/De/2010 9. Apropos ground no. 2, we have heard arguments of both the sides and carefully perused the relevant material placed on record. Ld. Counsel of the assessee submitted that the CIT(A) has wrongly upheld the addition made by the AO on account of filing fees paid to Registrar of Companies (ROC) amounting to ₹ 64 l .....

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Bond (India) Ltd. vs CIT 225 ITR 798 (SC). 10. On careful consideration of above submissions, we note that the AO has made addition on account of filing fees paid to ROC with following observations:- '1. Filing Fee paid to ROC The filing fee of ₹ 64,00,000/- which was paid to the Registrar of Companies in connection with the expansion of the capital base of the assessee company from ₹ 300 Crores to ₹ 400 Crores during the year under consideration and claimed in the profit .....

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uncements, but has attempted to make out a case that it was necessary for the business and therefore, the same should be allowed. It is to be seen that all the expenses whether capital or revenue can be termed as business expenditure. Just because expenditure is for the business it does not partake the character of revenue expenditure. In fact, nothing turns on it in law in deciding whether expenditure is of revenue nature or of capital nature. In view of the judicial pronouncements cited above .....

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to ₹ 400.00 crores during the assessment year under consideration. The only submission of the appellant is that the above expenditure was necessary for business and therefore it should be allowed as revenue expenditure. I am in agreement with tile views of the AO that the decisions of the decision of the Hon'ble Supreme Court in the case of Punjab State Indl. Devp.Corp. Ltd. Vs CIT 225 ITR 792 and Brooke Bond India Ltd. Vs CIT 225 ITR 798 are squarely applicable in the appellant s case .....

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was necessary and for the purpose of business of the assessee, therefore, the same should be allowed as revenue expenditure. At the same time, we respectfully take cognizance of the judgment of Hon ble Supreme Court in the case of Punjab Industrial Development Corporation Ltd. vs CIT (supra) and judgment in the case of Brooke Bond (India) Pvt. Ltd. vs CIT (supra) wherein speaking for the apex court, their lordships categorically held that the expenditure incurred by a company in connection with .....

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R 125, we respectfully note that the facts and circumstances of the present case are clearly distinguishable from the facts and circumstances of the judgment of Hon ble Delhi High Court and Hon ble Gujarat High Court. Per contra, the facts and circumstances of the present case are similar to the facts and circumstances of the cases as relied by both the AO as well as the CIT(A) viz. judgment of Hon ble Supreme Court viz. Punjab State Industrial Corporation (supra) and Brooke Bond (India) Pvt. Lt .....

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0 is deemed to be allowed for statistical purposes and ground no. 1 of the assessee is dismissed. Assessee s appeal in ITA No. 542/D/2013 and revenue s appeal in ITA 371/D/2013 for AY 2003-04 15. These appeals by the assessee and revenue have arisen from the order of CIT(A)-LTU New Delhi dated 7.11.2012 in Appeal No. 15/12-13/CIT(A)-LTU for AY 2003-04. The grounds raised by the assessee in ITA 542/D/2013 read as under:- The ld. CIT(A) has wrongly upheld the contention of ACIT in imposing the pen .....

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as erred in deleting the penalty u/s 271 (1)(c) in respect of disallowance of deduction of ₹ 85,75,103/- u/s 36 (1) (viia) (c) made by the assessing officer and confirmed by the CIT (A) in quantum appeals. 16. Apropos sole ground of the assessee, we have heard arguments of both the sides and carefully perused the relevant material placed on record. Ld. counsel of the assessee submitted that the CIT(A) has wrongly upheld the contention of ACIT in imposing the penalty u/s 271(1)(c) of I.T.Ac .....

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nd appeal proceedings. Therefore, it cannot be held that the assessee furnished wrong particulars of its income or has furnished inaccurate particulars to attract the penalty u/s 271(1)( c) of the Act. 17. Ld. Counsel has drawn our attention towards operative part of the penalty order in the second part of para 4.5 and submitted that firstly, the AO noted that the assessee has failed in the gamble of evading tax and the wrong claim of the assessee was deducted and the amount was brought to tax. .....

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cepted or was not found to be acceptable by the revenue. Ld. counsel has further drawn our attention towards paper book page no. 16-28 and submitted that the assessee placed all the relevant papers and evidence before the AO to establish this fact that the assessee paid ₹ 64 lakh to the ROC towards filing fees for increasing the authorised capital of the assessee. 18. Replying to the above, ld. DR supported the action of the AO as well as the CIT(A) and submitted that when it is a well-set .....

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urnished wrong particulars of its income, therefore, the penalty was rightly levied u/s 271(1)( c) of the Act. 19. On careful consideration of above submissions, at the very outset, we may point out that the revenue authorities have disallowed the claim of the assessee towards filing fees paid to the ROC for increasing authorised share capital but the revenue authorities have not disputed the quantum and purpose of the expenditure which has properly found place in the statement of accounts of th .....

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that the assessee has filed wrong particulars of its income. At the same time, we are inclined to hold that the fact remains that the assessee placed a claim towards filing fees paid to ROC for increasing the authorised share capital which was not found acceptable during quantum proceedings and the same attained finality. 20. In view of above, we respectfully take notice of the decision of Hon ble Supreme Court in the case of Reliance Petroproducts (supra) wherein it was held thus:- It was, ther .....

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and, therefore, both types amount to concealment of particulars of one's income as well as furnishing of inaccurate particulars of income. We do not agree, as the assessee had furnished all the details of its expenditure as well as income in its Return, which details, in themselves, were not found to be inaccurate nor could be viewed as the concealment of income on its part. It was up to the authorities to accept its claim in the Return or not. Merely because the assessee had claimed the exp .....

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wrong premises merely because the claim of the assessee which was fully disclosed in the statement of income was not found to be acceptable by the department but it cannot be held that the assessee either furnished wrong particulars of its income or has concealed particulars of its income to attract penalty u/s 271(1)(c) of the Act. Hence, impugned penalty levied on the assessee is not sustainable and thus, sole ground of the assessee in ITA No. 452/Del/2013 for AY 2003-04 is allowed and the AO .....

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t CIT(A) has erred in deleting the penalty u/s 271(1) (c) of the Act in respect of disallowance of deduction u/s 36(1) (vii) (c) of the Act made by the AO and confirmed by the CIT(A) in quantum proceedings. The Ld. DR further contended that the assessee should have claimed ₹ 93,53,977/- instead of ₹ 1,79,29,080/- on income from other sources and up to this extent, the assessee had furnished wrong and inaccurate particulars of its income within the meaning of Section 271(1) (c) of the .....

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