TMI Blog2015 (7) TMI 322X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of taxes and hence, the assessee company was not at all in any advantageous position to make a false claim of deduction u/s 35D of the Act as the assessee company and the transferee company belong to the same group of companies. At this juncture, we respectfully take note of decision of Hon’ble Supreme Court in the case of CIT vs. Reliance Petroproducts (2010 (3) TMI 80 - SUPREME COURT) and Pricewaterhouse Coopers Pvt. Ltd. vs CIT (2012 (9) TMI 775 - SUPREME COURT ) wherein it was held that penalty is not imposable merely on the ground that the assessee submitted the claim under a bonafide belief and due to inadvertent mistake which was not found to be acceptable or was not accepted by the revenue. Respectfully following the ratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 93,381/- after making several disallowances including disallowance of ₹ 52,30,121/- u/s 35D of the Act. 3. The aggrieved assessee filed an appeal before the CIT(A) wherein the assessee did not press disallowance made by the AO u/s 35D of the Act. Subsequently, the AO issued notice dated 19.2.2010 requiring the assessee to show cause as to why penalty u/s 271(1)(c) of the Act be not imposed with reference to additions sustained on further appeal before the CIT(A) viz. disallowance of ₹ 52,30,127 u/s 35D of the Act and disallowance of ₹ 97,381 u/s 14A of the Act. After considering detailed reply dated 26.2.2010 of the assessee, the AO did not find himself satisfied with the explanation furnished by the assessee and impose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment year was the last year for this claim. Ld. DR further submitted that Dadra Unit was demerged under the scheme of demerger w.e.f. 1.4.2004 into transferee company viz. Consolidated Photo Products Ltd. (now known as Jindal Photo Limited). Ld. DR further submitted that the assessee claimed deduction u/s 35D of the Act by furnishing inaccurate particulars of its income, therefore, the AO was justified in imposing the penalty. Ld. DR further submitted that the onus was on the assessee to prove that there was no concealment of income and assessee has not furnished inaccurate particulars of its income and the assessee has failed to discharge its onus and the explanation offered by the assessee was not found to be satisfactory and acceptabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. 7. Ld. counsel of the assessee has further drawn our attention towards paper book page no. 106 and 107 and submitted that no deduction for the aforesaid expenditure was claimed in the return of income of Consolidated Photo Products Ltd. for AY 2005-06 which again shows the bonafide of the assessee in this regard. 8. On careful consideration of above submissions from both the sides, from operative part of the impugned order, we note that the CIT(A) granted relief for the assessee with following observations and conclusion:- 5.2 Regarding the issue of disallowance u/s 350 it is seen that the aforesaid deduction was claimed by the appellant company in respect of explanation of a unit at Dadra, UP for a period of 10 years w.e.f. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m of deduction u/s 350 of the Act in the hands of Consolidated Photo Products Ltd. would have reduced the aforesaid income and consequential payment of taxes. Therefore, in my opinion, the appellant company was not at any advantageous position to claim deduction u/s 35D of the Act, since both the appellant company and the transferee company belongs to the same group. Therefore, in my opinion, the appellant's contention is bonafide and the mistake is inadvertent. Therefore, the AO is directed to delete the impugned penalty imposed u/s 271(1) (c). 9. In view of above, at the very outset, we note that although the assessee claimed deduction u/s 35D of the Act, the unamortized amount of public issue expense lying in the books of accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sent case, the AO has not disputed that there was an unamortized amount of public issue expenses lying in the books of account of Dadra Unit. The main explanation of the assessee is that due to inadvertent mistake and under bonafide belief, the amount of unamortized public issue expense was claimed as deduction u/s 35D of the Act as the same was not described with assets of demerged unit at Dadra by the accountant of the assessee while preparing the scheme of demerger. The contention of ld. DR is that the Dadra unit was showing loss which was subsequently merged with the assessee and in this situation, the assessee placed claim u/s 35D of the Act with the intention to reduce tax liability of the assessee and therefore, the AO was right in i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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