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The DCIT-9 (2) , Mumbai Versus M/s. Hindustan Oil Exploration co. Ltd.

2015 (9) TMI 1345 - ITAT MUMBAI

Penalty under section 271(1)(c) - claim of deduction under section 80IB(9) - CIT(A) deleted the penalty - Held that:- In the present case, the plea of the assessee was that such incomes have been earned in the course of carrying on its activity of exploration and extracting of oil and, therefore, the same was eligible for the claim of deduction under section 80IB(9) of the Act. Ofcourse, the Revenue has differed with the assessee on this aspect. The Hon’ble Supreme Court in the case CIT vs. Reli .....

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d under section 271(1)(c), qua the denial of deduction under section 80IB(9) of the Act with respect to the incomes on account of interest, foreign exchange fluctuation gain and other income. - Decided against revenue.

Disallowance of deduction claimed for exploration expenditure incurred for the business of prospecting for or extraction/production of oil under section 42(1) - Held that:- In the present case the difference between the assessed and the reported income on the aforesaid .....

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I SANJAY GARG, JJ. For The Appellant : Shri Shashi Bhusshan Prasad For The Revenue : Shri Sivam Subramanian ORDER PER G.S. PANNU,AM: The captioned appeal by the Revenue is directed against the order of the CIT(A)-20, Mumbai dated 23/10/2013 pertaining to the assessment year 2007-08, which in-turn has arisen from an order passed by the Assessing Officer dated 20/03/2012 levying a penalty of ₹ 34,24,75,519/- under section 271(1)(c) of the Income Tax Act, 1961 ( in short the Act ). The Ground .....

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m for deduction u/s 8018 being patently inadmissible, and penalty on disallowance u/s 14A amounting to ₹ 19,75,991/and u/s 42A amounting to ₹ 2,55,07,5821were levied as assessee has furnished inaccurate particulars of the income and the facts of the assessee's case are different from those of Reliance Petro Products Pvt. Ltd. (322 ITR 158 SC) relied on by the CIT(A)? 2. The respondent assessee before us is a company incorporated under the provisions of Companies Act, 1956 and is .....

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itions made in the course of assessment proceedings and, accordingly, levied a penalty of ₹ 34,24,75,519/- under section 271(1)(c) of the Act. The said penalty has since been deleted by CIT(A), against which the Revenue is in appeal before us on the aforesaid Ground of appeal. 3. In brief, the relevant facts are that, penalty under section 271(1)(c) of the Act has been levied on the difference between the reported and the assessed income on the following four additions made in the Quantum .....

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the Act amounting to ₹ 84,87,05,610/- and the disallowance under section 14A of the Act amounting to ₹ 58,70,442/- are concerned, the Tribunal vide its order in ITA NO.61/Mum/2011 dated 7/2/2014 has deleted the additions. Thus, the additions, which formed the basis for levy of penalty stand deleted, penalty under section 271(1)(c) of the Act to the said extent does not survive. The Ld. Representative for the assessee pointed out that the order of the Tribunal dated 7/2/2014(supra) ha .....

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unting to ₹ 58,70,442/- have since been deleted, the corresponding penalty under section 271(1)(c) of the Act is untenable and does not survive. Thus, on this aspect the ultimate decision of the CIT(A) is upheld, albeit on a different ground. 5. The next item on which the penalty has been levied is with regard to the exclusion of certain incomes for computing the deduction under section 80IB(9) of the Act. The Assessing Officer excluded certain incomes, namely interest, dividend, foreign e .....

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nalty with respect to the denial of deduction under section 80-IB(9) of the Act in relation to three elements of such income, namely interest- ₹ 7,12,64,714/-; foreign exchange fluctuation gain ₹ 1,53,47,008/-; and, other income of ₹ 10,92,679/-, totalling to ₹ 8,77,04,401/- 5.1 On the aforesaid aspect, the CIT(A) has deleted the penalty on the ground that a mere rejection of a claim of deduction does not result in levy of penalty under section 271(1)(c) of the Act in as .....

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is indeed borne out of the Ground of appeal raised by the Revenue. 5.3 So however, Ld. Departmental Representative contended that in the initial part of the Ground of appeal Revenue has challenged the action of the CIT(A) in deleting the entire amount of penalty imposed by the Assessing Officer which inter-alia, includes the aforesaid addition also, and therefore, the grievance of the Revenue against the aforestated specific action of the CIT(A) is also manifested in the Ground of appeal raised. .....

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y, in order to invoke the provisions of section 271(1)(c), the conditions stated therein must be established, i.e. either the assessee should have concealed the particulars of income or assessee should have furnished inaccurate particulars of such income. In the present case, the plea of the assessee was that such incomes have been earned in the course of carrying on its activity of exploration and extracting of oil and, therefore, the same was eligible for the claim of deduction under section 8 .....

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rs filed would not invite penalty under section 271(1)(c) of the Act. Considered in the aforesaid light, in our view, the CIT(A) made no mistake in deleting the penalty levied under section 271(1)(c), qua the denial of deduction under section 80IB(9) of the Act with respect to the incomes on account of interest, foreign exchange fluctuation gain and other income totaling ₹ 8,77,04,401/-. Thus, on this aspect also Revenue fails. 6. The last limb of the addition on which penalty has been lev .....

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he Tribunal and vide its order dated 7/2/2014(supra), the matter was restored back to the file of Assessing Officer for a decision afresh. 6.2 Ld. Departmental Representative pointed out that the Assessing Officer was justified in levying the penalty as the deduction claimed by the assessee in the return of income was for depletion in producing the property, which is reflected in the fixed assets block and, therefore, it was a disallowable item and the Assessing Officer was justified in adding i .....

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of total oil/gas reserves estimated from such blocks and the actual oil/gas produced during the year. The assessee had justified the claim of deduction under section 42(1) of the Act read with the Production Sharing Contract (PSC) entered into with the Government of India. Section 42 of the Act is a special provision for deductions in the case of business for prospecting for extraction or production of mineral oils, etc. It, inter-alia, prescribes for deduction of certain expenses incurred for s .....

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