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LIC Nomura Mutual Fund Asset Management Company Limited Versus Dy. Commissioner of Income Tax Circle–1 (2) , Mumbai

2015 (10) TMI 1886 - ITAT MUMBAI

Penalty u/s 271(1)(c) - Assessee has concealed the particulars of income or furnished inaccurate particulars of income in so far as its claim of Long Term Capital Loss on redemption of units of mutual funds - only ground as to why the penalty was applied against the assessee because certain claim in his return of income was not accepted by the Revenue - Held that:- The assessee company has disclosed full details and particulars of its claim of carry forward of long term capital loss in the retur .....

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not amount to furnishing of inaccurate particulars or concealment of income on the part of the assessee and, therefore, penalty for concealment of income could not be levied. Similar finding also given in the decision of the Hon'ble Supreme Court in Reliance Petroproducts Pvt. Ltd. (2010 (3) TMI 80 - SUPREME COURT) wherein it has been held that merely because a claim made by the assessee is rejected by the Revenue, levying of penalty under section 271(1)(c) is not justified. - Decided in favour .....

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mstances of the case and in law, the Assessee submits that the Learned Commissioner (Appeals) erred in confirming the penalty of ₹ 50,00,000 levied by the Assessing Officer under Section 271(1)(c) of the Income Tax Act, 1961 (the Act). 2. On the facts and circumstances of the case and in law, the Assessee submits that the Learned Commissioner (Appeals) erred in holding that the Assessee has concealed the particulars of income or furnished inaccurate particulars of income in so far as its c .....

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relating to the claim having been disclosed, no penalty is imposable under the provisions of explanation 1 to section 271(1)(c) of the Act and consequently erred in confirming the levy of penalty of ₹ 50,00,000. 2. Facts in brief:- The assessee is an asset management company and manages the investment of LIC Mutual Funds. The income earned by the company is mainly by way of management fees for managing the funds of LIC Mutual Funds. The assessee has invested ₹ 9,45,83,000, on 28th M .....

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ts between July 2003 and December 2003. These units were redeemed on 7th December 2004, and the assessee realised ₹ 5,12,87,467. Since these units were held for a period of more than 12 months from the date they were allotted, they were also long term capital asset within the meaning of section 2(42A) of the Act and, hence, also eligible for indexation. The assessee also made a loss of ₹ 37,500, on redemption of bonds in Konkan Railway Corporation Ltd. Since these bonds were not elig .....

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fide claim in his return of income since they were not bonds or debentures. There is a specific difference between units of mutual funds on one hand and bonds and debenture on the other. In support of this contentions, the assessee relied on the decision of the Hon'ble Jurisdictional High Court in CIT v/s Enam Securities Pvt. Ltd., [2012] 345 ITR 64 (Bom.), wherein the Hon'ble Jurisdictional High Court placed reliance on the decision of the Hon'ble Apex Court in R.D. Goel v/s Relianc .....

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ng Officer, on the other hand, was of the opinion that the units of LIC Mutual Bond Funds Units and LIC Mutual Funds Short Term Plan Units were in the nature of debenture and consequently, he was of the opinion that the provisions of third proviso to section 48 of the Act which denied the benefit of indexation to bonds and debentures were attracted. Therefore, in the assessment order under section 143(3) of the Act, while denying the benefit of indexation to the units, the Assessing Officer arri .....

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50,00,000 on the assessee under section 271(1)(c) of the Act. 3. The learned CIT(A) upheld the penalty imposed by the Assessing Officer. Aggrieved, the assessee is in further appeal before the Tribunal. 4. The learned Counsel for the assessee, before us, relied on the decision of the Hon'ble Supreme Court in CIT v/s Reliance Petroproducts Pvt. Ltd., [2010] 322 ITR 158 (SC) which was referred to in the case of DIT(IT) v/s Administrator of Estate of Late E.F. Dinshaw, [2013] 35 Taxman.com 15 ( .....

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y clear that the assessee has furnished all details in his return of income shown indexation wherever applicable and that also claimed loss on certain bonds. There is no doubt that the action of the assessee has all throughout been bona fide and entire details have been specifically stated in the return of income. There cannot be no dispute that everything would depend upon the return of income filed because that is the only document where the assessee can furnish the particulars of his income. .....

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