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2016 (4) TMI 345 - ITAT PUNE

2016 (4) TMI 345 - ITAT PUNE - TMI - Levy of penalty u/s. 271(1)(c) - Held that:- The assessee has shown the nature of expenditure in its books of account. Merely claiming of expenditure under wrong head would not make the assessee liable for penalty under the provisions of section 271(1)(c) of the Act. It is not the case of Revenue that the assessee has not disclosed the details of expenditure claimed. The Hon'ble Apex Court in the case of Commissioner of Income Tax Vs. Reliance Petroproducts ( .....

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mmissioner of Income Tax (Appeals)-V, Pune dated 04-03-2014 confirming the levy of penalty u/s. 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) for the assessment year 2001-02. 2. The brief facts of the case as emanating from the records are: The assessee is engaged in the business of manufacturing of Textile Machinery and Food Processing Machinery. The assessment in the case of assessee for the assessment year 2001-02 was made vide order dated 30-12-2008 u/s. 143(3) .....

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respect of disallowance of ₹ 1,94,195/- u/s. 14A of the Act and the demerger expenses claimed by the assessee as Revenue expenditure. The Assessing Officer held that the claim of the assessee was not proper and there is concealment of income for furnishing of inaccurate particulars of income on the part of the assessee. The Assessing Officer levied penalty of ₹ 4,75,000/- u/s. 271(1)(c) of the Act. Aggrieved by the penalty order dated 26-06-2009, the assessee filed an appeal before .....

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essee submitted that the assessee had incurred demerger expenses for the efficient conduct of business. The scheme of demerger was approved by the Hon'ble Bombay High Court vide order dated 31-07-2001. As per the scheme of arrangement the expenses including stamp duty and registration fee of any deed documents etc. was to be borne by the assessee company. The ld. AR referred to the order passed by the Hon'ble Bombay High Court sanctioning the scheme of arrangement at pages 46 to 55 of th .....

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Co. Ltd., 219 ITR 521 (SC); ii. Commissioner of Income Tax Vs. Akme Electronics and Control Pvt. Ltd., 267 ITR 396 (Guj); iii. Commissioner of Income Tax Vs. Bush Boake Allen (India) Limited, 135 ITR 306 (Mad); iv. Madras Race Club Vs. Commissioner of Income Tax, 151 ITR 675 (Mad); v. Commissioner of Income Tax Vs. Gujarat Urja Vikas Ltd.; 229 Taxman 46 (Guj). In all the above mentioned cases, the Hon'ble Courts have held that the legal/professional charges paid for the amalgamation of the c .....

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puty Commissioner of Income Tax Vs. Boston Consulting Group (India) (P.) Ltd., 7 ITR (T) 417; iii. Union of India Vs. Rajasthan Spg. & Wvg. Mills, 224 CTR 1 (SC); iv. Commissioner of Income Tax Vs. Dharamchand L. Shah, 204 ITR 462 (Bom). 4. On the other hand Shri Mukesh Jha representing the Department vehemently supported the findings of Commissioner of Income Tax (Appeals) in confirming the levy of penalty in respect of disallowance of ₹ 10,00,000/- on account of demerger expenses. Th .....

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of demerger expenses wrongly claimed by the assessee as Revenue expenditure. 5. We have heard the submissions made by the representatives of rival sides and have perused the orders of the authorities below. The penalty u/s. 271(1)(c) has been levied in respect of demerger expenses ₹ 10,00,000/- claimed by the assessee u/s. 37(1) of the Act. According to the Revenue the aforesaid demerger expenses are towards stamp duty for the transfer of capital assets in the scheme of demerger. Therefore .....

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red by the assessee in the course of demerger and the nature of expenditure in the various decisions on which the ld. AR has placed reliance are entirely different in character, although both the expenditures have been incurred during restructuring of the companies in the course of amalgamation / demerger. In all the case laws on which the ld. AR has placed reliance to substantiate his claim, the expenditure is towards payment of legal/professional charges. In the present case, the assessee had .....

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Tax Vs. Reliance Petroproducts (P.) Ltd. (supra) has held that penalty u/s. 271(1)(c) cannot be levied merely because the assessee had claimed expenditure which was not accepted by the Revenue. The relevant extract of the judgment of the Hon'ble Apex Court reads as under: A glance at this provision would suggest that in order to be covered, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his i .....

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