TMI Blog2016 (4) TMI 345X X X X Extracts X X X X X X X X Extracts X X X X ..... cepted by the Revenue. - Decided in favour of assessee. - ITA No. 1316/PN/2014 - - - Dated:- 7-3-2016 - SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM For The Assessee : Shri Divyesh Shah and Ms. Moksha Mehta For The Revenue : Shri Mukesh Jha ORDER PER VIKAS AWASTHY, JM : The appeal has been filed by the assessee against the order of Commissioner 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in confirming the penalty on demerger expenses. 3. Shri Divyesh Shah and Ms. Moksha Mehta appearing on behalf of the assessee 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 the paper book. The ld. AR further submitted that this fact was brought to the notice of the Assessing Officer vide letter dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. The ld. DR contended that from the perusal of the records it is evident that the expenditure ₹ 10,00,000/- claimed as Revenue has been incurred on stamp duty for the transfer of capital assets carried out in the process of demerger. Therefore, there cannot be two opinions about the nature of expenditure. In quantum appeal, the assessee has a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 incurred demerger expenses towards payment of stamp duty for transfer of capital assets. 7. Be that as it may, 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 (P.) Ltd. (supra) has held that penalty u/s. 271(1)(c) c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch can be the interpretation of the concerned words. The words are plain and simple. In order to expose the assessee to the penalty unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars 8. Thus, in view of the facts of the case and law laid down by the Hon'ble Supreme Court of India, we are of the considered opinion that it is not a fit case for levy of penalty u/s. 271(1)(c) of the Act. Therefore, the impugned order is set aside and the appeal of the assessee is allowed. 9. In the result, the appeal of the assessee is allowed. Order pronounced on Monday, the 07th day ..... X X X X Extracts X X X X X X X X Extracts X X X X
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