TMI Blog2016 (7) TMI 832X X X X Extracts X X X X X X X X Extracts X X X X ..... ly by way of notes in the audited accounts but also before the authorities below have relied upon the decisions wherein similar nature of income were held to be allowable for deduction u/s. 80 IA. Thus, the claim of the assessee was genuinely bona fide at the time of filing the return of income. Not only that, some of the items of “other income” like processing charges, insurance claim there are still decisions which are in favour of the assessee post the judgment of Liberty India Ltd. Thus, it cannot be held that the assessee had made any false claim for which any penalty u/s. 271(1)(c) is warranted. Accordingly, on the facts and circumstances of the case, we are of the opinion that no penalty for furnishing of inaccurate particulars u/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he income of the manufacturing unit and the Sector Headquarter mainly comprising of scrap sales, processing charges, cash discount, interest on employee loans, but excludes dividend, interest on investments and rental income, which is allocated on the following basis: Related to the manufacturing unit allocated in the same proportion as the quantity of formulation of the Topik Unit bears to the quantity of formulation of the entire manufacturing unit for the year. Sector Headquarter other income is allocated to the Topik Unit in the proportion of the turnover of the unit compared to the total turnover of the Crop Protection Segment of the Company. 4. Before the AO, the assessee in response to show cause notice with regard to claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Processing charges Rs.24,05,286/- ii. Misc. Income Rs.12,95,519/- iii. Interest on employees loan ₹ 3,19,073/- 5. Now on these three items of disallowance, the AO has levied the penalty u/s. 271(1)(c) for furnishing of inaccurate particulars and, accordingly, levied penalty of ₹ 12,05,963/-. The assessee s detailed explanation before the AO about the bona fide claim of deduction u/s. 80IB has been incorporated by the AO in his penalty order from pages 2 to 5. The sum and substance of assessee s explanation has been that firstly, the aforesaid income had direct and proximate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discussed the concept of penalty rather than deciding the appeal on merits. He has again gone by the fact that Tribunal has confirmed the said disallowance. 6. Before us, learned counsel after explaining the entire facts, submitted that so far as the miscellaneous income forming part of other income is concerned the same comprised of interest, insurance claim and lease rent. On insurance claim he submitted that, now there is decision of Hon ble Bombay High Court in the case of Pfizer Ltd. 330 ITR 62 (Bom) in favour. Regarding interest and lease rent also there were various decisions, which have been cited before the CIT(A) in the penalty proceedings. He further pointed out in the earlier years also, no penalty was levied on similar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hus, he strongly relied upon the order of the CIT(A). 6. We have heard the rival submissions, perused the relevant findings given in the impugned orders and the material placed before us. The penalty has been levied on account of disallowance of claim of deduction on processing charges; miscellaneous income, consisting of interest, insurance claim and lease rent; and interest on employee loan. There were other items of income also which were disallowed by the AO however, from the stage of the Tribunal most of these deductions have been allowed, which is evident from the fact that out of the total disallowance of ₹ 1,31,12,764/- the disallowance has now been restricted to ₹ 40,19,878/- only. As discussed above, the assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee can point out the factors which had lead to a bona fide belief for making the claim at the time of filing the return of income. Here in this case, the assessee not only by way of notes in the audited accounts but also before the authorities below have relied upon the decisions wherein similar nature of income were held to be allowable for deduction u/s. 80 IA. Thus, the claim of the assessee was genuinely bona fide at the time of filing the return of income. Not only that, some of the items of other income like processing charges, insurance claim there are still decisions which are in favour of the assessee post the judgment of Liberty India Ltd. Thus, it cannot be held that the assessee had made any false claim for which an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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