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Syngenta India Ltd. Versus The Dy. CIT 1 (3) , Mumbai

2016 (7) TMI 832 - ITAT MUMBAI

Penalty u/s. 271(1)(c) - disallowance of claim of deduction u/s. 80IB on processing charges, miscellaneous income and on interest on employee loans - Held that:- The disallowance may have been confirmed in the quantum proceedings, however, such a finding may not be a final word so far as penalty proceedings are concerned, because the considerations, which arise in penalty proceedings are separate and distinct from the assessment proceedings. In the penalty proceedings, the assessee can point out .....

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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. 271(1)(c) can be levied - Decided in favour of assessee - ITA No.5537/Mum/2015 - Dated:- 10-6-201 .....

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. 80IB on processing charges, miscellaneous income and on interest on employee loans. 3. The facts in brief are that the assessee is a limited company engaged in the business of manufacturing and trading of agro chemical products and seeds. The return of income was filed on 31.10.2005 declaring total income of ₹ 63,58,97,030/-. In the said return, assessee has claimed deduction u/s. 80 IB for an amount of ₹ 26,09,60,584/- in respect of following units: Topic Unit - 30% Rs.11,65,42,21 .....

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lated 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 of deduction u/s. 80IB has g .....

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O, reduced the claim of deduction at ₹ 24,78,47,820/- i.e. disallowance of ₹ 1,31,12,764/- on the various miscellaneous income shown by the assessee on the ground that it cannot be said to be derived from industrial undertaking. Up to the second appellate stage, the claim of disallowance of deduction was reduced to ₹ 40,19,878/- on the following three items: i. Processing charges Rs.24,05,286/- ii. Misc. Income Rs.12,95,519/- iii. Interest on employees loan ₹ 3,19,073/- 5 .....

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ess of the industrial undertaking; secondly, these claims were based on certain decisions available as on date of filing of return of income. For the first time the disallowance was confirmed by the Tribunal in A.Y. 2001-02, which was on 05.11.2012. Before the CIT(A) also, the assessee reiterated its explanation and submitted that claim of deduction was based on following judicial precedents: i) CIT vs. India Gelatine & Chemicals Ltd. 275 ITR 284, judgment dated 08.04.2004 ii) ITAT Chandigar .....

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me of filing of return of income the assessee s claim was bona fide. The detailed submissions and explanations of the assessee before the CIT(A) has been dealt with and incorporated at pages 4 to 14 of the appellate order. However, the learned CIT(A) too confirmed the penalty after detailed discussion, which was purely on philosophical and conceptual concept behind levy of penalty de hors the substance and merits. In the entire order the learned CIT(A) has merely discussed the concept of penalty .....

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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 disallowance u/s. 80 IB. In support of this contention he also pointed out to the relevant order of the AO for A.Y. 2004-05 in the penalty proceedings. He also placed strong reliance on the decision of Allahabad High Court in CIT vs. Arvind Footwear Private Ltd, wherein on disallowance of .....

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ut also in the audit report, therefore there was no furnishing of inaccurate particulars. 7. On the other hand, learned DR submitted that the very nature of the income which has been claimed as deduction u/s. 80IB shows that they are not derived from the industrial undertaking. He submitted that interest from employee loans cannot be said to be derived from the industrial undertaking. Even if the decision of Supreme Court in Liberty India Ltd. and Tribunal order in the case of assessee came on a .....

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llaneous 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 has duly disclosed the entire particulars of oth .....

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he outset, assessee did have some basis for claiming the deduction on other income. Further disallowance of deduction on similar income made in the earlier years were upheld by the Hon ble Tribunal only on 05.11.2012, in wake of Hon ble Supreme Court decision in the case of CIT vs. Liberty India Ltd. (supra). Before us, it has also been pointed that similar penalty proceedings were initiated on disallowance made u/s. 80 IB however, the learned AO did not levy any penalty. Thus, in this year ther .....

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