TMI Blog2010 (4) TMI 1129X X X X Extracts X X X X X X X X Extracts X X X X ..... r before the CIT(A). The CIT(A) deleted the some of the additions and confirmed remaining additions. Both revenue as well as the assessee preferred appeals before this Tribunal against the order of the CIT(A) in quantum. This Tribunal partly allowed both the appeals filed by the revenue and well as by the assessee. After giving effect to the order of this Tribunal, the assessment order modified for the purposes of levy of penalty u/s 271(1) ( c ) of the Act. The following additions confirmed by this Tribunal were considered by the AO for levy of penalty u/s 271(1)( c ) of the Act : Rent, repairs, rates and taxes Rs.41,678 Disallowance u/s 40A(9) Rs.27,200 Depreciation Rs.1,036,049 Repair expenses disallowed as capital expenditure Rs.5,994,930 Entertainment expenses disallowed Rs.50,473 Deduction u/s 80I Rs.46,16,888 Consequently, the AO levied the penalty of ₹ 60,89,535/- with regard to the additions referred above vide penalty order date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntended that the assessee making a payment of ₹ 4 crores for getting residential premises vacated from tenants was not connected with the business of the assessee and therefore, was not allowable as business expenditure. Despite that the assessee has made a malafide claim of depreciation on the said amount of ₹ 4 crores, which clearly shows that the assessee has furnished in accurate particulars of income by making absolute wrong claim. He has pointed out that the assessee himself has admitted that the premises in question are residential premises and the expenditures was connected with the said premises then making a claim of depreciation on the said expenditure on residential premises shows the non- bonafide intention and claim of he assessee in which the penalty is leviable u/s 271(1)( c ) of the Act. He has relied upon the assessment order as well as penalty order. 10. Repair expenses disallowed as capital expenditure (Rs. 5,994,930) The learned DR has submitted that the claim of the assessee was disallowed being capital in nature and confirmed by this Tribunal that the said claim was also made by the assessee with the intention to reduce the taxable income an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing and Manufacturing co. ltd V/s CIT reported in 189 ITR 660. He has thus contended that the assessee has explained each and every aspect and basis of all the said claims in the note forming the part of the computation of income. Thus, the learned AR of the Assessee has urged that merely because the claim of expenditure was not allowable as per the provisions of law does not amount to furnishing of inaccurate particulars of income and concealment of particulars of income. 14. He has thus submitted that when the issue was very much debatable in view of the decision of the jurisdictional High Court on the issue and merely disallowance of the claim does not warrant levy of penalty under section 271(10( c ) of the Act. Disallowance u/s 40A(9) 15. The learned AR submitted that the assessee has share recreation expenses incurred by the staff associations of the assessee who were the members of the club. In fact, the clubs were association of staff the assessee and therefore, the assessee has claimed the expenses by explaining all relevant facts and the basis as mentioned in the Note 11 of computation of income. He has further contended that the issue was not pressed before the Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t gathering ₹ 20,76,568/- and hence hotel expenses amounting to ₹ 1,00,945/- as entertainment expenses out of disallowance made by the AO. The Tribunal allowed the assessee s claim at 25% of the entertainment expenses are attributable to employee and only a minor portion was disallowed. Since the issue was debatable and no bogus or false claim made on the part of the assessee, therefore, the disallowance of the same does not attract the penalty. Deduction u/s 80I 20. The learned AR submitted that the assessee vide note no.4 given the computation of income, which clearly states that this claim is based on an estimated working and would undergo a change depending on the quantum of 80I allowed in earlier years. 21. During the course of assessment proceedings, the assessee revised its claim u/s 80I from ₹ 1455 lacs to ₹ 1408 and the claim was accepted by the AO. Therefore there is no disallowance as such on this account. The assessee has explained the basis and the reasons for estimating the working out of the claim because the same was depending on the quantum of claim allowed in the earlier years. 22. The learned AR submitted that all these disallowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the provisions of law, since the assets was not put to use in particular year relevant to assessment year under consideration. However, when the assessee has explained the basis for claim that the assessee needed the premises for its business use then it cannot be said that this claim made by the assessee is bogus or inheritently wrong. The assessee has relied upon the decision of Hon ble Kerala High Court and therefore, there was an obvious bonafide belief and reason for making the claim. The claim of the assessee has been disallowed as the same is not as per the provisions of law, it cannot be treated as furnishing inaccurate particulars of income or concealment of particulars of income. 25. Disallowance of repair expenses on plant and machinery and building etc. This claim was disallowed on the ground that the same is a capital expenditure in nature. The assessee has explained all the relevant material facts regarding these expenditure at notes 23 of computation of income. Since the issue of revenue or capital expenditure was a debatable issue and finally decided against the assessee therefore, merely because the claim of the assessee disallowed on the ground that the expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... curate particulars of income or concealment of particulars of income. In the case of decision of CIT V/s Reliance Petroproducts Pvt.Ltd reported in 322 ITR 158(SC), the Hon ble Supreme Court held in paragraphs 11 to 14 as under : 11. We have already seen the meaning of the word particulars in the earlier part of this judgment. Reading the words in conjunction, they must means the details supplied in the return, which are not accurate, not exact or correct, not according to truth or erroneous. We must hasten to add here that in this case, there is no finding that any details supplied by the assessee in its return were found to be incorrect or erroneous or false, Such not being the case, there would be no question of inviting the penalty under section 271(1)(c ) of the Act. A mere making of the claim which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of he assessee. Such claim made in the ret5urn cannot amount to the inaccurate particulars. 12. It was tried to be suggested that section 14A of the Act specifically excluded the deduction in respect of the expenditure incurred by the assessee in relation to inco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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