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2016 (9) TMI 1067 - ITAT HYDERABAD

2016 (9) TMI 1067 - ITAT HYDERABAD - TMI - Penalty u/s 271(1)(c) - deduction u/s 10A allowed - Held that:- There is no scope for levy of penalty on the given facts of the case. As far as the provisions of Section 10A are concerned, the Sub-Section 1 of Section 10A allows the deduction for a period of ten consecutive assessment years beginning with the assessment year relevant to the previous year in which the undertaking begins to inform or produce such articles or things or computer software as .....

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ar, on the basis of satisfying the conditions, assessee would be eligible for deduction for consecutive ten assessment years. In this case, there is no dispute that assessee was eligible for deduction u/s 10A in earlier years. There is also no dispute that assessee has applied for renewal on STPI approval for the later five years which was however, not pursued. According to my understanding, assessee has made a claim of deduction on the strength of the provisions, even though it has accepted tha .....

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eligible in earlier years, assessee would be allowed deduction in the impugned assessment year as well. This, in my view does not come into the purview as concealment of income or of furnishing of inaccurate particulars - Decided in favour of assessee - I.T.A. No. 278/HYD/2016 - Dated:- 30-6-2016 - Shri B. Ramakotaiah, Accountant Member For Assessee : Shri P. Murali Mohan Rao, AR For Revenue : Shri M. Sitaram, DR ORDER This is an appeal by assessee against the order of the Commissioner of Incom .....

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proceedings, the Assessing Officer (AO) examined the eligibility of the company for the purpose of 10A deduction and it was found that STPI had given approval to assessee through its letter dt. 29-08-2003. As per the approval letter, the company should commence its production within the period of three years and such approval is valid only for a period of five years since the date of commencement of production. The date of commencement of production as per Form No. 56F was 01-08-2003. Therefore, .....

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on the following decisions: i. ACIT Vs. TVS Finance & Services Ltd., [126 TTJ 302] (Chennai Tribunal) where the Hon'ble ITAT upheld the penalty levied u/s. 271(1)(c) on a wrong claim of depreciation made by the assessee; ii. Dr. KD Arora Vs. CIT [162 ITR 481] (Patna), where in the Hon'ble High Court has held that concealment is always deliberate and the presumption of deliberate concealment has to be rebuted by the assessee. If it is not rebutted by cogent materials, the presumption .....

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or a period of ten years. it was under the impression that once it becomes eligible to claim deduction u/s. 10A of the Act, it can continue to claim the same for ten years as per the provisions of Section 10A of the Act. Accordingly, it started claiming deductions u/s. 10A only from the current year as it did not earn any profits in the previous year; iii. It was further submitted by assessee that it has fulfilled the first condition of obtaining approval of Government through STPI as 100% EOU. .....

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(ITA No. 1852 to 1857/Hyd/2011); iv. ACIT Vs. VIP Industries [112 TTJ 289]; v. Mahavir Irrigation Pvt. Ltd., Vs. CIT [314 ITR 150]; vi. Roshan lal Madan Vs. ACIT [67 TTD 33]; vii. S. Prasada Rao, Hyd in ITAT A Bench (ITA 338/Hyd/06, dtd. 21.11.2008); viii. CIT Vs. Ms. Sania Mirza [259 CTR 386] (AP); 5. Ld. CIT(A) however, confirmed the penalty by stating as under: The information on record is carefully considered. The assessment records were perused. The copy of approval given by STPI dated 29.0 .....

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on to renew its STPI status or opt out at the end of five years; As per the certificate in Form 56F the commencement of production was 01.08.2003, therefore the approval granted by STPI was valid only up to 31.07.2008. Further the Assessing Officer also observed that as per the information available on website at www.Hyd.SPTI.in, the appellant company is not registered with STPI for the relevant year. In fact, the submissions made by the AR are contradictory, on one hand he is pleading that appl .....

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s made by furnishing inaccurate particulars that it was a registered unit with STPI. Therefore the action of Assessing Officer in levying penalty of ₹ 4.5 Iakhs, is confirmed. I also would like to mention here that none of the case laws relied upon by the appellant are relevant to the facts of the case. Both parties reiterated the respective contentions on the issue. 6. Having considered the rival contentions and perusing the Paper Book, I am of the opinion that there is no scope for levy .....

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ation of quantum and restrictions placed, if the units are transferred etc. Nowhere in Section 10A, it is specified that the deduction is not eligible, if the STPI does not continue the approval beyond the five year period. On a complete reading of the provision, anybody will come to a conclusion that once deduction of Section 10A is allowed in the first year, on the basis of satisfying the conditions, assessee would be eligible for deduction for consecutive ten assessment years. In this case, t .....

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assessment proceedings. Mere erroneous claim in the absence of any concealment or furnishing of inaccurate particulars is not a ground for levying penalty especially when there is nothing on record to show that assessee has concealed any particulars or furnished any inaccurate particulars. Assessee simply made a claim u/s. 10A on the reason that having been eligible in earlier years, assessee would be allowed deduction in the impugned assessment year as well. This, in my view does not come into .....

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) held that 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 the assessee. Thus, merely because the assessee had claimed the expenditure in relation to exempt income, which claim was not accepted or was not acceptable to the Revenue, that by itself would not, attract the penalty u/s 271 (1)(c) of the Act. In the present case, we are of the opinion that the disallowance of claim for deductions u/s .....

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the Act specifically excluded the deductions in respect of the expenditure incurred by the assessee in relation to income which does not form part of the total income under the Act. It was further pointed out that the dividends from the shares did not form the part of the total income. It was, therefore, reiterated before us that the Assessing Officer had correctly reached the conclusion that since the assessee had claimed excessive deductions knowing that they are incorrect; it amounted to con .....

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tails of its expenditure as well as income in its Return, which details, in themselves, were not found to be inaccurate nor could be viewed as the concealment of income on its part. It was up to the authorities to accept its claim in the Return or not. Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not, in our opinion, attract the penalty under Section 271 (1 )(c). If we accept the contention of the .....

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