New User   Login      
Tax Management India .com TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (10) TMI 43 - ITAT DELHI

2016 (10) TMI 43 - ITAT DELHI - TM - Penalty u/s. 271(1)(c) - Addition on Legal and professional charges and Cost of investment written off - Held that:- In the present case the legal and professional fee paid to various professionals was duly disclosed in the books of account and the same have been paid by cheques to the consultants. Tax was also deducted at sources on such payments. The bills of the legal consultants were also produced before the AO. Therefore, there being complete disclosure .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f these circumstances, the entire amount invested, is said to have been written off in the books of account, as the said amount was not expected to be recovered. The factum of investment and its write off was also completely disclosed before the AO in the financial statement furnished by assessee. However, on disallowance of this claim of assessee, it is not justified to hold that the appellant has concealed the particulars of income or has furnished inaccurate particulars of such income entaili .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

: Ms. Anima Barnwal, Sr. DR ORDER Per L.P. Sahu, Accountant Member: This is an appeal filed by the assessee against the order of ld. CIT(A)- VIII, New Delhi dated 25.09.2013, New Delhi for the assessment year 2006-07 on the following grounds : GROUND - I 1. On the facts and circumstances of the case and in law, the Learned Commissioner of Income - Tax ( Appeals) - VIII , New Delhi ( CIT (A) ) erred in upholding the action of the Assistant Commissioner of Income Tax - 5 (1), New Delhi ( the AO ) .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

: a. Where claim of the Appellant was based on certain judicial pronouncements or where the issue is debatable or where two views are possible or where adequate disclosure have been made no penalty can be levied; b. A mere making of a claim , which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. 4. of the Act, of ₹ 10,05,115/- be deleted or appropriately reduced. GROUND - II The Appellant craves leave to add t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

chase, to invest and to acquire shares/other securities. The company is also getting interest income and rental income and dividend. The appellant filed return of income on 18.11.2006 showing loss of ₹ 15,65,153/-. The case was selected for scrutiny & statutory notices were issued. In response to the notice, the assessee submitted that legal and professional charges have been paid for availing consultancy in various legal matters from time to time with respect to various corporate matt .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

assessee submitted as under : "Company has charged an amount of ₹ 12,50,000/- towards write off of investment value as revenue expenditure. This was on account of investment turning zero in the share of Modi Creata Promotion Pvt. Ltd. The modi Creata Promotion Pvt. Ltd. has applied to the Registrar of Company for its name to strike off under section 560 of the Companies Act, 1956. If an expense is a capital expenditure, it needs to be capitalized; this requires the company to spread .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ejudice to our claim for revenue expenditure, since the assessee had only investment activity, the loss arising out of investment assets which are its productive assets, has to be allowed as loss under Sec. 28 of the income Tax Act 1961. On both the counts, it is felt that such expenditure/loss is allowable during the year under reference. The Assessing Officer noted that the company is not a banking company and loss claimed is not directly linked to the income component of the assessee. In the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed by the order of the Assessing Officer, he appealed before the ld. CIT(A) who confirmed the order of the Assessing Officer. Against the order of the ld. CIT(A), the assessee did not prefer any appeal before the Tribunal. 4. On the basis of above disallowances, the Assessing Officer initiated penalty proceedings and imposed penalty of ₹ 10,05,115/- u/s. 271(1)(c) of the Act. Against this order the assessee appealed before the ld. CIT(A) who confirmed the action of the Assessing Officer fo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

roceedings is not legally valid, inasmuch as the Assessing Officer has issued notice u/s. 271(1)(c) read with Section 274 of the Act in a printed format and has placed a tick mark on the paragraph have concealed the particulars of your income or furnished inaccurate particulars of such income in terms of explanation 1, 2, 3, 4 and 5 which shows that the notice did not spell out the charge against the assessee - as to whether the assessee was guilty of having concealed the particulars of income o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ionals aggregating to ₹ 17,36,080/-, it was submitted that the same were duly disclosed in the books of account and the same have been paid by cheques to the consultants. TDS was also made on the payments of these professional fees. The bills of the legal consultants were also produced before the AO. Therefore, there being complete disclosure of these expenditures before the AO, no penalty could be imposed against the assessee. 5.2 With respect to written off investments of ₹ 12,50,0 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

O on this issue, as reproduced in this order above. Since the factum of investment and its write off was also completely disclosed before the AO in the financial statement furnished, it is not justified to assume that the appellant has concealed the particulars of income or has furnished inaccurate particulars of such income entailing penalty u/s. 271(1)(c) of the Act. It was further submitted that merely because claimed expenditure which was not acceptable to the Revenue, that by itself would n .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

l.Trib) (iii). Rajendra Kumar vs. ITO, 94 TTJ 280 (Jodh. Trib.) For the proposition that no penalty can be levied on a claim on investment written off as a revenue loss allowable as a deduction, the ld. AR relied on the following decisions : (i). CIT vs. IFCI Ltd., 328 ITR 611 (Del.) (ii). CIT vs. Ganesan Builders Ltd., 299 ITR 403 (Mad) (iii). CIT vs. Aditya Birla Nuvo Ltd (ITA No. 3899 of 2010)(Bom. HC) (iv). CIT vs. MWP Ltd., 41 Taxmann.com 496 (Kar. HC) It was also argued that no penalty can .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e department, no penalty can be levied on the same : (i). CIT vs. Amit Jain, 351 ITR 74 (Del.) (ii). CIT v. Harilal Doshi (ITA No. 2331 of 2013)(Bom. HC) (iii). DCIT vs. JMD Advisors (P) Ltd. (124 ITD 223)(Del. Trib.) 6. The ld. DR relied on the orders of the authorities below and submitted that the notice for imposing penalty u/s. 271(1)(c) read with section 274 is in standard format which has been prescribed by the Board. Moreover, the assessee has not raised this legal issue before the first .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

at the company was incorporated for investing in shares and earning exempt income because the shares were purchased for the investment and earning dividend income. Therefore, the loss on shares which had no value cannot be claimed as revenue expenditure. Both the additions were confirmed by ld. CIT(A) against which the assessee did not prefer any appeal before the Tribunal. Therefore, both the authorities below are justified to impose penalty on both the counts for legal and professional charges .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

274 of the Act in a printed format and the said notice nowhere spells out the specific charge against the assessee as to whether the assessee was guilty of having concealed the particulars of income or of having furnished inaccurate particulars of income. A perusal of record shows that this issue has neither been raised before the first appellate authority nor before us in the grounds raised in the memo of appeal. The assessee has also not bothered even to file any additional ground in appeal ra .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ee, it will not be enough reason to hold that assessee is guilty of concealment of income or of furnishing inaccurate particulars of income. Even if the claim of the assessee was found wrong, such incorrect claim made by assessee, in the peculiar facts of the present case, cannot be said to prove furnishing of inaccurate particulars of income where the assessee had made complete disclosure in respect of the claims so made in the return of income itself. For this, we stand fortified by the decisi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Lal Sugar & General Mills Ltd. (supra) and other decisions as relied by assessee. The ld. DR could not be able to adduce any material on record contrary to the submissions of the assessee that mere change of head of income as computed by the assessee and as assessed by the Revenue, no penalty could be imposed as held by Hon ble Delhi High Court in the case of Amit Jain (supra) and Bombay High Court in CIT vs. Harilal Doshi (supra). In the present case the legal and professional fee paid to .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version