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2016 (11) TMI 734 - ITAT MUMBAI

2016 (11) TMI 734 - ITAT MUMBAI - TMI - Penalty u/s 271(1)(c) on disallowance under section 14A - Held that:- Following the decision of the Coordinate Bench of this Tribunal in the assessee’s own case for A.Y. 2000- 01 we also are of the view that the issue of the disallowance under section 14A of the Act is a highly debatable one and it cannot be said that the assessee has concealed any particulars of income. In the light of the above facts and circumstances of the case, we hold that the levy o .....

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ncome was concealed. In this factual and legal matrix of the case, we are of the view that penalty under section 271(1)(c) of the Act was not exigible in the case on hand on the issue of the assessee’s claim regarding non-compete fee paid to ex-Directors and cancel the penalty levied thereon. - Decided in favour of assessee - Penalty on income from bad debts recovered - Held that:- The reason put forward by the assessee for its action; that since bad debts claimed in this regard had been dis .....

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and unambiguous; the assessee has to offer the same to tax in the year in which the recovery is made. Since the assessee has failed to do, in violation of the mandated provisions of law, we are of the view that action of the authorities below in levying penalty under section 271(1)(c) of the Act, in respect of the assessee’s not offering the recovery of bad debts written off in the facts and circumstances of the case is in order and we uphold and confirm the same. Decided against assessee - .....

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ase on hand, the employees contribution to PF/ESCI having been admittedly paid before the due date for filing its return under section 139(1) of the Act, the disallowance made by the authorities below was not called for, as the issue in the case on hand would be covered by the proviso to section 43B of the Act. In this view of the matter, we cancel the penalty levied under section 271(1)(c) - Decided in favour of assessee - Penalty on disallowance of donation - Held that:- Admittedly, the as .....

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pellant : Shri Milin Thakore For The Respondent : Shri Dipak Kumar Sinha ORDER Per Jason P. Boaz, A.M. This appeal by the assessee is directed against the order of the CIT(A)- 4, Mumbai dated 23.07.2013 for A.Y. 2002-03 upholding the levy of penalty of ₹ 9,66,239/- under section 271(1)(c) of the Income Tax Act, 1961 (in short 'the Act') by the Assessing Officer (AO) for A.Y. 2002-03. 2. Order on condonation of delay in filing the appeal for A.Y. 2002-03 2.1 The impugned order of th .....

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R. for the petitioner, after receipt of the impugned order, the same was forwarded to their tax consultants for advice, but due to inadvertent oversight by them, the appeal could not be filed. On noticing this mistake, the appeal was immediately prepared and filed on 13.12.2013. It is submitted that the delay of 69 days in filing the appeal was caused due to inadvertent oversight by the tax consultants and the mistake being not intentional but a bonafide mistake of oversight, it is prayed that a .....

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9) SCC 733 (iv) Improvement Trust, Ludhiana vs. Ujagar Singh & Others (C.A. No. 2395 of 2008 (SC) 2.2.1 We have heard the rival contentions of both the parties and perused and carefully considered the material on record; including the judicial pronouncements cited. Admittedly, there has been a delay of 69 days in filing this appeal before the Tribunal in respect of the impugned order dated 23.07.2013 of the learned CIT(A) for A.Y. 2002-03 confirming the levy of penalty of ₹ 9,66,239/- .....

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elay in filing appeals, has stated that substantial justice should prevail over technical considerations. The Hon'ble Court also explained that every days delay must be explained does not mean that a pedantic approach should be taken and the doctrine must be applied in a natural, common sense and pragmatic manner. Considering the aforesaid principles and the facts and circumstances of the case, we are of the opinion that if the said delay of 69 days in filing this appeal is condoned there sh .....

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the same in the interest of justice and equity. The appeal for A.Y. 2002-03 is accordingly admitted for consideration and adjudication. 3. The facts of the case, briefly, are as under: - 3.1 The assessee, a company engaged in the business of, inter alia, manufacturing of yarn, engineering goods and shipping, filed its return of income for A.Y. 2002-03 on 31.10.2002 declaring taxable income of ₹ 32,47,744/- on account of long term capital gains (LTCG) and loss from business. A revised retur .....

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; 32,74,774/- under the normal provisions and book profits under section 115JB of the Act was computed at (-)Rs. 4,87,49,500/-. The AO also allowed carry forward of business losses to the extent of ₹ 6,38,72,710/- . Penalty proceedings under section 271(1)(c) of the Act were simultaneously initiated in respect of disallowances made in the order of assessment, i.e. under section 14A of the Act, non-compete fee of ₹ 6,41,600/-, income from bad debts recovered amounting to ₹ 12,94 .....

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id beyond the due date of those Acts ₹ 6,852/- 3.3 Aggrieved by the order dated 30.03.2009 levying penalty of ₹ 9,66,239/- under section 271(1)(c) of the Act for A.Y. 2002-03, the assessee preferred an appeal before the CIT(A)-4, Mumbai who dismissed the assessee s appeal vide the impugned order dated 23.07.2013. 4.1 Aggrieved by the order of the CIT(A)-4, Mumbai dated 23.07.2013 for A.Y. 2002-03, the assessee has preferred this appeal raising the following grounds: - Levy of Penalty .....

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nce of delay in employee s payment towards PF and ESIC 6,852 Disallowance of donation 1,859 2. The learned CIT(A) erred in confirming the penalty inter alia on the grounds that the Appellant had furnished inaccurate particulars of income leading to concealment of income in respect id disallowance of Appellant s various claims made by the AO. 3. The learned CIT(A) failed to appreciate and ought to have held that: a) The Appellant has given complete disclosure in the Return of income and/or in the .....

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nds raised, the assessee contends that the impugned order of the learned CIT(A) upholding the levy of penalty under section 271(1)(c) of the Act is erroneous since the assessee has given complete disclosure of all facts in the return of income for A.Y. 2002-03 and accompany financial statements and that merely because addition have been confirmed by itself should not necessarily result in the levy of penalty for furnishing of inaccurate particulars of income leading to concealment of income. 5. .....

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l in the assessee s own case for A.Y. 2002-03 in its order in ITA No. 6720/Mum/2007 dated 12.06.2013. According to the learned A.R. for the assessee, the assessee had sufficient own funds (i.e. from share capital and reserves) of ₹ 191.91 crores from out of which the investments of ₹ 82.26 crores could be said to have been made. The learned A.R. submits that full disclosure of facts has been made by the assessee as the details of investments, own funds and borrowed funds were availab .....

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that in view of the aforesaid decision on the Coordinate Bench of this Tribunal and, inter alia, the decision of the Hon'ble Bombay High Court in the case of Reliance Utilities and Power Ltd. (313 ITR 340) (Bom), the penalty levied under section 271(1)(c) on the disallowance under section 14A of the Act be deleted. 5.2 Per contra, the learned D.R. supported the orders of the authorities below on this issue. 5.3.1 We have heard the rival contentions of both the parties and perused and careful .....

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y. After considering the submissions and perusing the material on record, we find that the arguments advanced by the ld AR mentioned above are correct. There were no provisions on the statute on the date of filing the return, therefore, the assessee, as in past, claimed expenditure on account of interest. The provisions of section 14A came on statute in 2001, through with retrospective effect. Therefore, it cannot be held that the assessee had concealed any particulars of income by claiming high .....

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stances, we hold that on the facts of the present case the levy of penalty was not justified, therefore, the same is cancelled. In the case on hand also, the facts being identical; i.e. the AO made a disallowance of ₹ 2,44,22,750/- which the learned CIT(A) restricted to ₹ 7,61,476/- in the period under consideration. Following the decision of the Coordinate Bench of this Tribunal in the assessee s own case for A.Y. 2000- 01 (supra), we also are of the view that the issue of the disal .....

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assessment proceedings, the AO on observing that the assessee has debited an amount of ₹ 2,60,495/- in the miscellaneous expenses of the Engineering Division and an amount of ₹ 3,81,105/- in the miscellaneous expenses of the Forbes Division, queried the assessee in this regard and it was submitted that these expenses totalling to ₹ 6,41,600/- were non-compete fees paid to ex-Directors. The AO observing that in the earlier years also, non-compete fees were disallowed as they we .....

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e submitted that there was no concealment of income or furnishing of inaccurate particulars by the assessee as the facts and details of payment of non-compete fee paid to ex- Directors was fully disclosed as part of the miscellaneous expenses claimed/submissions made in assessment proceedings vide letter dated 23.09.2004 and Schedule-11 in notes to account 7(a). Merely because the contentions of the assessee are not accepted, penalty under section 271(1)(c) of the Act cannot be levied, merely be .....

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India (P.) Ltd. (127 ITD 1) (Del), certain subsequent decisions have held that non-compete fee is revenue in nature like, CIT vs. Eicher Ltd. (2008) 302 ITR 249 (Del), etc. It was prayed that merely because the assessee s contentions and claims are not accepted, penalty cannot be levied. In support of this proposition, the learned A.R., inter alia, placed reliance on the decision of the Hon'ble Apex Court in CIT vs. Reliance Petroproducts Ltd. (2010) 322 ITR 158 (SC). 6.2 Per contra, the le .....

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he AO in assessment proceedings as per the assessee s letter dated 23.09.2004 (copy placed at pages 58 to 67 of assessee s paper book) and similar details were also disclosed at Note 7(a) in Annual Accounts regarding post retirement payments to ex-Directors. After considering the facts on record and the judicial pronouncements cited, we are of the considered view that merely because the assessee s claim for the said expenditure as revenue was turned down in quantum appeal proceedings; that by it .....

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ground raised by the assessee this issue is cancelled. 7. Penalty on income from bad debts recovered : ₹ 12,94,498/- 7.1 We have heard the rival contentions of both the parties and perused and carefully considered the material on record. On an appreciation of the facts on record, it is seen that the recovery of bad debts amounting to ₹ 12,94,498/- in the year under consideration pertained to bad debts written off by the assessee in the period relevant to A.Y. 2000-01. According to t .....

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be taxed in the year under consideration and did not file any further appeal to the Tribunal. According to the learned AR since all the details were on record before the authorities below, penalty under section 271(1)(c) of the Act was not leviable on this issue. 7.2 In our view, once the assessee had claimed write off of bad debts in its books of accounts in any year, the correct treatment, as per the provisions of section 36 of the Act, was to have offered the recovery of bad debts written off .....

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ery thereof for tax, in our considered view, is not acceptable as the aforesaid action of the assessee, in not offering the recovery of bad debts to tax, is not in conformity with the mandate of the provisions of section 36 of the Act. It is not the case of the assessee that a legal claim made was disallowed, which is a debatable issue. In respect of recovery on bad debts written off by the assessee, the position in law is clear and unambiguous; the assessee has to offer the same to tax in the y .....

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isallowance of employees contribution to PF/ESIC for delayed payment : ₹ 6,852/- 8.1 We have heard the rival contentions of both the parties and perused and carefully considered the material on record. The facts on the record indicate that the assessee has not pressed this issue before the Coordinate Bench of this Tribunal in quantum proceedings. According to the learned A.R. for the assessee the payments of employees contribution to PF/ESIC were made belatedly, but these payments were mad .....

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