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M/s Suraksha Realtors Versus DCIT Central Circle-36, Mumbai

2017 (4) TMI 811 - ITAT MUMBAI

Penalty under Section 271(1)(c) - wrong claim of deduction under Section 80IB(10) - bonafide belief - Held that:- The claim of the deduction under Section 80IB(10) raised by the assessee in respect of the interest on margin money parked in the form of fixed deposits with bank, remaining under a bonafide belief that the same being inextricably interlinked and interwoven with the business of the assessee, is a claim raised by the assessee on account of a mistaken interpretation of a statutory prov .....

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ainst the order passed by the CIT(A)-53, Mumbai, dated 30.09.2015, which in itself arises from the order passed by the A.O under Section 271(1)(c) of the Income-tax Act, 1961 (for short Act ), dated 22.03.2013. The assessee assailing the order of the CIT(A) who had confirmed the penalty imposed by the A.O under Section 271(1)(c), had therein raised the following grounds of appeal before us: - Being aggrieved by the order of the learned Commissioner of Income Tax (Appeals)-53, Mumbai, this appeal .....

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ting to ₹ 3,48,202/-. The levy of penalty, considering the claim of the appellant as not a bonafide claim, is bad in law and needs to be cancelled. 2 The appellant craves leave to add, to amend, alter/delete and/or modify the above grounds of appeal on or before the final hearing. 2. Briefly stated, the facts of the case are that the assessee firm which is engaged in the business of Real Estate Development had e-filed its return of income on 30.09.2008 declaring Nil income after claiming d .....

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tion of ₹ 3,48,202/- and assessed its income at ₹ 21,69,326/-. The A.O during the course of the assessment proceedings holding a conviction that the assessee had raised a false claim by claiming deduction under Sec. 80IB(10) in respect of its Income from other sources , therefore alleging furnishing of inaccurate particulars of income in respect of the deduction claimed by the assessee under Section 80IB(10) on the aforesaid amount of ₹ 3,48,202/-(supra) therein initiated penal .....

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ious permissions required for smooth running of the project, had thus remaining under a bonafide belief that the interest income of ₹ 3,48,202/-generated on such fixed deposits had a clear nexus with the business of the assessee, therein treated the same as part of its business income and claimed deduction under Section 80IB(10) in respect of the said amount. The A.O however not being satisfied with the explanation of the assessee and holding a conviction that the latter had raised a claim .....

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of deduction under the aforesaid statutory provision. The assessee taking support of a host of judicial pronouncements therein submitted before the CIT(A) that as the complete details pertaining to the process of computing and raising of the consequential claim of deduction under Section 80IB(10) was furnished by the assessee in its Computation of income , as well as the Audit report filed along with its return of income, therefore the same to the most being in the nature of a misconceived claim .....

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assessee, therein submitted that pursuant to the judgment of the Hon ble Supreme Court in the case of Liberty India Vs. CIT 317 ITR 218 (SC), wherein the Hon ble Apex Court had interpreted the scope and gamut of the term derived from , and had thus once and for all put to rest the divergent and conflicting views as regards the same, the assessee therein yielding to the said interpretation of the Hon ble Supreme Court had thus itself conceded the said point in the course of its quantum appeal bef .....

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e backdrop of the fact that the assessee remaining under a bonafide belief that interest on margin money maintained by way of fixed deposits as a requisite condition for satisfying the various permissions needed for smooth running of the project, was inextricably interlinked and rather interwoven with the business of the assessee, was thus eligible for claim of deduction under Section 80IB(10), had thus being prompted by such belief had included the same in its business income while computing th .....

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basis of complete facts disclosed in the return of income, which however is dislodged by the A.O by adopting a different interpretation of the scope of the statutory provision under which the deduction had been raised, would not automatically lead to levy of penalty under Section 271(1)(c) in the hands of the assessee. It was thus submitted by the ld. A.R that in the backdrop of the facts involved in the case, the penalty imposed under Section 271(1)(c) was liable to be vacated. Per contra, the .....

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of both the parties, perused the orders of the lower authorities and the material made available before us. We have given a thoughtful consideration to the facts of the case and find that the assessee while raising the claim under Section 80IB(10) of the Act , remaining under a bonafide belief that as the interest income on the margin money parked by way of fixed deposits with the banks was inextricably interlinked and rather interwoven with the business of the assessee, had therein included th .....

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e latters return of income. We thus are of the considered view that now when the complete facts and details as regards inclusion of the interest income of ₹ 3,48,202/- in the business income of the assessee for claim of deduction under Section 80IB(10) was duly disclosed by the assessee in its return of income, and thus was very much before the A.O, therefore in the backdrop of the aforesaid factual matrix it can safely be concluded that the assessee on the basis of the facts as they so re .....

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row connotation as against the word attributable to by the Hon ble Supreme Court in the case of Liberty India Vs. CIT (2009) 317 ITR 218 (SC), the assessee yielded to the same and in its quantum appeal before the Tribunal brought his interpretation of the said term in accord with the judgment of the Hon ble Apex Court. We thus in the totality of the facts involved in the case of the present assessee, are of the considered view that the assessee remaining under a bonafide belief as regards its el .....

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ed by the assessee along with its return of income, which details were at no stage found to be inaccurate. We thus in the backdrop of the aforesaid facts are of the considered view that on account of the bonafide claim of deduction raised by the assessee on the basis of fully disclosed facts in the return of income, penalty under Section 271(1)(c) of the Act was liable to be imposed in the hands of the assessee. That our aforesaid view is fortified by the judgment of the Hon ble Supreme Court in .....

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