TMI Blog2019 (4) TMI 191X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 - PUNJAB AND HARYANA HIGH COURT] penalty is imposed only when there is some element of deliberate default and not a mere mistake. The assessee has claimed software expenses under the head “software expenses” as evident from the order of the AO which shows that the software expenses were claimed as revenue in nature under the bonafides belief. Had the intention of the assessee been malafide then it should have claimed the same under any other head to avoid the attention - See KANBAY SOFTWARE INDIA (P) LIMITED. VERSUS DEPUTY COMMISSIONER OF INCOME-TAX. [2009 (4) TMI 499 - ITAT PUNE-A]. Exemption u/s.10A - whether the deduction under section 10A needs to be worked out after setting off the brought forward losses? - gains of the busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A) erred in law in upholding penalty u/s.271(1)(c) of Income Tax Act, 1961. 3. First, we deal with assessee s appeal in ITA No.1162/Ahd/2015. The solitary issue raised by the assessee is that the Ld.CIT(A) erred in confirming the penalty imposed by the Assessing Officer u/s 271(1)(c) of the Act. 4. Briefly stated facts are that the assessee is a limited company and engaged in the business of software development and IT enabled services. The assessee for the year under consideration filed its return of income declaring loss of ₹ 8,21,23,365/- only. The Assessing Officer in the assessment framed u/s 143(3) of the Act vide order dated 30/11/2010 determined the loss at ₹ 8,06,05,099/- after making the disallowances/addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... solve the assessee from the penalty to be imposed u/s 271(1)(c) of the Act. The Ld.CIT(A) also observed that the assessee had not made any specific submission against the penalty imposed by the Assessing Officer. Accordingly, the Ld.CIT(A) confirmed the order of the Assessing Officer. 7. Being aggrieved by the order of Ld.CIT(A), now the assessee is in appeal before us 8. The Ld.AR before us reiterated the submissions as made before the Ld.CIT(A), whereas the Ld.DR supported the orders of the authorities below. 9. We have heard the rival contentions and perused the materials available on record. In the instant case, the assessee has incurred an expense on the software amounting to ₹ 10,47,700/- which was considered by the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alitative difference between criminal liability under section 276C and penalty under section 271(1)(c) had to be kept in mind and approach adopted to the trial of a criminal case need not be adopted while considering the levy of penalty. Even so, concept of penalty has not undergone change by virtue of the said judgment. Penalty is imposed only when there is some element of deliberate default and not a mere mistake. This being the position, the finding having been recorded on facts that the furnishing of inaccurate particulars was simply a mistake and not a deliberate attempt to evade tax, the view taken by the Tribunal cannot be held to be perverse. 9.2. We also note that the Hon ble court delivered the above judgement after cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding factual elements embedded therein, if any, the bona fides should be taken as proved. The assessee's explanation regarding bona fides of the claim does not suffer from any apparent consistencies or factual errors and it is quite in tune with the human probabilities. There is no good reason to reject the same as unacceptable for the purpose of making of the claim of deduction being covered by the deeming fiction under Explanation 1 to section 271(1)(c). 9.4. In view of the above, we hold that the penalty levied by the AO and subsequently confirmed by the learned CIT (A) under section 271(1)(c) of the Act is not sustainable. Therefore, we reverse the order of the lower authorities. Hence the ground of appeal of the assessee is al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the deduction under section 10A of the Act is available before setting off the eligible loss. 15. The learned DR before us vehemently supported the order of the lower authorities. 16. We have heard the rival contentions and perused the materials available on record. The solitary issue in the instant case relates to the fact whether the deduction under section 10A needs to be worked out after setting off the brought forward losses. In this regard, we note that the impugned issue is well settled now by the judgment of Hon ble Supreme Court in the case of CIT ANR. vs. M/s Yokogawa India LTD. in Civil Appeal No. 8498 of 2013. The relevant extract of the case (supra) is as under: 17. If the specific provisions of the Act provide [f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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