TMI Blog2022 (10) TMI 1098X X X X Extracts X X X X X X X X Extracts X X X X ..... Decided in favour of assessee. - ITA Nos.86 & 87/PUN/2021 - - - Dated:- 26-9-2022 - SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER Revenue by : Shri Ramnath P. Murkunde Assessee by : Shri J. G. Pendse ORDER PER INTURI RAMA RAO, A M: These are the appeals filed by the Revenue directed against the separate orders of ld. Commissioner of Income Tax (Appeals)- 11, Pune [ the CIT(A) ] dated 12.10.2020 for the assessment years 2010-11 and 2011-12 respectively. 2. Since the identical facts and common issues are involved in both the above captioned appeals, we proceed to dispose of the same by this common order. 3. For the sake of convenience and clarity, the facts relevant to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g aggrieved by the above additions, an appeal was filed before the ld. CIT(A), who vide impugned order confirmed the additions. However, on further appeal before the ITAT, the Tribunal had deleted the additions in respect of section 80-IC and u/s 14A of the Act. However, he confirmed the addition on account of disallowance of loss incurred on derivatives. On receipt of the direction of ITAT, the Assessing Officer also passed a consequential order and proceeded with levy of penalty u/s 271(1)(c) vide order dated 26.07.2018 of Rs.4,46,97,128/- with reference to the addition submitted in respect of disallowance of loss incurred on derivatives. 6. Being aggrieved by the above order of penalty u/s 271(1)(c), the respondent-assessee filed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f penalty u/s 271(1)(c) in respect of an item of addition made on account of disallowance of loss incurred on derivatives. The undisputed fact of the issue are as under :- The respondent-assessee borrowed foreign currency for the purpose of acquisition of capital assets, in order to hedge against the fluctuation on foreign currency, the appellant entered into derivative contract with the bank, the loss incurred on such derivatives was claimed as revenue expenditure. The Assessing Officer had disallowed the same holding to be capital in nature. On appeal before the ld. CIT(A) as well as the ITAT, the action of the Assessing Officer was confirmed. Subsequent to the passing of order by the ITAT, the Assessing Officer had levied penalty u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... detail supplied was found to be factually incorrect. Hence, at least, prima facie, the assessee could not be held guilty of furnishing inaccurate particulars. The revenue argued that submitting an incorrect claim in law for the expenditure on interest would amount to giving inaccurate particulars of such income. Such cannot be the interpretation of the concerned words. The words are plain and simple. In order to expose the assessee to the penalty unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing of inaccurate particulars. [Para 7] Therefore, it must be shown that the conditions under section 271 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inaccurate particulars of income. Such contention could not be accepted as the assessee had furnished all the details 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 attract the penalty under section 271(1)(c). If the contention of the revenue was accepted, then in case of every return where the claim made was not accepted by the Assessing Officer for any reason, the assessee would invite penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X
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