TMI Blog2024 (4) TMI 592X X X X Extracts X X X X X X X X Extracts X X X X ..... have brought adverse material in respect of the expenditure so claimed by the assessee more particularly, when the assessee himself has reduced its claim as recorded by the AO in the assessment order itself. Thus in the light of decision of M/s. Napord Life Sicences P.Ltd. [ 2019 (2) TMI 980 - ITAT MUMBAI] no infirmity in the finding of Ld.CIT(A), the same is hereby affirmed. Grounds raised by the Revenue are accordingly, dismissed. - Shri Kul Bharat, Judicial Member And Shri M.Balaganesh, Accountant Member For the Appellant : Shri Vivek Vardhan, Sr.DR For the Respondent : Shri Ved Jain, Adv. And Shri Aman Garg, CA ORDER PER KUL BHARAT, JM : The present appeal filed by the Revenue is directed against the order passed by Ld.CIT(A)-7, New Delhi dated 27.03.2022 for the assessment year 2016-17. 2. The Revenue has raised following grounds of appeal:- (i). Whether on the facts and in the circumstances of the case, the Ld. CIT(A) was correct in deleting the penalty levied u/s 271(1)(c) of the I.T. Act of Rs. 60,11,830? (ii) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) was correct in deleting the penalty levied u/s 271(1)(c) of the I.T. Act of Rs. 60,11,830/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounsel for the assessee reiterated the submissions as made in the Synopsis. He submitted that it is not the case of concealment or furnishing of inaccurate particulars of income. Infact, the assessee had incurred expenditure of INR 4.41 crores for running/operation of Research Development activities. However, Department of Scientific and Industrial Research ( DSIR ) in respect of expenditure of INR 4.41 crores claimed by the assessee, restricted it to the extent of INR 2.85 crores. It was contended that the AO has not disallowed the expenditure as not being genuine. The expenditure was disallowed on the basis that DSIR had restricted this expenditure to INR 2.85 crores. It was contended that the nature of expenditure remained to be business expenditure and it is allowable u/s 37(1) of the Act. Therefore, looking to the totality of the facts of the present case and case laws relied upon by the assessee, the AO was not justified in imposing the penalty. For the sake of clarity, the synopsis filed by the Ld. Authorized Representative ( AR ) of the assessee is reproduced as under:- 1. This is a Revenue appeal filed against the order passed by the CIT(A) dated 21.11.2019, whereby CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lished a Research Development (R D) center in the city of Noida, State of Uttar Pradesh, in North India to carry out the testing development activities related to plastic films since last many years has been claiming the deduction regularly u/s 35. The assessee had spend Rs. 4,41,39,054/- on R D expenditure in approved R D centre u/s 35(2)AB but have claimed deduction of Rs. 8,82,78,108/- (200% of Rs. 4,41,39,054/-) The letter of approval of expenses to the extend of Rs, 264.52 lakhs from DSIR is enclosed as per Annexure 4 8. Further, assessee via reply dated 13.12.2018 (PB Pg 168-170, relevant page 170) submitted as under- The amount of Rs. 4.41 crores has been spend for the running/operation of R D unit established as per provisions of section 35(2)(AB) of the Income Tax Act, 1961. However, the Secretary DSIR had restricted this expenditure to Rs. 2.85 crores meaning thereby the DSIR had confirmed only Rs. 2.85 crores had been spent for R D purpose, however the expenditure remains business expenses u/s 37(1) of the Act. Hence only the additional deduction of Rs. 4.41 crores claimed u/s 35(2)(AB) stands restricted to 2.85 crores and the basic expense of Rs. 4.41 crores is eligible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 271(1)(C) are not clearly attracted in this case. In view of thereof, the penalty imposed u/s 271(1)(c) of the Act of Rs. 60, 11,830/- is deleted. 20. Now, Revenue is in appeal before the Hon'ble Tribunal against the order of CIT(A). 21. At the outset, it is relevant to mention that the issue is squarely covered in the favor of assessee via judgment of Hon'ble ITAT Mumbai in the case of M/S. NAPORD LIFE SCIENCES P. LTD. VERSUS DCIT, RANGE- 8 (2), MUMBAI, 2019 (2) TMI 980- ITAT MUMBAI, Dated. November 30, 2018, where Hon'ble Tribunal under similar circumstances deleted the penalty u/s 271(1)(c) holding as under- The dispute arises only with regard to the quantum of deduction claimed on account of part disallowance of expenditure by the DISR. As observed earlier, the certificate of the DSIR in Form No. 3CL disallowing part of the expenditure was received by the assessee in November, 2013, i.e. at a much later stage, even after the AO has started enquiry with regard to assessee's claim of deduction under section 35(2 AB) of the Act. Thus, upon considering the overall facts and circumstances of the case we are of the considered opinion that the assessee cannot be alle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;ble Apex Court is squarely applicable and therefore, respectfully following this judgment of Hon'ble Supreme Court, we decline to interfere in the order of learned CIT(A). 9. In the result, the appeal of the Revenue stands dismissed. [Disallowance was made only on the basis of report of DSIR and genuineness of the expenditure was never doubted by the AO. 23. It is relevant to mention that Ld. A.O has not doubted the genuineness of expenditure of Rs. 4.41 crores incurred by assessee for running / operation of research development unit established as per the provision of section 35(2AB) of the Income Tax Act, 1961. 24. It is also relevant to mention that Ld.AO has solely relied on report of secretary DSIR for making disallowance of Rs. 1.76 crore and no any other observation/ allegation was made by the AO. 25. It is further submitted that assessee in support of expenditure of Rs. 4.41 crores, has furnished report in form no.3CLA, from accountant which is required to be furnished u/s 35(2AB) of the Act. (PB Pg. 134-137). 26. The above mentioned facts at Pt. 2-9, highlight following points- Assessee received approval of secretary, DSIR in respect of expenditure of Rs. 4.41 cror ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been questioned by A. . Basic expenditure of Rs. 4.41 crores has been allowed as expenditure u/s 37(1) and only additional deduction of Rs. 4.41 crore u/s 35(2AB) stands restricted to Rs. 2.84 crores. Based on above mentioned facts and points, it is an undeniable fact that assessee furnished complete information and accurate information at the time of filling of income tax return, as report of DSIR was not available with assessee at the time of filling of income tax return and was received much later, so assessee cannot be deemed to have furnished any inaccurate particulars. 27. The above mentioned contention of assessee is supported by the Hon'ble, ITAT Mumbai judgment in the case of M/S. NAPORD LIFE SCIENCES P. LTD. VERSUS DCIT, RANGE-8 (2), MUMBAI, 2019 (2) TMI 980-ITAT MUMBAI, Dated.- November 30, 2018. 28. Further reliance is placed on the judgment of co-ordinate bench of ITAT Lucknow in the case of A.C.I.T., RANGE-V, LUCKNOW VERSUS MIS PTC INDUSTRIES LTD., 2015 (12) TMI 963-ITAT LUCKNOW, Dated.- June 15, 2015. 29. It is further submitted that it is settled position in law that where deduction claimed by assessee was not accepted by AO, then same cannot be treated as inacc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it had wrongly claimed the deduction u/s 35(2)AB of the Income Tax Act, 1961. The AO therefore concluded during penalty proceedings that the appellant had accepted the addition and not filed appeal on this issue before CIT(A) the charge of filing inaccurate particulars stands substantiated and accordingly imposed a penalty of Rs. 60,11,830/-. 4.2. It was submitted that section 35(2)AB provides for 200% deduction of the amount spend by assessee on R D activities. During the year the Appellant had spend Rs. 4,41,39,054/- on R D unit approved by DSIR u/s 35(2) (AB) and accordingly claimed 200% deduction on the said amount. But DSIR approved only Rs. 2,64,52,000/- out of the above amount the appellant accordingly reduced its deduction u/s 35(2)(AB) by Rs. 1,76,87,054/-during the assessment proceedings. The genuineness of expenditure of basic amount of Rs. 4,41,39,054/- had never been in question during the assessment proceedings, the AO had verified these expenses during the assessment proceedings and allowed them as deduction u/s 37 of the Act. The issue was only for the additional deduction of 100% u/s 35(2)AB. It was submitted that as such there is no requirement in section to restr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c) of the Income Tax Act, suggest that in order to be covered by it, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. The meaning of the word particulars used in section 271(1)(c) would embrace the details of the claim made. Where no information given in the return is found to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate particulars. In order to expose the assessee to penalty, unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By no stretch of imagination can making an incorrect claim tantamount to furnishing inaccurate particulars. There can be no dispute that everything depend upon the return filed by the assessee, because that is the only document where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. To attract penalty, the details supplied in the return must not be accurate, not exact or correct, not according to the truth or erroneous. Where there is no finding that any details supplied by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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