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of <h1>Tax Tribunal Upholds Assessee's Exemption Claim & Cancels Penalty</h1> <h3>Commissioner of Income Tax, Faridabad Versus Olympia Electronics Private Limited</h3> The appeal was dismissed in favor of the assessee. The Tribunal ruled that the claim for exemption under Section 10B was bonafide, despite being debatable ... - Issues:The appeal involves the interpretation of Section 10B of the Income Tax Act, 1961 and the imposition of penalty under Section 271(1)(c) for inaccurate particulars of income.Interpretation of Section 10B:The appellant contended that the respondent's claim for exemption under Section 10B for interest income from fixed deposits was inaccurate. The Tribunal, however, found the claim to be bonafide and in line with judicial thinking at the time of filing the return of income.Penalty under Section 271(1)(c):The Assessing Officer imposed a penalty under Section 271(1)(c) for inaccurate particulars of income, which was upheld by the CIT(A). The Tribunal, on the other hand, cancelled the penalty, stating that the assessee had disclosed all relevant facts regarding the interest income and the claim was debatable at the time of filing the return.Judicial Findings:The Tribunal highlighted that the legal position regarding interest income as business income was debatable before the Supreme Court's pronouncement in 2003. The Tribunal emphasized that the mere fact that the Assessing Officer did not accept the claim does not imply inaccurate particulars were furnished. Citing relevant case law, the Tribunal concluded that no penalty should be imposed on the assessee.Legal Precedent:The judgment referenced the case of Pandian Chemicals v. CIT and CIT v. Sterling Foods to support the argument that a claim found to be unsustainable does not amount to furnishing inaccurate particulars. The judgment in Commissioner of Income Tax v. Reliance Petro Products (P) Ltd. further clarified that an unsustainable claim in the return does not constitute inaccurate particulars regarding income.Conclusion:The appeal was dismissed, ruling in favor of the assessee based on the interpretation of Section 10B and the application of penalties under Section 271(1)(c). The judgment emphasized the importance of disclosing all relevant facts and the bonafide nature of the claim made by the assessee.
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