Foreign currency loan interest penalty deleted; lack of evidence cited. Excess claim penalty also removed. Tribunal affirms CIT(A) decision.

The penalty imposed for undercharging interest on a foreign currency loan to an associated enterprise was deleted as the quantum addition had been removed. The Tribunal upheld the deletion of penalty, noting the lack of evidence provided by the revenue to support their case. Additionally, the penalty for an excess claim made under section 35(2AB) of the Act was also deleted. The Tribunal found the claim to be bona fide and in compliance with the law, as the assessee had informed the Assessing Officer of the approved expenditure and accepted the disallowance without contest. The Tribunal dismissed the revenue's appeal, affirming the CIT(A)'s decision.

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Issues involved:
The issues involved in this case are the deletion of penalty imposed under section 271(1)(c) of the Income Tax Act, 1961 for undercharging interest on foreign currency loan to an associated enterprise and the deletion of penalty on excess claim made under section 35(2AB) of the Act.

Deletion of penalty for undercharging interest:
The revenue appealed against the deletion of penalty imposed for undercharging interest on a foreign currency loan to an associated enterprise. The Tribunal considered the appeal and held that since the quantum addition had been deleted, the penalty did not survive. The Tribunal noted that the revenue failed to demonstrate any distinguishing feature in the case and did not provide any material to show that the order in the assessee's own case for other years had been overruled. Therefore, the penalty was directed to be deleted, and the CIT(A)'s findings were upheld.

Deletion of penalty for excess claim under section 35(2AB):
The second issue pertained to the disallowance of an excess claim made under section 35(2AB) of the Act. The assessee had claimed a deduction for Research and Development (R&D) expenditure, which was approved at a lower amount by the Department of Scientific and Industrial Research (DSIR). The Assessing Officer disallowed the excess claim and initiated penalty proceedings under section 271(1)(c) of the Act. However, the Tribunal observed that the assessee had intimated the approved expenditure to the AO during assessment proceedings and had explained the bifurcation of the claim. The Tribunal also noted a previous decision where a penalty on a similar excess claim was deleted. The Tribunal found the assessee's claim to be bona fide and in compliance with relevant provisions of the law. As the claim was revised by DSIR after the filing of the return, the assessee accepted the disallowance without contesting it further. Citing the precedent set by the Supreme Court, the Tribunal dismissed the revenue's appeal, upholding the findings of the CIT(A) and dismissing the penalty.

Separate Judgement:
No separate judgment was delivered by the judges in this case.

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