2013 (5) TMI 390

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....y of Rs.9,39,715 levied under section 271(1)(c) by holding that levy of penalty on additin to the returned loss which result in reduction of loss was not on statute in the year under consideration as it was introduced w.e.f. 01.04.2003 without appreciating the fact that Explanation 4 to section 271(1)(c) introduced by Finance Act, 2002 is clarificatory and not substantive and is applicable retrospectively". 2. Briefly stated, assessee company filed its return of income for AY 1997-98 showing returned loss of Rs.25.23 lakhs. However, while completing the assessment under section 143(3) of the Act on 10.02.2000 AO made various disallowances amounting to Rs21,85,384 under the following heads: i) Disallowance out of interest Rs.20,7....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....s due to the fact Concast India Ltd was given an interest free security deposit of Rs.100/- lakhs. The agreement provided that Landlord shall provide office spare with facilities like Xerox machine, telephone, fax, furniture and fixtures etc. Assessee's decision to take premises on rental is the business decision based on the order from SISCO". 4. The learned CIT (A) deleted the penalty holding as under: "4.4 I have considered AO's order as well as appellant AR's submission. Having considered both, I find that the major addition was on account of interest paid by the appellant company of Rs.20,75,000 on the bank borrowing which was partly utilized for advancing security deposit of Rs.1 crore to M/s Concast India Ltd for use of thei....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... Reliance Petroleum Products reported in 322 ITR page 158. I am of the considered view that the appellant company has not concealed any particulars of its income intentionally to conceal the particulars of income and in view of the same, I hold that AO was not justified in his action while levying penalty under section 271(1)(c) of the Act to the appellant company. Accordingly the penalty so levied by AO is cancelled. Thus, appellant's this ground of appeal is allowed". 5. After considering the rival submissions, we are of the opinion that the order of the CIT (A) is justified on merits. Just because an addition was confirmed in assessment, that itself does not lead to levy of penalty under section 271(1(c). As rightly considered by the ....