2014 (9) TMI 761

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....s. 40,62,344/- u/s. 35Ab, which was already confirmed by the CIT (A) and the Appellate Tribunal ?" {B} "Whether the Appellate Tribunal has erred in not appreciating the fact that the assessee had claimed entire technical knowhow fees as revenue expenses u/s. 37 (1) in the return of income when there is specific provision u/s. 35AB where only 1/6th deduction is allowable and the same was detected only during assessment proceedings, which tantamount to furnishing of inaccurate particulars of income liable to penalty u/s. 271 [1](c) of the Act ?" It appears from the record that the assessee respondent, for the A.Y 199899, had furnished the return of income which was scrutinized by the Assessing Officer who framed assessment under Section....

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....cal knowhow expenditure of Rs. 40.60 lacs [rounded off]. CIT [A] ordered levy of a penalty of Rs. 14,21,820/- ie., @ 100% of the tax sought to be evaded under Section 271 [1](c) of the Act. When the matter traveled to the Tribunal, on merits, the Tribunal concurred with the CIT [A] and held that the claim of entire technical knowhow fees is revenue expenditure under section 35AB where 1/6th of the deduction was allowable. However, on the penalty proceedings, the Tribunal held in favour of the assessee that there was nothing to attract any of the ingredients of Section 271 [1](c) of the Act. We have heard Ms. Mauna Bhatt, learned standing counsel for the Department who has submitted before us that having now found that technical knowho....

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....wed. In other words, when the claim of expenses under the general provision was questioned, it changed such claim under the provision of Section 35AB and such change during the course of assessment proceedings is permissible under the law. Allowing 1/6th of the total claim sum of Rs. 40.60 lacs [rounded off] were disallowed. All details were already before the Assessing Officer and the Commissioner [Appeals]. It is also not the case of the revenue that in the earlier years, such claim was made by the respondent any time. So far as levy of penalty for concealment of the income under section 271[1](c) is concerned, the Tribunal has noted that in terms of provisions of Explanation 1 to Section 271 [1](c) of the Act, if an explanation comes ....