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TaxTMI 
TaxTMI 
TaxTMI 
2014 (11) TMI 853
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....came to be dismissed. Thus, the present appeal by Revenue. 2. Case of the Revenue in brief is as follows :- Respondent- assessee Company is manufacturer of automobile parts. It filed return of income declaring total income of Rs. 59,75,720/-. It claimed deduction of Rs. 1,11,66,935/- on account of waiver of sales tax deferral loan from Government of Maharashtra being capital receipt. In the earlier assessment proceedings, the A.O. noticed that the assessee has collected sales tax from customers and claimed deduction in the said amount for profit and loss. The amount of sales tax collected was retained by the assessee under the deferral scheme. However, the assessee claimed deduction under Section 43-B of the Act considering sales tax collected as deemed payment for the purpose of Section 43-B. The Government of Maharashtra formulated scheme of premature repayment of sales tax deferral loan. Assessee availed the said scheme and paid Rs. 51.55 Lakhs towards final payment of sales tax deferral loan of Rs. 163.22 Lakhs. Thus, liability of Rs. 111.67 Lakhs got extinguished. This gain of Rs. 111.67 Lakhs was claimed by assessee as capital receipt. The A.O. rejected the claim of assesse....
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.... holding the amount as revenue receipt has been upheld in appeal. Mere submitting the claim, which is inaccurate in law, may not amount to inaccurate particulars of income, but it is necessary that the claim should be bonafide. If the claim is incorrect in law, and also malafide, explanation (1) of Section 271(1)(c) gets attracted to the disadvantage of the assessee. It has been argued that, the assessee was taking chance that only small percentage of income tax returns are picked up for scrutiny. As the claim was wholly without basis, the explanation furnished was found to be not bonafide. For such reasons, the revenue claims setting aside of the orders of the appellate Tribunal. Case of Respondent - Assessee 4. Per contra, it has been submitted on behalf of the respondent that, the assessee has opted for Sales Tax Deferral Scheme on 26.3.1999 and was granted eligibility certificate by DIC, Aurangabad under No.DICA/PSI-1993/STI/ DEFERRAL/ 354 for an amount of Rs. 2,52,36,000/-. In the financial year 2000- 2001, the eligibility granted to the assessee company under the Sales Tax Deferral Scheme was enhanced by the DIC, Aurangabad from Rs. 2,52,36,000/- to Rs. 2,82,85,000/-. The c....
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.... by the assessee was credited to the capital reserve account in the balance sheet dated 31.3.2003. (ii) The auditors of the company had given a detailed disclosure note against item of Form 3CD of the Tax Audit Report devised under Section 44AB of the Income Tax Act. (iii) Statement of computation of income to which the disclosure note was annexed was part and parcel of the return. (iv) That the amount of capital reserve was added and separately deducted from the computation of income. It is submitted that, thus, there was no inaccurate furnishing of particulars by the assessee to the Income Tax authority, as is claimed by the Revenue. The respondent submitted to consider the following aspects: (a) There was no mens rea on the part of the assessee while furnishing particulars of its income. (b) The word 'inaccurate' signifies a deliberate act or omission on the part of the assessee, however, in the present case, the assessee has given the specific declaration in the Income Tax return as to how the amount of capital reserve was arrived at. (c) The term 'inaccurate particulars' has not been defined anywhere in the Income Tax Act, therefore, furnishing of an assessment of the va....
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....ction 115WE or under sub-section (1) of Section 142 or sub-section (2) of Section 143 or fails to comply with a direction issued under sub-section (2A) of Section 142, or (c) has concealed the particulars of his income or furnished inaccurate particulars of such income, or (d) has concealed the particulars of the fringe benefits or furnished inaccurate particulars of such fringe benefits, he may direct that such person shall pay by way of penalty, --- (i) - - - - (ii) in the cases referred to in clause (b), in addition to tax, if any, payable by him, a sum of ten thousand rupees for each such failure; (iii) in the cases referred to in clause (c) or clause (d), in addition to tax, if any, payable by him, a sum which shall not be less than, but which shall not exceed three times, the amount of tax sought to be evaded by reason of the concealment of particulars of his income or fringe benefits or the furnishing of inaccurate particulars of such income or fringe benefits. Explanation 1:- Where in respect of any facts material to the computation of the total income of any person under this Act, - (A) such person fails to offer an explanation or offers an explanation which is fou....
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....serve" and not liable to tax. In view of this it is not correct to state that Company has furnished inaccurate particulars of such income. May it be that your honour is of the view that it is revenue receipt to protect the interest of revenue and keep the issue alive, your honour has made the addition. The Company has not furnished inaccurate particulars of income. The debatable issue can not be subject to penalty under Section 271(1) (c)." The A.O., however, was not impressed and observed that the assessee has attempted to take double benefit; that first it had claimed revenue expenditure on account of payment of sales tax which was actually not paid to the State Government but retained by it as per the incentive scheme of the Government and secondly, by treating the said receipts as capital receipts. 10. In the first appeal to the Commissioner (Exhibit C), the Commissioner took note of the rival cases put up and found that the dispute revolved regarding whether or not benefit accrued to the assessee was capital receipt or revenue receipt, he found that, the issue was admittedly complicated and debatable. During the course of assessment proceedings as well as appellate proceed....
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....lief that the Waiver of Sales Tax Deferred Loan by the Maharashtra Government is not liable to tax in view of this being capital receipts in nature. While claiming the aforesaid deduction, the appellant has not concealed any particulars of income and the appellant's conduct cannot be held as deliberately in defiance of law and contumacious with conscious disregard of provisions of law. In such situation, there is no scope for levying of penalty." 11. The appellate tribunal also in its order (Exhibit D) discussed the judgment in the matter of Thirumaliaswamy vis-avis the facts of the present matter and observed that facts of the case of respondent though identical, but were not as exactly as that of the matter of Thirumaliaswamy. The appellate Tribunal also considered the fact that the issue in hand required detailed analysis of the scheme offered by the Government and it could not be said that the issue was not debatable at all at the relevant point of time. The appellate Tribunal also found that, after analyzing facts and provisions in this regard, the authority had come to the conclusion that the amount was revenue receipt. In such situation, the claim of the respondent/ assesse....
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....ch is not disputed fact. In this judgment, we are not deciding if the said amount was capital receipt or revenue receipt. Material here is only if there was a debatable issue. The respondent- assessee submitted necessary particulars by way of audited accounts and also statement of total income and even added necessary notes with the returns and took a stand. We find that, there is no substance in the arguments of the appellant- Revenue that explanation (1) of Section 271 is attracted. It will be necessary to first show that, either the particulars were "concealed" or that the particulars were "inaccurate". Unless this requirement of section 271(1)(c) gets attracted, the question of going to the explanation will not arise. 14. Apart from this, even if the explanation is perused, it cannot be said that, explanation offered by the respondentassessee was false. The respondent- assessee did put up an explanation along with necessary notes. Only because the stand taken was not accepted by the A.O., relying on reasonings from different rulings does not make the explanation false. Both the courts in appeal below have found the explanation of the respondent- assessee as bonafide. In such s....
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....dabad Vs. Reliance Petroproducts Pvt. Ltd., reported in [ (2010) 11 Supreme Court Cases 762 ]. In this regard, in para Nos.10 and 11, the observations were as under : "10. . . . . .A glance at this provision would suggest that in order to be covered, 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. Present is not the case of concealment of the income. That is not the case of the Revenue either. However, the learned counsel for the revenue suggested that by making incorrect claim for the expenditure on interest, the assessee has furnished inaccurate particulars of the income. As per Law Lexicon, the meaning of the word "particular" is a detail or details (in plural sense); the details of a claim, or the separate items of an account. Therefore, the word "particulars" used in Section 271(1)(c) would embrace the meaning of the details of the claim made. It is an admitted position in the present case that no information given in the return was found to be incorrect or inaccurate. It is not as if any statement made or any detail supplied was found to be factually incorrect. Henc....