TaxTMI 
TaxTMI 
2015 (4) TMI 596
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....alty of Rs. 2,40,000.00 against the appellate company without appreciating that there is neither concealment of income nor furnishing of in-accurate particulars of incomes which could fall within rigours of Section 271 (1)(c) of the Act and learned Commissioner of Income Tax(Appeals) has passed the impugned appellate order dated 10.8.2011 totally in disregard of the peculiar facts and circumstances of the appellate company in total disregard of the mandate of rigours of Section 271 (1)( c) of the Act and hence the impugned penalty order dated 28th June 2010 and the appellate order dated 10.8.2011 are bad in law and on facts liable to be quashed. iii. The impugned penalty order u/s 271 (1)( c) of the Act dated 28th June 2010 and appellate orders dated 10.8.2011 are bad in law and on facts as it fails to appreciate that the explanation offered by appellate company are bona fide and backed by judicial precedents and law keeping in view the business of the appellate company and the expenses incurred by the appellate company towards fee paid to Registrar of Companies for increase in authorized capital of the company are lawful revenue expenses incurred wholly and exclusively for the ....
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....F FUNDS DEPLOYED 1126 1653 1817 3761 To support the above figures, learned AR has also filed balance-sheet for the respective years. 4. It is further the argument of learned AR that this plea was duly made by the assessee before the Assessing Officer even during the course of assessment proceedings and reference was made to the reply filed before the Assessing Officer, copy of which is filed at page nos. 6 to 9 of the paper book-II and relevant para touching the issue is reproduced below: "During the year under reference, the Company has incurred Rs. 708,800 charged to Filing fee ROC in the Profit and Loss Account, the detail of the same is being enclosed herewith at page no 183 to 193. It may be observed from the detail that the Rs. 560000/- was incurred towards fee towards increase in its authorized share capital from Rs. 2000000 to Rs. 100000000/-, paid to Registrar of Companies; the said increase in capital was required for the purposes of enabling the Company to issue more share capital to fulfill the working capital requirement of the Company considering the total working capital required for the purposes of business of the Company and Rs. 14....
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.... it was not for mere expansion of the capital base. Benefit of section 350 is, therefore, available for initial setting up or in connection with setting up a new industrial unit, but not for meeting the expanding needs of the business." 6. It is further the case of learned AR that the return of income was filed by the assessee on 15th November, 2007 and as per the decision of Delhi Tribunal, dated 26th May, 2006 in the case of ACIT Vs. Fascel Ltd., 120 TTJ 289 (Del.), the expenditure incurred by the said assessee for increase in authorized share capital amounting to Rs. 7,08,000/- were allowable and reference was made to paras 17 and 18 which for the sake of convenience are reproduced below: "17. The assessee had claimed a sum of Rs. 7,96,300 under section 35D of the Income-tax Act. The deduction claimed was in respect of payment of fees to the Registrar of Companies (hereinafter referred to as RoC) for increase" in share capital of the assessee company. According to the Assessing Officer the provisions of section 35D of the Act did not apply to the payment of fees to RoC and he accordingly disallowed the claim of the assessee. The CIT(A), however, deleted the addition made b....
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.... settled law laid down in the two decisions of Hon'ble Supreme Court i.e. in the cases of Punjab State Industrial Development Corporation Ltd. Vs. CIT (supra) and Brooke Bond Indian Ltd. Vs. CIT (supra), such expenditure could not be claimed. It was further submitted that in view of the aforementioned decisions, the claim of the assessee was prima facie wrong and is a bogus claim. Learned DR submitted that similar submissions were made before the learned CIT(A) and by way of speaking order, learned CIT(A) has dismissed all the arguments of the assessee. Thus, it was submitted by learned DR that penalty has rightly been sustained by learned CIT(A) and his order should be upheld and the appeal filed by the assessee should be dismissed. 9. We have carefully considered the rival submissions in the light of the material placed before us. To claim that such expenditure is allowable, assessee is relying upon the commentary of Iyengar's Law of Income Tax 11th Edition, the relevant portion has already been reproduced above. A clear reading of the aforementioned commentary will reveal that no specific view has been formed by the Apex Court regarding allowability of such claim that if ther....
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....ribunal while deciding the appeal of Fascel Ltd. (supra) has taken a possible view of law. In view of the existing decision of Hon'ble Delhi High Court in the case of CIT Vs. Hindustan Insecticides Ltd. (supra), on the date when assessee filed its return and claimed the impugned expenditure, there was no other view possible. 11. During the course of hearing, learned AR referred to the decision of Hon'ble Supreme Court in the case of CIT Vs. Reliance Petroproducts Private Ltd. (supra) to contend that the assessee cannot be said to have furnished inaccurate particulars and mere making the claim does not tantamount to concealment. We find no force in such contention of learned AR as the claim made by the assessee is prima facie wrong and is against the two decisions of Hon'ble Supreme Court in the cases of Brooke Bond India Ltd. (supra) and Punjab State Industrial Corporation Ltd. (supra). The decision of Hon'ble Supreme Court in the case of CIT Vs. Reliance Petroproducts Pvt. Ltd. (supra) cannot be applied to the facts of the assessee's case as by claiming the expenditure which is against the law laid down by Hon'ble Supreme Court and Hon'ble Jurisdictional High Court will amount ....