2015 (7) TMI 322

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....ed to delete the impugned penalty. The sole ground raised by the revenue reads as under:- "1. The ld. CIT(A) has erred on facts and in law in deleting penalty imposed u/s 271(1)(c) of the IT Act in respect of expenditure of Rs. 52,30,121/- claimed by the assessee u/s 35D of the Act." 2. Briefly stated the facts giving rise to this appeal are that the assessee is an investment company registered as non-banking financial company (NBFC) with Reserve Bank of India. For the relevant financial year under consideration, return of income was filed showing taxable income of Rs. 5,29,14,607/- on 28.10.2005 and the AO completed the assessment u/s 143(3) of the Act at an income of Rs. 5,93,93,381/- after making several disallowances including dis....

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....y the revenue as reproduced hereinabove, we note that the revenue has only agitated the issue of deletion of penalty in respect of expenditure claimed by the assessee u/s 35D of the Act. In this situation, we presume that the department has not challenged the deletion of penalty in respect of disallowance u/s 14A of the Act. 5. Ld. DR pointed out para 5.2 at page 7 of the impugned order and submitted that in the relevant assessment year, the assessee claimed deduction u/s 35D of the Act in respect of unit at Dadra, UP for a period of 10 years w.e.f. AY 1996-97 in accordance with the provisions of section 35D of the Act. The DR further submitted that the relevant assessment year was the last year for this claim. Ld. DR further submitted t....

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....hands of assessee company, the same amount would be eligible for deduction in accordance with the provisions of sub-section (5A) of section 35D of the Act for the unexpired period in the hands of resulting company i.e. Consolidated Photo Products Ltd. which did not claim any deduction in this regard in the return of income for the year under consideration. Ld. counsel strenuously contended that the assessee company was not at any advantageous position to claim deduction u/s 35D of the Act as both the companies i.e. appellant company and the transferee company belong to the same group, therefore, the mistake was bonafide and inadvertent and hence penalty was not leviable. 7. Ld. counsel of the assessee has further drawn our attention towa....

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....en in the case of disallowance in the hands of the appellant company, the same amount would be eligible for deduction in accordance with provision of sub-section (5A) of Section 35D of the Act for the unexpired period in the hands of resulting company i.e. Consolidated Photo Products Ltd. It is further seen that no deduction for the aforesaid expenditure was claimed in the return of income of consolidated Photo Products Ltd. Which was otherwise eligible in terms of section 35D(5A) of the Act. The return of income was filed by M/s Consolidated Photo Products Ltd. at total income of Rs. 26,68,67,560/- on which tax was also duly paid by the company. The impugned claim of deduction u/s 350 of the Act in the hands of Consolidated Photo Products ....

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....computation of total income of any person under this Act, such person fails to offer an explanation or offers an explanation which is found by the AO to be false or such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bonafide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause (c) of this sub-section, be deemed to represent the income in respect of which particulars have been concealed. In the present case, the AO has not disputed that there was an unamortized amount of publi....