TaxTMI 
TaxTMI 
2015 (12) TMI 138
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....consideration, assessee filed its return of income declaring total income of Rs. nil under the normal provisions and book profit of Rs. 13,88,82,280 under section 115J. The assessment in case of the assessee was completed under section 143(3) of the Act by determining the total income at Rs. nil after set-off of brought forward of business loss and unabsorbed depreciation under the normal provision and book profit of Rs. 15,31,42,900 under section 115J. While completing the assessment, the Assessing Officer made the following additions / disallowance:- Commission Rs. 34,13,738 Expenditure relating to issue of fully convertible debenture Rs. 25,96,19,969 Expenditure project not materialized Rs. 10,29,703 3. As it appears, the aforesai....
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....under the law. That being the case, imposition of penalty under section 271(1)(c) would not be justified. The Assessing Officer, however, did not find merit in the submissions of the assessee and proceeded to pass an order imposing penalty of Rs. 14,25,94,241, alleging furnishing of inaccurate particulars of income. Being aggrieved of the penalty order, the assessee preferred appeal before the first appellate authority. However, learned Commissioner (Appeals) also confirmed the imposition of penalty. 4. The learned Counsel for the assessee contesting the imposition of penalty submitted before us, as far as commission payment is concerned, the reason for disallowance was, the contracts since were from the Government Department/PSU, there wa....
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....e incurred in relation to issuance of convertible debenture can be allowed as revenue expenditure. In this context, he relied upon the following case laws:- i) CIT v/s Secure Meters Ltd., [2011] 321 ITR 611 (Raj.) ii) CIT v/s Sukhijit Starch & Chemicals Ltd., [2010] 326 ITR 29 (P&H); iii) CIT v/s Havells India Ltd., [2012] 352 ITR 376 (P&H); iv) CIT v/s ITC Hotels Ltd., [2010] 334 ITR 109 (Kar.); v) CIT v/s Ranbaxy Laboratories Ltd., [2013] ITA no.93 of 2000 (Del.) Thus, he submitted that in view of the fact that different High Courts have held the expenditure on issuance of convertible debenture as revenue in nature, the issue is highly contentious hence will not come within the purview of section 271(1)(c) as it is a debatable legal....
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.... Thus, it was submitted the penalty imposed should be deleted. 7. The learned Departmental Representative, on the other hand, relied upon the order of the authorities below. 8. We have heard Shri J.D. Mistry, learned Counsel for the assessee and Shri G.S. Rao, learned Departmental Representative. We have also perused the orders of the Departmental Authorities as well as other material placed on record. We have also carefully applied our mind to the decisions relied upon by the learned Counsel for the assessee. As far as the factual aspect is concerned, there is no dispute that the Assessing Officer while completing the assessment made three additions as referred to herein before and such additions were also confirmed by the Tribunal. Howe....
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....ave deleted penalty imposed under section 271(1)(c). The same view was again reiterated by the Tribunal in assessee's own case for the assessment year 1994-95 cited supra. In view of the above, we hold that disallowance of commission payment does not invite imposition of penalty under section 271(1)(c) as the Assessing Officer has failed to make out a case that the assessee has furnished inaccurate particulars of income. As far as the expenditure on convertible debenture is concerned, the disallowance has been made by treating the expenditure as capital. Whether a particular expenditure is in the nature of revenue or capital is a highly contentious and debatable legal issue. As could be seen from the catena of decisions cited by the lea....
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....isdictional High Court in an appeal preferred by the assessee under section 260A, registered as Income Tax Appeal no.741 of 2008. It needs to be noted, the Tribunal, Mumbai Benche, in Nayan Builders (supra) while examining the issue whether penalty under section 271(1)(c) can be sustained when the additions on the basis of which such penalty has been imposed are subject matter of appeal in the High Court held as under:- "3. It is, therefore, abundantly clear that the additions in respect of which penalty was confirmed have been accepted by the Hon'ble Bombay High Court leading to substantial question of law. When the High Court admits substantial question of law on an addition, it becomes apparent that the addition is certainly debata....