TaxTMI 
TaxTMI 
2016 (4) TMI 345
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....g from the records are: The assessee is engaged in the business of manufacturing of Textile Machinery and Food Processing Machinery. The assessment in the case of assessee for the assessment year 2001-02 was made vide order dated 30-12-2008 u/s. 143(3) r.w.s. 264 of the Act. During the course of scrutiny assessment proceedings the Assessing Officer disallowed certain expenses including demerger expenses amounting to Rs. 10,00,000/- claimed by the assessee u/s. 37(1) of the Act. The Assessing Officer held the demerger expenses as capital expenditure. Penalty proceedings were initiated against the assessee in respect of disallowance of the expenditure. The Assessing Officer vide penalty order dated 26-06-2009 levied penalty u/s. 271(1)(c) in ....
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....ok. The ld. AR further submitted that this fact was brought to the notice of the Assessing Officer vide letter dated 15-12-2004 which is at page 44 of the paper book. However, the same were not considered by the authorities below. The ld. AR further contended that the assessee had bonafide reason to believe that the demerger expenses towards payment of stamp duty are Revenue in nature in view of the following decisions: i. Commissioner of Income Tax Vs. Bombay Dyeing and Manufacturing Co. Ltd., 219 ITR 521 (SC); ii. Commissioner of Income Tax Vs. Akme Electronics and Control Pvt. Ltd., 267 ITR 396 (Guj); iii. Commissioner of Income Tax Vs. Bush Boake Allen (India) Limited, 135 ITR 306 (Mad); iv. Madras Race Club Vs. Commissioner....
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....erefore, there cannot be two opinions about the nature of expenditure. In quantum appeal, the assessee has accepted the addition. Therefore, the Commissioner of Income Tax (Appeals) was well justified in confirming the levy of penalty u/s. 271(1)(c) in respect of demerger expenses wrongly claimed by the assessee as Revenue expenditure. 5. We have heard the submissions made by the representatives of rival sides and have perused the orders of the authorities below. The penalty u/s. 271(1)(c) has been levied in respect of demerger expenses Rs. 10,00,000/- claimed by the assessee u/s. 37(1) of the Act. According to the Revenue the aforesaid demerger expenses are towards stamp duty for the transfer of capital assets in the scheme of demerger.....
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....sioner of Income Tax Vs. Reliance Petroproducts (P.) Ltd. (supra) has held that penalty u/s. 271(1)(c) cannot be levied merely because the assessee had claimed expenditure which was not accepted by the Revenue. The relevant extract of the judgment of the Hon'ble Apex Court reads as under: "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 revenue suggested that by making incorrect claim for the expenditure on interest, the assess....