TaxTMI 
TaxTMI 
2016 (7) TMI 452
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....s which are not covered by the provisions of Section 80P(2)(d) of the Act. The interest from banks other than cooperative banks amount worked out to Rs. 1,51,73,115/-. Further the Assessing Officer noticed that the assessee had earned income at Rs. 1,50,935/- from the sale of cement, Rs. 1,95,655/- from sale of hardware, Rs. 8651/- from sale of CFL and Rs. 1,400/- from Insurance. These amounts were also not eligible for deduction under section 80P of the Act. 2(i) The Assessing Officer disallowed the amount of Rs. 1,55,29,765/- (i.e. Rs. 1,51,73,115/- + Rs. 3,56,641/-) which was restricted to the profit declared by assessee in its Profit & Loss Account i.e. Rs. 97,60,590/- and initiated the penalty proceedings under section 271(1)(c) of the Act for furnishing inaccurate particulars of income. 3. During the course of penalty proceedings, the Assessing Officer noticed that assessee had filed appeal before ld. CIT(Appeals)-I Ludhiana against the order under section 143(3) of the Act. The ld. CIT(Appeals) vide order dated 18.06.2012 partly allowed the appeal of the assessee with the observation that interest to the extent which has direct nexus with the interest received should b....
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....arned on FDR from the banks other than cooperative banks was disallowed by holding that they are not covered u/s 80P(2)(d) of the Act. Further, the assessee had income from sale of cement, hardware, CFL and from insurance aggregating Rs. 3,56,641/- which was disallowed as, it was not in accordance with the aims and objectives of the society which is eligible for deduction only for the work done for the welfare of its members. The exemption u/s 80P, disallowed aggregating Rs. 1,55,29,756/-, was restricted to the profit declared by the assessee in its P&L account i.e. Rs. 97,60,590/-. The Ld. CIT(Appeals) partly allowed the appeal of the assessee with the observation that interest to the extent which has direct nexus with the interest received should be allowed by the Assessing Officer, by placing reliance on the other of the Ld. CIT(Appeals) for A.Y. 2007-08 in the appellant's own case which had been upheld by the Hon'ble ITAT. Thus, it is clear that only that part of the interest paid shall be deducted which has direct nexus to the FDRs on which receipt of interest has to be assessed whereas the appellant worked out its net profit after debiting the entire amount of interes....
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....s. Therefore, it is distinguishable on facts. Further, in the said case it was held that there was no conscious breach of law whereas in the case under consideration as already discussed earlier, although for A.Y. 2007-08 it was already held by the Hon'ble ITAT that only that part of the interest shall be deducted which has direct nexus with the interest received on the FDRs with banks other than Cooperative banks which is to be assessed; the appellant continued with the practice to work out to its net profit after debiting the full amount, of interest on FDRs from banks not covered u/s 80P(2)(d) and therefore it was a consciously committed act of claiming a wrong deduction. The decision of the Hon'ble Supreme court in the case of CIT vs. Reliance Petro Products Pvt. Ltd.(2010) 322 ITR 158 relied upon is not applicable to the case of the assessee as it is not the case of mere making of a claim which is not sustainable in law but rather is a case of making a wrong claim wilfully. The AR has further relied on the case of CIT vs. Sidhartha Enterprises (2010) 322 ITR 80 (P&H) which is again distinguishable on facts as it was a case of claim of set-off of capital loss against pr....
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....in accordance with the aims and objectives of the society and no deduction is allowable on the same and the appellant knowingly claimed deduction wrongly on the same. Therefore, it attracted penalty u/s 271(l)(c). In view of the said facts and circumstances, the penalty u/s 271(l)(c) imposed in this case is held to be justified. These grounds of appeal are dismissed. 4. Grounds of appeal no.4 & 5:- These grounds of appeal are general in nature, requiring no specific adjudication. In the result, the appeal is dismissed. 5. None appeared on behalf of the assessee at the time of hearing of the appeal. On the last date of hearing fixed on 22.06.2016, appeal was adjourned on the request of the assessee to 04.07.2016. On 04.07.2016, none appeared and a request has been received through FAX from Shri O.P. Garg & Co. ( Chartered Accountant Shri Praveen Jindal) making a request for adjournment because the counsel Shri Manish K. Gupta conversant with the matter is still out of India. The request for adjournment is unnecessary and without substance. The request is made by Shri Praveen Jindal for adjournment who has appeared before ld. CIT(Appeals) and argued the appeal. T....