2016 (7) TMI 832

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....ssing charges, miscellaneous income and on interest on employee loans. 3. The facts in brief are that the assessee is a limited company engaged in the business of manufacturing and trading of agro chemical products and seeds. The return of income was filed on 31.10.2005 declaring total income of Rs. 63,58,97,030/-. In the said return, assessee has claimed deduction u/s. 80 IB for an amount of Rs. 26,09,60,584/- in respect of following units: Topic Unit - 30% Rs.11,65,42,214 (6th year) Multipurpose Formulation unit - 100% Rs.13,47,78,640 (4th year) TMX Unit - 100% Rs. 96,39,730 (5th year)   In Form 10CCB, the assessee had given following note in respect of "other income": "Other income represents the income of....

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.... miscellaneous income shown by the assessee on the ground that it cannot be said to be derived from industrial undertaking. Up to the second appellate stage, the claim of disallowance of deduction was reduced to Rs. 40,19,878/- on the following three items: i. Processing charges Rs.24,05,286/- ii. Misc. Income Rs.12,95,519/- iii. Interest on employees loan Rs. 3,19,073/-   5. Now on these three items of disallowance, the AO has levied the penalty u/s. 271(1)(c) for furnishing of inaccurate particulars and, accordingly, levied penalty of Rs. 12,05,963/-. The assessee's detailed explanation before the AO about the bona fide claim of deduction u/s. 80IB has been incorporated by the AO in his penalty order ....

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....phical and conceptual concept behind levy of penalty de hors the substance and merits. In the entire order the learned CIT(A) has merely discussed the concept of penalty rather than deciding the appeal on merits. He has again gone by the fact that Tribunal has confirmed the said disallowance. 6. Before us, learned counsel after explaining the entire facts, submitted that so far as the 'miscellaneous income' forming part of 'other income' is concerned the same comprised of interest, insurance claim and lease rent. On insurance claim he submitted that, now there is decision of Hon'ble Bombay High Court in the case of Pfizer Ltd. 330 ITR 62 (Bom) in favour. Regarding interest and lease rent also there were various decisions, which have been....

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....w was quite clear that such income cannot be allowed as deduction and in all the earlier years, assessee's claim have been disallowed. Thus, he strongly relied upon the order of the CIT(A). 6. We have heard the rival submissions, perused the relevant findings given in the impugned orders and the material placed before us. The penalty has been levied on account of disallowance of claim of deduction on processing charges; miscellaneous income, consisting of interest, insurance claim and lease rent; and interest on employee loan. There were other items of income also which were disallowed by the AO however, from the stage of the Tribunal most of these deductions have been allowed, which is evident from the fact that out of the total disallo....