2017 (1) TMI 387

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....-side and that of Assessing Officer may be restored to the above extent. 2. Briefly stated facts as culled out from the records are that assessee is a private limited company engaged in construction work. Return of income for Asst. Year 2007-08 showing NIL income was filed on 19.10.2007. The case was selected for scrutiny assessment and assessment order u/s 143(3) of the Act was framed on 15.12.2009 after disallowing interest expenses of Rs. 44,19,194/- and income assessed at Rs.NIL after setting off of brought forward losses. In the quantum appeal assessee could not succeed before ld. CIT(A) and the Tribunal. Penalty proceedings u/s 271(1)(c) of the Act were initiated on the disallowance of interest and levied penalty of Rs. 13,25,759 vide order dated 13.03.2012 which was deleted by ld. CIT(A) vide his appellate order dated 24.10.2013. 3. Aggrieved, Revenue is now in appeal before the Tribunal. 4. Ld. DR referred and relied on the order of ld. Assessing Officer disallowing interest expenses of Rs. 44,19,194/- claimed to have been paid to a co-operative bank in earlier years which was not allowable to be claimed as deduction u/s 43B(e) of the Act which is specifically mean....

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..... We observe that assessee is engaged in the construction business and has booked the expenses on a pro rata basis as per the completion of construction and the area sold during the year. As submitted by ld. AR total area of construction was 11,219 sq.ft. out of which during the asst. year 2007-08 assessee has sold 2192 sq.ft. During assessment proceedings ld. Assessing Officer observed that a sum of Rs. 44,19,194/- incurred towards interest expenditure was added to the construction account. This amount of Rs. 44,19,194/- included interest paid to a Co-op. Bank at Rs. 21,10,019/- in Asst. Year 2004-05 and Rs. 23,01,175/- in Asst. Year 2005-06. In response to the query raised by ld. Assessing Officer it was specifically replied by the assessee that the total amount of Rs. 44,19,194/- has been transferred to construction account and the amount standing in the construction account has been apportioned on the basis of square feet areas sold. In the year under appeal assessee sold 2191 sq.ft. out of 11,219 sq.ft and proportionate amount of Rs. 2,49,81,176/- being the total construction amount was accordingly apportioned by applying 2192 sq.ft. /11,219 sq.ft., which gave a figure of Rs. ....

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.... perusal of the construction account in which interest amount of Rs. 44,19,194/- was transferred and was not fully claimed in the year. We just confine to adjudicate as to "whether in these circumstances assessee should have been visited with penalty u/s 271(1)(c) of the Act." In the given circumstances there has been a claim made by the assessee treating it to be a bona fide claim but not accepted by the Revenue authorities. We observe that Hon. Supreme Court in the case of CIT vs. Reliance Petro Product Pvt. Ltd. (supra) has held that if the assessee had furnished all the details of its expenditure as well as income in the return, which were not found to be inaccurate particulars or concealment of income, it was upto to the authorities to accept its claim in the return or not. Merely because assessee had claimed expenditure which was not accepted or not acceptable to Revenue that by itself would not attract a penalty u/s 271(1)(c) of the Act. 11. We further observe that similar view was taken by Hon. Supreme Court in the case of Price Waterhouse Coopers (P) Ltd. vs. CIT (2012) 25 taxmann.com 400 (SC) wherein Hon. Apex Court has observed as follows :- 17. Having heard learne....

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....f the confirm the view that in the given case assessee had made claim of expenditure on pro rata basis by way of filing particulars which were not found to be inaccurate at any stage nor there has been any concealment of income but it was merely non-allowability of claim by the Revenue authorities by applying the provisions of section 43B(e) of the Act but certainly such circumstances do not call for visiting assessee with penalty u/s 271(1)(c) of the Act. We, therefore, find no reason to interfere with the order of ld. CIT(A) deleting the penalty u/s 271(1)(c) of the Act on disallowance of Rs. 44,19,194/- and accordingly uphold the same and dismiss this ground of Revenue. 13. Other grounds are of general nature, which need no adjudication. 14. In the result, appeal of Revenue is dismissed. Order pronounced in the open Court on 4th January, 2017 ============= Document 1 4. श्री कौशिक एस. दलाल, एडवोकेट अपीलकर्ता के पक्ष को प्रस्तà¥....

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.... पर claim किया जा सकता है। इस कारण यह addition कर दिया गया। धारा 271 ( 1 ) (c) के अंतर्गत शास्ति इसी addition के संबंध में लगाई गई है। अपीलार्थी ने अपने प्रस्तुतिकरण में merits के उपर भी प्रस्तुतिकरण दिया व उसके अलावा कई case laws पर rely करते हुए यह कहा कि उसका claim एक bonafide claim था और मातà¥....