2017 (6) TMI 395

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....der s.271(1)(d) of the Income Tax Act, 1961 (hereinafter referred to as "the Act"). 2. The grounds of appeal raised by the Revenue read as under:- 1. The CIT(A) has erred in law and on facts in deleting the penalty of Rs. 2.84 crores levied u/s.271(1)(d) despite the fact that the corresponding quantum addition was already confirmed by the CIT(A). 2. The CIT(A) has not appreciated the fact that the assessee had not accounted for Fringe benefits to the extent of Rs. 8.45 crores in the return of Fringe benefits which tantamount to furnishing of inaccurate particulars of Fringe benefits liable to penalty u/s.271(1)(d). 3. At the time of hearing, the Ld.AR for the assessee, in the captioned appeal of the Revenue, submitted at the out....

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....itted that the impugned amount of FBT of Rs. 2.85 crores was deposited in a separate bank account keeping in view the directions of the Hon'ble Gujarat High Court in an interim order. The Ld.AR accordingly submitted that in view of these glaring facts, the CIT(A) was right in deleting the penalty imposed by AO under s.271(1)(d) of the Act and accordingly no interference is called for. 4. The Ld.DR, on the other hand, supported the action of the AO in imposing the penalty in the light of the decision of the Hon'ble Gujarat High Court in the quantum proceedings. 5. We have carefully considered the rival submissions. The short issue for adjudication in the present appeal is determination of correctness imposition of penalty under s.271(1....

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....y made the claim that the disputed expenditure was not chargeable to fringe benefit tax; mere rejection of the appellant's claim does not attract the penal provisions and therefore levy of impugned penalty is not in accordance with law. 3.4. I have given my careful consideration to the facts of the matter. In the case of DCIT Vs. Kotak Mahindra Old Mutual Life Insurance Ltd., 134 ITD 388 (Mum) (2011), it was held that Section 115WB(2) applies only when the expenditure is for employment. In the case of Desai Brothers Ltd. Vs. Addl.CIT 32 taxmann.com (2013)(Pune), it was held that "the interpretation sought to be advanced by the Revenue is not borne out of the statutory provisions. Ostensibly, the clarification issued by the CBDT vide ....

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....its' for the purpose of section 115WB(2) of the Act is quite misplaced. Considering the aforesaid, we therefore do not subscribe to the interpretation sought-to be placed by the revenue on section 115WB(2) of the Act and instead, hold that the expenses prescribed therein are liable to be considered as fringe benefits only to the extent the same are incurred in consideration for employment. To the same effect is also the view of our co-ordinate Bench in the case of Dy. CIT v. Kotak Mahindra Old Mutual Life Insurance Ltd. [2012] 134 ITD 388 / [2011] 16 taxmann.com 395 (Mum) ". As contended by the Id. A.R. the operation of CBDT's Circular No.8/2005 dtd. 29.08.2005 has been stayed by the jurisdictional Gujarat High Court with certain di....