TaxTMI 
TaxTMI 
2017 (10) TMI 586
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.... "1. On the facts and in the circumstances of the case, the Ld. CIT (A) has erred in deleting the penalty of Rs. 54,37,000/- imposed u/s 271 (1 )(c) of the 1.1.Act, 1961, ignoring the fact that patently a wrong claim has been made by the assessee of treating the interest on Income Tax Refund as income derived from the export of articles or things or computer software by a hundred percent export oriented undertaking and thereby it amounts to filing inaccurate particulars of Income. 2. The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal." 2. The brief facts qua the issue relating to levy of penalty are tha....
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.... is required to be paid by the assessee, whether from its own fund or from OD facility, is not material and it cannot be netted with the interest paid by the assessee company for the purpose of its business activities, because the interest on income tax refund has not been earned in the course of business activities of the assessee company and same cannot be reckoned to have been derived from the business of the undertaking. The Assessing Officer held that interest income falls under the head, 'income from other sources' and therefore, cannot be netted. The total interest accrued to the assessee during the year was Rs. 1,64,62,391/- and the assessee had netted interest income of Rs. 1,52,29,404/- against the interest paid. Thus, the Assessi....
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....k, after discussing various judicial decisions rendered in the context of Explanation 1 and also the judgment of Hon'ble High Court in the case of CIT vs. Zoom Communications Pvt. Ltd. and CIT vs. Mak Data Ltd. 7. The Ld. CIT (Appeals) has deleted the said penalty after observing and holding as under:- "6. I have carefully considered the submissions of the appellant and perused the order passed by the AO. I find merit in the submission of the Id. AR that since adequate disclosures regarding the claim of deduction u/s 10B on interest on incometax refund were made in the notes to computation of income filed with the return of income for the subject year, therefore it cannot be said that the appellant has concealed the particul....
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....f the above discussion, I am of the view that the penalty levied by the AO cannot be upheld and the same is deleted. Grounds of appeal are allowed." 8. Before us the Ld. DR first of all relied upon various judgments of Hon'ble Supreme/ High Court rendered in the context of levy of penalty u/s 271(1)(c) without even addressing us as to in what manner these judgments are relevant on the facts of the case. For the sake of ready reference case laws relied upon by him are reproduced here under:- "1. CIT Vs Moser Baer India Ltd. (184 Taxman 8 (SC)/2009 315 ITR 460 (SC)/(2009) 222 CTR 213) 2. CIT Vs Gold Coin Health Food (P.) Ltd (172 Taxman 386 (SC)/(2008) 304 ITR 308 (SC). 3. Union of India v. Dharamendra Textil....
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.... accentuated by the fact that the first appellate authority in the quantum proceedings had accepted the assessee's contention and deleted the addition made by the Assessing Officer. Thus in such a situation it cannot be held that the assessee can be liable for penalty u/s 271(1)(c) for 'furnishing of inaccurate particulars'. Lastly, he submitted that exactly on same issue and on similar set of facts, this Tribunal in the case of M/s. Millennium International vs. ACIT in ITA no. 4956/Del/2010 vide order dated 8.8.2013 had deleted the penalty. 10. We have heard the rival submissions and also perused the relevant findings given in the impugned order as well as material referred to before us. The subject matter of levy of penalty is claimed ....
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....case it is submitted that the company became entitled to receive the interest only after the passing of the order by the Assessing Officer on 22nd July, 2002 and therefore, the same cannot be said to be taxable in the previous year relevant to present assessment year." 7. Thus, the assessee had furnished and disclosed the entire particulars of the claim for netting of the interest and also the said claim was backed by the aforesaid note. As discussed above, in the first appeal, first appellate authority had allowed the netting-off of the interest, while computing the profits of business eligible for deduction u/s 10B. This order of the first appellate authority has been reversed by the Tribunal by holding that interest receipt from the d....