2019 (8) TMI 544

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....d in law, the Ld. CIT(A) has erred in deleting the penalty amounting to Rs. 32,24,281/- without appreciating the fact that Ld. CIT(A) himself confirmed the additions on account of deduction u/s 80IB(7) and netting off of interest and partly allowed on the issue of disallowance of expenses of Jaipur Project restricting the amount of addition of Rs. 57,84,341/- vide appeal no. 167/11-12 dated 28.11.2013." 2. None appeared on behalf of the assessee despite service of notice. Accordingly, the appeal is being decided on the basis of material on record. The brief facts qua the issue of levy of penalty u/s 271(1)(c) are that Assessee Company is engaged in the business of running and operating hotels and resort. The assessee has claimed deduction ....

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...., rent and misc. income for deduction u/s 80IB for the reason that the same is not derived from undertaking. The nature of disallowance is of legal nature and the AO has not made out a case of suppression of any material fact. The appellant is entitled to take a view on legal issues which are favourable to it, and the mere fact that its stand has not been accepted cannot per se lead to imposition of penalty. Similarly, the disallowance in respect of expenses pertaining to Jaipur Project involves an issue of Capital expenses vs. Revenue expenses and Capitalization of expenses. Once again there has been no suppression of any material fact. 4.5. The addition of interest income pertains to an issue of netting of interest i.e., set off all i....

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....r the appointment of PDC, appellant company has withdrawn all its employees and security personnel from Jaipur hotel construction site. Thus, unlike the financial year 2007-08, no such expenses including employees' remuneration, contribution to PF, security services etc. are directly attributable to Jaipur Hotel Construction during the year under consideration. Moreover, Jaipur project is not a separate business but is a part of the appellant's business. Jaipur project is the form of expansion of the same business already carried on by the appellant because it is having common management, common control and owned by the same company. Thus all the expenses incurred by the appellant company are revenue expenses and deductible u/s 37 of the ....