TaxTMI 
TaxTMI 
2020 (1) TMI 1110
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....g delayed payment of ESI and PF (iii) Disallowance of Rs. 1,530/- u/s.36(l)(iii) being interest paid on purchase of capital goods. (iv) Disallowance of Rs. 14,500/- u/s.37 being penalty paid to Sales Tax and Excise Department. The appellant reserves its right to add, amend, alter or modify any of the grounds stated hereinabove either before or at the time of hearing. 2. The interconnected issue raised by the assessee in all the grounds of appeal is that the learned CIT (A) erred in confirming the penalty levied by the AO under section 271(1)(c) of the Act on addition of Rs. 4,05,328/-. 3. The facts in brief are that the assessee in the present case is a private limited company and engaged Manufacturing of Pharma Products. The assessment for the year under consideration was completed under section 143(3) of the Act order dated 15-03-2013 after inter-alia making certain additions to the total income of the assessee as detailed under: (a) Disallowances of consolidated tax of Rs. 91,726/- under section 43B (b) Disallowances of Rs. 2,97,572/- under section 36(1)(v) on account of delayed payment of PF/ESI (c) Disallowances of interest expenses of Rs. 1,530/- being capital i....
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....erefore there cannot be any penalty on account of concealment of income. d. Regarding the disallowance of Rs. 14,500.00 on account of penalty payment to Sales tax and Excise department i. The assessee claimed that it has incurred the impugned expenses in the course of the business which were wrongly classified as penalty under the accounting head. Therefore it claimed that the demand raised by the sales tax and excise department for the amount of tax has been treated as penalty inadvertently. Accordingly the assessee claimed that there cannot be any penalty on such amount on account of concealment of income. 5. However, the AO disagreed with the contention of the assessee and levied the penalty being 100% of the amount of tax sought to be evaded on above addition of Rs. 4,05,328/- only. Aggrieved assessee preferred an appeal to the learned CIT (A). 6. The assessee before the learned CIT (A) submitted as under: a. Regarding the disallowance of consolidated tax of Rs. 91,726.00 under section 43B of the Act i. The assessee before the learned CIT (A) submitted that it has claimed the deduction for the consolidated tax paid after the due date of filing the income tax return under....
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....of income/concealed particular of income. Accordingly the learned CIT (A) upheld the order of the AO. Being aggrieved by the order of the learned CIT (A), the assessee is in appeal before us. 7. The learned AR before us reiterated the submissions as made before the authorities below whereas the learned DR before us vehemently supported the order of the authorities below. 8. We have heard the rival contentions of both the parties and perused the materials available on record. Now, we proceed to adjudicate each addition/items with respect to which the penalty was levied. a. Regarding the disallowance of consolidated tax of Rs. 91,726.00 under section 43B of the Act. i. Admittedly, the amount of consolidated tax was not eligible for deduction as per the provisions of section 43B of the Act. But, the same was eligible for deduction on payment basis in the subsequent assessment year as the payment made by the assessee falls in the subsequent assessment year. However, neither the assessee nor the AO has claimed/allowed the deduction in the subsequent assessment year. ii. Undisputedly, the claim made by the assessee in the profit and loss account was not the false claim. As such, th....
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....asset for extension of existing business or profession (whether capitalised in the books of account or not); for any period beginning from the date on which the capital was borrowed for acquisition of the asset till the date on which such asset was first put to use, shall not be allowed as deduction.] ii. From the order of the authorities below, we note that there is no allegation that the impugned interest expense was incurred in connection with the extension of the existing business of the assessee. Therefore, the mere claim of interest expenses as revenue in nature cannot be equated with the concealment/ inaccurate particular of income. As such, the assessee has disclosed all the material facts in the financial statements and furthermore its claim was not found to be false. Thus we hold that, the assessee has claimed deduction for such interest expenses under the bona fides believe and therefore there cannot be any penalty on account of concealment of income. d. Regarding the disallowance of Rs. 14,500.00 on account of penalty payment to Sales tax and Excise department i. Admittedly, the penalties levied on account of contravention of the provisions of law are not allowable f....