2022 (10) TMI 754

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....d appeals, they were heard together and are disposed of by this common order for the sake convenience and brevity. 3. The common grievance in both the appeals relate to the deletion of penalty levied by the Assessing Officer u/s 271(1)(c) of the Incometax Act, 1961 [hereinafter referred to as 'The Act'], though the quantum of penalty may differ in each Assessment Year under consideration. 3. The common facts in both the Assessment Years relates to the claim of expenditure on account of advertisement and publicity. During the course of assessment proceedings, the assessee was asked to justify its claim for advertisement expenses and was asked as to why a disallowance be not made considering part of it to be capital in nature. ....

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....ciation of facts. It was brought to the notice of the ld. CIT(A) that the Assessing Officer himself has estimated capital expenditure @ 60% of total expenditure and has allowed 40% as Revenue expenditure and levied penalty on the estimation. 10. After considering the facts and submissions and after referring to various judicial decisions, the ld. CIT(A) was convinced that the bifurcation of the expenditure into capital and Revenue is a debatable issue and, therefore, no penalty can be levied on a highly debatable issue. The ld. CIT(A) further found that disallowance made by the Assessing Officer was purely on estimation and, therefore, no penalty is leviable on adhoc disallowance. Penalty so levied was deleted. 11. Before us, the ld. ....