TaxTMI 
TaxTMI 
2023 (7) TMI 608
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....AO passed, levying penalty for concealing/furnishing inaccurate particulars of income under section 271(1)(c) of the Act for the Asst. Year 1997-98. 2. The grounds raised by the assessee are as under: i) In law and in facts and circumstances of the appellant's case, the ld.CIT(A) has grossly erred in points of law and facts. ii) In law and in facts and circumstances of the appellant's case, the ld.CIT()A) has grossly erred in dismissing appellant's case ground regarding passing order u/s. 271(1)(c) of the Act beyond the prescribed time. iii) In law and in facts and circumstances of the Appellant's case, the ld.CIT(A) has grossly erred in confirming penalty levied u/s. 271(1)(c) of the I.T.Act for Rs. 47,55,054/....
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....s. 8,000/- Deduction u/s. 80IA Rs. 55,31,204 TOTAL Rs. 56,67,025/- Section 80HH/Mandali Division: i) Interest on FD Rs. 21.72.730 ii) Insurance Rs. 4,04,133/- iii) Truck hire charges Rs. 37,50,000/- iv) Rent income Rs. 32,400 v) Other Interest income Rs. 101,88,522 vi) Interest income on loans Rs. 193,93,359/- Deduction u/s 80HH @ 20% Rs. 65,11,211/- 5. The contention of the ld.counsel for the assessee against the levy of penalty on the above was : (i) that majority of the disallowance was on account of interest earned on FDs; that the said interest income earned from FDs and loans granted, was part and parcel of the business....
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....on 80HH/ 80IA of the Act on interest earned on FDs was debatable issue with several decisions/rulings of the Courts in favour of the assessee. In this regard, our attention as drawn to the following decisions: i) CIT Vs. J.J. Exporters Ltd., (2010) 324 ITR 329 (Cal); ii) Pr.CIT Vs. West Bengal Housing Board, 134 taxmann.com 175 (Cal); iii) R.P. Tarway & Co. Vs. ITO, 71 TTJ 203 (Pat.); iv) Laxminarain Kheta Vs. ITO, 99 taxmann.com 450 (All) 6. He thereafter pointed out that other major component of the income was in the nature of insurance claim which was received by the assessee for damages occurred to the vehicles, and hence, it was contended that it related to the business activities of the assessee.....
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....levy of penalty u/s 271(1)(c) of the Act is as stated in the earlier portion of our order above that it was levied on account of disallowance of claim of deduction under section 80IA and 80HHC of the Act on the profits earned in the various divisions of the assessee-company, relating to the income which were found by the Revenue authorities as having no nexus with the business activities of the assessee 9. As is evident from the details noted in the earlier part of our order, majority of the incomes denied deduction pertained to interest earned on FDs and loans, insurance claim and drivers salary. As far as insurance claim received is concerned, we hold, that it is not in the nature of the income at all. It is a compensation which is ....
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....lty has been levied, relates to interest income earned on FDs and on loans. Admittedly, the ITAT in the case of the assessee for the impugned year itself has held that the assessee be allowed benefit of netting of interest expenses against such income, and this order of the ITAT has been confirmed by the Hon'ble High Court. Therefore, in any case, the penalty, if any, which could be levied on the components of the interest income earned on FDs and loans is only on that which remains after netting of interest expenses. The ld.CIT(A), we have noted has given no credence to this fact pointed out by the ld.counsel for the assessee, noting that the Revenue has filed appeal against order of the Hon'ble High Court to the Supreme Court. This cannot....