AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (1) TMI 1550
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Income Tax Act, 1961 (hereinafter referred to as 'the Act') relating to the Assessment Year 2014-15. 2. Brief facts of the case is that the assessee is Private Limited Company engaged in the business of public transportation in various cities and dealership business. For the Asst. Year 2013-14, assessee filed its Return of Income on 10-09-2014 declaring total income of Rs. 5,79,96,700/-. The return was taken for scrutiny assessment and assessment was passed making following disallowances: (i) Disallowance u/s. 14A of Rs. 81,667/- (ii) Disallowance of expenses for increased in authorized share capital of Rs. 1,80,000/- (iii) Disallowance u/s. 36(1)(iii) of Rs. 21,26,536/- The A.O. also initiated penalty proc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sessee was asked to furnish the details of date of acquisition, source of funds and when the assets (Volvo buses) put to use and compute the interest cost attributable to the loans taken by the assessee and utilized towards acquisition of such assets. The assessee explained that it purchased commercial vehicles which are of two types (1) is ready to use Volvo bus and (2) body chassis which were thereafter worked upon before the vehicle was put to use. There were a time gap between the acquisition of the assets and their original use in the second category of assets. The assessee submitted that the date of acquisition, amount of loans, date of put to use and interest details as follows: Assets Amount of Loan Date of purchase Date....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... particulars of income before the Income Tax Authorities. The assessee was in bona-fide belief that after purchase of body chassis and convert into bus is passive put to use. Further the timing difference and interest prior to put to use (Registration certificate, date) were to be capitalized and not to be allowed as revenue expenditure is highly debatable issue. Though it is a legal claim of the assessee not allowed by the department, the same cannot tantamount to furnishing inaccurate particulars of income as held by the Hon'ble Supreme Court in the case of Reliance Petro Products Pvt. ltd. reported in 189 taxmann.com 322. 6.4. Ld. Counsel also placed on record on similar disallowance u/s. 36(1)(iii) wherein Chandigarh Bench of ITAT in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....any not made such claim and the interest expense is capitalized to the capital goods. Thus it cannot be said that the assessee has made inaccurate particulars of income. The Hon'ble Supreme Court has held that making incorrect claim cannot tantamount to furnishing inaccurate particulars. Hon'ble Supreme Court held if we accept the contention of the Revenue then in case of every Return whether the claim is not accepted by the assessing officer for any reason, the assessee will invite penalty u/s. 271(1)(c) and which is not the clear intendment of the legislature by observing as follows: "...10. It was tried to be suggested that Section 14A of the Act specifically excluded the deductions in respect of the expenditure incurred by the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....for any reason, the assessee will invite penalty under Section 271(1)(c). That is clearly not the intendment of the Legislature. 11. In this behalf the observations of this Court made in Sree Krishna Electrical v. State of Tamil Nadu & Anr. [(2009) 23VST 249 (SC)] as regards the penalty are apposite. In the aforementioned decision which pertained to the penalty proceedings in Tamil Nadu General Sales Tax Act, the Court had found that the authorities below had found that there were some incorrect statements made in the Return. However, the said transactions were reflected in the accounts of the assessee. This Court, therefore, observed: "So far as the question of penalty is concerned the items which were not included in the....