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2015 (9) TMI 333 - BOMBAY HIGH COURTPenalty levied u/s. 271(1)(c) - furnishing inaccurate particulars of income by making inadmissible claim on account of interest paid to foreign party - Tribunal deleted the penalty - Held that:- It is a settled position in law that mere disallowance in quantum proceedings would not ipso facto lead to imposition of penalty. The tests to be applied in imposing penalty are different and distinct from the tests to be applied in disallowing an expenditure in quantum proceedings. In the present case, Respondent-Assessee has made a complete disclosure of particulars of income and expenditure by disclosing it in its account and also making a note in its Accounts viz. awaiting the permission of the RBI to make the payment. Moreover, the explanation offered by the Respondent-Assessee was not found to be false. The decision of the Apex Court held in CIT v/s. Reliance Petro Products (P) Ltd. [2010 (3) TMI 80 - SUPREME COURT] has held that where details supplied in returns of Income are neither incorrect or false, penalty cannot be imposed. A mere making of an claim not sustainable in law, would not invite penalty. - Decided in favour of assessee. Furnishing inaccurate particulars of income by making inadmissible claim on account of compensation paid - non deduction of TDS - Tribunal deleted the penalty - Held that:- Tribunal records the fact that due to the negotiation with the Shahs, the amount of compensation was reduced from ₹ 64.72 lakhs to ₹ 45 lakhs and the Respondent-Assessee had deducted the tax at the time of actual payment. The balance provision for compensation made in its account, was reversed. The impugned order to our mind correctly records the fact that disallowance in this case is not done on account of the expenditure being bogus but merely because the requirement of deducting tax at source had not been complied with by the Respondent-Assessee. The explanation offered by the Respondent-Assessee that no tax was deducted by it because no compensation was payable, as it was still under negotiation. It was only on the amount of compensation payable being determined and paid that tax was deducted. The decision of the Apex Court in Reliance Petro Products (supra) which Mr. Mohanty, sought to distinguish would continue to apply as the distinctions made do not touch the aspect with which we are concerned viz. Is penalty imposable if particulars are disclosed but the claim is disallowed. In such a case the Apex Court has held that penalty is not imposable. In this case, it has been held that claim made was on a bonafide view. The view taken by the Tribunal in the impugned order is a possible view to the effect that the Respondent-Assessee had a bona fide belief that they are not liable to deduct tax at the time of the making a provision as negotiations were still in progress. - Decided in favour of assessee.
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