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2016 (5) TMI 807 - ITAT CHANDIGARHPenalty under section 271(1)(c) - claim of exemption under section 10(20) - Held that:- The explanation of the assessee with regard to his claim of exemption under section 10(20) of the Act is that the same is based on a bonafide belief and on certain other cases of the assessees carrying on the same type of activities, these judgments have been referred to by him before the learned CIT (Appeals) also. This is a case of a claim of exemption made by the assessee which was ultimately denied to it. Making of a claim, which is not sustained, does not amount to levy of penalty under section 271(1)(c) of the Act. Reliance placed by the assessee on Reliance Petroproducts Pvt. Ltd. (2010 (3) TMI 80 - SUPREME COURT ) is not out of place since this is not a case where the assessee has concealed some particulars of its income or furnished any inaccurate particulars. In fact, all the facts and figures have been taken by the Assessing Officer from the return filed by the assessee only. The argument of the assessee that if it had taken registration under section 12A of the Act, the whole income would be eligible for exemption under section 11 of the Act, is of no consequence. However, we find that the argument of the assessee that it is a Government organization and no malafide can be imposed on it, is a relevant consideration while levying penalty under section 271(1)(c) of the Act. - Decided in favour of assessee Rental incomes shown by the assessee under the head 'income from business or profession' - Held that:- It has all along been claimed that it is a bonafide belief of the assessee that these rental incomes are part of its business income. Though we are aware of the fact that the issue stands against the assessee in quantum, but we cannot brush aside the fact that the issue of considering certain incomes under a particular head is a debatable and controversial issue all along. There are judgments of various High Courts as well as of various Benches of the Tribunal, whereby the dispute regarding the rental income to be taxed under the head 'income from house property' or under the head 'business income' are considered. In view of this, we observe that it may be a case of making additions or disallowances but not a case of levying penalty under section 271(1)(c) of the Act. In view of the above, the Assessing Officer is directed to delete the penalty levied by him under section 271(1)(c) of the Act. - Decided in favour of assessee
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