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2022 (9) TMI 406 - ITAT AHMEDABADLevy of penalty u/s 271(1)(c) - concealing/furnishing inaccurate particulars of income - excess deduction claimed u/s 80IA of non allocation of R&D expenses of the same amount to its unit in Silvassa eligible to such deduction - quantum of deduction so claimed had been reduced by allocation of R&D expenses to the said units in the assessment framed for the impugned year u/s 143(3) - HELD THAT:- Allocation is not based on any such nexus being directly and clearly established but merely on the basis of admission of a technical person of the assessee that too to the effect that 10% of the R&D expenses can be said to have been incurred for the formulation activity. Of course the assessee has since then accepted allocation of R&D expenses to this extent. But despite all the above it cannot still be said that the assesses claim was found to be totally unfounded. Mere statement of a technical person is not sufficient to hold the claim of the assessee as being totally incorrect in law. The same has to be established from the facts of the case whether the R&D expenses actually had nexus with the manufacturing activity of the units. For the same reason the acceptance by the assessee of the allocation in preceding years does not establish that its claim was totally unfounded. Further even the said technical personnel has only stated that 10% expenses are in relation to formulation activity. The assessee therefore having furnished all particulars of the R&D expenses , the allocation of such expenses to units eligible to deduction u/s 80IA of the Act by the Revenue not having been done on the parameters laid down by judicial decisions , there being no factual basis for establishing that the expenses needed to be allocated and the expenses so allocated being only estimated, the assesses claim of not allocating such expenses to the eligible units cannot be said to have been proved to be not bonafide. The assessee cannot therefore, in such circumstances be charged with having concealed/furnished any inaccurate particulars of income so as to attract levy of penalty u/s 271(1)(c) of the Act. It is simply a case where all particulars of income have been truly disclosed and it is only the assesses claim which has been denied ,which cannot be the basis for levying penalty u/s 271(1)(c) of the Act as laid down by the Hon’ble apex court in the case of CIT vs Reliance Petro Products [2010 (3) TMI 80 - SUPREME COURT] The penalty so levied is directed to be deleted. - Decided in favour of assessee.
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