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2022 (11) TMI 962 - ITAT DELHIPenalty u/s 271(1)(c) - allowability of club expenses - HELD THAT:- In the light of plethora of judicial precedents, the question of allowability of club expenses, in itself, is a debatable issue and varies from case to case. Under the circumstances imposition penalty on such contentious addition/disallowance on account of club expenses is not justified on the touchstone of law interpreted by the Hon’ble Supreme Court in Reliance Petro Products Pvt . Ltd, [2010 (3) TMI 80 - SUPREME COURT] and other host of judgments. The penalty imposed on club expenses is thus reversed. Penalty on disallowances u/s 14A r.w. Rule 8D - assessee contends that Section 14A has many legal facets and disallowance under Section 14A is a highly debatable issue and considerable varies having regard to the facts of the case - HELD THAT:- The action of the AO imposing penalty under Section 271(1)(c) on disallowance made u/s 14A appears to be mechanical exercise and thus stands reversed. Donation claimed u/s 80G - As pointed out on behalf of the assessee, the amount of donation claimed under Section 80G is correct per se but however the quantum of deduction eligible under Section 80G is restricted to 10% of the total income in accordance with law. Thus, no allegation of furnishing of inaccurate particulars of income is justified. Coupled with this, AO has not applied his mind towards basis for imposing penalty on the issue. No satisfaction has been reached to invoke provisions of Section 271(1)(c) of the Act. In totality, we find merit in the plea of the assessee for reversal of penalty on this point. Appeals of the assessee are allowed.
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