TMI Blog2015 (2) TMI 626X X X X Extracts X X X X X X X X Extracts X X X X ..... regards the issue of debiting the routine and administrative expenses and preliminary expenses to the profit and loss account, we find that it cannot be said that it is a bogus or wrong claim. Hence, levy of penalty on disallowance of these expenses cannot be sustained. As regards the issue of charging off in the profit and loss account, the interest expenditure we note that same was incurred on the purchase of land. Assessee has not started any specific project. Hence, the interest expenditure incurred in this regard has been charged to the profit and loss account. The above charging of all the expenditure to the profit and loss account cannot be said to be ex-facie bogus claim. It is certainly a debatable issue. When the matter is deba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od under consideration, A.O. opined that the payment of interest on borrowed fund was in the nature of capital expenditure and needs to be capitalized. Again, the miscellaneous expenditure was in the nature of pre-operative expenses and hence AO opined the same cannot be allowed. Hence, the AO disallowed the entire loss and the assessment was completed at NIL income. In the quantum proceedings the disallowance was sustained by the Ld. CIT(A) and ITAT. On the above disallowances penalty proceedings u/s. 271(1)(c) was also initiated. In the penalty proceedings, Assessing Officer opined that assessee company made a wrong claim of loss amounting to ₹ 4308317/- and concealed income by that amount by filing inaccurate particulars of its inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied in levying penalty u/s. 271(1)(c) amounting to ₹ 14,51,000/-. Accordingly, the same is canceled. 4. Against the above order the Revenue is in appeal before us. 5. We have heard both the counsel and perused the records. Ld. DR submitted that assessee was following project completion method during the year under consideration and no income from any project has been offered for taxation. Hence, the assessee has made a wrong claim and the penalty has rightly been levied. Further he relied upon the Delhi High Court decision in the case of CIT vs. Escorts Finance Ltd 328 ITR 44 and in the case CIT vs. Zoom Communication Pvt. Ltd. 327 ITR 510. 5.1 On the other hand, ld. Counsel of the assessee submitted that there is no case fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and perused the records. We find that section 271(1)(c) postulates imposition of penalty for furnishing of inaccurate particulars and concealment of income. In this case we find that this is the first year of the existence of the company and the company has not started any business activity except purchasing some land. In this regard, assessee has incurred expenditure on the following:- (i) ₹ 40,76,035/- interest expenses; (ii) ₹ 2,09,177/- on account of rent and taxes, legal and professional expenses, audit fees, printing and stationery, filing fees and bank charges; and (iii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the only activity performed by the company is purchase of lands. In this purchase the assessee has incurred interest expenditure. The assessee has also incurred routine administrative expenditure necessary to run the company. The company has also written off preliminary expenses. As regards the issue of debiting the routine and administrative expenses and preliminary expenses to the profit and loss account, we find that it cannot be said that it is a bogus or wrong claim. Hence, levy of penalty on disallowance of these expenses cannot be sustained. 10. As regards the issue of charging off in the profit and loss account, the interest expenditure we note that same was incurred on the purchase of land. Assessee has not started any specifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we find that Ld. DR s reliance upon the case laws mentioned above are not applicable as in those case laws of Escorts Finance Ltd. and Zoom Communication Pvt. Ltd. the claims made were found to be ex-facie bogus. This is not at all the case here. Rather on the facts of the case we are of the opinion that the decision of the Hon ble Apex Court in CIT vs. Reliance Petro Products Ltd. in Civil Appeal No. 2463 of 2010 order dated 17.3.2010 is squarely applicable. In this case it has been held that the law laid down in the Dilip Sheroff case 291 ITR 519 (SC) as to the meaning of word concealment and inaccurate continues to be a good law because what was overruled in the Dharmender Textile case was only that part in Dilip Sheroff case where i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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