2010 (8) TMI 1048 - HC - Income Tax

Summary

Issues involved: Appeal u/s 260A of the Income Tax Act, 1961 regarding deletion of penalty u/s 271(1)(c) on grounds of concealment of income and intention of retaining control over shares.

Deletion of Penalty under Section 271(1)(c): The assessing officer imposed a penalty under Section 271(1)(c) as the assessee claimed interest paid under Section 36(1)(iii) of the Act, which was disallowed under Section 14A. The CIT(A) allowed the appeal stating that the issue of disallowance under Section 14A was debatable, hence benefit should favor the assessee. The tribunal concurred with the CIT(A) based on the debatable nature of the issue, citing Mimosa Investment Co. (P) Ltd. v. ITO. It was held that in debatable matters, it cannot be concluded that the assessee concealed income, thus upholding the tribunal's decision.

Intention of Retaining Control over Shares: The tribunal noted that the assessee acquiring shares of its principal company to retain control was a factor in the decision. The revenue expressed concern that this finding might impact the quantum appeal. However, it was clarified that such observations by the tribunal were to be treated as submissions of the assessee for all purposes. Ultimately, the appeal was dismissed with no order as to costs.