2022 (7) TMI 214 - AT - Income Tax

Penalty u/s 271(1)(c) - additions/ disallowances made on account of corporate guarantee fee, interest on foreign currency, disallowance u/s. 35(2AB) of the Act and donation to SRF Vidyalaya - HELD THAT - In so far as the addition on account of corporate guarantee fee and interest on foreign currency loans and advances are concerned the impugned addition have been deleted by this Tribunal - Since the addition have been deleted we do not find any justification in the levy of penalty u/s. 271 (1) (c) of the Act and the same has been rightly deleted by the CIT(A) and, therefore, no interference is called for. Disallowance u/s. 35 (2AB) - As claim of the assessee was bonafide the only point of concern was that the department of Scientific and Industrial Research vide letter dated 12.07.2012 has approved the sum of Rs.1282.46 lakhs including additional 50% of revenue expenditure of Rs.1023.53 lakhs whereas the assessee has claimed deduction of Rs.1305.26 lakhs which prompted the AO to make the impugned disallowance. In our humble opinion the assesee s claim is being bonafide levy of penalty u/s. 271 (1) (c) of the Act is not justified in the light of the ratio laid-down by the Hon ble Supreme Court in the case of Reliance Petro Products 2010 (3) TMI 80 - SUPREME COURT We decline to interfere with the findings of the CIT(A). The appeal filed by the revenue is accordingly dismissed.

Summary

Issues: Appeal against deletion of penalty under section 271(1)(c) of the Income Tax Act for various additions/disallowances made.

Analysis:
1. Revenue's Appeal: The appeal by the revenue challenges the deletion of penalty under section 271(1)(c) of the Income Tax Act by the CIT(A) for additions/disallowances related to corporate guarantee fee, interest on foreign currency loans, and donation to SRF Vidyalaya for the assessment year 2010-11. The Tribunal noted that the additions on account of corporate guarantee fee and interest on foreign currency loans had already been deleted in a previous order, thus rendering the penalty unjustified. Consequently, the Tribunal upheld the CIT(A)'s decision to delete the penalty in these aspects. Regarding the disallowance under section 35(2AB) concerning a scientific research claim, the Tribunal found the assessee's claim to be bonafide, with a minor discrepancy in the amount claimed compared to the department's approval. Citing the precedent set by the Supreme Court in the case of Reliance Petro Products, the Tribunal concluded that the penalty under section 271(1)(c) was not justified. Therefore, the Tribunal dismissed the revenue's appeal against the deletion of the penalty.

2. Assessee's Cross Objection: The cross objection by the assessee pertains to the penalty confirmed by the CIT(A) on the disallowance of a donation made to SRF Vidyalaya amounting to Rs.4,28,000 for the assessment year 2010-11. The Tribunal referenced a previous order where the disallowance was deleted, leading to the conclusion that no penalty was leviable under section 271(1)(c) of the Act. Accordingly, the AO was directed to delete the penalty related to the donation to SRF Vidyalaya. Consequently, the cross objection filed by the assessee was allowed. The decision was announced in the open court on 20.06.2022.