2013 (3) TMI 175 - HC - Income Tax

Penalty levied for inaccurate particulars of income - As per AO assessee treated the revenue receipt of subsidy as capital receipt - Held that - There is no dispute about the quantum of receipt of grant in aid from the State Government. The assessee reflected the same as capital receipt, whereas it has been treated as to be revenue receipt. The issue, whether the amount of grant in aid is capital receipt or a revenue receipt, is a debatable issue. The findings returned in the judgment relied upon of CIT Versus ECS Ltd. 2010 (2) TMI 713 - DELHI HIGH COURT is on fact of non-furnishing of details of expenses. The issue was not debatable as in the present case. No error in the findings recorded by Tribunal while setting aside the penalty. The Tribunal gives rise to no substantial question of law for the opinion of this court.

Summary

Issues:
- Interpretation of penalty levied for furnishing inaccurate particulars of income
- Treatment of subsidy receipt as revenue receipt
- Applicability of Division Bench judgment of Delhi High Court
- Dispute over grant in aid being capital or revenue receipt

Analysis:

The judgment pertains to Income Tax Appeals filed under Section 260A of the Income Tax Act, 1961 against an order passed by the Income Tax Appellate Tribunal. The main issue raised was whether the penalty of Rs.10,50,00,000/- was justified for furnishing inaccurate particulars of income by treating a revenue receipt of Rs.2,15,00,000/- as a capital receipt. The appellant relied on a Division Bench judgment of the Delhi High Court regarding deductions under Section 80-O, but the court found this reliance to be untenable as the facts differed significantly. In the Delhi High Court case, deductions were denied due to the lack of details of expenses, unlike the present case where the issue was the nature of the grant in aid receipt.

The court highlighted that the dispute in the present case revolved around whether the grant in aid should be considered a capital or revenue receipt, which was a debatable issue. Unlike the Delhi High Court case, the findings were not based on the non-furnishing of expense details. Consequently, the reliance on the Delhi High Court judgment was deemed misconceived. The court concluded that there was no error in the Tribunal's decision to set aside the penalty, as the treatment of the grant in aid as revenue receipt was a debatable issue. Therefore, the court dismissed the appeal, stating that no substantial question of law arose from the Tribunal's order.