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2016 (4) TMI 810 - AT - Income TaxPenalty u/s. 271(1)(c) - disallowance of capital loss, pertaining to receipt arising out of sale of research and development of capital assets - Held that - On this issue the Hon ble Bombay High Court, in quantum, has admitted the substantial question of law as noted above. In view of these facts, we find that the issue is squarely covered by the decision of the jurisdictional High Court in assessee s own case and also of Hon ble Delhi High Court in the case of Liquid Investment and Trading Co. 2010 (10) TMI 1021 - DELHI HIGH COURT wherein it is held that whenever the assessee had preferred appeal in Hon ble High Court under section 260A of the Act, which has been admitted and substantial question of law frames, that itself shows that the issue is debatable and for that reason the penalty under section 271(1)(c) of the Act cannot be levied. We are of the view that Hon ble Jurisdictional High Court has clearly laid down the principle that once Hon ble High Court admits the substantial question of law in quantum appeal of the assessee, that itself shows that the issue is debatable and for that reason penalty u/s. 271(1)(c) of the Act cannot be levied. - Decided in favour of assessee.
Issues:
- Appeal against CIT(A) order confirming penalty under section 271(1)(c) of the Income-tax Act, 1961. - Admissibility of substantial question of law in quantum appeal. - Debatable nature of the issue leading to penalty imposition. Issue 1: Appeal against CIT(A) order confirming penalty under section 271(1)(c) of the Income-tax Act, 1961: The appeal by the assessee challenges the order of CIT(A) confirming the penalty imposed by the Assessing Officer under section 271(1)(c) of the Income-tax Act. The contention raised by the assessee was that it did not furnish inaccurate particulars of income or conceal its income, and the rejection of the claim was a debatable issue with two reasonable views possible. The penalty was imposed by the Assessing Officer, and the CIT(A) upheld it. The assessee argued that the tax liability calculation should consider the specific circumstances of the case related to long-term capital loss on the sale of R&D assets. Issue 2: Admissibility of substantial question of law in quantum appeal: The counsel for the assessee highlighted that the quantum appeal under section 260A of the Act had been admitted by the Hon'ble Bombay High Court, focusing on the disallowance of capital loss related to the sale of R&D capital assets. The substantial question of law was reframed by the High Court, indicating a debatable issue. The counsel also referred to a judgment where the High Court accepted that the Tribunal was correct in deleting the penalty on a similar issue of disallowance. Issue 3: Debatable nature of the issue leading to penalty imposition: The argument presented by the Ld. CIT, DR was based on the decision of the Hon'ble Delhi High Court and the Hon'ble Gujarat High Court, emphasizing that the admission of an appeal and framing of substantial questions of law did not automatically render the issue debatable. However, the Tribunal, following the precedent set by the jurisdictional High Court and the Hon'ble Delhi High Court, concluded that the issue in question was debatable, as indicated by the admission of the substantial question of law in the quantum appeal. Therefore, the penalty under section 271(1)(c) of the Act was deleted. In conclusion, the Tribunal ruled in favor of the assessee, allowing the appeal and deleting the penalty imposed under section 271(1)(c) of the Income-tax Act. The decision was based on the debatable nature of the issue, as indicated by the admission of substantial questions of law in the quantum appeal by the jurisdictional High Court. The Tribunal's decision aligned with the principles established by the High Courts, leading to the penalty deletion in this case.
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