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TMI Blog2002 (4) TMI 223X X X X Extracts X X X X X X X X Extracts X X X X ..... edings under s. 132(4) of the IT Act, the assessee stated that the amount of Rs. 20 lacs surrendered is the income from business. Since the assessee had made a statement that the surrendered amount is the income from business, perhaps it was on this basis, the assessee made a claim under s. 80-I on this amount in the return of income filed. 4. The AO prior to his framing assessment made a detailed investigation and before taking the surrendered income as income from other sources heard the assessee s representative. 5. The assessee s representative during the course of framing assessment stated before AO that the assessee has surrendered the amount and in terms of Expln. 5 attached to s. 271(1)(c), no penalty proceedings can be initiated. It was further submitted by the assessee s representative that in view of the immunity granted to an assessee in terms of Expln. 5 to s. 271(1)(c) coupled with the statement of the assessee who had stated the surrendered amount as income from business, necessary benefit of s. 80-I so claimed in the return filed needs to be granted. 6. The AO agreed with the authorised representative on the issue that no penalty can be imposed under s. 271(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted that the liability when discharged shall relate to the year of demand and thus supported the order of the CIT(A). 15. We have gone through the record and heard the parties on this issue. 16. The undisputed facts are that bill has been raised by DESU/DVB. The bill has not been paid. The assessee has filed a suit and obtained a stay. The matter is still pending in the civil Court we are informed. The filing of the suit obviously indicates that there is a challenge to the demand. No one is sure when the suit will be decided and at that time what would be the demand. In these circumstances, we feel that let the assessee claim deduction in the year of payment in and the action of the assessee making provision for the said payment the subject relevant year is disallowed. 17. The ground No. 2 of the appeal by the Revenue is, therefore, allowed. 18. This brings us to ground No. 1 of two appeals i.e. 4611/Del./96 and 4613/Del/96. 19. On this ground the learned Departmental Representative while making this submission submitted that the CIT(A) committed a serious irregularity in treating the surrendered amount as income from business and thus directing the AO to allow deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 131 CTR (Ker) 396 : (1996) 219 ITR 235 (Ker), Fakir Mohd. Haji Hasan vs. CIT (2001) 165 CTR (Ru) 111 : (2001) 247 ITR 290 (Guj), CIT vs. Standard Motor Products of India Ltd. (1962) 46 ITR 814 (Mad), 578 ITR 317 (sic) and Dr. Mrs. Renuka Datla vs. CIT Anr. (2000) 158 CTR (AP) 555 : (1999) 240 ITR 463 (AP). While the learned Departmental Representative in support of its contention placed reliance on Tuticorin Alkali Chemicals Fertilizers Ltd. vs. CIT (1997) 141 CTR (SC) 387 : (1997) 227 ITR 172 (SC), (2001) 165 CTR (Guj) 111 : (2001) 247 ITR 290 (Guj), CIT vs. Rajeshree Cinema (P) Ltd. (2001) 247 ITR 76 (MP) : (2001) 247 ITR 76 (MP), Daulat Ram Rawat Mull vs. CIT (1967) 64 ITR 593 (Cal), CIT vs. Smt. P.K. Noorjahan (1999) 155 CTR (SC) 509 : (1999) 237 ITR 570 (SC). Some other legal precedents with regard to interpretation of statutes were also cited for the proposition that in the event of doubt, the interpretation which benefits the assessee should be followed. 23. We have heard the parties and gone through the record. 24. From the record and the submissions made, it is clear that pursuant to proceedings, surrender was made. The amount of surrender was not disclosed in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m is not included or rejected in quantum proceedings does not bring the assessee to the net of s. 271(1)(c) of the IT Act. 32. We thus hold for this reason also that Chapter XXI of the IT Act is independent of the other provisions of Act and no benefit of any action taken under Chapter XXI can be drawn in any other proceedings. 33. In this background we hold that immunity granted by the Revenue under the Expln. 5 of s. 271(1)(c) is limited only to the extent that no penalty as contemplated under s. 271(1)(c) of the Act shall be imposed but this does not restrict the Revenue from investigating the source or the taxability of the amount under the other provisions of the Act. 34. The argument of the assessee s representative that in view of the immunity granted to the assessee under Expln. 5 to s. 271(1)(c) no proceedings under s. 69 of the IT Act could be initiated needs to be rejected. 35. This brings us to the issue whether it was a business income or income from other sources. 36. According to the Revenue, this was an income from other sources while according to the assessee it was business income. According to Revenue, it wants it to be income from other sources to brin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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