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TMI Blog2012 (12) TMI 206X X X X Extracts X X X X X X X X Extracts X X X X ..... /2011 - - - Dated:- 31-1-2012 - Shri MUKUL KUMAR SHRAWAT And Shri A. K. GARODIA, JJ. Appellant by: Shri Kartar Singh CIT DR Respondent by: Shri P M Mehta, AR ORDER PER SHRI A. K. GARODIA, AM:- These are two appeals of the revenue for the assessment year 2001- 02. One appeal in I.T.A.No. 3475/Ahd/2004 is in the case of quantum proceedings whereas the second appeal in I.T.A.No. 750/ahd/2007 is in penalty proceedings in respect of the penalty deleted by Ld. CIT(A) being the penalty imposed by the A.O. u/s 271(1)(c) of the Income tax Act, 1961. The Cross Objections of the assessee are for the assessment year 2001-02. First C.O. is filed by the assessee in quantum proceedings and various grounds are raised for part disallowance confirmed by the Ld. CIT(A) in C.O. No.355/Ahd/2004. In the second C.O., the assessee s grievance is regarding confirmation of part penalty of Rs.6,64,616/- out of total penalty imposed by the A.O. of Rs.52,68,269/- u/s 271(1)(c) of the Act. 2. Regarding Ground No.1 of the quantum appeal, Ld. D.R. supported the assessment order whereas the Ld. A.R. supported the order of Ld. CIT(A). He submitted that the assessee had made provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the next year, excess amount debited in the present year has been offered to tax in the subsequent year and, therefore, under these facts of the present case, we do not find any reason to interfere in the order of Ld. CIT(A) on this issue because deduction claimed by the assessee in the present year is as per the judgement of Hon ble Apex Court and also as per the judgement of Hon ble Bombay High Court rendered in the case of S M Holding and Finance Pvt. Ltd. (supra) and therefore, we decline to interfere in the order of Ld. CIT(A) on this issue. Ground No.1 of the revenue is rejected. 5. Regarding ground No.2 of the revenue s appeal, we find that this issue has been decided by Ld. CIT(A) as per para 21 of his order which is reproduced below: 21. In this regard assessee's first and foremost contention is that the assessment order itself takes notice of the fact that "the assessee company is engaged in the business of trading in plastic, shares, securities and consultancy". Obviously, even as per the Assessing Officer the assessee is trader in shares and securities. For a trader in shares and securities the whole of interest expenditure is allowable as deduction in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 17,93,51,118.- applying the said rate has to be disallowed u.s. 14A. which comes to Rs.1,17,91,794/ -. The A.O. is directed to restrict the disallowance to Rs. 1,17,91,794/-. As regards the disallowance of Demat charges of Rs. 23,832/-, I find that the same represents to the investment made in shares and, therefore, the disallowance of the said amount is quite in order and the same is hereby confirmed. 6. We find that the decision of Ld. CIT(A) is on this basis that proportionate interest on investment of Rs.1793.51 lacs should be on the basis of average rate of interest paid by the assessee. The average rate of interest has been worked out by Ld. CIT(A) @ 6.57% and disallowance at this rate was confirmed by him and this has been worked out at Rs.1,17,91,794/- is against the amount of disallowance made by the A.O. of Rs.3,72,88,743/-. To this extent, the order of Ld. CIT(A) is justified but his action of reducing shares held as stock in trade of Rs.5,44,89,529/- from the amount of total investment for computing the amount of interest to be disallowed as against the ratio laid down by the special bench of the Tribunal in the case of Daga Capital Management (P) Ltd. as re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... total income. It was, therefore reiterated before us that the A.O. had correctly reached the conclusion that since the assessee had claimed excessive deductions knowing that they are incorrect; it amounted to concealment of income. It was tried to be argued that the falsehood in accounts can take either of the two forms; (i) an item of receipt may be suppressed fraudulently; (ii) an item of expenditure may be falsely (or in an exaggerated amount) claimed, and both types attempt to reduce the taxable income and, therefore, both types amount to concealment of particulars of one s income as well as furnishing of inaccurate particulars of income. We do not agree, as the assessee had furnished all the details of its expenditure a well as income in its return, which details, in themselves, were not found to be inaccurate nor could be viewed as the concealment of income on its part. It was up to the authorities to accept its claim in the return or not. Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not, in our opinion, attract the penalty under section 271(21)(c). If we accept the contention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case the CIT(A) has erred in upholding the disallowance of Demat charges of Rs.23,832. 7. On the facts and in the circumstances of the case and without prejudice particularly to grounds No.2 3 above, the CIT(A) has erred in upholding a part of disallowance for interest which is allegedly attributable to purchase of shares. 8. Without prejudice, on the facts and in the circumstances of the case the CIT(A) has erred in rejecting the additional grounds taken in regard to the levy of interest u/s.234B. The CIT(A) should be held that it was not at all a fit case for levy of interest u/s.234B. 9. The respondent craves leave to add, alter, amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal. 13. Ld. A.R. of the assessee did not make any serious arguments regarding this C.O. filed by the assessee. We also find that the order of Ld. CIT(A) is reasonable with regard to the disallowance confirmed by him and hence, we do not find any merit in the C.O. filed by the assessee. 14. In the result, C.O. No. 355/Ahd/2004 of the assessee is dismissed. 15. Now, we take up the remaining C.O. of the assessee in C.O. 262/Ahd/201 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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