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TMI Blog2014 (3) TMI 252X X X X Extracts X X X X X X X X Extracts X X X X ..... E COURT] followed – when the assessee furnishes all the details of its expenditure as well as its income in the return of income, which details, in themselves, are not found to be inaccurate or nor can be viewed as the concealment of income on its part - It is up to the authorities to accept its claim in the return or not - Mere rejection of claim will not amount to furnishing of inaccurate particulars or concealment of income and hence, no penalty can be levied under section 271(1)(c) of the Act – thus, the case of the assessee does not attract the provisions of section 271(1)(c) of the Act and therefore the penalty levied/confirmed on this count stands deleted. With regard to disallowance of depreciation on the sale and lease back tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome claimed under section 36(1)(vii) and disallowance of depreciation claimed on leased assets made by the AO during the course of scrutiny assessments passed under section 143(3) of the Act. On appeal, the Ld.CIT(A) confirmed the penalty levied by the AO on account of disallowance of deduction claimed under section 36(1)(vii). However, the Ld.CIT(A), allowed the relief on entire normal lease transaction and confirmed the penalty only on sale and lease back transaction to the extent where transaction is treated as non genuine. Aggrieved by the impugned orders, the assessee is in appeal before us. 3. Having heard both the sides and perused the material on record, it is pertinent to mention that as regards the disallowance of deduction cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mes Ltd. 7 SOT 916 (Bang) which has been approved by Karnataka High Court in 347 ITR 383, AIG Home Finance India Ltd. 47 SOT 275 (Chn) and National Co-operative Development Corporation, 36 SOT 445 (Del). Further, without prejudice to the above, it has been submitted that, even if interest and dividend income has to be excluded, while computing deducting under section 36(1)(viii) of the Act, only net interest and dividend income should be excluded (i.e. after reducing expenses on accounts of interest expenses). In this regard, reliance has been placed on the decision in the case of National Co-operative Development Corporation 36 SOT 445 (Del). Also reliance has been placed on the decision of of the Hon'ble Apex Court in the case of Reli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be inaccurate or nor can be viewed as the concealment of income on its part. It is up to the authorities to accept its claim in the return or not. Mere rejection of claim will not amount to furnishing of inaccurate particulars or concealment of income and hence, no penalty can be levied under section 271(1)(c) of the Act. Considering the totality of facts and the legal position on this issue, we are of the considered opinion that the case of the assessee does not attract the provisions of section 271(1)(c) of the Act and therefore the penalty levied/confirmed on this count stands deleted. 4. On the decision of the Ld.CIT(A) in confirming the penalty levied by the AO on account of the disallowance of depreciation on the assets acquire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of depreciation on asset given on lease to Konkan Railway Corp. Ltd. and Andhra Pradesh State Electricity Board to the AO and directed to examine the issue of sale and lease back agreement afresh. When the said issue has been restored to the file of the AO, in our considered opinion, the penalty on this aspect should also be restored to the file of AO for taking a fresh decision in accordance with the view finally taken by him in respect of addition in quantum proceedings. Our view is fortified by the judgment of the Hon'ble Supreme Court in the case of Mohammed Mohatram Farooqui Vs. CIT (SC) - 2010-TIOL-23-SC-IT. We, therefore, overturn the impugned decision on this issue and restore the matter to the file of AO. 5. In the result, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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