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TMI Blog2015 (2) TMI 398X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment order had disallowed the claim by observing as follows :- "From the details furnished by the assesee and from Annexure D of 3CD Report it has been found that the assessee has also not deducted TDS on the interest amount of Rs. 22,79,123/- paid to M/s. Hyderabad Industries on settlement as directed by arbitration. The assessee was asked to furnish the details of the same and also to explain as to why the claim of expense could not be disallowed. Vide submission dated 13.11.2009 the assessee has furnished the details of the same and it has been submitted that Rs. 60 lakhs has been paid to M/s. Hyderabad Industries in accordance to the direction of Hon'ble High Court of Delhi vide settlement order dated 14.5.2007. The copy of terms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pense crystallized on 14.5.2007 and hence the same cannot be claimed in this year. The assessee could not furnish any cogent explanation in this regard. Hence, the claim of this amount of Rs. 22,79,123/- is hereby disallowed and added to the total income of the assessee." 2. In the penalty order passed u/s 271(1)(c) the AO held that the assessee has furnished inaccurate particulars of income and is liable for penalty u/s 271(1)(c). The first appellate authority at para 33.1 to 34 held as follows :- 33.1 It is settled now that claiming excessive deductions also amount to concealment of income. Falsehood in accounts can take either of the two forms: either an item of receipt may be suppressed fraudulently, or an item of expenditure may be f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced on the judgment of Jurisdictional High Court in the case of Ms. Madhushree Gupta, British Airways PLC vs. UOI 317 ITR 107 (Delhi) specifically at page 138 wherein it is held as follows:- "We are of the opinion that the argument of learned counsel appearing for the Department is misconceived. Their Lordships of the Supreme Court have repeatedly emphasized the word "satisfaction" and the satisfaction is not tobe in the mind of the Assessing Officer but must be reflected from the record. It is a settled rule of law that the authorities performing quasi-judicial or judicial function must given reasons in support of its order so as to provide in the order itself the ground which weighed with the authorities concerned for passing an order ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred to the audit report u/s 44AB and specifically to annexure "D" and submitted that despite the specific observations of the auditors that no TDS has been made on the interest amount paid to M/s. Hyderabad Industries, the assessee has consciously and deliberately made a false claim instead of disallowing the same u/s 40(a)(ia). He contended that the assesee ignored the legal advice and hence it has furnished inaccurate particulars warranting levy of penalty u/s 271(1)(C). 7. In reply the Ld. Counsel submitted that if the expenditure is allowable only in the subsequent assessment year the question of deducting tax at source during the current year does not arise. Even otherwise it is submitted that what was paid was compensation and no ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Hon'ble Gujrat High Court in the case of Commissioner of Income-tax v. Manilal Tarachand [2002] 254 ITR 630 (Guj) held as follows :- "In the light of the facts as recorded by the Income-tax Officer in the assessment order, we feel that this is not a case where penalty could be imposed on the assessee on the charge of either concealment of income or furnishing inaccurate particulars of income. The dispute in the assessment, between the assessee and the department, was to the effect as to in which year the compensation received by the assesee was taxable. It appears that the assessee was under a belief that he would be liable to capital gains tax only on receipt of the compensation and accordingly had shown the liability to capital gains t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . V. Goslino Mario and others 241 ITR 312 and CIT & another V. Morgenstern Werner 259 ITR 486." 13. After hearing the rival contentions we find that the Commissioner of Income Tax (TDS), New Delhi passed an order u/s 264(1) of the I.T. Act, 1961 on 23.7.2003 for the assessment years 1998-99, 99-00,00-01 and 01- 02 wherein he has held that payment of living allowance for food and other out-of-pocket expenses of the experts, i.e. of Russian expatriates, is exempt in the hands of the Russian experts u/s 10(14) of the Income Tax Act. When the Commissioner of Income Tax (TDS) has taken such a view in his order u/s 264(1) and also held that the judgment of the Hon'ble Supreme Court in the case of CIT vs. Goslino Mario and others 241 ITR 312 is s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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