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TMI Blog2015 (3) TMI 567X X X X Extracts X X X X X X X X Extracts X X X X ..... ies Act. Keeping in view the smallness of the claim and disclosures of particulars of assets and rate of depreciation and also the returned income of 8.90 crores, we are of the opinion that this could be an inadvertent mistake for which the assessee should not be held liable for concealment penalty. We, therefore, delete the penalty. - Decided in favour of assessee. Disallowance under section 14A r.w.r. 8D - Held that:- In the year under consideration the assessee has made substantial investment and for making such investment decision have to be taken and it cannot be said that assessee did not incurred any expenditure to earn dividend income which is substantial. Therefore, there is no force in the claim of Ld. AR that assessee did not incur expenditure for earning the dividend income. It is a case where expenses incurred by the assessee to earn exempted income are incurred from joint expenditure and for such situation formula has been prescribed in Rule 8D. In the present case, since assessee did not make any disallowance and even could not substantiate its explanation that no expenditure was incurred for earning exempted income, therefore, we don’t see any force in the claim of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the circumstances of the case and in law, the learned CIT. (A) erred in partly confirming the penalty levied u/s 271(1)(c) of the I.T. Act although there has been neither any concealment of income nor furnishing of inaccurate particulars of income. 3. In the details furnished at page 1 & 2 of the paper book the additions which have been made in the assessment order and the position of the quantum are described in the following chart. "For the relevant A.Y 2006-07 the date of hearing for quantum addition made was 06/02/2014 and the order was pronounced on 28/02/2014. Following is the summary of ITAT orders passed relevant for penalty levied by the learned CIT(A): S.No. Pariculars of penalty levied Amount ITAT order on quantum Reference No. Remarks 1. Deferred Revenue disallowance 9,13,635 In favour of appellant ITAT order pg. No.4- 6 Para 17 to para 28 Penalty N.A 2. Depreciation on Goodwill 1,26,563 ITAT has directed the AO to allow depreciation on goodwill based on Supreme Court decision in case of Smifs Securities. ITAT order pg.No.2, Para 4-5 Leviability of penalty to stay in abeyance 3. Gratuity 13,08,005 In favour of appellant ITAT order Pg. No.2 pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) Deferred Revenue disallowance - ₹ 9,13,635/- (ii) Gratuity - ₹ 13,08,005/- (iii)Renovation/Civil expenses - ₹ 38,56,361/- 3.4 So far as it relates to the levy of concealment penalty with regard to ROC fees. ROC fees is not allowable as expenditure. The position of law in this regard is very clear. Ld. AR also did not make any submission. Thus, it was a clear cut disallowable amount, which has been claimed as revenue expenditure. So the levy of concealment penalty to this extent is confirmed. 3.5 Similar is the position with regard to trade mark and patent expenses of ₹ 11,235/-. On this issue also Ld. AR did not submit any arguments and levy of concealment penalty on this amount is also confirmed. 3.6 Now the issue remain only with respect to excess depreciation claimed in the return. It was submitted by Ld. AR that on Air Conditioners and Office Equipments instead of 15% depreciation the assessee inadvertently claimed depreciation @25% as per Companies Act and this was only an inadvertent mistake and assessee surrendered the same in the assessment itself and did not file any appeal against the said disallowance. It was submitted that it was purely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above observations of the AO, it is case of the assessee right from the beginning that such claim was inadvertently made. The fact regarding the assets were duly disclosed in the return and only rate of depreciation was wrongly claimed. The basis of claim made by the assessee is that it has been described under Companies Act. Keeping in view the smallness of the claim and disclosures of particulars of assets and rate of depreciation and also the returned income of ₹ 8.90 crores, we are of the opinion that this could be an inadvertent mistake for which the assessee should not be held liable for concealment penalty. We, therefore, delete the penalty. .9 In the result, this appeal is partly allowed in the manner aforesaid. ITA NO.2660/MUM/2013, A.Y.2007-08: Grounds of Appeal: 1. On the facts and in the circumstances of the case and in law, the penalty order passed u/s 271(1)(c) of the I.T. Act is invalid and bad in law. 2.. On the facts and in the circumstances of the case and in law, the learned C.I.T. (A) erred in partly confirming the penalty levied u/s 271(1)(c) of the I.T. Act and that too without appreciating fully and properly the facts of the case. 3. On the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able opportunity of hearing to the assessee. To ensure compliance before Ld. CIT(A), we have directed Ld. AR of the assessee to appear before Ld. CIT(A) on 17/04/2015 to which Ld. AR had agreed. Therefore, we restore this appeal to the file of Ld. CIT(A) for re-adjudication of the issue regarding levy or otherwise of the concealment penalty as per directions given above. Since we are restoring the issue to the file of Ld. CIT(A), we do not express any opinion on the merits. 4.3 In the result, this appeal is treated to be allowed for statistical purposes. ITA NO.2659/MUM/2013,A.Y.2009-10:. Grounds of appeal: 1. On the facts and in the circumstances of the case and in law, the learned C.I.T. (A) erred in disposing of the appeal and that too without fully and properly considering the written submission as well as the evidence submitted during the course of hearing proceedings 2. On the facts and the circumstances of the case and in law, the learned C.I.T. (A) erred in approving the action of the A.O. in disallowing of ₹ 12,80,130/- u/s 14A of the I.T. Act. 3. On the facts and in the circumstances of the case and in law, the learned C.IT. (A) erred in approving the action o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s called for as the assessee's own funds were much more than the investment made in the shares and securities, out of which the assessee has earned tax free dividend. To substantiate such contention, Ld. AR referred to the balance sheet, copy of which is placed at page 48 of the paper book. According to the said balance sheet share capital of the assessee including reserves and surplus is a total sum of ₹ 72,84,85,240/- as against investment of ₹ 41,61,63,310/-. Relying upon the decision of Hon'ble Bombay High Court in the case of CIT vs. HDFC Bank Ltd., 366 ITR 505 (Bom) it was pleaded that no addition could be made on account of interest. 5.3 So far as it relates to other part of the disallowance, which is mentioned at Sl.No.3 of the aforementioned table i.e. a sum of ₹ 12,70,726/-, it is the submission of Ld.AR that no part of the same could be disallowed as the assessee did not have to incur any such expenditure, particularly in view of the technology which enable the assessee make the investment by click to mouse and does not require any expenditure for the same. It is further the submission of Ld. AR that before making the disallowance the AO bound to recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penditure relates to director remuneration and administrative and other expenses. The investment of the assessee, as pointed out earlier in the shares and securities out of which dividend of ₹ 2.93 crores has been earned is a sum of ₹ 41.61 crores. The details of investment is also found placed in Schedule "E". Substantial investments have been made during the year under consideration except investment of ₹ 5.00 crores in Templeton Fixed Horizon Fund Series and investment in Equity share of shares of Just Dial Inc. (100% subsidiary) of ₹ 1.36 crores. Thus, in the year under consideration the assessee has made substantial investment and for making such investment decision have to be taken and it cannot be said that assessee did not incurred any expenditure to earn dividend income which is substantial. Therefore, there is no force in the claim of Ld. AR that assessee did not incur expenditure for earning the dividend income. It is a case where expenses incurred by the assessee to earn exempted income are incurred from joint expenditure and for such situation formula has been prescribed in Rule 8D. The mandate of application of Rule 8D for assessment year 2008- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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