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TMI Blog2015 (6) TMI 178X X X X Extracts X X X X X X X X Extracts X X X X ..... paid to ROC - Rs. 64,00,000 The Ld.CIT(A)-LTU has wrongly upheld that the filing fees paid to ROC amounting to Rs. 64,00,000 is of the capital nature. This filing fees was paid to enhance financial business of IREDA and was fully allowable. Accordingly, the filing fees paid to ROC is required to be allowed as revenue expenditure. 2. Decrease in the deduction u/s 36(1)(viia)(c) of the Income tax Act, 1961 from Rs.l,79,29,080 to Rs. 93,53,978 resulting in an disallowance of Rs. 85,75,102. The Ld. CIT(A) has wrongly upheld the computation of deduction u/s 36(1)(viia)(c) by the DCIT(LTU) at Rs. 93,53,978 i.e. 5% of business income. As per the provisions of Income Tax Act such deduction is allowable @ 5% of the total income amounting to Rs. 1,79,29,080." Ground No. 1 of the revenue and ground no. 2 of the assessee 4. We have heard arguments of both the sides and carefully perused the relevant material placed on record. In the beginning of the argument, ld. Counsel of the assessee submitted a copy of the order of ITAT Delhi "C" Bench dated 21.11.2014 in assessee's own cases/appeals in ITA No. 3742/D/2001 for AY 1998-99 and other 16 appeals and submitted that the issue of deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;Income from other sources' as against the assessee's claim of 'Business income.' Following the view taken for the above earlier years, we set aside the impugned order and remit the matter to the file of AO for taking decision as regards each of the above items of income falling under the, head 'Income from other sources' or 'Profits and gains of business or profession.' It is only thereafter that the question of exemption u/s 10(23G) can be decided and the question of disallowance of expenses incurred in relation to the exempt income. The decision about the deduction u/s 36(1)(viii) and 36(1)(viia)(c) is, again, dependent on the nature of the items of income as discussed above. This matter is, therefore, sent back to the AO for taking a decision as per law, after allowing a reasonable opportunity of being heard to the assessee. " 6. On careful consideration of facts and circumstances of the present case, we note that the AO also made addition of Rs. 85,75,102 to the total income of the assessee on this issue by holding that the deduction u/s 36(1)(viia) (c) of the Act is allowable in respect of business income only. During first appellate procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing influenced with the earlier assessment and impugned order. Ground no.1 of the assessee in ITA NO.1183/De/2010 9. Apropos ground no. 2, we have heard arguments of both the sides and carefully perused the relevant material placed on record. Ld. Counsel of the assessee submitted that the CIT(A) has wrongly upheld the addition made by the AO on account of filing fees paid to Registrar of Companies (ROC) amounting to Rs. 64 lakh. Ld. counsel further submitted that this filing fees was paid to enhance financial base of the assessee and hence was fully allowable as revenue expenditure. Replying to the above, ld. DR, supporting the action of the AO and the impugned order of the CIT(A), submitted that the issue is squarely covered in favour of the revenue by the judgment of Hon'ble Supreme Court in the case of Punjab State Industrial Development Corporation Ltd. vs CIT 225 ITR 792 (SC) and judgment in the case of Brooke Bond (India) Ltd. vs CIT 225 ITR 798 (SC). 10. On careful consideration of above submissions, we note that the AO has made addition on account of filing fees paid to ROC with following observations:- "'1. Filing Fee paid to ROC The filing fee of Rs. 64,00,000/- w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dismissed." 12. As per facts of the present case, undisputedly and admittedly, the assessee paid filing fees of Rs. 64 lakh to the ROC in connection with the expansion of the capital base of the appellant company from Rs. 300 crore to Rs. 400 crore during the assessment year under consideration. The only contention of the assessee company is that the said expenditure was necessary and for the purpose of business of the assessee, therefore, the same should be allowed as revenue expenditure. At the same time, we respectfully take cognizance of the judgment of Hon'ble Supreme Court in the case of Punjab Industrial Development Corporation Ltd. vs CIT (supra) and judgment in the case of Brooke Bond (India) Pvt. Ltd. vs CIT (supra) wherein speaking for the apex court, their lordships categorically held that the expenditure incurred by a company in connection with issue of shares with a view to increase its share capital is directly related to the expansion of capital base of the company and, therefore, the same is capital expenditure, even it may incidentally help in the business of company and in the profit making. 13. Ld. Counsel of the assessee has placed reliance on the decision o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer and confirmed by the CIT (A) in quantum appeals." 16. Apropos sole ground of the assessee, we have heard arguments of both the sides and carefully perused the relevant material placed on record. Ld. counsel of the assessee submitted that the CIT(A) has wrongly upheld the contention of ACIT in imposing the penalty u/s 271(1)(c) of I.T.Act, 1961 of Rs. 23,52,000/- being 100% tax sought to be evaded on ROC fees of Rs. 64,00,000/- paid for increasing the authorized share capital from Rs. 300 crore to Rs. 400 corre. Ld. Counsel vehemently contended that the assessee company clarified before the revenue authorities that all the particulars of filing fees deposited with the ROC were accurately furnished during the assessment proceedings as well as appellate proceedings and the same were also furnished during penalty and appeal proceedings. Therefore, it cannot be held that the assessee furnished wrong particulars of its income or has furnished inaccurate particulars to attract the penalty u/s 271(1)( c) of the Act. 17. Ld. Counsel has drawn our attention towards operative part of the penalty order in the second part of para 4.5 and submitted that firstly, the AO noted that the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n allegation of the AO is that the assessee has filed a wrong claim and therefore, the assessee has clearly filed wrong particulars of income. Under above noted facts and circumstances, we decline to accept the claim of the AO that the assessee has filed wrong particulars of its income. At the same time, we are inclined to hold that the fact remains that the assessee placed a claim towards filing fees paid to ROC for increasing the authorised share capital which was not found acceptable during quantum proceedings and the same attained finality. 20. In view of above, we respectfully take notice of the decision of Hon'ble Supreme Court in the case of Reliance Petroproducts (supra) wherein it was held thus:- "It was, therefore, reiterated before us that the Assessing Officer 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 fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs. 1,79,29,080/- on income from other sources and up to this extent, the assessee had furnished wrong and inaccurate particulars of its income within the meaning of Section 271(1) (c) of the Act, hence penalty was rightly levied on the assessee. The Ld. DR vehemently contended that the CIT(A) was not correct and justified in deleting the penalty merely because the issue is debatable and there may be a possibility of a different opinion or view by the higher judicial forum. The Ld. DR pointed out this issue is very clear and the assessee claimed higher amount without any bonafide reason, hence, penalty was leviable. 24. Replying to the above and supporting the impugned order, the Ld. Counsel of the assessee submitted that the same issue being debatable has been remitted back to the file for fresh adjudication for A.Y 2004-05 by the ITAT Bench "C" order dated 21/11/2014 (supra) and hence, the quantum assessment and appeal order on the basis of which the penalty was levied do not survive and hence, the penalty order cannot be held as sustainable. The Ld. Counsel further pointed out that even otherwise when the issue on which disallowance or addition has been made is debatable havi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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