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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 ..... d circumstances of the present case are similar to the facts and circumstances of the cases as relied by both the AO as well as the CIT(A) viz. judgment of Hon’ble Supreme Court viz. Punjab State Industrial Corporation (1996 (12) TMI 6 - SUPREME Court) and Brooke Bond (India) Pvt. Ltd. vs CIT (1997 (2) TMI 11 - SUPREME Court) and the issue is squarely covered in favour of the revenue by these decisions. Under above noted facts and circumstances, we are unable to see any infirmity, ambiguity or any other valid reason to interfere with the conclusion of the CIT(A) confirming the addition made by the AO. - Decided against assessee. Penalty u/s 271(1)( c) - 100% tax sought to be evaded on ROC fees of ₹ 64,00,000/- paid for increasing the authorized share capital from ₹ 300 crore to ₹ 400 corre - Held that:- AO imposed penalty on wrong premises merely because the claim of the assessee which was fully disclosed in the statement of income was not found to be acceptable by the department but it cannot be held that the assessee either furnished wrong particulars of its income or has concealed particulars of its income to attract penalty u/s 271(1)(c) of the Act. Hence, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss income. As per the provisions of Income Tax Act such deduction is allowable @ 5% of the total income amounting to ₹ 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 u/s 36(1)(vii) 36(1)(viia)(c) of the Income Tax Act, 1961 (for short the Act) have been sent back to the AO for taking a fresh decision for subsequent AY 2004- 05, therefore, sole ground no.1 of the revenue and ground no. 2 of the assessee may kindly be restored to the file of the AO on the same line as the issues are squarely covered by the decision of the Tribunal (supra) on these issues. Ld. DR fairly accepted that the issue of said deduction u/s 36(1)(vii) 36(1)(viia)(c) of the Act has been restored to the file of the AO for AY 2004-05 and the facts and circumstances of the present case are also similar to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent 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 ₹ 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 proceedings, the CIT(A) confirmed the action of the AO by holding that the base for allowing deduction refers to the computation of income in respect of income as referred to in section 28 of the Act and the appellant would be allowed deduction only in so far as the income relates to business income. 7. We also note that the sole ground of the revenue is related to the addition made by the AO u/s 36(i)(viii) of the Act wherein the AO held that the deduction under said section is admissible to a financial corporation which is engaged in providing long term finance for industrial or agricultural development or development of infrastructure facility in India or by a public company formed and registered in India with the main object of carryi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vered 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 ₹ 64,00,000/- which was paid to the Registrar of Companies in connection with the expansion of the capital base of the assessee company from ₹ 300 Crores to ₹ 400 Crores during the year under consideration and claimed in the profit and loss account under the head 'Administrative Expenses' (Schedule-'O'). The same is in the nature of capital expenditure and is therefore not allowable. Moreover, it clearly constitutes capital expenditure in view of the ratio of the decisions of the Hon'ble Supreme Court in the case of Punjab State Industrial Development Corporation Limited vs. CIT 225 ITR 792 and Brooke Bond India Limited vs. CIT 225 ITR 798. The assessee has not distinguished the aforesaid judici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 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 of Hon ble Delhi High Court in the case of CIT vs Citi Financial Consumer Fin.Ltd. 335 ITR 29, Hon ble Gujarat High Court decision in the case of CIT vs Laxmi Talkies 275 ITR 125, we respectfully note that the facts and circumstances of the present case are clearly distinguishable from the facts and circumstances of the judgment of Hon ble Delhi High Court and Hon ble Gujarat High Court. Per contra, the facts and circumstances of the present case are similar to the facts and circumstances of the cases as relied by both the AO as well as the CIT(A) viz. judgment of Hon ble Supreme Court viz. Punjab State Industrial Corporation (supra) and Brooke Bond (India) Pvt. Ltd. vs CIT (supra) and the issue is squarely covered in favour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 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 assessee has failed in the gamble of evading tax and the wrong claim of the assessee was deducted and the amount was brought to tax. Ld. Counsel further pointed out that in the last sentence as the operative part, the AO further observed that the assessee has filed wrong particulars of income within the meaning of section 271(1)(c) of the Act and hence, penalty is leviable. Ld. Counsel further pointed out that as per decision of Hon ble Supreme Court in the case of CIT vs Reliance Petroproducts Pvt. Ltd. 322 ITR 158 (SC), the penalty u/s 271(1)( c) of the Act is not leviable merely because the claim of the assessee was not accepted or was not found to be acceptable by the revenue. Ld. counsel has further drawn our attention towards paper book p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 as 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(1)(c). If we accept the contention of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 having two possible views, then penalty is not imposable. 25. On careful consideration of above, at the beginning, we note that undisputedly, the issue of allowability of claim of the assesssee for A.Y 2004- 05 has been restored to the file of the AO for fresh adjudication by the order of the Tribunal dated 21/11/2014. Further, we also note that on similar lines, respectfully following the order of the Tribunal for A.Y 2004-05 (supra), we have restored the same issue to the file of the AO for fresh consideration, while disposing and adjudicating Ground No. 2 of the assessee in ITA No. 1183/Del/2010 for A.Y 2003-04 by the earlier part of this order. 26. In this situation, we hold that since the quantum assessment and appeal order for A.Y 2003-04, on the basis of w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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