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TMI Blog2016 (7) TMI 832X X X X Extracts X X X X X X X X Extracts X X X X ..... interest on employee loans. 3. The facts in brief are that the assessee is a limited company engaged in the business of manufacturing and trading of agro chemical products and seeds. The return of income was filed on 31.10.2005 declaring total income of Rs. 63,58,97,030/-. In the said return, assessee has claimed deduction u/s. 80 IB for an amount of Rs. 26,09,60,584/- in respect of following units: Topic Unit - 30% Rs.11,65,42,214 (6th year) Multipurpose Formulation unit - 100% Rs.13,47,78,640 (4th year) TMX Unit - 100% Rs. 96,39,730 (5th year) In Form 10CCB, the assessee had given following note in respect of "other income": "Other income represents the income of the manufacturing unit and the Sector Headquarter mainly co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e second appellate stage, the claim of disallowance of deduction was reduced to Rs. 40,19,878/- on the following three items: i. Processing charges Rs.24,05,286/- ii. Misc. Income Rs.12,95,519/- iii. Interest on employees loan Rs. 3,19,073/- 5. Now on these three items of disallowance, the AO has levied the penalty u/s. 271(1)(c) for furnishing of inaccurate particulars and, accordingly, levied penalty of Rs. 12,05,963/-. The assessee's detailed explanation before the AO about the bona fide claim of deduction u/s. 80IB has been incorporated by the AO in his penalty order from pages 2 to 5. The sum and substance of assessee's explanation has been that firstly, the aforesaid income had direct and proximate connection with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty rather than deciding the appeal on merits. He has again gone by the fact that Tribunal has confirmed the said disallowance. 6. Before us, learned counsel after explaining the entire facts, submitted that so far as the 'miscellaneous income' forming part of 'other income' is concerned the same comprised of interest, insurance claim and lease rent. On insurance claim he submitted that, now there is decision of Hon'ble Bombay High Court in the case of Pfizer Ltd. 330 ITR 62 (Bom) in favour. Regarding interest and lease rent also there were various decisions, which have been cited before the CIT(A) in the penalty proceedings. He further pointed out in the earlier years also, no penalty was levied on similar disallowance u/s. 80 IB. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he order of the CIT(A). 6. We have heard the rival submissions, perused the relevant findings given in the impugned orders and the material placed before us. The penalty has been levied on account of disallowance of claim of deduction on processing charges; miscellaneous income, consisting of interest, insurance claim and lease rent; and interest on employee loan. There were other items of income also which were disallowed by the AO however, from the stage of the Tribunal most of these deductions have been allowed, which is evident from the fact that out of the total disallowance of Rs. 1,31,12,764/- the disallowance has now been restricted to Rs. 40,19,878/- only. As discussed above, the assessee has duly disclosed the entire particulars ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which had lead to a bona fide belief for making the claim at the time of filing the return of income. Here in this case, the assessee not only by way of notes in the audited accounts but also before the authorities below have relied upon the decisions wherein similar nature of income were held to be allowable for deduction u/s. 80 IA. Thus, the claim of the assessee was genuinely bona fide at the time of filing the return of income. Not only that, some of the items of "other income" like processing charges, insurance claim there are still decisions which are in favour of the assessee post the judgment of Liberty India Ltd. Thus, it cannot be held that the assessee had made any false claim for which any penalty u/s. 271(1)(c) is warranted. A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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