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TMI Blog2012 (7) TMI 994X X X X Extracts X X X X X X X X Extracts X X X X ..... interest of ₹ 75,00,000 during the year thereon. Assessee claimed deduction of interest on tax free bonds of ₹ 5,60,11,644 in its return filed. During the course of assessment proceedings, assessee was asked to give details of interest on tax free bonds. While preparing the said details, it was noticed by assessee that 6% Government of India-Capital Index Bonds purchased during the year had inadvertently been categorized as tax free bonds and, therefore, interest of ₹ 75,00,000 earned on such bonds had also inadvertently escaped tax. The assessee requested the AO to include ₹ 75 lakhs as taxable interest and corrected the figure of interest of tax free bonds amounting to ₹ 4,85,11,644. In view of above, AO initiated penalty proceedings u/s.271(1)(c) of the Act. 6. On behalf of assessee, it was contended that said interest income was voluntarily offered to tax and the claim had not been detected or unearthed during the course of assessment proceedings to say that there had been concealment or non disclosure of information since mistake was not discovered by the AO but the assessee on becoming aware of the mistake himself offered the same for tax. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rticulars of income. He submitted that investment made by the assessee on 6% Government of India-Capital Index Bonds is not disputed and only the income generated was claimed as tax free, which is inaccurate and, therefore, levy of penalty is in order. 10. We have carefully considered orders of authorities below and submissions of ld representatives of parties. We observe that assessee has disclosed in the balance sheet purchase of 6% Government of India-Capital Index Bonds in the assessment year under consideration. There is no dispute that assessee received interest of ₹ 75 lakhs included the said interest under the heading interest on tax free bonds in computation of income. We observe on perusal of computation of income placed at page 12 of PB that assessee has stated interest on tax free bonds ₹ 5,60,11,644 and breakup of is given by way of a Note at Sl.No.-15 forming part of computation of income alongwith Annexure- P at page 15 of PB. In the said Annexure-P, assessee at Sl.No.34 thereof mentioned 6% Government of India-Capital Index Bond -2002 , interest of ₹ 75 lakhs. In Annexure-P, assessee has given heading statement of interest on tax free bonds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of interest on the bonds and considering the decision of Hon ble apex Court in the case of K.C. Builders vs. ACIT, 265 ITR562, we cancel penalty levied by authorities below on the said amount of ₹ 75 lakhs by allowing ground No.1 to 3 of appeal taken by assesee. 11. In Ground Nos.4 to 8, assessee has disputed the order of ld CIT(A) in confirming penalty elvied u/s.271(1)(c) on receipt of premium on redemption of debentures of ₹ 2,37,60,000. 12. The relevant facts in this regard are that assessee claimed premium on redemption of debentures of ₹ 2,37,60,000 as income from capital gain. During the course of assessment proceedings, AO held that the premium received by the assessee on redemption of debentures is nothing but an addition to the rate of interest or is a payment in lieu of the rate of interest being received on the investment made in the debentures. Accordingly, said premium was held to be revenue receipt and assessed to tax under the head income from other sources . The assessee agitated the said assessment order before ld CIT(A)and action of AO was confirmed. No further appeal was filed before the Tribunal on said issue. In view thereof, the AO i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, assessee has furnished wrong particulars of facts with an intention to pay lower tax. Hence, levy of penalty is justified. 16. We have considered submissions of ld representatives of parties and orders of authorities below. We have also perused the relevant pages i.e. pages 11 12 of PB, which is computation of income of the assessee alongwith Note-11 at page 16 forming part of computation of income and also considered the cases cited before us (supra). There is no dispute to the fact that assessee has duly disclosed the amount of premium received on redemption of debentures in the computation of income. The assessee has reduced premium from the business income in the computation of income and considered it as capital gain alongwith Note which is forming part of computation of income. The said note No.11 at page 16 reads as under: The company received premium of ₹ 2,37,60,000 on redemption of debentures of Times Guarantee Ltd during the year. This has been shown as long term capital gains because these were received for the transfer of the asset. It is therefore the Company s claim that this is taxable as capital gain. 17. However, the authorities below in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot bonafide, we hold that levy of penalty u/s.271(1)(c) is not justified. Hence, we allow ground Nos.4 to 8 of appeal of the assessee. 18. Now we take up appeal by department being I.T.A. No.4979/M/2011. 19. Ground raised by department reads as under: Whether on the facts and circumstances of the case and in law, ld CIT(A) erred in deleting the penalty levied u/s.271(1)(c) in respect of disallowance of repair expenses treated as capital expenditure amounting to ₹ 15,80,169 in the light of decision of CIT(A) ITAT in quantum appeal sustaining the additions. 20. The relevant facts are that during the course of assessment proceedings, AO disallowed a sum of ₹ 33,25,336 out of building repairs and furniture and fixture repairs on the ground that these are capital expenditure. The assessee filed appeal before ld CIT(A) and ld CIT(A) confirmed the addition to the extent of ₹ 15,80,169. The Tribunal also confirmed the action of AO. In view thereof, AO initiated penalty proceedings on account of addition of ₹ 15,80,169 sustained finally in the assessment proceedings and stated that assessee furnished inaccurate particulars of income leading to conceal ..... 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