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TMI Blog2011 (6) TMI 968X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 11,00,922/-. For the sake of completeness, grounds are reproduced below:- 1. The learned CIT(Appeals) has erred in confirming the penalty of ₹ 11,00,922/- u/s.271(1)(c) of the I.T.Act. It is submitted that on the facts and circumstances of the case, there is neither concealment of furnishing of inaccurate particulars of income and the penalty levied of ₹ 11,00,922/- be deleted. 2. The learned CIT(Appeals) has erred in levying a penalty of ₹ 11,00,922/- u/s.271(1)(c) holding that the claim of interest made was not bonafide. The appellant under reasonable cause to prove that the borrowed funds were utilized for investment. There is a bunch and bundle of finance from which various investments have been made. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the entire claim of interest of ₹ 27,83,624/- paid on borrowed funds was not wholly and exclusively for the purpose of business. It has also been held by the Assessing Officer that since the borrowed funds have been utilized towards acquisition of shares, therefore the income generated out of the said investment, i.e. dividend income being exempt under I.T. Act, therefore the related expenditure of interest was not to be allowed in terms of the provisions of section 14A of the I.T.Act. The said addition was contested in quantum appeal before Learned CIT(Appeals) who has affirmed the action of the Assessing Officer and held that the borrowings were not for the purpose of earning income, therefore interest thereon was not admissible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present appeal before me, I am only concerned with the fact as to whether the direction given by the CIT(A) has been carried out correctly or not. Therefore, there is no question of deleting the disallowance and as directed by the CIT(A), the A.O. was only required to recomputed the disallowance by ascertaining the borrowed funds which have been utilized in buying of shares. The A.O. was therefore not justified in computing the disallowance in an adhoc manner by adopting the average rate of interest of 20 per cent per annum on the total investment of ₹ 2,40,27,496.00. The A.O. was in fact required to take the following steps in order to comply with the directions of CIT(A). ( i) To ascertain the amount of borrowed funds utilize ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not fully aware about the amended provisions of low as applicable for the assessment year under consideration, i.e. Assessment Year 2001-02. Under bona fide belief, the accounts were finalized and the interest paid was claimed in the Profit Loss Account. In support of this legal proposition, the Learned Authorised Representative cited two decisions of Respected Co-ordinate Bench Delhi as follows:- Sl. No (s) Decision in the case of In ITA No(s) 1. ACIT vs. M/s.Jindal Equipment Leasing Consultancy Services Ltd. ITA Nos.3808-3809/Del/2010 A.Ys.1999-00 2001-02 Order dated 21/04/2011 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art of the assessee has to be examined. Before levy of penalty this fact has also to be examined that whether all relevant related facts in respect of the impugned claim have fully, truly and correctly furnished by a claimant. It has also to be ascertained that whether there was any falsity in respect of such a claim. On examination of the orders of the authorities below there is no such allegation from the side of the Revenue that the explanation offered by the assessee in terms of section 271(1)(c) Explanation-1 (A)(B) were either false or not bona fide in nature. Rather, totality of the circumstances and the provisions of the Statute clearly indicate that there was an honest difference of opinion. Considering these facts we are of the co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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