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TMI Blog2019 (1) TMI 207X X X X Extracts X X X X X X X X Extracts X X X X ..... concluded that the assessee deliberately claimed the interest as revenue expenditure. The assessee has filed its return of income declaring loss of ₹ 8,52,704/-. Therefore if the assessee treats the interest expenses as capital in nature then also there was also no tax liability on the part of the assessee. Therefore, we are of the view there was no deliberate act on the part of the assessee to escape from the tax liability by claiming interest expenses as revenue. The claim made by the assessee in the return of income on account of interest expenses can be an inaccurate claim which cannot be equated with the inaccurate particulars of income - No penalty to be imposed u/s 271(1)(c) - decided in favour of assessee. - I.T.A. No.2907/Ahd/2016 - - - Dated:- 3-12-2018 - Shri Waseem Ahmed, Accountant Member And Smt Madhumita Roy, Judicial Member For the Appellant : Shri Aseem L. Thakkar, A.R. For the Respondent : Shri Mudit Nagpal, Sr. D.R. ORDER PER WASEEM AHMED, ACCOUNTANT MEMBER: The captioned appeal has been filed at the instance of the Assessee against the order of the Commissioner of Income Tax (Appeals) 2, Ahmedabad [CIT(A) in short] vide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it filed its reply dated 10.11.2014 by submitting that there was no deliberate/ mala fide intention either to conceal or furnish the inaccurate particulars of income. Therefore, there is no question of levying the penalty u/s 271(1)(c) of the Act. As such, the assessee has claimed interest expenses considering it as revenue in nature which can be an inaccurate claim of the assessee. Therefore, the ultimate inaccurate claim made by the assessee cannot be equated with the furnishing of inaccurate particulars of income. However, the AO disregarded the contention of the assessee and levied the penalty for ₹ 1,81,917/- being 100% of the amount of tax sought to be evaded vide order dated 20.03.2015. 6. Aggrieved, assessee preferred an appeal to ld. CIT(A). The assessee before the ld. CIT(A) submitted that the interest was claimed after treating it as revenue expenses. Therefore, there was no inaccurate particular of income furnished by the assessee in the return of income. The assessee in support of his claim relied on the judgment of Hon ble Supreme Court in the case of Reliance Petro products reported in 322 ITR 158. However, the ld. CIT(A) disregarded the contention of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the penalty order and there is no default on this count. 3.5. Even the appellant has not provided any details in support of its contention that the capital advances were made out of the interest free funds and not from the interest bearing loans and advances. In this regard the appellant has not complied to the proviso to Section 36(l)(iii) of I.T. Act which clearly states that the amount of interest paid on the borrowed capital which has been utilized for acquisition of an capital assets till the date on which such asset was first put to use shall not be allowed as deduction. Since the appellant has violated the terms of the aforesaid proviso to Section 36(l)(iii) of J. Act therefore the appellant in the return of income has wrongly claimed the interest expenditure as revenue in nature and it tantamount to furnishing of inaccurate particulars of income only. The appellant has relied upon the various judgements, however the same are not on identical facts as in the case of appellant and therefore, not applicable over the facts of the case. Thus, the reliance thereupon is misplaced. 3.6. Having considered the facts, it is noticed that the appellant was in knowledge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he expenses in the different form. In view of the above, it could not be concluded that the assessee deliberately claimed the interest as revenue expenditure. 8.1 Besides the above, we also note that the assessee has filed its return of income declaring loss of ₹ 8,52,704/-. Therefore if the assessee treats the interest expenses as capital in nature then also there was also no tax liability on the part of the assessee. Therefore, we are of the view there was no deliberate act on the part of the assessee to escape from the tax liability by claiming interest expenses as revenue. 8.2 We also note that the assessee furnished all the particulars of income in its income tax return. However, the claim made by the assessee in the return of income on account of interest expenses can be an inaccurate claim which cannot be equated with the inaccurate particulars of income. In this regard, we extend our reliance on the judgment of Hon ble Gujarat High Court in the case of ITO vs. Amol Decalite Ltd reported in 55 Taxman.com 419 wherein it was held as under: 7. So far as levy of penalty for concealment of the income under section 271[1](c) is concerned, the Tribunal has n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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