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TMI Blog2019 (9) TMI 1072X X X X Extracts X X X X X X X X Extracts X X X X ..... expense u/s 36(1 )(iii) of the Act, holding that the interest bearing funds are used for giving interest free advance to group concern. Under the identical facts the Hon ble Supreme Court of India in the case of S.A. Builders Vs. CIT 2 [ 2006 (12) TMI 82 - SUPREME COURT] has allowed the interest expense as deductible revenue expense wherein the interest free funds are given by the assessee to its sister concern as a measure of commercial expediency. It cannot be said that the assessee has concealed its income or furnished inaccurate particulars of such income. It is only a case wherein the AO did not accept the legitimate claim of the assessee due to difference of opinion on the same set of facts and hence under the facts and circumstance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PER: R.C. SHARMA, A.M. These appeals by the assessee are directed against the separate orders dated 29/12/2019 and 26/12/2019 respectively of ld. CIT(A)-13, Mumbai for the A.Y. 2011-12 in the matter of order passed U/s 143(3) and in the matter of penalty imposed U/s 271(1)(c) of the Income Tax Act, 1961 (in short, the Act). 2. Rival contentions have been heard and record perused. Facts in brief are that the assessee is engaged in the business of electronic distribution of mobile and DTH recharge and provision of travel booking services to various retail outlets spread across India. The assessee company has filed its return of income on 29.09.2011 declaring total income/loss of (-)₹ 6,18,02,588/-. The case of the assessee was taken u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,35,685/- has the effect of only reducing the loss incurred by the assessee and consequently has no tax effect during the year. Accordingly, the cost of litigation for assessee would be higher than the gain from the appeal. Thus, on the advice of its accountant and considering the higher cost of litigation than the tax involvd, the assessee accepted the additions made by the AO in the appellate proceeding before the CIT(A). The assessee also accepted the small penalty of ₹ 1,50,323/- levied by the AO under bonafide belief that the matter will get closed. However, the Ld.CIT(A) vide order dt.26.12.2016 dismissed the quantum appeal and vide order dt.29.12.2016 dismissed the penalty appeal filed by the assessee. Thereafter, the Principl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by various parties to the assessee. The assessee has duly booked the commission income in its books of accounts as well as the TDS of ₹ 6,91,912/- as per certificates provided by various parties. The additional TDS of ₹ 3,14,325/- deducted by various parties and deposited into government account, were not booked by the assessee as income in its books of accounts, as the assessee was not aware of the above TDS of ₹ 3,14,325/- deducted by the parties and has also not received the TDS certificate in respect of above TDS. 8. In this regard, we observe that non accounting of TDS of ₹ 3,14,325/- was an inadvertent bonafide mistake due to non availability of TDS certificate and proper information at the relevant time. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee became eligible for increased refund to the extent of ₹ 3,14,325/-. Accordingly, there was no tax sought to be evaded by the assessee and consequently no penalty can be levied u/s 271(1)(c) of the Act. 9. In this regard, reliance is placed upon the following decisions wherein the Hon'ble Supreme Court/jurisdictional High Courts has deleted the penalty u/s 271(1 )(c) on account of inadvertent mistakes by the assessee in filing their returns: a) Price Waterhouse Coopers Pvt. Ltd Vs. CIT [348 ITR 306](Supreme Court) b) CIT Vs. Somany Evergree Knits Ltd [352 ITR 592](Bombay) c) CIT Vs. Bennett Coleman & Co. Ltd. [87 DTR 368](Bombay) 10. In view of our above facts and circumstances and considering judicial pronouncement reli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,000/- by capitalizing it to Capital work in progress, we found that the interest expense was incurred by the assessee on loans taken for its working capital requirement. The AO allocated the interest expense incurred on working capital requirement to Capital Work in Progress only on the basis of assumption and surmises and disallowed interest expense of ₹ 1,05,000/- u/s 36(1)(iii) of the Act. The assessee has not made any borrowing for specific asset or incurred any interest expense for Capital Work in Progress. Thus, there was no concealment of income or furnishing of inaccurate particulars of such interest so as to attract penalty u/s.271(1)(c). In this regard, we observe that the Hon'ble Supreme Court of India in its decision ..... X X X X Extracts X X X X X X X X Extracts X X X X
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