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TMI Blog2020 (9) TMI 462X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the learned Commissioner of is in deleting the penalty on above disallowance. Disallowance of provisions for gratuity u/s 43B - Commissioner - A deleted the penalty on the above sum holding that the assessee has furnished the details in the income tax return, in the books of account, in the work in progress - HELD THAT:- The penalty on this sum was deleted. DR could not show us any reason that penalty on the above sum is leviable. Further, it is also not free from doubt whether such disallowance can be made u/s 43B of the income tax act or not when the assessee itself is not claim the above deduction in the computation of total income. Merely because the disallowance has been confirmed by the higher forum, it cannot automatically result into penalty. Further for the reasons given by us, relying upon the decision of the jurisdictional High Court in case of principal Commissioner of income tax versus Sahara India life insurance Co Ltd [ 2019 (8) TMI 409 - DELHI HIGH COURT ] we do not find any infirmity in the order of the learned some is CIT A in deleting the penalty on the above disallowance. No infirmity in the order of the learned CIT A in cancelling the penalty levied u/s 27 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome tax A are also revenue neutral or having a time gap only. It was also submitted that mere this allowance of expenditure cannot result into penalty automatically. Assessee also claimed that it is bona fide claim are rejected. It has neither concealed any income nor furnished inaccurate particulars of its income. Therefore, it was submitted that there is a merely difference of opinion and not the concealment of income and therefore the penalty u/s 271 (1) (C) cannot be imposed. Assessee also submitted that it has submitted complete details before the lower authorities and there is no concealment of income at any stage. Assessee further relied upon the several judicial precedents submitting the penalty should not be levied. 05. However, the learned assessing officer considered the explanation of the assessee. He held that in the present case the various additions/disallowances are sustained by the learned CIT A were detected by the Department after conducting an elaborate enquiry in as much as special audit was conducted u/s 142 (2A) of the act. Additions so made are virtually the outcome of detailed investigation. On the plea of the assessee that it had disclosed everything in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the concealment of income or furnishing of inaccurate particulars of such income in terms of explanation 1,2,3,4 and 5 of the above Section. He therefore submitted that even otherwise the penalty levied by the learned assessing officer does not survive. He relied up on decision of Honourable Jurisdictional High court in Case of PCT V Sahara India Life Insurance Company limited dated 2-8-2019. He submitted that this issue has been decided against the assessee as per ground number 1 of the appeal before the learned Commissioner A where the jurisdictional facts were contested. 11. We have carefully considered the rival contention and perused the orders of the lower authorities. In the present case the learned assessing officer has levied the penalty with respect to the following additions/disallowance confirmed by the learned CIT A. Assessee and the AO both carried matter before the coordinate bench. Further, assessee preferred appeal before the coordinate bench and coordinate bench has also deleted the certain addition, set aside certain additions to the file of the learned assessing officer for further verification as per order dated 11th of March 2016 in ITA number 2677/del/2011 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee s appeal is dismissed by coordinate bench holding that income is not assessable Under the head house property as per paragraph number 63 64 at page number 73 of the order 8 Disallowance of provision of gratuity u/s 40 A (7) 14,49,123 This issue is not pressed by the assessee before the coordinate bench and appeal of the assessee is dismissed by coordinate bench at paragraph number 65 66 at page number 73 of the order 9 Capitalization of revenue expenditure i.e. disallowance of revenue expenditure 84,12,762 The coordinate bench has deleted the part addition of ₹ 8,262,762 and confirmed the addition of ₹ 150,000 as per paragraph number 67 86 at page number 73 77 of the order 10 Addition on account of closing credit balance of refundable security deposits 3,12,41,768 This addition is deleted by the coordinate bench as per paragraph number 87 91 at page number 77 79 of its order 11 Expenses disallowed not related to the business 1,47,70,222 This addition is deleted by the coordinate bench wide paragraph number 92 96 at page number 79 80 of its order 12 Disallowance of expenditure u/s 40 A (3) 1,02,786 The ITAT has set aside the issue to the file of the learned assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment services were rendered by that company and 50% of the total amount payable to that party as per the bill was paid during the year and balance amount has been paid in subsequent years, when income from that building has started. Learned assessing officer disallowed above amount for the reason that these are capital expenditure in nature and are not pertaining to the year under consideration. The learned Commissioner of income tax appeal also confirmed the above disallowances holding that the expenses are in respect of renting of the building, which are not allowable deduction u/s 24 of the act. The claim of the assessee is that the brokerage expenditure are related to tower number two whereas in the assessment order for assessment year 2005 06, the learned assessing officer made entire discussion with regard to tower number one. Assessee has submitted that these two buildings are quite distinct buildings though the name is somewhat similar. Assessee justified the claim for deduction on the ground that services relating to renting of tower number two had been partly provided by the broker in the year under consideration and therefore only half of the brokerage payable was paid d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charges was cancelled by the assessing officer. In view of this, penalty has rightly been deleted by the learned Commissioner of income tax appeals on this disallowance. 18. With respect to the withdrawal of 30% deduction u/s 24 of ₹ 3,509,870, the facts emerged that rent of ₹ 160,99,500 was received from Sriram School in terms of agreement dated 27 December 2000 for operations and running Sriram School, Arawali. The above building was previously owned by the appellant but in arbitration award, it was reverted to DLF enclave complex educational charitable trust with effect from 1 April 1994 and the tenant Sriram School continued to pay rent to the assessee company in terms of lease deed entered into with them. The assessee in turn used to pay the entire rental receipts to the about trust. The assessee continued to show the rental income received from the school as its income Under the head income from house property on actual receipt basis and because of the fact that tax deduction at source was duly deducted by the tenant in the TDS certificates were also issued in the name of the company. In fact, the trust was the ultimate receiver of the rental income. The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision for gratuity liability in the books of account in the construction division. Out of the above sum ₹ 3,532,502/ has been recovered by the construction division from other companies and this amount is credited in gratuity expenses account. This leaves a net balance of ₹ 1,449,123/ which was booked in construction work in progress account. The above sum has neither been debited to the profit and loss account is expenses and has also not been claimed in the income tax return as a deduction but it was simply included in the balance-sheet has work in progress item only. Therefore, the claim of the assessee is that the disallowance u/s 43B is not applicable even to the amount of ₹ 4,049,123/ as it has not been claimed as deduction in the profit and loss account or in the computation of total income. The learned Commissioner A deleted the penalty on the above sum holding that the assessee has furnished the details in the income tax return, in the books of account, in the work in progress and the disallowance has been made only on account of difference of opinion, since the appellant holds a genuine belief that the amount of gratuity shown in the work in progress but ..... X X X X Extracts X X X X X X X X Extracts X X X X
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