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TMI Blog2015 (3) TMI 1394X X X X Extracts X X X X X X X X Extracts X X X X ..... ong furnishing of particulars of income or concealment of income. In view of above, we do not find any infirmity in the order of Ld. CIT(A). Appeal filed by revenue is dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... erms of Explanation I to section 271 (1 ) (c), penalty cannot be imposed, if the appellant shows justification in claiming such expenditure .. The ratio of the judgment of Pune Bench of ITA T in the case of Kanbay Software India (I» Ltd. 122 TTJ 721, is as follows :- "Before penalty is imposed the AO has to be satisfied that the assessee has concealed income, or that the assessee has furnished inaccurate particulars, that the case of assessee is covered by deeming fiction of one of the Explanations appended to s. 271 (1) (c). The apart, it is also well-settled in law that penalty proceedings are distinct from the assessment proceedings and based on the findings in the Assessment Order per se, penalty cannot be imposed. It is, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led its income or furnished inaccurate particulars of income. The disallowance of the software expenses by the AO has arisen on account of difference of opinion between the appellant and the AO as to whether the same were revenue or capital in nature. In any case, capitalization of the expenses and allowing depreciation on the same, as has been done by the AO, would merely amount to allowing the expenses over a number of years, instead of in a single year, had the expenses been treated as revenue in nature. In the case of the appellant, the returned and assessed losses are quite heavy and whether software development expenses are allowed as revenue or treated as capital in nature, would not impact the tax liability of the appellant, and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the A.O. and from those particulars only; the A.O. had treated revenue expenditure as capital expenditure. 6. We have heard rival parties and have gone through the material placed on record. We find that it is a clear case where penalty has been imposed by A.O. in view of the difference of opinion between assessee and the A.O. The assessee treated the expenditure as revenue expenditure whereas, the A.O. treated the purchase of software as capital asset. All the particulars were before the A.O. from which only he could arrive at a conclusion that assessee had debited the expenditure in the P & L account. Therefore, it is not a case where there was any wrong furnishing of particulars of income or concealment of income. In view of above, we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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