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TMI Blog2023 (2) TMI 420X X X X Extracts X X X X X X X X Extracts X X X X ..... s against the cancellation of levy of penalty under section 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) relating to the Assessment Year (A.Y) 2005-06. 2. The brief facts of the case is that the respondent-assessee is a Government Company mainly acting as Nodal Agency for augmenting power generation in the state of Gujarat. For the Assessment Year 2005-06, the assessee filed its Return of Income on 24.10.2005 declaring total income of Rs. 22,19,87,638/-. Assessment was completed under section 143(3) on 27.12.2007 whereas income was determined at Rs. 27,08,18,876/- on various disallowances were made by the Assessing Officer. 2.1. On further appeal before Ld. CIT(A) and Hon ble ITAT the assessee partly succeed its appeal. The Assessing Officer issued a letter dated 07.12.2013 as to why penalty u/s. 271(1)(c) should not be imposed on the various disallowances confirmed by the Appellate Authorities as follows: Particulars Amount Rs. Disallowance u/s. 35D 25,16,488/- Disallowance of deduction u/s. 35E 77,83,160/- Disa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bility or non-deductibility. Where it is verified, probed and after satisfaction allowed in the first year of claim or in any subsequent year of claim, a different view on same would be difficult to take. This is because the subsequent claims for deduction has rooted from expenditure incurred, verified and allowed in an earlier year and there will be no change in facts as the triggering event has attained finality The issue in hand is fit for applicability of doctrine of consistency and M/s. Gujarat Power Corporation Ltd. [AY 2005-06) the AO cannot take a different view since the claim would flow from same initial expenditure which have been probed and allowed in earlier assessment u/s.143(3) of the Act by him. Strength and guidance has been lent from the judgement of Hon'ble Gujarat HC in case of DCIT v. Gujarat Narmada Valley Fertilizers Co. Ltd. (2014) 42 taxmann.com 438 (Gujarat)/(2014) 222 Taxman.com 30 (Gujarat) (MAG), the relevant extract is reproduced as under:- It is an undisputed position that claim under Section 35D of the Act did not arise for consideration for the first time. Since last several years, the Assessing Officer had granted such claim on the same co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure claimed by the assessee are revenue in nature. Accordingly, there cannot be any disallowance on account of such expenses treating them as capital in nature. Hence, we upheld the finding of the ld. CIT(A). Thus, the ground of appeal of the Revenue is dismissed it is observed that addition of rent and taxes of the Act made by AD now settled in favour of appellant and addition is already deleted by Hon'ble ITAT, penalty u/s. 271(1)(c) levied by AO to that extent does not survive and AO is directed to delete such penalty. 2.5. However the ld. CIT(A) confirmed the penalty levied u/s. 35E of the Act since the ITAT has upheld the disallowance made by the Assessing Officer u/s. 35E of the Act and relying upon Hon ble Supreme Court Judgment in the case of Sundaram Finance Ltd. reported in 99 taxmann.com 152 and Hon ble Supreme Court in the case of Jivanlal and Sons reported in 103 taxmann.com 208 and confirmed the levy of penalty u/s. 271(1)(c) of the Act. 3. Aggrieved against the same, the Revenue is in appeal before the raising the following Grounds of Appeal: i) Whether, the Ld. Commissioner of Income Tax(appeals) has erred in law and on facts in deleting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 84/AHD/2007 vido paragraph number 16 of this order. The issue was decided against the Revenue. For detailed discussion, please refer the relevant paragraph Respectfully following the same, we uphold the order of the Id. CIT-A, Hence the ground of appeal of the Revenue is dismissed. The 2 issue raised by the Revenue is that the learned CIT (A) erred in deleting the addition of 2.72,81,590.00 on account of rates and taxes. 26. The assessee possesses several pieces of land for establishing the power projects including the lands located at Bhavnagar and Amreli Districts where the activities of the assessee was not commenced till the year under consideration despite the fact that these lands were acquired by it in earlier years. Accordingly, the AO was of the view that the rent and taxes paid to the Revenue Authorities in respect of such lands needs to be capitalized. Hence the AO, disallowed the expenses towards the rent and taxes with respect to such lands amounting to 2,72,81,590.00 and added to the total income of the assessee. Aggrieved assessee preferred an appeal to the learned CIT (A). 27. The assessee before the learned CIT (A) submitted that the project ..... X X X X Extracts X X X X X X X X Extracts X X X X
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