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TMI Blog2024 (10) TMI 586X X X X Extracts X X X X X X X X Extracts X X X X ..... ccurate particulars. The Assessee has not furnished any inaccurate particulars in return of income and the claim of revenue expenditure was allowed in 20 years as against in the year itself. Thus, expenditure was allowed on a deferred basis. Also, the Delhi Bench of ITAT in case of Simplex Pharma (P) Ltd. [ 2010 (5) TMI 710 - ITAT DELHI ] and Onicra Credit Rating Agency of India Ltd. [ 2013 (6) TMI 855 - ITAT DELHI ] had deleted the penalty levied under section 271(1)(c) of the Act on deferred revenue expenditure. Thus, we concur with the findings of the Ld. CIT(A). Thus, solitary ground of the revenue is dismissed - Dr. S. Seethalakshmi, JM And Shri Rathod Kamlesh Jayantbhai, AM For the Revenue : Smt. Monisha Choudhary (Addl.CIT) For the Assessee : Shri Yogesh Parwal ( C.A.) ORDER PER: DR. S. SEETHALAKSHMI, J.M. This is an appeal filed by the Revenue directed against the order of the ld. CIT(A), National Faceless Appeal Centre, Delhi (hereinafter referred to as CIT(A)/NFAC ) dated 25.01.2024 for the assessment year 2013-14 raising therein following solitary ground of appeal. 1. Whether on the facts and circumstances of the case, the learned CIT(A), NFAC, Delhi was justified in d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;ble ITAT accepted that the expenditure is revenue in nature but considering that mineral would be extracted over a period of 20 years, directed to allow the above expenditure over 20 years and thereby, allowing deduction of Rs. 19,60,160/-. Thus, the appellate authorities have also held that the expenditure is revenue in nature but since its benefit may accrue over 20 years, the expenditure was allowed to be claimed over this period. This itself establishes that the explanation furnished by the assessee for claim of expenditure was bona fide and all material facts for computation of total income are disclosed. It is not the case of the AO that the explanation so furnished by the assessee is false or mala fide or the particulars furnished by it is inaccurate. Hence, on such disallowance no penalty is leviable. 5.1.3 Further, the appellant has relied on the decision of Hon'ble Supreme Court of India in the case of CIT Vs. Reliance Petro products Pvt. Ltd. 322 ITR 158. The relevant para of the Hon'ble Supreme Court's judgement as quoted by the appellant is reproduced as under: 5. The Hon'ble Supreme Court in case of CIT Vs. Reliance Petro products Pvt. Ltd. 322 ITR15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med by the Hon'ble ITAT. Later the assessing officer has imposed penalty of Rs. 1,26,58,910/- u/s 271(1)(c) for furnishing inaccurate particulars of income. 5.1.5 In it's submission the appellant has relied on the judgment of Hon'ble Supreme Court of India in the case of CIT vs. M/s Reliance Petro products Pvt Ltd (322 ITR 158). The facts of the case and submissions are considered. In the instant case there is disagreement between the appellant and Revenue in respect of the expenditure incurred on compensation for acquiring mining rights are revenue or capital. During the penalty proceedings, the appellant had relied upon the judgment of Hon'ble Supreme Court of India in the case of M/s CIT Vs Reliance Petro products Pvt. Ltd.(322 ITR 158). But the AO has distinguished it without citing any reason. The Hon'ble Supreme Court in the aforesaid judgement has observed that: The Hon'ble Supreme Court in case of CIT Vs. Reliance Petro products Pvt. Ltd. 322 ITR 158 held that the words inaccurate and particulars in conjunction mean the details supplied in there turn, which are not accurate, not exactor correct, not according to truth or erroneous. Where there is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch in CIT(A), Kota/10066/2018-19 25.01.2024 in the case of Mangalam Cement Ltd, PAN-AABCM6602Q) for the AY 2013-14- in grounds of appeal :-reg- Kindly refer to the above mentioned subject. In this connection, it is submitted that the CIT(A), has deleted penalty of Rs. 1,26,58,910/- u/s 271(1)(c) imposed by the A.O. vide his order u/s 250 dated 25.01.2024. In this case, central scrutiny report on the said appellate order of CIT(A) has been submitted before the worthy Pr. Commissioner of Income Tax, Udaipur. Further, it has been directed by the worthy Pr. Commissioner of Income Tax Udaipur vide letter no.5536 dated 20/023/2024 to file appeal before the Hon'ble ITAT, Jaipur in against the order of CIT(A), Kota/10066/2018-19 vide 25.01.2024 in the case of Mangalam Cement Ltd, (PAN-AABCM66020) for the AY 2013-14 (copy enclosed). The tax effect on issues on which II Appeal Recommended comes to Rs. 1,26,58,910/- which is above the limit prescribed by the Board vide Circular No.17/2019 for filing appeal before the Hon'ble ITAT. Therefore, as per direction of the worthy Pr. Commissioner of Income Tax, Udaipur, Form no. 36 in the case of Mangalam Cement Ltd, (PAN- AABCM6602Q) for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1(1)(c) of the Income Tax Act is not leviable in the instant appeal. Against the order of the NFApC, the Appellant has filed an appeal before your honors Submission:- 4. The Respondent is engaged in the business of manufacturing of cement. Limestone is the primary raw material for manufacture of cement. It entered into mining lease agreement with the Govt. of Rajasthan in 1976-77 over a land of 895 hectare. In order to conduct mining in the area so as to extract limestone, Respondent is required to obtain specific permission from the respective owners of the land to undertake the mining. For this, the Respondent is to make payment to them so that the limestone can be extracted. 5. During the year, the Respondent incurred expenditure of Rs. 3,92,03,205/- towards compensation on acquiring mining rights over an area of 28.705 hectares of land of Schedule Caste/Schedule Tribes which was claimed as deduction u/s 37(1) of the Act as by making such payment it acquires no ownership right on the said land. The AO by referring to the registered deeds observed that as per one of the clause of this deed, the land owners have given the possession of land to the Respondent and they have no right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y proceedings under this Act, is satisfied that any person - (a) (b) , or (c) has concealed the particulars of his income or furnished inaccurate particulars of such income, or (d) He my direct that such person shall pay by way of penalty: (i) (ii) (iii) In the cases referred to in clause (c) or clause (d), in addition to tax, if any, payable by him, a sum which shall not be less than, but which shall not exceed three times, the amount of tax sought to be evaded by reason of the concealment of particulars of income of his income or fringe benefits or the furnishing of inaccurate particulars of such income or fringe benefits. (emphasis supplied) 10. A plain reading of the provisions of section 271(1)(c) makes it amply clear that so far as scheme of penalty under this section is concerned, it is a sine qua non for imposition of penalty that the designated authorities during the course of any proceedings before them, should be satisfied that an assessee has: concealed the particulars of his income; or furnished inaccurate particulars of his income. 11. Only when the aforesaid conditions exists, the designated authorities may direct levy of penalty on the assessee. The expressions conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... glance at this provision would suggest that in order to be covered, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. Present is not the case of concealment of the income. That is not the case of the Revenue either. However, the Learned Counsel for Revenue suggested that by making incorrect claim for the expenditure on interest, the assessee has furnished inaccurate particulars of the income. As per Law Lexicon, the meaning of the word particular is a detail or details (in plural sense); the details of a claim, or the separate items of an account. Therefore, the word particulars used in the Section 271(1)(c) would embrace the meaning of the details of the claim made. It is an admitted position in the present case that no information given in the Return was found to be incorrect or inaccurate. It is not as if any statement made or any detail supplied was found to be factually incorrect. Hence, at least, prima facie, the assessee cannot be held guilty of furnishing inaccurate particulars. The Learned Counsel argued that submitting an incorrect claim in law for the expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferent from inaccurate claim . By any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars. The NFApC has also by placing reliance on the decision of the Hon ble Supreme Court of India in the case of CIT vs Reliance Petroproducts (P) Ltd(supra) held that penalty under section 271(1)(c) of the Act for furnishing of inaccurate particulars of income is not leviable. Thus, the order of the NFApC be directed to be upheld. Expenditure incurred is revenue in nature 15. It is submitted that the amount so paid is for extraction of limestone and not for acquiring any ownership right over the land. Hence, the expenditure incurred by Respondent is a revenue expenditure allowable u/s 37(1). The AO however, held it to be capital expenditure but the Ld. CIT(A) and the Hon'ble ITAT accepted that the expenditure is revenue in nature but considering that mineral would be extracted over a period of 20 years, directed to allow the above expenditure over 20 years and thereby, allowing deduction of Rs. 19,60,160/-. Thus, the appellate authorities have also held that the expenditure is revenue in nature but since its benefit may accrue over 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces, in our view, a clear and bona fide debate existed vis-a-vis assessee incurring expenses on drug registration fees being capital or revenue. With this bona fide debate, it cannot be held that assessee furnished inaccurate particulars or concealed the particulars in respect of these expenses. In our view, the assessee s case by no means calls for imposition of penalty under s. 271(1)(c) which is deleted. Onicra Credit Rating Agency of India Ltd. [TS-320-ITAT-2013(DEL)] In the instant case, the assessee claimed expenditure on website development of Rs 84,76,603 as revenue expenditure while filing the income tax return which was treated as a deferred revenue expenditure in the books of accounts. The AO did not allow the claim of the assessee and made addition of the said amount. Against the assessment order, the assessee did not file an appeal. The AO levied penalty under section 271(1)(c) of the Act. The ITAT deleting the penalty held as under: 7.2 Thus, assessee had itself treated the expenditure having enduring benefit but did not capitalize on the ground that website did not construe to be an intangible asset. Therefore, the whole amount was charged to profit and loss account ..... X X X X Extracts X X X X X X X X Extracts X X X X
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