Full News
ITAT deleted penalty as claim for disalllowance could not be ground for penalty
ITAT deleted penalty as claim for disalllowance could not be ground for penalty
Mohair Investment and Trading Co (P) Ltd received dividend income of Rs 3.1 crores from various companies. AO made disallowance. CIT(A) confirmed disallowance. AO imposed penalty. Tribunal quashed penalty as it was levied beyond period of limitation u/s 275(1)(a) (of Income Tax Act, 1961). High Court remanded matter to Tribunal. ITAT deleted penalty, as claim for disalllowance could not be ground for penalty.-500347
1. Mohair Investment and Trading Company (P) Ltd was in the business of shares and securities.
2. It declared income of Rs 3.84 crores and same was assessed u/s 143(3) (of Income Tax Act, 1961).
3. It had received dividend income of Rs 3.1 crores from various other companies.
4. AO noticed that it had claimed exemption of an expenditure of Rs.4.15 crores being interest on loans raised for acquiring shares of various companies.
5. AO held that u/s 14A (of Income Tax Act, 1961) & s 115-O(5), no deduction was allowable on expenditure incurred in relation to dividend income which was exempted from tax.
6. AO made disallowance of Rs.3.07 crores and intiated penalty proceedings.
7. CIT(A) confirmed AO’s order.
8. ITAT dismissed assessee’s quantum appeal.
9. Therefater AO levied penalty.
10. Tribunal quashed the penalty as it was levied beyond the period of limitation u/s 275(1)(a) (of Income Tax Act, 1961).
11. High Court remanded the matter to the Tribunal.
The ITAT held as under:
12. We find that the assessee has furnished all the details relating to the earning of dividend income.
13. So it cannot be said that the assessee had concealed income or furnished inaccurate particulars of income.
14. The only basis of levying the penalty u/s 271(1)(c) (of Income Tax Act, 1961) was that the claim of the assessee for the disallowance u/s 14A (of Income Tax Act, 1961) was not accepted by the AO, so it can at the most be a ground for making the addition but was not sufficient to levy the penalty u/s 271(1)(c) (of Income Tax Act, 1961).
15. So we find merit in the appeal of the assessee and direct deletion of penalty levied against the assessee.
Case Reference - M/s. Mohair Investment and Trading Company (P) Limited, vs. DCIT.
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH 'E' : NEW DELHI)
BEFORE SHRI A.T. VARKEY, JUDICIAL MEMBER AND
SHRI O.P. KANT, ACCOUNTANT MEMBER
ITA No.4677/Del./2009
(ASSESSMENT YEAR : 2001-02)
×
