COMMISSIONER OF INCOME TAX vs. MAHALAXMI SUGAR MILLS CO LTD

IN THE HIGH COURT OF DELHI AT NEW DELHI . ITA 92/2010 . COMMISSIONER OF INCOME TAX ..... Appellant Through: Mr Sanjeev Sabharwal . versus . MAHALAXMI SUGAR MILLS CO LTD ..... Respondent Through: None . . CORAM: HON'BLE MR. JUSTICE BADAR DURREZ AHMED HON'BLE MR. JUSTICE SIDDHARTH MRIDUL . O R D E R 09.02.2010 This is an appeal from the order dated 17.07.2009 passed by the Income- tax Appellate Tribunal in ITA No.1484/Del/2007 pertaining to the assessment year 2001-02. The only issue that is sought to be raised before us by the revenue is that the Tribunal erred in deleting the penalty of Rs 1,51,80,699/- which was chargeable to tax under Section 41(1) of the Income-tax Act, 1961 as remission of liability. This remission / cessation of liability was shown in the accounts as lease rentals payable to IFCI. It was pointed out that the liability ceased to exist on account of a settlement with IFCI under which the leased asset was purchased by the assessee. It was pointed out by the assessee before the Tribunal that all the facts with regard to the lease of the machinery, dispute with IFCI and its settlement out of court, were furnished to the Assessing Officer and there was no question of any non-disclosure and, therefore, penalty ought not to have been levied. . . The Tribunal, after examining the rival contentions on this aspect of the matter, found that the issue regarding computation of the profit under Section 41(1) was rather complex and its final determination rested on fixing the cost of acquisition of the asset. The Tribunal found that the assessee had furnished complete facts with regard to the lease agreement entered into with the IFCI as well as the details with regard to the dispute and the ultimate settlement arrived at with IFCI. The Tribunal, therefore, came to the conclusion that it cannot be said that any inaccurate particulars of income were furnished in respect of computation of profit under Section 41(1). The Tribunal also took the view that there could be two possible interpretations and the assessee chose one of them while the lower authorities chose the other. In such circumstances, the Tribunal came to the conclusion that the explanation furnished by the assessee was bona fide and that it could not be said that the assessee had not furnished complete and / or inaccurate particulars. Consequently, the Tribunal deleted the penalty. We have heard the counsel for the revenue as well as examined the order of the Tribunal and we find that the Tribunal has arrived at the above conclusions on an appreciation of facts. We see no reason to interfere with the same as no perversity was pointed out. No substantial question of law arises for our consideration. The appeal is dismissed. BADAR DURREZ AHMED, J . . . . SIDDHARTH MRIDUL, J FEBRUARY 09, 2010 dutt . 2