CIT vs. HERO HONDA MOTORS LTD

IN THE HIGH COURT OF DELHI AT NEW DELHI . . . ITA 147/2012 . . . CIT ..... Appellant . Through Mr. N P Sahni, sr. standing counsel . . . versus . . . HERO HONDA MOTORS LTD ..... Respondent . Through . . . CORAM: . HON'BLE MR. JUSTICE SANJIV KHANNA . HON'BLE MR. JUSTICE R.V.EASWAR . . . O R D E R . 12.03.2012 . . . 1. Revenue by the present appeal impugns order dated 27th May, 2011 passed by the Income Tax Appellate Tribunal (?Tribunal?, for short) in ITA No.2698/Del./2010. By the impugned order, the Tribunal has allowed the appeal of the respondent-assessee and deleted the penalty imposed under Section 271(1)(c) of the Income Tax Act, 1961 (?Act?, for short) for the assessment year 1998-99 on two grounds : . (1) Wrong claim was made under Section 43B on account of excise duty on which Modvat credit was available. . (2) Wrong claim of Rs.1.80 lacs was made on account of provisions for doubtful debts. . 2. The Tribunal, in its impugned order, has noticed that the assessee in the return of income itself had mentioned and given details of the Modvat credit under Section 43B in the form of a note. The assessee had relied upon an order of the CIT(Appeals) in the case of Maruti Udyog Ltd. in support of the said contention. The Tribunal, in the impugned order, has noticed that a similar controversy and legal issue had arisen in number of cases and was subject matter of several conflicting decisions of the Tribunal. The matter was ultimately referred to the larger bench of Tribunal in the case of DCIT v. Glaxo Smithkline Consumers Healthcare Ltd., 107 ITD 343. . 3. With regard to the claim of bad debts, the tribunal has held that the return of income was filed on 30th November, 1998 and the disallowance was made on the basis of the Explanation inserted in Section 36(1) (vii) of the Act by the Finance Act, 2001 with retrospective effect from 01.04.1989. . 4. Considering the aforesaid factual matrix, the Tribunal has . distinguished the decisions relied upon by the Revenue. It is therefore, clear that the Tribunal has accepted the explanation given by the assessee. The issues/claim made were debatable and two legal views were possible. The claims made by the assessee were under bona fide belief that they may be acceptable. Keeping in view the factual finding recorded by the Tribunal, we are not inclined to issue notice and the appeal is dismissed. . . . SANJIV KHANNA, J . . . . . . . R.V.EASWAR, J . MARCH 12, 2012 . vld . . . . . $ 16 .