CHANDIGARH HOUSING BOARD,CHANDIGARH vs. ASSISTANT COMMISSIONER OF INCOME TAX CHANDIGARH -CIRCLE 1(1), CHANDIGARH

The assessee is assessed as Artificial Juridical person. The assessee is Chandigarh Administration undertaking established in the year 1976 by extending the Haryana Housing Board Act, 1971 to the Union Territory of Chandigarh. The primary object of the assessee is to provide reasonably priced, good quality housing to poor people. An assessment was framed on assessee u/s 143(3) wherein Ld. AO disallowed certain expenditure viz. interest expenses, Income Tax expenditure, maintenance expenditure and loss on sale of fixed assets. Consequently, impugned penalty was initiated against the assessee. During first appeal, the assessee challenged disallowance of Income Tax expenditure and maintenance charges which was partly allowed and disallowance of Rs.80.66 Lacs was confirmed. Considering the same, Ld. AO levied penalty of Rs.24.92 Lacs. The Ld. CIT(A) confirmed the same on the ground that the assessee concealed the particulars of its income and the assessee failed to file any cogent explanation thereof. Aggrieved, the assessee is in further appeal before us.

Upon perusal of assessee’s submissions, it could be seen that Income Tax expenditure of Rs.3.32 Lacs represent income tax on perk value on account of concessional accommodation provided by the assessee to its employees. The assessee has provided residential houses to some of its employees on a nominal rent. The income tax on the differential value of this perquisite is deposited by the assessee.

It is clear that this expenditure in not in the nature of Income Tax on the income of the assessee and therefore, no penalty could be imposed against the same on account of its disallowance since the same is claimed under a bona-fide belief.

The maintenance expenditure is on account of maintenance of old complexes / colonies as developed by the assessee for which the possession was already been given by the assessee to the allottees. The said expenditure was claimed by the assessee. However, a part of the expenditure has been disallowed on the ground that the same was related to earlier period. A part of the expenditure was rectified by the assessee which was not accepted. On these facts, it could be seen that the expenditure was not disallowed on the ground of genuineness but the disallowance was more on technical breaches. In such a case, the ratio of decision of Hon’ble Apex Court in the case of Reliance Petroproducts Pvt. Ltd. (189 Taxman 322) would apply wherein it was held that mere non-acceptance of a claim would not automatically lead to imposition of penalty on the assessee. Therefore, we delete the impugned penalty and allow the appeal of the assessee.