SHRI. SATISH P. MALHOTRA,MUMBAI vs. ITO 19(3)(2), MUMBAI

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ITA 186/MUM/2019Status: DisposedITAT Mumbai20 January 2020AY 2009-104 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal noted that the quantum addition, which formed the basis for the penalty, had already been deleted by a previous Tribunal order. Therefore, the penalty had no basis to stand.

What were the facts?

The assessee's appeal was against a penalty imposed under Section 271(1)(c) for the Assessment Year 2009-10. The penalty was related to the disallowance of a deduction claim under Section 54F.

What were the issues?

Whether penalty under Section 271(1)(c) can be sustained when the underlying quantum addition has been deleted. The interpretation and applicability of Section 54F for deduction claims.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 54F

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(4)Show list

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Income Tax Appellate Tribunal, “SMC”, BENCH

Before: SHRI R.C.SHARMAShri Satish P Malhotra,

For Appellant: Shri Avinash A Mehta (AR)
For Respondent: Shri Akhtar H Ansari (DR)
Hearing: 15/01/2020Pronounced: 20/01/2020

Assessee by Shri Avinash A Mehta (AR) Revenue by Shri Akhtar H Ansari (DR) Date of Hearing 15/01/2020 Date of Pronouncement 20/01/2020 आदेश / O R D E R PER: R.C. SHARMA, A.M. This appeal by the assessee is directed against the order dated 09/10/2018 of ld. CIT(A)-30, Mumbai for the A.Y. 2009-10 in the matter of imposition of penalty U/s 271(1)(c) of the Income Tax Act, 1961 (in short, the Act).

2.

At the outset, the ld AR of the assessee placed on record the quantum order of the Tribunal dated 29/11/2017 in wherein addition made by disallowing claim of deduction U/s 54F was allowed in favour of the assessee. The ld AR has Shri Satish P Malhotra Vs ITO contended that since the quantum addition has already been deleted, therefore, the penalty imposed has no legs to stand.

3.

On the other hand, the ld DR has relied on the orders of the authorities below but conceded the fact that the Tribunal have deleted the quantum addition made by the A.O.

4.

I have considered the rival contentions and carefully gone through the orders of the authorities below and found that the penalty has been levied by disallowing claim of deduction U/s 54F of the Act. The Tribunal vide order dated 29/11/2017 has deleted the quantum addition by observing as under:

“10. As per our considered view Sec.54 is an incentive provisions and it should be interpreted and applied liberally as held by the honourable Supreme Court in the case of Bajaj Tempo Ltd. Vs. C.I.T. (196 ITR 188). The honourable Supreme Court also held in the case of C.I.T. Vs. Gwalior Rayon Silk Manufacturing Co. Ltd. (196 ITR 149) that the expression used in the taxing statutes would primarily be understood in the sense in which it is harmonious with the object of the statute to effectuate the legislative intention.

11.

Furthermore Hon’ble Supreme Court in case of Sanjeev Lal 365 ITR 389 observed as under:-

“Income-tax on the long-term Capital gain. The intention of the Legislature or the purpose with which the said provision has been incorporated in the Act is also very clear that the assessee should be given some relief. Though it has been very often said that common sense is a stranger and an incompatible partner to the Income-tax

Shri Satish P Malhotra Vs ITO Act and it is also said that equity and tax are strangers to each other, still this court has often observed that purposive interpretation should be given to the provisions of the Act. In the case of Oxford University Press v. CIT [2001] 3 SCC 3591 this court has observed that a purposive interpretation of the provisions of the Act should be given while considering a claim for exemption from tax. It has also been said that harmonious construction of the provisions which subserve the object and purpose should also be made while construing any of the provisions of the Act and more particularly when one is concerned with exemption from payment of tax. Considering the aforestated observations and the principles with regard to the interpretation of statute pertaining to the tax laws, one can very well interpret the provisions of section 54 read with section 2(47) of the Act i.e., the definition of "transfer", which would enable the appellants to get the benefit under section 54 of the Act.”

12.

Respectfully following the proposition of law laid down by Hon’ble High Court and Supreme Court as stated above, we do not find any merit in the action of AO for declining assessee’s claim of exemption u/s.54 of the IT Act.

5.

In view of the above facts and circumstances, since the quantum addition has already been deleted by the Tribunal, therefore, the penalty levied has no legs to stand, therefore, I direct the A.O. to delete the same.

6.

In the result, appeal of the assessee is allowed.

Order pronounced in the open court on 20th January, 2020.

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