M/S. GLOBE CAPITAL MARKET LTD.,NEW DELHI vs. DCIT, NEW DELHI

The Ld.AR maintaining that even if the specific ground was not raised before the CIT (Appeals), the specific ground it was submitted can be raised in the present proceedings as it was an omnibus ground and the said argument could be raised. 4.1 It was his submission that even on merits the ground of the assessee deserves to be allowed. Inviting attention to the Section 35D of the Income Tax Act it was his submission that the claim of capital expenditure to the extent of 1/5 is permissible under law. In the facts of the present case it was his submission that it is no one’s case that the assessee has not disclosed the relevant details and facts for claiming the said expenditure in terms of the statutory provisions. The sole fact that the AO was of the opinion that the expenditure cannot be allowed under section 35D by itself does not mean that the assessee has either filed inaccurate particulars of income or has concealed the particulars as all necessary facts and details relatable to the said claim were made available to the Assessing Officer. In these circumstances the reliance if any placed by the Revenue on the decision of the Apex Court in the case of Zoom Communications 327 ITR 510 (Delhi) on the oft repeated plea that only a miniscule percentage of cases are picked up by the revenue it was submitted cannot be of any help. It was his submission that the assessee has no role to play on the policies of the Ministry whether to pick all cases or some cases. The plea that miniscule cases are picked up cannot be a ground to hold that in all cases picked up if an addition is maintained penalty is automatically levied. Referring to the facts it was his submission that the assessee company had claimed the amount of ROC expenses in its Profit and Loss account which has been disallowed by the Assessing Officer holding it to be capital in nature. It was his submission that simply because the addition has been accepted by the assessee by itself does not invite penalty proceedings. Inviting attention to the record it was his submission that the assessee has declared an income of Rupees M/s. Globe Capital Market Ltd. ITA No.-6090/Del/2015 Page 3 of 4 112 crores odd and the disallowance of the expenditure made in the assessment order was considered to be small when compared with the cost of litigation. Thus not having challenged the addition by itself does not falsify the claim put forth. The explanation offered in the penalty proceeding it was submitted cannot be brushed aside. The fact that the assessee had duly disclosed all details relatable to the said expenditure incurred duly reflected the same in its books of accounts, accordingly in the circumstances it was his submission there was no occasion to hold that it was an act of concealment of income by the assessee company. Similarly there can be no charge of furnishing of inaccurate particulars as the mere fact that the claim of the assessee has been held to be unsustainable by the Assessing Officer cannot by itself amount to furnishing of inaccurate particulars in order to levy penalty on the assessee. Reliance was placed upon the decision of the Apex Court in the case of Reliance Petro Products Pvt. Ltd. (2010) 322 ITR 158 (SC). Reliance was also placed upon CIT(A) vs. Brahmaputra Consortium Ltd. (2012) 348 ITR 339 (Delhi) and order dated 29/05/2015 in ITA 371/Del/2013 in the case of India Renewable Energy Development Agency Ltd. Vs. DCIT and order dated 10/07/2014 in ITA 953/K0L/2012 in the case of ACIT versus Khadim India Ltd.

We have heard the rival submissions and perused the material available on record admittedly as per record the claim put forth by the assessee in regard to the ROC expenditure made under section 35 D was not allowed by the assessing officer. A perusal of the said provision shows that the said section contemplates granting proportional deduction of the preliminary expenses in the case of an Indian company or a person, the assessee is an Indian Company. A proportional deduction has been given a statutory recognition. The preliminary expenses permissible for amortization contemplated by the statute are for expenditure in connection with preparation of feasibility report; preparation of project report; conducting Mark market survey etc; legal charges for drafting any agreement; and in case the assessee is a company then the charges for drafting the Memorandum and Articles of Association of the company; printing of the Memorandum and Articles of Association; fees for registering the company and the provisions of the companies act 1956 (now companies act 2013) and expenditure in connection with the issue for public subscription etc are also permissible for claiming amortization in terms of the statutory limit. Admittedly in the facts the present case all M/s. Globe Capital Market Ltd. ITA No.-6090/Del/2015 Page 4 of 4 necessary details were made available by the assessee the mere fact that the addition made in the course of assessment proceedings in the peculiar facts of the present case was not challenged in appeal by itself is neither here nor there. Satisfied by the explanation filed after giving our due consideration to the material available on record and the statutory provisions relying upon the proposition of law as laid down by the Apex court in the case of Reliance Petro products private limited cited supra the impugned order is set aside and the penalty is directed to be quashed 6. In the result the appeal of the assessee is allowed sd/- sd/- (R.K. PANDA) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 11.02.2019 *Veena / AG (Chd) Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI This order was directly dictated on Computer to 03.01.2019 the P.S.