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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
O R D E R Per Shamim Yahya, A. M.:
This appeal by the assessee is against the order of the learned Commissioner of Income Tax (Appeals)-16 (‘ld.CIT(A) for short) pertaining to the assessment year (A.Y.)
2009-10.
The issue raised is that the ld. CIT(A) erred in confirming the penalty of Rs.7,06,400/- u/s. 271(1)(c) of the Income Tax Act, 1961 (‘the Act' for short).
In this case, in the assessment proceedings, the Assessing Officer (Á.O.’ for short) has disallowed the claim of deduction u/s. 80IA in respect of its Division of Multinational Service Centre at Bangalore. As against the claim of deduction of Rs.1,60,06,372/-, on account of change in allocation of common expenditure, the A.O. allowed a deduction of Rs.1,37,20,277/-. This reduction of Rs.22,86,095/- was due to allocation of commission
M/s. BCD Travels India Pvt. Ltd. expenses to the Bangalore unit. On this disallowance, penalty u/s. 271(1)(c) was levied.
In doing so, the A.O. relied upon the decision of the Hon'ble Apex Court in the case of Union of India v. Dharamendra Textile Processors, [2008] 306 ITR 277 (SC). He rejected the assessee’s reliance upon the decision of Hon'ble Apex Court in the case of CIT vs. Reliance Petroproducts Pvt. Ltd., (2010) 11 SCC 762 (SC).
Upon the assessee’s appeal in this regard, he confirmed the penalty.
Against this order, the assessee is in appeal before the ITAT.
We have heard both the counsel and perused the records. We find that in this case there is a reduction in allowance for section 10A exemption by allocation of certain common expenditure. There is no doubt about the genuineness of the expenditure. From the material available on record, the Assessing Officer has done the re-allocation. Hence there is no case that any particular has been withheld. In this view of the matter, in our considered opinion, when there is no case of concealment or furnishing of inaccurate particulars of income. Hence the assessee cannot be visited with the rigors of penalty u/s. 271(1)(c) of the Act. The disallowance of claim of the assessee ipso facto cannot lead to levy of penalty u/s. 271(1)(c) of the Act. This view is duly supported by Hon'ble Apex Court decision in the case of Reliance Petroproducts Pvt. Ltd. (supra). Furthermore, in our considered opinion, the assessee’s conduct is not contumacious so as to warrant levy of penalty. In this regard, reliance is placed on Hon'ble Apex Court decision in the case State of Orissa vs. Hindustan Steel of 83 ITR 23.
M/s. BCD Travels India Pvt. Ltd. 7. Accordingly, in the background of the aforesaid discussion and precedent, we set aside the orders of the authorities below and delete the penalty.
In the result, this appeal by the assessee stands allowed.
Order pronounced in the open court on 05.09.2019