BCD TRAVELS INDIA P.LTD,MUMBAI vs. DCIT 9(2)(1) EARLIER ADDL CIT 8(1), MUMBAI

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

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.