ACIT 3(2)(1), MUMBAI vs. MAHARASHATRA AIRPORT DEVELOPMENT CO. LTD, MUMBAI

The Revenue has filed the present appeal being aggrieved with the decision of the learned Commissioner (Appeals) in deleting the penalty imposed under section 271(1)(c) of the Act.

Brief facts are, the assessee company is a wholly owned Government of Maharashtra Undertaking and was created to carry out infrastructure development activities like set–up of Special Economic Zone (SEZ) and development of International Airport at Nagpur. For the assessment year under dispute, the assessee filed its return of income on 30th September 2010, declaring loss of ` 8,97,42,143. During the assessment proceedings, the Assessing Officer held that interest income earned by the assessee is required to be assessed

At the outset, learned Counsel appearing for the assessee submitted that while deciding the quantum appeal of the assessee arising out of the assessment order, the Tribunal has accepted assessee’s claim that interest income earned from fixed deposit and advances given to the contractor as well as income received from lease rental SEZ is the business income of the assessee and accordingly allowed assessee’s claim of deduction under section 80IAB of the Act. Thus, he submitted, since the addition on the basis of which 4 Maharashtra Airport Development Co. Ltd. the Assessing Officer imposed penalty under section 271(1)(c) of the Act has been deleted by the Tribunal, the penalty imposed cannot survive.

The learned Departmental Representative fairly submitted that while deciding the quantum appeal of the assessee, the Tribunal has deleted the addition made by the Assessing Officer.

We have considered rival submissions and perused the material on record. On a perusal of the order passed by the Tribunal in the quantum appeal filed by the assessee for the impugned assessment year vide ITA no.3072/Mum./ 2014, dated 19th June 2019, it is observed that the Tribunal has reversing the decision of the Assessing Officer and learned Commissioner (Appeals) has treated the interest income earned by the assessee from the fixed deposits and advances given to the contractor as well as lease rental from SEZ as income from business, hence, allowed assessee’s claim of deduction under section 80IAB of the Act. Undisputedly, on the basis of the aforesaid additions made by the Assessing Officer, penalty under section 271(1)(c) of the Act was imposed. Therefore, when the additions on the basis of which the penalty under section 271(1)(c) of the Act was imposed have been deleted and assessee’s claim of deduction under section 80IAB of the Act in respect of such income has been allowed by the Tribunal, penalty imposed under section 271(1)(c) of the Act

In the result, Revenue’s appeal is dismissed.

In grounds raised in the cross objection, the assessee has challenged the validity of the penalty order on certain legal issues. Since while deciding the Revenue’s appeal in the earlier part of the order, we have upheld the decision of the learned Commissioner (Appeals) in deleting the penalty imposed under section 271(1)(c) of the Act, the grounds raised in the cross objection have become infructuous / redundant, hence, do not require adjudication. Accordingly, the grounds raised are dismissed.

In the result, cross objection is dismissed.

To sum up, Revenue’s appeal and assessee’s cross objection are dismissed. Order pronounced in the open Court on 12.07.2019