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Income Tax Appellate Tribunal, BENCH “F & E”, MUMBAI
Before: SHRI B.R. BASKARAN & SHRI PAWAN SINGH
Order Under Section 254(1) of Income Tax Act PER PAWAN SINGH, JM: 1. These two appeal filed by assessee u/s 253 of the Income-tax Act (‘the Act’) are related with Assessment Year (AY) 2009-10. is against the penalty levied u/s 271(1)(c) of the Act. As both the appeals are arising out of assessment order for AY 2009-10, hence, both the appeals were heard together and are decided by common order to avoid the conflicting decision.
2 & 415/M/2015 M/s. Time Securities Services Pvt. Ltd. 2. First, we shall take up . The assessee has raised the following grounds of appeal:
1. On the facts and circumstances of the case as well as in Law, the Learned CIT(A) has erred in confirming the action of Learned Assessing Officer in disallowing the claim of expenses of Rs.55,27,162/- on the alleged plea that the company is not engaged in any business activities during the year under consideration, without considering the facts and circumstances of the case.
2. On the facts and circumstances of the case as well as in Law, the Learned CIT(A) has erred in confirming the action of Learned Assessing Officer in not considering the explanation given by the appellant for claim of expenses and depreciation during the year, without considering the facts and circumstances of the case.
3. On the facts and circumstances of the case as well as in Law, the Learned CIT(A) has erred in confirming the action of Learned Assessing Officer in not allowing to carry forward the Business Loss of Rs.55,27, 162/ - without considering the facts and circumstances of the case.
Brief facts of the case are that the assessee-company is engaged in the business of trading and investment in Share and Securities, filed return of income for relevant AY on 30.09.2009 declaring total loss of Rs. 63,17,307/-. The assessment was completed on 29.09.2011 u/s 143(3) of the Act. The assessee claimed dividend income of Rs. 1,27,36,050/- as exempted under section 10(34) of the Act. The Assessing Officer (AO) on perusal of Profit & Loss Account found that assessee claimed deduction of Rs. 55,27,162/- on account of expenses. The AO disallowed the entire expenses holding that there is no business activity during the year under consideration. The entire expenditure is attributable for earning the exempt income and thus treated as disallowance u/s 14A r.w. Rule 8D and initiated the penalty u/s 271(1)(c) of the Act. On appeal before the ld. CIT(A), the disallowance was confirmed. Thus, the second appeal is filed before us.
We have heard the ld. Authorized Representative (AR) of the assessee and ld. Departmental Representative (DR) for the Revenue and perused the material available on record. The Ld. AR of the assessee argued that the disallowance made by assessee is not in accordance with the provisions of section 14A read with Rule 8D. The ld. AR of the assessee further argued that the AO is entitled to disallow only the amount which is attributable for earning of the exempt income and the remaining amount has to be disallowed in accordance with the provisions of section 37 of the Act. On the other hand Ms. Pooja Swarup the ld. DR for the Revenue strongly supported the order of authorities below. The ld DR for the revenue shown us that that in the Profit & 3 & 415/M/2015 M/s. Time Securities Services Pvt. Ltd. Loss Account, the assessee has shown to have granted loan and advances to M/s Vishwalaxmi Trading & Finance Pvt. Ltd. of Rs. 142,023,790/- and has not shown any interest income. While making rejoinder submission the ld. AR for the assessee without prejudice to his other contention agreed to concede for the entire disallowance. However, the ld AR submitted that his admission is without prejudice and should not be treated used against his admission against assessee in penalty proceedings.
We have considered the contention of ld. AR of the assessee. Considering the contention of ld. AR of the assessee, the appeal of the assessee is dismissed as not pressed. However, we may make clear that there is no estoppel against the law. The appeal of the assessee in penalty proceedings would be considered on its merit.
ITA No. 415/Mum/2015, the assessee has raised the following grounds of appeal:
1. On the facts and circumstances of the case as well as in Law, the Learned CIT(A) has erred in confirming the action of Learned' :Assessing Officer in levying a penalty of Rs.17,08,000/- u/s.271 (1)(c) of the Income Tax Act,1961,being 100% of tax Sought to be evaded, without considering the facts and circumstances of the case.
2. On the facts and circumstances of the case as well as in Law, the Learned CIT(A) has erred in confirming the action of Learned Assessing Officer in levying a penalty on the issue of Disallowance of Expenses of Rs.55,27,162/- by treating the same was wrongly claimed by the assessee, without considering the facts and circumstances of the case.
7. The Ld. AR of the assessee argued that assessee claimed the deduction of Rs. 55,27,162/- which consists of Administrative Expenses, Financial Expenses and depreciation, all the expenses were disallowed by AO in the assessment order. The assessee has not concealed any income nor furnished any inaccurate particular of income. The ld. AR of the assessee further submitted that mere claim of any deduction which is found to be not admissible or untenable under the law does not entitled the AO to levy the penalty for concealment of income. The assessee has not concealed any income and there was no occasion for filing inaccurate particular. The legal claim made by assessee was merely disallowed by AO. On the other hand, Sh. B.S. Bist the ld. DR for the Revenue supported the order of authorities below. The Ld. DR for the Revenue argued that the disallowance was sustained by ld. CIT(A) and after order of ld. CIT(A), the assessee was given sufficient opportunity before passing the order.
4 & 415/M/2015 M/s. Time Securities Services Pvt. Ltd.
We have considered the rival contention of the parties and perused the order of authorities below. In the return of income, the assessee claimed the deduction of Rs. 55,27,162/- on account of Administrative Expenses, Financial Expenses and depreciation. The AO disallowed the entire claim of expenditure u/s 14A of the Act. The disallowance was sustained by First Appellate Authority (FAA) against which the assessee filed appeal which we have decided vide ITA No. 7671/Mum/ 2012 (supra) .The AO levied the penalty holding that the assessee claimed dividend income of Rs. 1,27,36,050/-. The assessee claimed the deduction of Rs. 55,27,162/- on account of Administrative Expenses, Financial Expenses and Depreciation. The dividend income of the assessee falls under the head “Income from Other Sources” and exempt u/s 10(34) of the Act. As the assessee-company is not against in any business activity to be eligible for deduction under the head “Business Income”. Thus, the entire expenditure of Rs. 55,27,162/- was disallowed considered by AO as concealment of income. The AO further concluded that the assessee has not substantiated its claim of expenses under various heads. The assessee has no business activities during the relevant year and assessee claimed huge expenditure by putting such unsubstantiated claim of expenditure. Thus, willfully sought to evade the tax and levied the minimum penalty @ 100% of the tax sought to be evaded and works out the penalty at Rs. 17,08,000/-. The ld. CIT(A) confirmed the penalty concluded that assessee earned the dividend income which was claimed as exempt which is to be assessed under the head “Income from Other Sources”. However, assessee claimed business expenses of Rs. 55,27,162/-. There was no business activity carried out by the assessee during the year under consideration and thus, the assessee made the false claim of expenses.
We have carefully gone through the order of authorities below and examined the facts of the case independently. The assessee claimed expenses of Rs. 55,27,162/- which was disallowed by AO. On appeal before the ld. CIT(A), the disallowance was confirmed. Further appeal was filed before the Tribunal and the ld. AR of the assessee while making alternative submission conceded the disallowance as the dividend income of the assessee falls under one head of income and the expenses claimed by the assessee were related with the another head of the income. Neither the AO made the disallowance in accordance with the provisions of Rule 8D nor the ld. CIT(A)