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Income Tax Appellate Tribunal, “E” Bench, Mumbai
Before: Shri B.R. Baskaran (AM)& Ramlal Negi (JM)
O R D E R Per B.R. Baskaran (AM) :-
The Revenue has filed this appeal challenging the order dated 11.3.2013 passed by learned CIT(A)-18, Mumbai deleting the penalty levied by the Assessing Officer u/s. 271(1)(c) of the Act for A.Y. 2003-04.
We have heard parties and perused the record. The facts relating to the issue are discussed in brief. During the course of assessment proceedings, the Assessing Officer noticed that the assessee has claimed a sum of ` 63.97 lakhs under the head “deferred revenue expenses”. The assessee had incurred this expense in the earlier year and treated the same as “Deferred revenue expenditure” in the books of account. It appears that the assessee did not claim the expenditure fully in the year in which it was incurred. Accordingly it claimed the remaining portion of the expenditure during the year under consideration. Since the expenses were incurred in the earlier year, the 2 M/s. Technonet Technologies Ltd.
Assessing Officer took the view that the said claim of the assessee is not allowable. Accordingly he disallowed claim of ` 63,97,837/- referred above. Later the Assessing Officer levied penalty u/s. 271(1)(c) of the Act on the above said disallowance by holding the same as furnishing of inaccurate particulars of income. The learned CIT(A) deleted the same and hence the Revenue has filed this appeal before us.
Learned Departmental Representative submitted that the assessee has submitted inaccurate particulars of income by making this claim and hence the Assessing Officer was justified in levying penalty u/s. 271(1)(c) of the Act.
On the contrary, learned AR submitted that the assessee had booked expenditure as deferred revenue expenditure as per the Accounting Principle and hence the same would not amount to furnishing of inaccurate particulars of income. In support of the same learned AR placed reliance on the decision rendered by Hon'ble Gujarat High Court in the case of Amol Dicalite Ltd. (231 Taxman 663) and also decision rendered by Hon'ble Supreme Court in the case of Reliance Petro Products P. Ltd. (322 ITR 158).
Having heard the rival submissions, we find merit in the submissions made by learned AR. The expenditure incurred by the assessee in the earlier years has been booked as deferred revenue expenditure in the books of accounts as per the Accounting principles. The assessee appears to have claimed the expenditure in installments as accounted for in the books of account. Accordingly, a part of the expenditure was claimed by the assessee as deduction during the year under consideration. It is not the case of the AO that the assessee has made double deduction of same item of expenditure.
Thus, it is a case of deduction as per accounting principles, but the same came to be disallowed by the AO, since the AO felt that the claim of the assessee is not admissible during the year under consideration. In the case of Reliance Petro Products Pvt. Ltd. (supra), Hon'ble Supreme Court has held that making of a claim, which is not sustainable in law, would not give rise to 3 M/s. Technonet Technologies Ltd.
furnishing of inaccurate particulars of income. In the instant case also, the assessee has claimed impugned expenditure as per the Accounting Principles but the same came to be disallowed on the reasoning that the said claim is not sustainable in law. Accordingly, we are of the view that the learned CIT(A) was justified in deleting the penalty on the above said disallowance by following decision rendered by Hon'ble Supreme Court in the case of Reliance Petro Products Pvt. Ltd. (supra). Accordingly, we do not find any infirmity in the order passed by the learned CIT(A).
In the result, appeal filed by the Revenue is dismissed. Order has been pronounced in the Court on 17.10.2016