GUJARAT STATE POLICE HOUSING CORPORATION LTD.,GANDHINAGAR vs. THE DY. CIT, GNR CIRCLE, GANDHINAGAR

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ITA 2933/AHD/2014Status: DisposedITAT Ahmedabad18 December 2017AY 2010-113 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since the assessee was not engaged in any business and its only income was interest, which was also held to be exempt from tax by the jurisdictional High Court, the penalty under Section 271B was not leviable. The penalty was accordingly set aside.

What were the facts?

The assessee, a government company, showed a turnover of Rs. 21.30 crores, leading the Assessing Officer to believe it violated Section 44AB and was liable for penalty under Section 271B. The assessee contended it was not engaged in business and its only income was interest.

What were the issues?

Whether a government company whose sole income is interest, and that interest is tax-exempt, is liable for penalty under Section 271B for not complying with Section 44AB.

Which sections of the Income-tax Act were involved?

Section 44AB,Section 271B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AHMEDABAD “B” BENCH, AHMEDABAD

Before: SHRI RAJPAL YADAV & SHRI N.K. BILLAIYA

For Appellant: Shri S.N. Divatia, A.R
For Respondent: Shri Mudit Nagpal, Sr. D.R
Hearing: 05.12.2017Pronounced: 18.12.2017

ITA No.2933/Ahd/2014 A.Y. 2010-11 Page 1 of 3 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “B” BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ITA No.2933/Ahd/2014 Assessment Year: 2010-11 Gujarat State Police Housing vs. Dy. Commissioner of Income Tax, Corporation Limited, GNR Circle, Gandhinagar. Civil Supplies Corporation Building, CH Road, Sector 10A, Gandhinagar – 382 010. [PAN – AAACG 5532 C] (Appellant) (Respondent) Appellant by : Shri S.N. Divatia, A.R. Respondent by : Shri Mudit Nagpal, Sr. D.R. Date of hearing : 05.12.2017 Date of pronouncement : 18.12.2017 O R D E R PER N.K. BILLAIYA, ACCOUNTANT MEMBER

This appeal by the assessee is preferred against the order of CIT(A), Gandhinagar dated 18.09.2014 pertaining to assessment year 2010-11.

2.

The only grievance of the assessee relates to levy of penalty under section 271B of the Income Tax Act, 1961 (“the Act” hereinafter) which was confirmed by the CIT(A).

3.

Briefly stated facts of the case are that the assessee is a wholly owned Government Company of Gujarat and nodal agency engaged in various types of construction and maintenance activities for and on behalf of Home Department, Government of Gujarat. While scrutinizing the return of income, the Assessing Officer observed that the assessee has shown turnover of Rs.21.30 crores and, therefore, formed belief that the assessee has violated the provisions of Section 44AB of the Act and hence liable for penalty under section 271B of the Act. The Assessing Officer, therefore, levied penalty of Rs.1,00,000/-. The assessee carried the matter before the CIT(A) but without any success.

ITA No.2933/Ahd/2014 A.Y. 2010-11 Page 2 of 3 4. Before us the leaned counsel for the assessee vehemently stated that the assessee is not engaged in any business and the only income of the assessee is interest income and, therefore, the assessee is not liable to comply with the provisions of section 44AB of the Act. It is the say of the learned counsel that since the assessee is not liable for complying with the provisions of section 44AB of the Act, no penalty should be levied under section 271B of the Act.

5.

Per contra, learned Departmental Representative strongly supported the findings of the Assessing Officer.

6.

We have carefully considered the orders of the authorities below. A perusal of the income and expenditure account of the assessee exhibited at page 23 of the Paper Book shows that the only source of income of the assessee is bank interest and interest on ICD. Moreover, interest on ICD is Rs.20.42 crores. It is true that the assessee is not engaged in any type of business and even the interest income of the assessee has been held to be not taxable by the Hon’ble jurisdictional High Court of Gujarat in assessee’s own case in Tax Appeal No.63 of 2015, order dated 06.04.2015.

7.

In our considered opinion, since the assessee is not engaged in any business and the only income of the assessee is from interest which is also exempt from tax as per the order of Hon’ble High Court of Gujarat (supra), we do not find this to be a fit case for levy of penalty under section 271B of the Act. We accordingly set aside the findings of the CIT(A) and direct the Assessing Officer to delete the penalty of Rs.1,00,000/-.

8.

In the result, appeal filed by the assessee is accordingly allowed. (Order pronounced in the open Court on this 18th day of December, 2017)

Sd/- Sd/- Rajpal Yadav N.K. Billaiya (Judicial Member) (Accountant Member) Ahmedabad, the 18th day of December, 2017 PBN/*

ITA No.2933/Ahd/2014 A.Y. 2010-11 Page 3 of 3 Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order E COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad

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