ITO 9(3)(4), MUMBAI vs. WHISTLING WOODS INTERNAITONAL P.LTD, MUMBAI

The assessee filed its return of income declaring total income at Rs.NIL on 21.11.2003 and 21.10.2004. The case was selected for scrutiny and assessment u/s. 143(3) of the Income Tax Act, 1961 ( in short “the Act”) was completed on 18.10.2005 and 26.09.2006 determining total income at Rs.61,56,030/- and 76,40,047/- for A.Y.2003-04 and 2004-05 respectively . The assessee company engaged in the business of establishing research and training institute cum integrated studio. During the relevant year the project was under construction and work was allotted to M/s. Larsen & Toubro Ltd. According to the agreement the total contract was carried out for an amount of Rs.6,93,81,720/- and work was required to be completed within the period of 12 months. The total expenditure as on 31.03.2003 was shown to the tune of Rs.1,67,19,603/- and Rs.5,45,21,709/- for A.Y.2003-04 and 2004-05 respectively. According to the balance sheet, the assessee company declared authorized share capital to the tune of Rs.20.00 crores and issued share capital to the tune of Rs.10.10 crores. No unsecured loans were taken by the assessee company. During the A.Y. 2003-04 assessee has received interest income from fixed deposits to the tune of Rs.2,51,537/- and interest on loans of Rs.59,04,493/- aggregating to the tune of Rs.61,56,030/- on deploying surplus funds out of share capital and interest on fixed deposits of Rs.1,23,411/- and interest on loans of Rs.26,93,042/- and income from units and mutual funds of Rs.48,23,594/- aggregating to Rs.76,40,047/- on deploying surplus funds out of share capital for A.Y.2004-05. The assessee company reduced the said interest income earned, from the capital work in progress of Rs.1,67,19,603/- and declared closing capital work in Assessment Year: 2003-04 & 2004-05 progress of Rs.1,05,63,573/- for A.Y.2003-04 and reduced the said interest income earned, from the capital work in progress of Rs.5,45,21,709/- and declared closing work in progress of Rs.4,68,81,662/- for A.Y.2004-05. Assessing Officer was of the view that interest income comes under the income from other sources which has not been shown by the assessee in his return therefore the Assessing Officer levy the penalty in question. In appeal the learned CIT(A) deleted the penalty therefore the revenue is before us. We have heard the arguments advanced by the learned representatives of the parties and perused the record. The balance sheet and other convenient statement attached with the return of income speaks that the assessee has disclosed each and everything in his return. The only question is that the claim of the assessee is in connection with the claim of income as capital work in progress resulting to levy the penalty for furnish the inaccurate particulars of income. Penalty u/s. 271(1)(c) speaks about the concealment of income and furnishing the inaccurate particulars by the assessee. In the instant case the appellant had accurately and truly disclosed all particulars of his income or during the pre-commencement period. There is no change in respect of figure debited from interest on fixed deposits, loans and advances and mutual funds. It was only the case of difference of opinion wherein the claim made by the appellant is based upon the CIT Vs Bokaro Steel Ltd.[1999] 236 ITR 315 (SC) where the department decided the matter by relying upon the decision of Tuticorin Alkali Chemicals [1997] 227 ITR 172. No doubt in the said circumstances it is clearly the change of opinion with regard to the claim raised by the assessee and it cannot considered to furnish the inaccurate Assessment Year: 2003-04 & 2004-05 particulars of income. In this regard we also support of law settled in CIT Vs. Reliance Petroproducts (P) Ltd. 322 ITR 158 SC. No doubt in the said circumstances the learned CIT(A) has passed the order judiciously and correctly which is not required to be interfere with at this appellate stage.