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Income Tax Appellate Tribunal, DIVISION BENCH, ‘A’ CHANDIGARH
Before: SHRI SANJAY GARG & Ms. ANNAPURNA GUPTA
Per Sanjay Garg, Judicial Member:
The present appeal has been preferred by the assessee against
the order dated 19.12.2017 of the Commissioner of Income Tax(A)-2,
Chandigarh [hereinafter referred to as ‘CIT(A)’] agitating the
confirmation of penalty levied by the Assessing officer u/s
271(1)(c) of the Act
Brief facts of the case are that the Assessing officer levied the
impugned penalty observing that the assessee had wrongly claimed
deduction of interest u/s 24(b) of the Income-tax Act, 1961 (in short
'the Act'). He observed that deduction u/s 24(b) of the Act was
allowable relating to the interest expenditure incurred on the amount
ITA No. 200/Chd/2018- M/s Capri Developers Pvt Ltd, Chandigarh 2
borrowed for construction / repairs etc. of the property, income from
which is assessable under the head ‘income from house property’.
However, the assessee company in this case was involved in the
business of real estate. The rental income was returned as the main
business income and, hence, the loan taken was for business
purposes. He, therefore, denied the deduction u/s 24(b) of the Act
and simultaneously initiated penalty proceedings u/s 271(1)(c) of the
Act and levied the impugned penalty, which has been further
confirmed by the Ld. CIT(A).
Before us, the Ld. counsel has submitted that even if it is
assumed that the earning of rental income was the business income of
the assessee even then the interest expenditure incurred by the
assessee in relation to the earning of the rental income was
otherwise allowable as an expenditure u/s 36(i)(iii) of the Act. He
has further submitted that though the claim of the assessee of the
deduction u/s 24(b) of the Act was denied by the authorities in
quantum assessment proceedings, however, it was not a case of
furnishing of inaccurate particulars of income or concealment of
income. That the assessee under bonafide belief wrongly claimed
deduction u/s 24(b) whereas the assessee otherwise was entitled to
claim deduction as business expenditure.
The Ld. DR, on the other hand, supported the orders of the
lower authorities.
Considering the above submissions of the Ld. Counsel for the
assessee, we find that it is not a fit case for levy of penalty u/s
ITA No. 200/Chd/2018- M/s Capri Developers Pvt Ltd, Chandigarh 3
271(1)(c) of the Act. Therefore, the penalty imposed by the lower authorities is hereby ordered to be deleted.
In the result, the appeal of the assessee stands allowed. Order pronounced in the Open Court on 14.8.2018
Sd/- Sd/- (ANNAPURNA GUPTA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated 14. 08.2018 Rkk Copy to: • The Appellant • The Respondent • The CIT • The CIT(A) • The DR