Claim though ineligible in law but based on CA certificate does not amounts to making false claim

Claim though ineligible in law but made on the basis of CA certificate does not amounts to making false claim and consequently furnishing of inaccurate particulars of income

The aforesaid appeal has been filed by the assessee against impugned order dated 27.5.2015, passed by Ld. CIT (Appeals)-6, New Delhi in relation to the penalty proceedings u/s 271(1)(c) for the assessment year 2009-10. The assessee is aggrieved by levy of penalty of Rs. 7,31,244/- on account of disallowance of deduction u/s 80 IC while computing the book profit u/s 115JB.

The facts in brief are that the assessee company is engaged in the business of manufacturing and sale of cosmetic products on which it has claimed deduction u/s 80IC. The said claim has been allowed in the assessment order dated 29.12.2011 passed u/s 143(3), except disallowing the interest on FDs while computing the deduction u/s 80IC. The AO however noted that the assessee has shown ‘NIL’ book profit u/s 115JB after claiming deduction u/s 80IC. He held that there is no such provision u/s 115JB to reduce the income exempt u/s 80IC from the book profit. In support, he relied upon the judgment of Hon’ble Uttrakhand High Court in the case of Sidcul Industrial Association v. State of Uttrakhand (2011) 199 Taxman 75. Accordingly, the tax was determined on book profit computed u/s 115JB by denying the deduction of Rs. 77,45,746/- claimed u/s 80IC.

From the stage of first appeal the addition/disallowance made by the AO stands confirmed which had attained finality. 4. Based on this disallowance of claim of deduction u/s 80IC in the computation of book profit, AO has levied the penalty of Rs. 7,31,244/- u/s 271(1(c) which was the tax calculated on such book profit. This penalty has been confirmed by the Ld. CIT (A) also on the ground that said claim is not allowable in the computation of income u/s 115JB and therefore, it amounts to furnishing of inaccurate particulars of income.

Before us the Ld. Counsel for the assessee submitted that the claim of deduction u/s 80IC in the computation of book profit u/s 115JB was made by the assessee based on the certificate issued by the Chartered Accountant in Form No. 29B which has worked out the tax payable u/s 115JB at NIL. It was based on this certificate that assessee has shown NIL book profit. Here in this case it is not

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