Case Law Details
DCIT Vs American Express India Pvt. Ltd. (ITAT Delhi)– Assessee had furnished and disclosed the entire particulars of the claim for netting of the interest and also the said claim was backed by the aforesaid note. As discussed above, in the first appeal, first appellate authority had allowed the netting-off of the interest, while computing the profits of business eligible for deduction u/s 10B. This order of the first appellate authority has been reversed by the Tribunal by holding that interest receipt from the department on the income tax refund, does not have any direct nexus with the business of the assessee and it cannot be linked with the business of the assessee. Therefore, it cannot be netted off with the other interest payment. Though this issue has been decided against the Tribunal in the quantum proceedings, however, in the penalty proceedings, one has to see, whether at the time of making the claim at the time of filing of return of income the assessee had any bona fide belief based on certain judicial precedence or not. Here in this case, such a bona fide belief has been accentuated by the fact that the Ld. CIT (Appeals) had allowed such netting off and decided the issue in favour of the assessee. Under these facts it cannot be held that the assessee had furnished any inaccurate particulars of income so as to warrant levy of penalty u/s 271(1)(c) read with Explanation 1. If a claim made by the assessee has been allowed at one stage and later on has been disallowed, ostensibly, the assessee can said to have some bona fide belief for making such a claim. More so when the assessee had paid huge income tax demand in the earlier years for dis allowance of claim of deduction u/s 10B, out of borrowed funds for which it has paid huge interest and when the interest on such refund was made the assessee had netted-off on the ground that it is relatable to its activities of EOU. Thus, we hold that under these facts and circumstances the deletion of penalty by the Learned CIT(Appeals) is justified and the same is affirmed and the grounds raised by the revenue is dismissed.
Full Text of the ITAT Order is as follows:-
The aforesaid appeal has been filed by the Revenue against the impugned order dated 20.05.2014 passed by the ld. CIT (Appeals)-IV, New Delhi in relation to the penalty proceedings u/s 271(1)(c) for the A.Y. 2002-03. In the grounds of appeal the sole ground raised by the revenue reads as under:-
“1. On the facts and in the circumstances of the case, the Ld. CIT (A) has erred in deleting the penalty of Rs.54,37,000/- imposed u/s 271 (1)(c) of the 1.1.Act, 1961, ignoring the fact that patently a wrong claim has been made by the assessee of treating the interest on Income Tax Refund as income derived from the export of articles or things or computer software by a hundred percent export oriented undertaking and thereby it amounts to filing inaccurate particulars of Income.
2. The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal.”
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