Case Law Details
Pr. CIT Vs Shamrao Vithal Co-Op Bank (Bombay High Court)
The division bench of the Bombay High Court has held that penalty cannot be levied under the Income Tax merely on the ground that a deduction claim was rejected by the department.
The assessee is a Co-operative Bank. For the relevant A.Y under consideration, the assessee had incurred expenditure for acquisition of three co-operative Banks. Claiming directives of RBI contained in its circular, the bank amortized such expenditure over a span of five years.
While completing the assessment proceedings, the Assessing Officer observed that the expenditure was capital in nature and that the claim of expenditure would be governed by the Income Tax Act and not by the directives of RBI. The expenditure was therefore disallowed. In addition, the AO also instituted penalty proceedings and eventually imposed the penalty.
On appeal, the Income Tax Appellate Tribunal deleted the penalty and held that in relation to the assessee’s claim of expenditure, two views were possible.
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