Penalty cannot be imposed merely for non allowance of deduction

“1. Whether the Income-tax Appellate Tribunal was correct in law and on facts in deleting the penalty of Rs. 20,22,944, imposed by the Assessing Officer under section 271(1)(c) of the Income-tax Act?

2. Whether or not the findings recorded by the Income-tax Appellate Tribunal in its order are perverse in law, inasmuch as it has disregarded the relevant material and evidence placed on record and submissions made by the appellant?

3. Whether in view of the facts and under the circumstances of the case the Tribunal was legally correct in dismissing the appeal of the department on the ground that “allocation of expenses between the head office and the unit would always be a debatable issue”.

4. Whether the ITAT was legally correct to follow the decision of ITAT Jaipur Bench in the case of Harshvardhan Chemicals and Minerals Ltd. v. DCIT [1991] reported in 58 Taxman 234 which was based on sections 80HH and 80-I of the Income-tax Act.

5. Whether the ITAT was correct in law in not agreeing with the view of Assessing Officer that claiming expenses which would not have been debitable to the units in respect of which deduction under section 80-IA of the Income-tax Act has been claimed and that it was a case of furnishing inaccurate particulars of income which attracts penalty under section 271(1 )(c).

6. The appellant craves leave to add, alter or modify any question of law at the time of admission of appeal.

2. We have heard Mr. N.P. Sahni, learned senior standing counsel for the revenue and Mr. B. Gupta with Mr. R.K. Chawla, learned counsel for the assessee.