Brief of the case:
ITAT Delhi held in case of ACIT Vs. PTC Industries Ltd. ITAT held that when expenditure claimed is genuine then penalty u/s 271 (1) (c) cannot be levied. ITAT relied upon the decision of Hon’ble Supreme Court in the case of CIT Vs. Reliance Petro Product Pvt. Ltd. (2010) 36 DTR 449 (SC) wherein it was held that merely because of the assessee’s claim, deduction of the interest of expenses which has not been accepted by revenue, penalty u/s 271(1)(c) not attracted, for merely making of the claim, which is not sustainable in law by itself will not amount furnishing inaccurate particulars of income.
Facts of the case:
- AO has made the addition of disallowances of Revenue Expenditure claimed by appellant u/s 35(2AB) of I.T. Act of Rs.32,42,889/- (150% deduction claimed at Rs.21,61,926/-).
- The appellant has disclosed in its return of income in respect of the expenses claimed and shown in its return of income but the A.O. has found the same as disallowable expenses in the absence of approval/ sanction of Secretary, DSIR, New Delhi.
- The said approval was received by appellant from Secretary, DSIR, New Delhi vide letter dated 06.02.2013. In said approval letter the Secretary, DSIR has granted the approval of revenue expenditure allowable u/s 35(2AB) of IT Act of Rs. 37.38 lacs against claimed by appellant at Rs. 49,05,284/-.
- The AO has allowed the said expenses as revenue expenditure only Rs.27,43,358/- against the approval of DSIR u/s 35(2AB) Rs. 37.38 lacs and accordingly the AO has levied penalty u/s 271(1)(c) on the expenses claimed by appellant u/s 35(2AB) at Rs.32,42,889/-.
Contention of the revenue:
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