Case Law Details

Case Name : Commissioner of Income Tax, Delhi Vs. Madhushree Gupta (Delhi High Court)
Appeal Number : Appeal No. ITA 47/2013
Date of Judgement/Order : 27/02/2013
Related Assessment Year :
Courts : All High Courts (3796) Delhi High Court (1200)

Penalty u/s 271(1)(c ) shall not be imposed if assessee has set off  loss against the amount of profit after claiming deduction under Section 80HHC of the said Act.

In view of Supreme Court judgment in the case of IPCA Laboratory Ltd. v. DCIT : [2004] 266 ITR 521 (SC), wherein the Supreme Court held that the provisions of section 80AB had an overriding effect over all the other sections in Chapter VI-A including Section 80HHC. The decision in IPCA Laboratory Ltd (supra) came subsequent to the filing of the return. Therefore, it cannot be said that the claim made by the respondent /assessee was not bona fide or without any basis. The present case is not covered by the ratio laid down in Zoom Communication Private Limited: 327 ITR 510 (Del). The Tribunal has arrived at the correct decision relying upon the decision of the Supreme Court in Reliance Petroproducts Private Limited: 322 ITR 158 (SC).

HIGH COURT OF DELHI

Judgment delivered on: 27.02.2013

Appeal No. ITA 47/2013

COMMISSIONER OF INCOME TAX, DELHI

versus

MADHUSHREE GUPTA

JUDGMENT

BADAR DURREZ AHMED, J (ORAL)

1.       This appeal is directed against the Tribunal’s order dated 25.05.2012 in ITA No. 1589/Del/2005 pertaining to the assessment year 2001-02. It arises out of the penalty order passed by the Assessing Officer under Section 271(1)(c) of the Income Tax Act, 1961. A penalty of 18,79,303/- had been imposed upon the respondent. The Commissioner of Income Tax (Appeals) confirmed the penalty, which had been deleted by the Tribunal by virtue of the impugned order.

2. The Assessing Officer had noted that the assessee had claimed current year’s losses amounting to 80,65,000/- pertaining to the business of the assessee in respect of the share trading business. The respondent / assessee had set off this loss against the amount of profit after claiming deduction under Section 80HHC of the said Act. The Assessing Officer held that the deduction under Section 80HHC was allowable on the gross total income as defined under Section 80AB read with Section 80HHC. The gross total income, according to Section 80AB, was the income of the assessee after setting off the current year’s losses. Consequently, the Assessing Officer had, in the quantum proceedings, disallowed the deduction of 53,17,841/- out of the total deduction of 1,03,61,340/- claimed by the assessee /respondent.

3. The learned counsel for the respondent pointed out that the Tribunal had placed reliance on the decision in the case of CIT v. Reliance Petroproducts Private Limited: 322 ITR 158 (SC) wherein it was held that mere making of a claim, which is not sustainable in law, would not, ipso facto, amount to furnishing inaccurate particulars regarding the income of the assessee and would, therefore, not automatically result in a penalty order against the assessee.4. The learned counsel for the appellant placed reliance on the decision of this Court in the case of CIT v. Zoom Communication  Private Limited: 327 ITR 510 (Del), wherein this Court, after examining the decision of the Supreme Court in Reliance Petroproducts Private Limited (supra), had observed that the Court cannot overlook the fact that only a small percentage of the income tax returns are picked up for scrutiny and if the assessee makes a claim which is not only incorrect in law but is also wholly without any basis and the explanation furnished by him for making such a claim is not found to be bonafide, it would be difficult to say that he would still not be liable to penalty under Section 271(1)(c) of the Act. Therefore, the issue to be examined in the present case is whether the claim made by the assessee is wholly without any basis and the explanation furnished by the assessee for making such a claim is not bonafide.

5. The learned counsel for the respondent pointed out that the reason for making the claim in the manner indicated above was that there were decisions of the Bombay High Court in the case of CIT v. Shirke Construction Equipments Limited: [2000] 246 ITR 429 (Bom) and also of the Kerala High Court in the case of CIT v. Smt. T. C. Usha: [2004] 266 ITR 497 (Ker) which supported the position adopted by the respondent / assessee in its return. It is only subsequently that the matter was settled by the Supreme Court in the case of IPCA Laboratory Ltd. v.  DCIT: [2004] 266 ITR 521 (SC), wherein the Supreme Court held that the provisions of Section 80AB had an overriding effect over all the other sections in Chapter VI-A including Section 80HHC. The decision in IPCA Laboratory Ltd (supra) came subsequent to the filing of the return. Therefore, it cannot be said that the claim made by the respondent / assessee was not bona fide or without any basis. We agree with the submission made by the learned counsel for the respondent / assessee. The present case is not covered by the ratio laid down in Zoom Communication Private Limited: 327 ITR 510 (Del). The Tribunal has arrived at the correct decision relying upon the decision of the Supreme Court in Reliance Petroproducts Private Limited (supra). No question of law arises for our consideration.

The appeal is dismissed.

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