IN THE ITAT MUMBAI BENCH ‘E’
Skil Infrastructure Ltd.
versus
Assistant Commissioner of Income-tax
IT APPEAL NOS. 2038 & 2045 (MUM.) OF 2010
[ASSESSMENT YEAR 2006-07]
AUGUST 31, 2012
ORDER
B. Ramakotaiah, Accountant Member
These are the cross appeals by assessee and Revenue against the order of the CIT(A)-39 Mumbai, dated 30/12/2009. The issue in this appeal is with reference to levy of penalty under section 271(1)(c).
2. The facts relating to the issue in the appeals are that the assessee company is engaged in promoting different types of infrastructure projects. Assessee filed its return of income for assessment year 2006-07 on 30.11.2006 declaring its business income at Nil after setting of carried forward loss. The return was processed under section 143(1) of the I.T. Act on 30.11.2006. A revised return of income was filed on 24/03/2008 declaring income at Nil, but with minor changes in the computation of income due to change in carry forward losses. In the course of the assessment proceedings AO inquired about the reduction in ‘stock in trade’ as seen from Schedule-7 of the Act. After issuing a questionnaire dated 6.10.2008, assessee vide letter dated 10.10.2008 offered a net income of Rs. 2,98,97,272/- comprising long term capital gain arising on sale of shares of Mumbai SEZ (MISEZ), long term capital gain chargeable under section 45(2) arising in the conversion of shares of Pipava Shipyard Ltd (PSL) which was sold during the year and against this capital gain, claimed loss of equal amount arising on sale of ‘stock in trade’ of PSL as business loss and further business loss of Rs. 34,75,32,880/- which arose out of the expenditure incurred on LNG project abandoned during the year. These amounts were taken to Capital Reserves in books of account. AO examined assessee’s contentions and the capital gain working as admitted by assessee was brought to tax. The working is as under:
