Case Law Details
PCIT Vs Sonu Realtors Private Limited (Bombay High Court)
Wrong deduction claimed which resulted in reduction of Tax liability can’t amount to concealment of income
Pr. Commissioner of Income Tax (Appellant) filed the appeal being aggrieved against Order dated July 20, 2016 passed by Income Tax Appellate Tribunal (ITAT) in which the order of Appellant was set aside wherein it was alleged by the Appellant that Sonu Realtors Private Limited (Respondent) had made an attempt to reduce its tax liability by claiming wrong deduction and the Respondent committed a default of not computing the book profit under Section 115JB of the Income Tax Act, 1961 (IT Act).
Factually, the Respondent is a company engaged in the business of construction. For the Assessment Year 2008-2009, the Respondent filed its return of income at Rs.51,34,740/- after claiming deduction under Sub-Section 10 of 80 IB (Deduction in respect of profits and gains from certain industrial undertakings other than infrastructure development undertakings) of the IT Act amounting to Rs.13,72,33,540/-. Subsequently, the Commissioner of Income Tax (CIT) passed an order under Section 263 of the IT Act holding that Respondent was taxable under the provisions of Section 115JB (Special provision for payment of tax by certain companies) of the IT Act. The Respondent had agreed for the revisions of the assessment pursuant to revision order under Section 263 following which the Assessing Officer (“AO”) passed order under Section 143 (Assessment) of the IT Act assessing the income of the Respondent under Section 115JB of the IT Act. The Respondent also paid tax under Section 115JB.
The AO however later levied penalty under Section 271 (1) (c) of the IT Act on the ground that the Respondent had made an attempt to reduce its tax liability by claiming wrong deduction and committed a default of not computing the book profit under Section 115JB as required mandatorily by the provisions of the IT Act. The Appellant has assailed imposition of penalty by the AO on the ground that the Respondent committed a default of not computing the book profit under Section 115JB of the IT Act.
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