| The Tax Publishers2019 TaxPub(DT) 2553 (Mum-Trib) INCOME TAX ACT, 1961
Section 271(1)(c)
Mere making of a claim not maintainable in law, by itself, would not amount to furnishing of inaccurate particulars of income. Further, as assessee had made complete disclosure of details with regard to the claim for deduction under section 36(1)(iii) on interest expenses in respect of the flats purchased and shown in the Books of Account as well as in the return of income, penalty under section 271(1)(c) would not be leviable.
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Penalty under section 271(1)(c) - Deduction under section 36(1)(iii) - Interest on borrowed funds utilized for purchase of stock-in-trade -
Assessee claimed interest on borrowed funds, which were utilized for purchase of flats, treated as stock-itrade in its books of account. AO disallowed interest expenses under section 36(1)(iii) alleging that assessee had not put to use said premises for business purposes. Thereafter, AO had also initiated penalty proceedings under section 271(1)(c) alleging that assessee had made a conscious attempt to evade the tax by furnishing inaccurate particulars of income. Held: Mere making of a claim not maintainable in law, by itself, would not amount to furnishing of inaccurate particulars of income. Further, as assessee had made complete disclosure of details with regard to the claim for deduction under section 36(1)(iii) on interest expenses in respect of the flats purchased and shown in the Books of Account as well as in the return of income, penalty was rightly deleted by CIT (A). Moreover, whether assessee was entitled for deduction under section 36(1)(iii) on interest expenses on borrowed funds utilized for purchase of stock-in-trade was a debatable issue, there was neither concealment of income nor furnishing of inaccurate particulars of income by the assessee. Hence, no penalty was leviable under section 271(1)(c).
Relied:CIT v. Reliance Petroproducts Pvt. Ltd. (2010) 322 ITR 158 (SC) : 2010 TaxPub(DT) 1683 (SC)
REFERRED : CIT v. Srishti Securities Pvt. Ltd. (2010) 321 ITR 498 (Bom) : 2010 TaxPub(DT) 0313 (Bom-HC), ACIT v. Aditya Propcon (P) Ltd. [ITA.No. 762/JP/2012, dt. 31-1-2014], CIT v. First Data (India) Pvt. Ltd. (2016) 384 ITR 260 (Bom) : 2016 TaxPub(DT) 0907 (Bom-HC), CIT v. Dharamchand L. Shah (1993) 204 ITR 462 (Bom) : 1993 TaxPub(DT) 1198 (Bom-HC), Kanbay Software India (P) Ltd. v. Dy. CIT (2009) 31 SOT 153 (Pune) : 2009 TaxPub(DT) 1691 (Pune-Trib), CIT v. Atul Mohan Jindal (2009) 317 ITR 1 (SC) : 2009 TaxPub(DT) 2009 (SC),UOI v. Rajasthan Spinning & Weaving Mills & Anr. (2009) 224 CTR (SC) : 2009 TaxPub(DT) 1731 (SC),UOI & Ors. v. Dharmendra Textile Processors & Ors. (2008) 306 ITR 277 (SC) : 2008 TaxPub(DT) 2320 (SC),Dilip N. Shroff v. Jt. CIT & Anr. (2007) 291 ITR 519 (SC) : 2007 TaxPub(DT) 1247 (SC)
FAVOUR : In assessee's favour
A.Y. : 2012-13
INCOME TAX ACT, 1961
Section 271(1)(c)
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