JRK Auto Parts (P.) Ltd. v. Asstt. CIT

INCOME TAX ACT, 1961

--Penalty under section 271(1)(c)--Furnishing of inaccurate particulars Expenditure claimed as revenue but treated as capital --Debatable issue--In any case, whether the expenditure is revenue or capital is quite debatable issue and on such a claim, penalty under section 271(1)(c) for furnishing of inaccurate particulars could not be levied.--Assessee-company had paid fees to RoC to increase the authorized capital and claimed it as revenue expenditure. AO treated the said fees as capital expenditure and imposed penalty under section 271(1)(c) on the ground of furnishing of inaccurate particulars. Held: Nowhere from the records, it was borne out as to, whether authorized capital was for either running of business or for any expansion of business or for setting up of new business. The treatment of such an expense whether it is for capital or revenue largely depends on the facts of the case. Accordingly, whether the expenditure is revenue or capital is quite debatable issue and on such a claim, penalty under section 271(1)(c) for furnishing of inaccurate particulars could not be levied.