M/s Abhishek Industries Ltd., Ludhiana V. ACIT, Ludhiana

ITA 1445/CHANDI/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73517 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 24-02-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 23-12-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JYOTI KUMARI
• Keywords: Business income; Depreciation; Additional depreciation; Question of law; Wrong claim; Capital receipt; Revised return; Revenue expenditure; Capital expenditure
• Section: 143(3); 80HHC; 80IB; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.1445/CHD/2010 ( ASSESSMENT YEARS : 2004-05) M/S ABHISHEK INDUSTRIES LTD., VS. THE A.C.I.T., E-212, KITCHLU NAGAR, CIRCLE -1, LUDHIANA. LUDHIANA. PAN: AABCA4139J AND ITA NO.290/CHD/2011 ( ASSESSMENT YEARS : 2004-05) THE A.C.I.T., VS. M/S ABHISHEK INDUSTRIES LTD., CIRCLE -1, E-212, KITCHLU NAGAR, LUDHIANA. LUDHIANA. PAN: AABCA4139J (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ASHWANI KUMAR DEPARTMENT BY : SMT.JYOTI KUMARI, DR DATE OF HEARING : 24.02.2014 DATE OF PRONOUNCEMENT :06.03.2014 O R D E R PER SUSHMA CHOWLA, J.M. : THE CROSS APPEALS FILED BY THE REVENUE AND THE ASSE SSEE ARE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS )-I, LUDHIANA DATED 10.12.2010 RELATING TO ASSESSMENT YEAR 2004-05 AGA INST THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE INCOME TAX AC T, 1961. 2. THE CROSS APPEALS FILED BY THE ASSESSEE AND REVE NUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLI DATED ORDER FOR THE SAKE OF CONVENIENCE. 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THAT THE ORDER PASSED U/S 250(6) BY THE LD.CIT( A)-I, LUDHIANA IS AGAINST LAW AND FACTS ON THE FILE IN AS MUCH AS HE WAS NOT JUSTIFIED TO ARBITRARY UPHOLD 2 PENALTY U/S 271(1)(C) ON THE FOLLOWING ITEMS OF ADDITIONS/DISALLOWANCES:- A) DISALLOWANCE OF SET OFF OF BROUGHT FORWARD LOSSES AND DEPRECIATION AMOUNTING TO RS.22,45,85,291/-; B) DISALLOWANCE OF PRIOR PERIOD EXPENSES AMOUNTING TO RS.45,44,691/-; C) DISALLOWANCE OF DEPRECIATION ON GENERATOR AMOUNTING TO RS.5,54,391/-; D) RESTRICTING THE CLAIM OF DEDUCTION U/S 80IA BY RS.2,69,96,242/-; E) DISALLOWANCE OF CLAIM OF DEDUCTIONS U/S 80HHC AMOUNTING TO RS.1,33,19,595/-. 4. THE REVENUE HAS RAISED THE FOLLOWING GROUND OF A PPEAL : 1. THAT THE LD.CIT(A) ERRED IN LAW AND ON FACTS IN DELETING THE PENALTY LEVIED U/S 271(1)(C) OF THE IT ACT, 1961 BY AO ON ACCOUNT OF TREATMENT OF SALES TAX SUBSIDY AND INTEREST FREE ADVANCES TO SISTER CONCERN BY HOLDING THAT SINCE THE APPEAL OF THE ASSESSEE HAS BEEN ADMITTED BY HON'BLE SUPREME COURT THE ISSUE IS DEBATABLE WITHOUT APPRECIATING THE FACT THAT THE HON'BLE JURISDICTIONAL HIGH COURT HAS ALREADY DECIDED THE ISSUE IN FAVOUR OF THE REVENUE IN THE ASSESSEES OWN CASE FOR AY 1993-94 IN 286 ITR 1 AND WITHOUT APPRECIATING THAT THE HON'BLE HIGH COURT IN THE SAME CASE HAD ALSO HELD THE ORDER OF ITAT TO BE PERVERSE IT WAS MADE WITHOUT APPLICATION OF JUDICIAL MIND. 5. THE ISSUES RAISED IN THE PRESENT APPEALS ARE THA T DURING THE YEAR UNDER CONSIDERATION CERTAIN ADDITIONS/DISALLOWANCES WERE MADE BY THE ASSESSING OFFICER WHILE COMPLETING ASSESSMENT IN TH E HANDS OF THE ASSESSEE, WHICH ARE AS UNDER: 1. DISALLOWANCE OF SET OFF OF BROUGHT FORWARD LOSS ES AND DEPRECIATION AMOUNTING TO RS.22,45,85,291/-. 2. PRIOR PERIOD EXPENSES AMOUNTING TO RS.45,44,69 1/- DISALLOWED. 3. SALES TAX SUBSIDY AMOUNTING TO RS.6,80,61,977/- TREATED AS REVENUE RECEIPT. 4. DISALLOWANCE OF INTEREST AMOUNTING TO RS.54,40,7 20/- AS INTEREST PERTAINING TO INTEREST FREE ADVANCES FOR N ON BUSINESS PURPOSES. 5. DISALLOWANCE OF EXCESS DEPRECIATION ON GENERATOR AMOUNTING TO RS.5,54,391/-. 6. DEDUCTION U/S 801 A DISALLOWED ON INTEREST INCOM E, INSURANCE CLAIM, MISC. INCOME AMOUNTING TO RS.2,69,96,242/-. 3 7. DEDUCTION U/S 80HHC ON SCRAP SALES DISALLOWED BY EXCLUDING SCRAP SALES OF RS.1,33,19,595/- FROM PROFIT OF B USINESS FOR COMPUTING DEDUCTION U/S 80HHC. 6. THE ASSESSING OFFICER INITIATED PENALTY PROCEEDI NGS UNDER SECTION 271(1)(C) OF THE ACT. THE REPLY OF THE ASSESSEE T O THE PENALTY PROCEEDINGS IS INCORPORATED AT PAGES 1 TO 3 OF THE PENALTY ORDER PASSED UNDER SECTION 271(1)(C) OF THE ACT. THE ASSESSING OFFICER HELD THE ASSESSEE TO HAVE FURNISHED INACCURATE PARTICULARS O F INCOME ON THE ABOVE SAID ADDITIONS/DISALLOWANCES MADE IN THE HANDS OF T HE ASSESSEE AND LEVIED MINIMUM PENALTY OF RS.7,63,66,380/-. 7. THE CIT (APPEALS) UPHELD THE LEVY OF PENALTY ON ACCOUNT OF SET OFF OF BROUGHT FORWARD LOSSES AND DEPRECIATION AMOUNTIN G TO RS.22,45,85,291,PRIOR PERIOD EXPENSES OF RS.45,44,6 91/-, EXCESS DEPRECIATION ON GENERATOR OF RS.5,54,391/-, RECOMPU TATION OF DEDUCTION UNDER SECTION 80IA OF THE ACT INTEREST INCOME, INSU RANCE CLAIM, MISC. INCOME OF RS.2,69,96,242/- AND RECOMPUTATION OF DED UCTION UNDER SECTION 80HHC ON SCRAP SALES OF RS.1,33,19,595/-. THE CIT (APPEALS) DELETED THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON ACCOUNT OF DISALLOWANCES MADE OF INTEREST OF RS.54,40,720/- AS INTEREST PERTAINING TO INTEREST FREE ADVANCES FOR NON BUSINESS PURPOSES AND ON ACCOUNT OF TREATMENT OF SALES TAX SUBSIDY. 8. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF C IT (APPEALS) IN UPHOLDING THE PENALTY LEVIABLE UNDER SECTION 271(1) (C) OF THE ACT ON VARIOUS ACCOUNTS AND REVENUE IS IN APPEAL AGAINST T HE ORDER OF THE CIT (APPEALS) IN DELETING THE PENALTY ON ACCOUNT OF TWO ISSUES. 9. THE LEARNED A.R. FOR THE ASSESSEE POINTED OUT TH AT FIRST ADDITION MADE IN THE HANDS OF THE ASSESSEE WAS ON ACCOUNT OF NON ADJUSTMENT OF BROUGHT FORWARD LOSSES AND DEPRECIATION. IT WAS PO INTED OUT BY THE LEARNED A.R. FOR THE ASSESSEE THAT THE SAID LOSSES WERE WORKED OUT BY TREATING THE SUBSIDY RECEIPT BY THE ASSESSEE AS CAP ITAL RECEIPT, WHEREAS 4 THE REVENUE TREATED THE SAME AS REVENUE RECEIPT AND CONSEQUENTLY THERE WAS REDUCTION IN THE BROUGHT FORWARD LOSSES. IT WA S SUBMITTED BY THE LEARNED A.R. FOR THE ASSESSEE THAT NO FACTS WERE CO NCEALED AS IS EVIDENT FROM THE NOTE NO.3 AND 5 IN THE COMPUTATION OF INCO ME PLACED AT PAGE 17 OF THE PAPER BOOK AND CONSEQUENTLY NO INACCURATE PA RTICULARS WERE FURNISHED BY THE ASSESSEE IN THIS REGARD. THE LEA RNED A.R. FOR THE ASSESSEE PLACED RELIANCE IN THE CASE OF ACIT VS. A. H.WHEELERS & CO.(P)LTD. [132 ITD 34 (TRIB)(ALL)] AND CIT & ANR. VS. MAKINO ASIA (P) LTD. (2013) 95 DTR (KAR) 9]. 10. THE SECOND DISALLOWANCE WAS MADE ON ACCOUNT OF PRIOR PERIOD EXPENSES AND IT WAS POINTED OUT BY THE LEARNED A.R. FOR THE ASSESSEE THAT A NOTE TO THE EFFECT OF CLAIM WAS APPENDED AS NOTE NO.2 TO THE COMPUTATION OF INCOME WHICH IS PLACED AT PAGES 16 T O 18 OF THE PAPER BOOK. THE LEARNED A.R. FOR THE ASSESSEE FURTHER PO INTED OUT THAT THE SAID ISSUE OF PRIOR PERIOD EXPENSES HAS BEEN REMITTED BA CK TO THE FILE OF ASSESSING OFFICER BY THE TRIBUNAL VIDE ITS ORDER DA TED 27.9.2011 AND IN ALL FAIRNESS IT WAS FURTHER POINTED OUT BY HIM THAT THE ISSUE OF LEVY OF PENALTY MAY BE SET ASIDE TO THE FILE OF THE ASSESSI NG OFFICER. 11. THE NEXT ADDITION MADE BY THE ASSESSING OFFICER WAS ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION ON GENERATOR WHEREIN T HE ASSESSEE HAD CLAIMED DEPRECIATION @ 25% AND ADDITIONAL DEPRECIAT ION @ 20%. THE ASSESSING OFFICER HOWEVER, ALLOWED THE DEPRECIATION @ 10% AND IN EFFECT @ 5% AS THE ASSET WAS PURCHASED AFTER 30.9.2 003. IT WAS STRESSED BY THE LEARNED A.R. FOR THE ASSESSEE SUCH CLAIM OF DEPRECIATION AT HIGHER RATE COULD NOT BE SAID TO BE FURNISHING OF INACCURA TE PARTICULARS OF INCOME. 12. THE NEXT ITEM OF DISALLOWANCE WAS WORKING OF DE DUCTION UNDER SECTION 80IA OF THE ACT AND UNDER SECTION 80HHC OF THE ACT. AS PER THE LEARNED A.R. FOR THE ASSESSEE THE ASSESSEE HAD CLAI MED THE DEDUCTION UNDER SECTION 80IA OF THE ACT AT RS.12.01 CRORES WH ICH WAS ALLOWED BY 5 THE ASSESSING OFFICER AT RS.14.04 CRORES. HOWEVER, THE SAID DEDUCTION UNDER SECTION 80IA OF THE ACT WAS NOT ALLOWED ON IN TEREST INCOME, INSURANCE CLAIM AND MISC. INCOME AMOUNTING TO RS.2. 69 CRORES. IT WAS POINTED OUT BY THE LEARNED A.R. FOR THE ASSESSEE TH AT THE SAID DEDUCTION WAS CLAIMED AS PER AUDIT REPORT FURNISHED IN FORM N O.10CCB BY THE AUDITOR. THE PLEA OF THE LEARNED A.R. FOR THE ASSE SSEE THAT THERE WAS NO CLAIM OF NETTING OFF OF INTEREST AND DEDUCTION UNDE R SECTION 80IA WAS NOT ALLOWED AS PER RATIO LAID DOWN BY THE HON'BLE SUPRE ME COURT IN PANDIAN CHEMICALS LTD. VS. CIT (2003) [262 ITR 278 (SC)]. THE LEARNED A.R. FOR THE ASSESSEE POINTED OUT THAT THERE WAS A CLAIM OF INTEREST RECEIPT AND INTEREST EXPENDITURE, BUT THERE WAS NO CLAIM OF NET TING OFF OF INTEREST. RELIANCE WAS PLACED IN THE CASE OF ITO VS. SHILPA F ILAMENTS P. LTD. [(2011) 12 ITR (TRIB) 324 (AHMEDABAD)] FOR THE PROP OSITION THAT ON SUCH DISALLOWANCE NO PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS LEVIABLE. THE SECOND CLAIM OF DEDUCTION UNDER SECTION 80IA WA S ON THE INSURANCE CLAIM RECEIVED FOR DAMAGES DUE TO LOSS ON FIRE. TH E TRIBUNAL IN THE APPEAL RELATING TO THE CAPTIONED YEAR VIDE PARA 26 AT PAGE 13 HELD THAT THE SAID INSURANCE CLAIM OF RS.2.00 CRORES COULD NO T BE HELD TO BE INCOME DERIVED FROM INDUSTRIAL UNDERTAKING TO QUALI FY FOR DEDUCTION UNDER SECTION 80IA OF THE ACT AND HENCE THE SAME HA D TO BE EXCLUDED FROM THE PROFITS OF BUSINESS. THE LEARNED A.R. FOR THE ASSESSEE POINTED OUT THAT THE ABOVE SAID CLAIM WAS MADE ON THE BASIS OF THE REPORT OF THE CHARTERED ACCOUNTANT AND NON ALLOWANCE OF SUCH CLAI M COULD NOT BE HELD TO BE FURNISHING OF INACCURATE PARTICULARS OF INCOM E. 13. THE NEXT DISALLOWANCE ON WHICH PENALTY UNDER SE CTION 271(1)(C) OF THE ACT WAS LEVIED WAS THE RECOMPUTATION OF DEDUCTI ON UNDER SECTION 80HHC OF THE ACT UNDER WHICH THE ASSESSEE HAD CLAIM ED DEDUCTION OF RS.5.70 CRORES AND WAS ALLOWED DEDUCTION OF RS.2.42 CRORES. THE FIRST ITEM OF RECOMPUTATION OF DEDUCTION UNDER SECTION 80 HHC OF THE ACT WAS THE SCRAP SALE WHICH ISSUE WAS NOT PRESSED BEFORE T HE TRIBUNAL IN THE QUANTUM PROCEEDINGS. THE SECOND ASPECT WAS THE SAL ES TAX SUBSIDY 6 RECEIVED BY THE ASSESSEE WHICH HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE VIDE PARA 24 OF THE ORDER OF THE TRIBUNAL. THE NEXT CLAIM WAS MISC. INCOME BEING EXCLUDED FROM THE PROFITS OF BUS INESS ELIGIBLE FOR DEDUCTION UNDER SECTION 80HHC OF THE ACT AT RS.1.27 LACS, WHICH ISSUE WAS NOT PRESSED BEFORE THE TRIBUNAL. 14. THE NEXT ITEM OF INCOME WAS INSURANCE CLAIM WHI CH WAS ALSO NOT ALLOWED IN THE HANDS OF THE ASSESSEE. FURTHER DEDU CTION UNDER SECTION 80HHC OF THE ACT WAS RECOMPUTED ON ACCOUNT OF DEPB RECEIPTS AND INTEREST INCOME BEING TREATED AS INCOME FROM OTHER SOURCES AND NOT BEING ELIGIBLE FOR THE SAID DEDUCTION. THE LEARNED A.R. FOR THE ASSESSEE PLACED RELIANCE ON THE UNDER-MENTIONED CASE LAWS: I) CIT VS. AMAR NATH [16 DTR 326 (P&H)] II) S.D.RICE MILLS [275 ITR 206](P&H) III) RELIANCE PETRO CHEMICALS LTD. [322 ITR 58 (SC )] IV) CIT VS. PHI SEEDS INDIA LTD. [301 ITR 13(DEL)] V) ACIT VS. PERFECT FORGING 11 ITR (TRIB) 166 (CHD )] 15. THE LEARNED D.R. FOR THE REVENUE PLACED RELIANC E ON THE ORDER OF THE CIT (APPEALS) IN RESPECT OF THE ADDITIONS ON WH ICH PENALTY UNDER SECTION 271(1)(C) OF THE ACT HAS BEEN CONFIRMED. T HE LEARNED D.R. FOR THE REVENUE FURTHER POINTED OUT THAT ONCE THE ISSUE OF DISALLOWANCE OF PRIOR PERIOD EXPENDITURE HAS BEEN SENT BACK TO THE ASSESSING OFFICER, THE PENALTY PROCEEDINGS IN RELATION THERETO MAY ALSO BE SENT BACK TO THE ASSESSING OFFICER. IN RESPECT OF CLAIM OF DEPRECIA TION ON GENERATOR, IT WAS POINTED OUT BY THE LEARNED D.R. FOR THE REVENUE THAT THE PENALTY HAD BEEN LEVIED UNDER SECTION 271(1)(C) OF THE ACT ON F ALSE CLAIM BEING MADE BY THE ASSESSEE WHERE THE ASSESSEE HAD ALSO NOT FUR NISHED DETAILS. IT WAS FURTHER STRESSED BY THE LEARNED D.R. FOR THE REVENU E THAT EXPLANATION-I TO SECTION 271 OF THE ACT WAS ATTRACTED IN THE CASE . RELIANCE WAS PLACED ON THE DECISION OF THE HON'BLE SUPREME COURT IN UNI ON OF INDIA AND OTHERS VS DHARMENDRA TEXTILES PROCESSORS & OTHERS 3 06 ITR 277 (SC) AND ON THE DECISION OF THE HON'BLE DELHI HIGH COURT IN CIT VS ZOOM COMMUNICATION P. LTD. 327 ITR 510 (DEL). IN RESPEC T OF RECOMPUTATION 7 OF DEDUCTION UNDER SECTION 80IA OF THE ACT, IT WAS POINTED OUT BY THE LEARNED D.R. FOR THE REVENUE THAT VIS--VIS INTERES T INCOME, IT WAS FALSE CLAIM MADE BY THE ASSESSEE AND IN RESPECT OF INSURA NCE CLAIM ISSUE WAS AGAINST THE ASSESSEE. FURTHER IN RESPECT OF DEDUCT ION CLAIMED UNDER SECTION 80HHC OF THE ACT, THE CASE OF THE REVENUE W AS THAT THE SAID REWORKING HAS BEEN CONFIRMED BY THE TRIBUNAL AND HE NCE MERITS LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 16. WITH REGARD TO THE APPEAL FILED BY THE REVENUE, THE LEARNED D.R. FOR THE REVENUE POINTED OUT THAT TWO ITEMS ON WHICH THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT HAS BEEN DELETED BY TH E CIT (APPEALS) ARE THE CLAIM OF SALES TAX SUBSIDY, WHETHER CAPITAL OR REVENUE AND DISALLOWANCE OF INTEREST ATTRIBUTABLE TO INTEREST F REE ADVANCE MADE TO THE SISTER CONCERN. THE LEARNED D.R. FOR THE REVENUE P OINTED OUT THAT BOTH THE ISSUES WERE COVERED AGAINST THE ASSESSEE BY THE RATIO LAID DOWN BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN ASSESSEE S OWN CASE REPORTED IN CIT VS. ABHISHEK INDUSTRIES [286 ITR 1( P&H)]. 17. THE LEARNED A.R. FOR THE ASSESSEE POINTED OUT T HAT SLP WAS ADMITTED AND WAS PENDING BEFORE THE HON'BLE SUPREME COURT. IT WAS FURTHER POINTED OUT THAT ONCE SLP HAS BEEN ADMITTED IN THE CASE, THE ISSUE BEING DEBATABLE NO PENALTY WAS LEVIABLE UNDER SECTION 271(1)(C) OF THE ACT. RELIANCE WAS PLACED ON THE DECISION OF AH MEDABAD BENCH OF THE TRIBUNAL IN THE CASE OF RUPAM MERCANTILES LTD. VS DCIT 91 ITD 237 (TM)(AHD). FURTHER IT WAS POINTED OUT BY THE LEARN ED A.R. FOR THE ASSESSEE THAT SIMILAR ISSUE OF PENALTY UNDER SECTIO N 271(1)(C) OF THE ACT ON ADDITIONS MADE ON ACCOUNT OF SALES TAX SUBSIDY A ROSE BEFORE THE TRIBUNAL IN CASE OF DCIT VS. M/S BHUSHAN POWER & ST EEL LTD. IN ITA NOS.70 & 71/CHD/2012 RELATING TO ASSESSMENT YEARS 2 005-06 AND 2006- 07, ORDER DATED 25.9.2013 AND THE SAID PENALTY HAS BEEN DELETED IN THE HANDS OF THE ASSESSEE. 8 18. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE COMPANY HAD FURNISHED THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION DECLARING INCOME OF RS.82,47,513/-, T HE ASSESSING OFFICER ASSESSED THE INCOME IN THE HANDS OF THE ASSESSEE AT RS.32,80,54,210/- VIDE ORDER PASSED UNDER SECTION 143(3) OF THE ACT D ATED 28.12.2006. THE MAJOR ADDITIONS MADE IN THE HANDS OF THE ASSESSEE W ERE AS UNDER: 1. DISALLOWANCE OF SET OFF OF BROUGHT FORWARD LOSS ES AND DEPRECIATION AMOUNTING TO RS.22,45,85,291/-. 3. PRIOR PERIOD EXPENSES AMOUNTING TO RS.45,44,69 1/- DISALLOWED. 3. SALES TAX SUBSIDY AMOUNTING TO RS.6,80,61,977/- TREATED AS REVENUE RECEIPT. 4. DISALLOWANCE OF INTEREST AMOUNTING TO RS.54,40,7 20/- AS INTEREST PERTAINING TO INTEREST FREE ADVANCES FOR N ON BUSINESS PURPOSES. 5. DISALLOWANCE OF EXCESS DEPRECIATION ON GENERATOR AMOUNTING TO RS.5,54,391/-. 6. DEDUCTION U/S 801 A DISALLOWED ON INTEREST INCOM E, INSURANCE CLAIM, MISC. INCOME AMOUNTING TO RS.2,69,96,242/-. 7. DEDUCTION U/S 80HHC ON SCRAP SALES DISALLOWED BY EXCLUDING SCRAP SALES OF RS.1,33,19,595/- FROM PROFIT OF B USINESS FOR COMPUTING DEDUCTION U/S 80HHC. 19. PART OF THE SAID ADDITIONS WERE CONFIRMED BY TH E CIT (APPEALS) AND PARTLY SOME OF THEM WERE DELETED BY THE CIT (APPEAL S). THE ASSESSEE WAS IN APPEAL BEFORE THE CHANDIGARH BENCH OF THE TR IBUNAL IN ITA NO.321/CHD/2009 RELATING TO ASSESSMENT YEAR 2004-05 AND REVENUE ALSO FILED AN APPEAL AGAINST THE ORDER OF THE CIT (APPEA LS) IN ITA NO.259/CHD/2009 RELATING TO ASSESSMENT YEAR 2004-05 . THE TRIBUNAL VIDE ORDER DATED 27.9.2011 ADJUDICATED VARIOUS ISSU ES RAISED BOTH BY THE ASSESSEE AND THE REVENUE AND COPY OF THE ORDER OF T HE TRIBUNAL IS AVAILABLE ON RECORD. 20. IN VIEW OF VARIOUS ADDITIONS MADE BY THE ASSESS ING OFFICER, PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT WERE INITIATED BY THE ASSESSING OFFICER AND PENALTY WAS LEVIED UNDER SECTION 271(1)(C) OF THE ACT UPON THE ASSESSEE FOR FURNISHING INACCURATE PARTICULARS OF INCOME VIS--VIS ADDITIONS MADE BY THE ASSESSING OFFICER. AS POINTED OUT IN 9 PARAS HEREINABOVE THE TRIBUNAL HAD ADJUDICATED THE ISSUES RAISED BEFORE IT FOR THE CAPTIONED ASSESSMENT YEARS AND CONSEQUEN TLY THE SAME NEEDS TO BE CONSIDERED WHILE ADJUDICATING THE ISSUE OF LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON VARIOUS ACCOUNTS. WE PROCEED TO DISPOSE OF THE PRESENT APPEAL RAISED BY THE ASSESSEE AND AL SO BY THE REVENUE BY ADDRESSING THE ISSUE OF ADDITIONS MADE IN THE HANDS OF THE ASSESSEE. 21. PENALTY FOR CONCEALMENT IS LEVIABLE UNDER SECTI ON 271 (1)(C) OF THE ACT IN CASE ANY ONE OF THE TWO PRE-CONDITIONS ARE S ATISFIED. THE PRE- CONDITIONS FOR LEVY OF PENALTY ARE EITHER THE ASSES SEE HAD CONCEALED THE PARTICULARS OF ITS INCOME OR IN THE ALTERNATIVE, TH E ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME. EITHER OF THE T WO CONDITIONS NEEDS TO BE FULFILLED BEFORE LEVY OF PENALTY UNDER SECTION 2 71 (1)(C) OF THE ACT. THE PROVISIONS OF THE ACT ENVISAGES AN OPPORTUNITY OF HEARING TO BE AFFORDED TO THE ASSESSEE TO PROVE ITS BONAFIDES AND WHERE THE ASSESSEE IS ABLE TO PROVE THE BONAFIDES OF HIS CLAIM, WITH REGA RD TO THE PARTICULARS OF INCOME FURNISHED IN THE RETURN OF INCOME, IN SUCH C IRCUMSTANCES NO PENALTY IS LEVIABLE FOR CONCEALMENT OF INCOME OR FO R FURNISHING INACCURATE PARTICULARS OF INCOME UNDER SECTION 271 (1)(C) OF THE ACT. THE EXPRESSIONS CONCEALMENT AND INACCURATE PARTI CULARS UNDER SECTION 271 (1)(C) OF THE ACT HAS BEEN DELIBERATED UPON IN PLETHORA OF JUDGMENTS BY VARIOUS COURTS. THE HON'BLE SUPREME COURT IN D HARMENDRA TEXTILES & PROCESSORS CASE (SUPRA), OBSERVED THAT THE PENALT Y UNDER SECTION 271 (1)(C) OF THE ACT IS A CIVIL LIABILITY. HOWEVER, THE LIABILITY IS PENAL IN NATURE THOUGH BEING CIVIL LIABILITY AND THERE IS NO REQUIREMENT OF ESTABLISHING THE MENS REA OF THE INTENTION OF THE A SSESSEE IN CASES WHERE THE ASSESSEE IS FOUND TO HAVE CONCEALED THE PARTICU LARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. WHERE, THE INFORMATION FURNISHED BY THE ASSESSEE IN THE RETURN OF INCOME T O THE BEST OF KNOWLEDGE OF THE ASSESSEE IS CORRECT AND COMPLETE, IT CANNOT BE SAID THAT THE ONUS ON THE ASSESSEE HAS NOT BEEN DISCHARGED TO PROVE ITS BONAFIDES. WHERE ANY ADDITION TO, OR DISALLOWANCE FROM, HAD BE EN MADE TO THE 10 RETURNED INCOME, IT PER SE CANNOT BE THE FOUNDATION OF PENALTY UNDER SECTION 271 (1)(C) OF THE ACT AS FINDINGS IN THE AS SESSMENT ORDER CANNOT BE TAKEN A CONCLUSIVE PROOF OF CONCEALMENT FOR THE PURPOSE OF LEVY OF PENALTY UNDER SECTION 271 (1)(C) OF THE ACT. UNDE R THE EXPLANATION 1 TO SECTION 271 (1)(C), THE ONUS IS UPON THE ASSESSEE TO ESTABLISH THE BONAFIDES OF HIS CLAIM AND WHERE THE ASSESSEE DISCH ARGES ITS ONUS OF PROVING HIS CLAIM TO BE BONAFIDELY MADE, THE COURTS HAVE HELD THAT THERE IS NO MERIT IN LEVY OF PENALTY UNDER SECTION 271(1) (C) OF THE ACT. . 22. THE HON'BLE SUPREME COURT OF INDIA IN CIT, AHEM DABAD VS. RELIANCE PETROPRODUCTS PVT. LTD (SUPRA) WHILE REFE RRING IN THE WORD PARTICULARS IN INACCURATE PARTICULARS OF INCOME, OBSERVED, A S PER LAW LEXICON, THE MEANING OF WORD PARTICULAR IS A DE TAIL OR DETAILS, THE DETAILS OF A CLAIM, OR THE SEPARATE ITEMS OF AN ACC OUNT. THEREFORE, THE WORD PARTICULARS USED IN SECTION 271 (1)(C) WOUL D EMBRACE THE MEANING OF THE DETAILS OF THE CLAIM MADE. IT WAS FURTHER HELD AS UNDER:- WE HAVE ALREADY SEEN THE MEANING OF THE WORD PARTICULARS IN THE EARLIER PART OF THIS JUDGMENT. READING THE WORDS IN CONJUNCTION, THEY MUST MEAN THE DETAIL S SUPPLIED IN THE RETURN, WHICH ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TRUTH OR ERRONEOUS. WE MU ST HASTEN TO ADD HERE THAT IN THE CASE, THERE IS NO FINDING T HAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN WERE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE. SUCH NOT BEING THE CASE, THERE WOULD BE NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INC OME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO INACCURATE PARTICULARS . (UNDERLINED SUPPLIED BY US) 23. THE HON'BLE SUPREME COURT IN CIT, AHEMDABAD VS. RELIANCE PETROPRODUCTS PVT LTD (SUPRA) FURTHER NOTED THAT IN THE FACTS OF THE CASE BEFORE IT, THERE WERE NO FINDINGS THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN OF INCOME WERE NOT INCORRECT OR ERRONEOUS OR FALSE NOR ANY STATEMENT MADE OR ANY DETAILS SUPPLIED WAS FOUND TO BE FACTUALLY INCORRECT. THE COURT THUS HELD THAT MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT, ATTRACT P ENALTY UNDER SECTION 11 271 (1)(C) OF THE ACT. IT WAS ALSO LAID DOWN BY THE COURT THAT THE INTENDMENT OF THE LEGISLATURE IS NOT TO LEVY PENALT Y UNDER SECTION 271 (1)(C) OF THE ACT IN CASE OF EVERY NON ACCEPTANCE OF CLAIM MADE BY THE ASSESSEE IN THE RETURN OF INCOME. 24. THE HON'BLE SUPREME COURT IN CIT VS RELIANCE PE TROPRODUCTS P.LTD. (SUPRA) FURTHER HELD AS UNDER : READING THE WORDS 'INACCURATE' AND 'PARTICULARS' IN CONJUNCTION, THEY MUST MEAN THE DETAILS SUPPLIED IN THE RETURN, WHICH ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TRUTH OR ERRONEOUS. IN TH IS CASE, THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RE TURN WERE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE. SUCH NOT BEING THE CASE, THERE WOULD BE NO QUESTION OF INVITING THE PENALTY UNDER S. 271(L)(C) . A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NO T AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO THE INACCURATE PARTI CULARS. THE ASSESSEE HAD FURNISHED ALL THE DETAILS OF ITS EXPENDITURE AS WEL L AS INCOME IN ITS RETURN, WHICH DETAILS, IN THEMSELVES, WERE NOT FOUND TO BE INACCURATE NOR COULD BE VIEWED AS THE CONCEALMENT OF INCOME ON ITS PART. IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS CLAIM IN THE RETURN OR NOT. MERELY BE CAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPT ED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT ATTRACT TH E PENALTY UNDER S. 271(L)(C). IF THE CONTENTION OF THE REVENUE IS ACCEPTED THEN I N CASE OF EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTED BY AO FOR ANY REASON , THE ASSESSEE WILL INVITE PENALTY UNDER S. 271(L)(C). THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE. THE TRIBUNAL, AS WELL AS, THE CIT(A) A ND THE HIGH COURT HAVE CORRECTLY REACHED THIS CONCLUSION.SREE KRISHNA ELE CTRICALS VS. STATE OF TAMIL NADU & ANR. (2009) 23 VST 249 (SC) APPLIED; RELIANCE PETROPRODUCTS (P) LTD. (JUDGMENT DT. 23RD OCT., 2007 OF THE GUJAR AT HIGH COURT IN TAX APPEAL NO. 1149 OF 2007) AFFIRMED. 25. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS AMTEK AUTO LTD. (2013) 84 CCH 140 (P&H) HELD THAT THE ASSESSEE HAD DISCLOSED THE NATURE OF TRANSACTION IN ITS RETURN OF INCOME AND B ASED ON INTERPRETATION OF PROVISIONS OF THE STATUTE WHERE THE ASSESSING OF FICER FOUND THAT THE EXPENDITURE CLAIMED BY THE ASSESSEE WAS NOT REVENUE IN NATURE BUT CAPITAL EXPENSES, MERELY FOR THAT REASON WOULD NOT RENDER THE ASSESSEE LIABLE TO PENALTY PROCEEDINGS. THE RELEVANT FINDIN GS OF THE HON'BLE PUNJAB & HARYANA HIGH COURT VIDE PARA 4 ARE AS UNDE R : 4. THE ASSESSEE HAS DISCLOSED THE NATURE OF TRANSACTIO NS IN ITS RETURN. IT WAS ON THE BASIS OF INTERPRETATION OF THE PROVISION S OF THE STATUTE, THE ASSESSING OFFICER FOUND THAT SUCH EXPENDITURE CLAIMED BY THE ASSESSEE IS NOT THE REVENUE EXPENDITURE BUT THE CAPITAL EXPENSES. THERE IS FINE DISTINCTION AS TO WHEN AN EXPENDITURE CAN BE TREATED AS A REVENUE OR A CAPITA L EXPENDITURE. THEREFORE, MERELY FOR THE REASON THAT THE ASSESSEE HAS CLAIMED THE EXPENDITURE TO BE REVENUE WILL NOT RENDER THE ASSESSEE LIABLE TO P ENALTY PROCEEDINGS. THE ORDER PASSED BY THE TRIBUNAL DOES NOT GIVE RISE TO THE QU ESTIONS OF LAW SOUGHT BY THE REVENUE. 12 26. SIMILAR RATIO HAS BEEN LAID DOWN BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. SHAHBAD COOPERATIVE SUGAR MI LLS LTD [322 ITR 73 (P&H)], WHEREIN IT HAS BEEN OBSERVED THAT MAKING WRONG CLAIM FOR DEDUCTION, DOES NOT AMOUNT TO CONCEALMENT OR GIVING OF INACCURATE PARTICULARS WITHIN THE MEANING OF SECTION 271 (1)(C ) OF THE ACT. 27. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. SIDHARTHA ENTERPRISES [(2010) 228 CTR (P&H) 579 ] HELD THAT THE JUDGMENT OF THE HON'BLE SUPREME COURT IN DHARMENDRA TEXTILE (SUPRA) CANNOT BE READ AS LAYING DOWN THAT EVERY CASE WHERE PARTICULARS OF IN COME ARE INACCURATE, PENALTY MUST FOLLOW. WHAT HAS BEEN LAID DOWN IS TH AT QUALITATIVE DIFFERENCE BETWEEN CRIMINAL LIABILITY UNDER SECTION 276C AND P ENALTY UNDER S. 271(1)(C) HAD TO BE KEPT IN MIND AND APPROACH ADOPTED TO THE TRIAL OF A CRIMINAL CASE NEED NOT BE ADOPTED WHILE CONSIDERING THE LEVY OF P ENALTY. EVEN SO, CONCEPT OF PENALTY HAS NOT UNDERGONE CHANGE BY VIRTUE OF TH E SAID JUDGMENT. PENALTY IS IMPOSED ONLY WHEN THERE IS SOME ELEMENT OF DELIBERA TE DEFAULT AND NOT A MERE MISTAKE. THIS BEING THE POSITION, THE FINDING HAVI NG BEEN RECORDED ON FACTS THAT THE FURNISHING OF INACCURATE PARTICULARS WAS S IMPLY A MISTAKE AND NOT A DELIBERATE ATTEMPT TO EVADE TAX, THE VIEW TAKEN BY THE TRIBUNAL CANNOT BE HELD TO BE PERVERSE. 28. THE HON'BLE HIMACHAL PRADESH HIGH COURT IN CIT VS H.P. STATE FOREST CORPORATION LTD. (2012) 340 ITR 204 (HP) HELD AS UN DER : WE ARE OF THE CONSIDERED VIEW THAT THE LATEST JUDG EMENT OF THE APEX COURT IN RELIANCE PETRO PRODUCTS CASE (SUPRA) SQUARELY COVE RS THE PRESENT CASE ALSO. THE APEX COURT IN THIS JUDGMENT HAS CLEARLY HELD TH AT THE WORD 'INACCURATE' AS USED IN THE ACT WOULD MEAN SOMETHING WHICH IS NOT A CCURATE, NOT EXACT OR NOT CORRECT. SOMETHING WHICH IS UNTRUE IS INACCURATE. T HE SAME FACTS CAN BE GIVEN TWO INTERPRETATIONS. IF THE INTERPRETATION GIVEN IS PLAUSIBLE THOUGH NOT ACCEPTED BY THE ASSESSING AUTHORITY IT CANNOT BE SA ID THAT THE STATEMENT OF PARTICULARS IS SO INACCURATE OR ERRONEOUS AS TO INV ITE IMPOSITION OF PENALTY. TRUE IT IS THAT MENS REA IS NOT REQUIRED TO BE PROV ED. WHEN MENS REA IS PROVED IT SHOWS THAT THE PERSON HAD AN INTENTION OF EVADIN G PAYMENT OF TAX BY ILLEGAL MEANS. MERELY BECAUSE A WRONG INTERPRETATION TO THE SAME SET OF FACTS IS GIVEN WOULD NOT, IN OUR OPINION, MEAN THAT THE ASSESSEE I S LIABLE TO PAY PENALTY ALSO. WE MUST REMEMBER THAT PENALTY IS BY ITS VERY NATURE PENAL AND SOMEBODY IS BEING PUNISHED FOR AN ACT WHICH IS UNJUSTIFIED. THE ASSESSEE IN THE PRESENT CASE HAS ALREADY BEEN BURDENED WITH TAX AND INTERES T ON THE AMOUNT ADDED TO 13 HIS INCOME. THE MOOT QUESTION IS WHETHER THE ASSESS EE SHOULD BE MADE LIABLE TO PAY PENALTY. 22. THE APEX COURT IN RELIANCE PETRO PRODUCTS' CASE (SU PRA) HAS CLEARLY LAID DOWN THAT MERELY BECAUSE THE ASSESSEE MAKES A CLAIM WHICH IS NOT SUSTAINABLE IN LAW, WILL NOT AMOUNT TO FURNISHING INACCURATE PA RTICULARS REGARDING THE INCOME OF THE ASSESSEE. IN THE PRESENT CASE, AS POI NTED OUT ABOVE, THE ASSESSEE WAS DEDUCTING THE AMOUNT OF RS. 2,12,18,295 ON ACCO UNT OF DETERIORATION OF OLD STOCK. THIS WAS BEING DONE ON ESTIMATION ON THE BASIS OF THE REPORTS MADE BY VARIOUS OFFICERS OF THE CORPORATION. THIS ESTIMA TION WAS NOT ACCEPTED MAINLY ON THE GROUND THAT THE REPORTS WERE MADE AND RESOLUTION PASSED BY THE BOARD AFTER THE ASSESSMENT YEAR WAS OVER AND THEREF ORE THEY COULD NOT BE GIVEN RETROSPECTIVE BENEFIT. IT HAS NOT BEEN FOUND THAT THE CLAIM OF THE ASSESSEE THAT THE WOOD HAD ROTTED AND DETERIORATED IS FALSE. IT IS NOBODY'S CASE THAT THE ASSESSEE FUDGED THE AMOUNTS, THE BOOKS OF ACCOUNTS OR TRIED TO CREATE FALSE EVIDENCE. THE CLAIM MADE BY THE ASSESSEE MAY NOT HAVE BEEN ACCEPTED BY THE REVENUE BUT IT CANNOT BE SAID THAT THE ASSESSEE FURNISHED INACCURATE PARTICULARS TO SUCH AN EXTENT THAT PENALTY SHOULD B E IMPOSED UPON IT. THERE DOES NOT APPEAR TO BE FALSEHOOD IN THE ACCOUNTS THO UGH THE SYSTEM OF CALCULATING THE DEPRECIATION MAY HAVE BEEN IMPROPER . WE ALSO CANNOT LOSE SIGHT OF THE FACT THAT ASSESSEE IS A GOVERNMENT COR PORATION. ITS ACCOUNTS ARE DULY AUDITED AND EVEN THE CAG HAS GONE THROUGH AND APPROVED THE ACCOUNTS OF THE CORPORATION. IN SUCH CIRCUMSTANCES, WE ARE O F THE VIEW THAT MERELY BECAUSE THE ASSESSEE HAD CLAIMED DEPRECIATION WHICH CLAIM WAS NOT ACCEPTED BY THE REVENUE THAT BY ITSELF WOULD NOT, IN OUR OPI NION, ATTRACT PENALTY UNDER S. 271(L)(C) OF THE ACT. 29. ANOTHER ASPECT TO BE CONSIDERED WHILE LEVYING P ENALTY UNDER SECTION 271(1)(C) OF THE ACT IS THE EXPLANATION-I T O SECTION 271(1) OF THE ACT. CLAUSE (A) OF EXPLANATION-I TO SECTION 271(1 ) OF THE ACT PROVIDES THAT WHERE ANY PERSON UNDER THE ACT FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION WHICH IS FOUND TO BE FALSE BY THE ASSESSING OFFICER, CIT (APPEALS) OR COMMISSIONER OF INCOME TA X, THEN THE AMOUNT ADDED OR DISALLOWED WHILE COMPUTING TOTAL INCOME OF SUCH PERSON, IS DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS OF INCOME HAVE BEEN CONCEALED. 30. FURTHER CLAUSE (B) OF EXPLANATION-I TO SECTION 271(1) OF THE ACT PROVIDES THAT WHERE SUCH PERSON OFFERS AN EXPLANATI ON, WHICH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH E XPLANATION WAS BONAFIDE AND THAT ALL THE FACTS RELATING TO THE SAM E AND MATERIAL TO THE COMPUTATION OF HIS INCOME HAVE BEEN DISCLOSED BY HI M, THEN SUCH AMOUNT ADDED TO HIS INCOME IS TO BE TREATED AS INCOME IN R ESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. THUS IN CASES WHE RE THE ASSESSEE OFFERS AN EXPLANATION WHICH THOUGH HE IS NOT ABLE TO SUBST ANTIATE BUT IS ABLE TO PROVE THE EXPLANATION OFFERED BY HIM WAS BONAFIDE A ND ALL THE FACTS 14 RELATING TO THE SAME HAD BEEN DISCLOSED BY HIM, THE N HE IS NOT LIABLE TO LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. IN SUCH CASES WHERE SUCH PERSON HAS DISCHARGED THE ONUS CAST UPON HIM B Y THE ACT, CANNOT BE SAID TO HAVE CONCEALED THE PARTICULARS OF HIS INCO ME OR FURNISHED INACCURATE PARTICULARS OF INCOME. 31. THE HON'BLE DELHI HIGH COURT IN CIT VS DEEKSHA HOLIDAYS LTD. (2010) 186 TAXMAN 183 (DEL) HAD DELIBERATED UPON TH E ISSUE AND HAD UPHELD THE ORDER OF THE TRIBUNAL WHO IN TURN HAD CO NSIDERED VARIOUS JUDICIAL PROPOSITIONS ON THE ISSUE AND HELD AS UNDE R : PENALTY HAVING BEEN CANCELLED BY THE TRIBUNAL ON FI NDING THAT ASSESSEE HAD DISCLOSED ALL THE FACTS BEFORE THE A.O. AND DIS ALLOWANCE WAS MADE BECAUSE THE ASSESSEE'S CLAIM HAD NOT BEEN SUBSTANT IATED WITH SUFFICIENT EVIDENCE, NO SUBSTANTIAL QUESTION OF LAW ARISES. 32. IN CASES WHERE TWO VIEWS ARE POSSIBLE THEN THE ISSUE BEING DEBATABLE AND CLAIM OF THE ASSESSEE HAVING BEEN BAS ED ON ONE OF THE POSSIBLE VIEWS, THE DISALLOWANCE IN THE HANDS OF TH E ASSESSEE BY THE ASSESSING OFFICER IN ADOPTING THE OTHER VIEW DOES N OT JUSTIFY LEVY OF PENALTY FOR CONCEALMENT UNDER SECTION 271(1)(C) OF THE ACT IN THE HANDS OF THE ASSESSEE AS THE CLAIM OF THE ASSESSEE WAS ON THE BASIS OF ONE POSSIBLE VIEW. 33. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. TEK RAM (HUF) 300 ITR 354 (P&H) HAD HELD THAT WHERE THE IS SUE IS HIGHLY DEBATABLE IN AS MUCH AS TWO VIEWS WERE POSSIBLE ON THE SAID ISSUE AND WHERE THE CLAIM OF THE ASSESSEE ON THE ISSUE WAS BA SED ON ONE POSSIBLE VIEW, THE MAKING OF SUCH BONAFIDE CLAIM ON THE BASI S OF A POSSIBLE VIEW COULD NOT BE TREATED AS CONCEALMENT OF ITS INCOME B Y THE ASSESSEE OR FURNISHING OF INACCURATE PARTICULARS OF INCOME SO A S TO ATTRACT THE PENAL PROVISIONS OF SECTION 271 (1)(C) OF THE INCOME TAX ACT. 34. FURTHER, THE HON'BLE PUNJAB & HARYANA HIGH COUR T IN CIT VS RAJ OVERSEAS (2011) 306 ITR 261 (P&H) ALSO ADJUDICATING THE ISSUE OF LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON DI SALLOWANCE OF CLAIM OF 15 DEDUCTION UNDER SECTION 80IB OF THE ACT IN RESPECT OF INCOME FROM DUTY DRAWBACK HELD AS UNDER : THE ASSESSEE IS MANUFACTURER AND DERIVED INCOME FRO M EXPORTS. THE ASSESSEE CLAIMED DEDUCTION UNDER S. 80-IB OF THE AC T IN RESPECT OF INCOME FROM DUTY DRAW BACK. THE AO DISALLOWED THE SAID CLA IM ON THE GROUND THAT THE INCOME DERIVED FROM DUTY DRAW BACK WAS NOT INCO ME DERIVED FROM INDUSTRIAL UNDERTAKING, AS HELD BY THE HON'BLE SUPR EME COURT IN CIT VS. STERLING FOODS INDIA (1999) 153 CTR (SC) 439 : (199 9) 237 ITR 579 (SC). PENALTY WAS ALSO LEVIED. THE CIT(A) UPHELD THE VIEW OF THE AO BUT THE TRIBUNAL DELETED THE PENALTY WITH THE FOLLOWING OBS ERVATIONS : ...................THUS, PRIMA FACIE, IT INDICATES THAT THIS ISSUE WAS A DEBATABLE ONE. 4. IN VIEW OF FACTUAL FINDING OF THE TRIBUNAL, IT C ANNOT BE DISPUTED THAT THE ISSUE WAS DEBATABLE AND DEDUCTION CLAIMED BY THE AS SESSEE DID NOT LACK BONA FIDES. IN SUCH A SITUATION, PENALTY UNDER S. 7 1(C) OF THE ACT WAS NOT ATTRACTED. IN RECENT JUDGMENT OF THE HON'BLE SUPREM E COURT IN CIT VS. RELIANCE PETROPRODUCTS (P) LTD. (2010) 230 CTR (SC) 320 : (2010) 36 DTR (SC) 449 THE LEGAL POSITION TO THIS EFFECT HAS BEEN REITERATED. IF THE ASSESSEE HAS MADE FULL DISCLOSURE IN THE RETURN, CLAIM FOR D EDUCTION CANNOT BE HELD TO BE GIVING OF INACCURATE PARTICULARS. THE VIEW TAKEN BY THE TRIBUNAL IS, THUS, A POSSIBLE VIEW. 35. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. M/S GURDASPUR COOPERATIVE SUGAR MILLS (2013) 354 ITR 24 (P&H) ON THE ISSUE WHETHER THE AMOUNT OF GRANT-IN-AID WAS CAPITA L RECEIPT OR REVENUE RECEIPT BEING DEBATABLE ISSUE HELD THAT THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS NOT IMPOSABLE. THE RELEVA NT FINDINGS OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. M/S GURDASPUR COOPERATIVE SUGAR MILLS (SUPRA) ARE AS UNDER: 3. WE FIND THAT THE RELIANCE ON THE ABOVESAID JUDGM ENT IS NOT TENABLE, AS IN THE AFORESAID CASE, THE DEDUCTIONS UNDER SECTION 80-O OF THE ACT WAS DECLINED FOR THE REASON THAT THE ASSESSEE HAS NOT P RODUCED ANY DETAILS OF THE EXPENSES ALLEGEDLY INCURRED BY IT. THE DELHI HIGH C OURT OBSERVED (PAGE 170): 'THE ASSESSEE, FOR CLAIMING DEDUCTION UNDER SECTION 80-O OF THE ACT, WANTED THE SAME AT 50 PER CENT OF THE GROSS INCOME RECEIVED IN CONVERTIBLE FOREIGN EXCHANGE IN INDIA PROVIDED BY IT TO ITS FOREIGN CLIENTS. THE ASSESSING OFFICER, HOWEVER, WAS OF THE VIEW THAT ON CORRECT INTERPRETATION UNDER SE CTION 80-O, DEDUCTION IS RESTRICTED TO THE NET INCOME AND, THEREFORE, EXPEND ITURE INCURRED IN INDIA FOR EARNING THE FOREIGN EXCHANGE HAD TO BE DEDUCTED. TH E ASSESSING OFFICER, THEREFORE, WANTED THE ASSESSEE TO FURNISH THE DETAILS OF EXPEN SES. AS THE ASSESSEE FAILED TO DO THE NEEDFUL IN RESPECT OF VARIOUS PARTICULARS DEMAN DED, THE ASSESSING OFFICER WAS LEFT WITH NO ALTERNATIVE BUT TO ESTIMATE SUCH EXPEN DITURE IN THE RATIO OF PROPORTION OF FOREIGN INCOME TO THE TOTAL INCOME.' 4. IN THE PRESENT CASE, THERE IS NO DISPUTE ABOUT THE QUANTUM OF RECEIPT OF GRANT- IN-AID FROM THE STATE GOVERNMENT. THE ASSESSEE REFL ECTED THE SAME AS CAPITAL RECEIPT, WHEREAS IT HAS BEEN TREATED AS TO BE REVEN UE RECEIPT. THE ISSUE WHETHER THE AMOUNT OF GRANT-IN-AID IS CAPITAL RECEIPT OR A REVENUE RECEIPT, IS A DEBATABLE ISSUE. THE FINDINGS RETURNED IN THE JUDGMENT RELIED UPON IS ON FEET OF NON-FURNISHING 16 OF DETAILS OF EXPENSES. THE ISSUE WAS NOT DEBATABLE AS IN THE PRESENT CASE. THEREFORE, THE RELIANCE ON THE DIVISION BENCH JUDGM ENT IS MISCONCEIVED. 5. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY ERROR I N THE FINDINGS RECORDED BY THE TRIBUNAL WHILE SETTING ASIDE THE PENALTY. CONSE QUENTLY, WE DO NOT FIND THAT THE ORDER OF THE TRIBUNAL GIVES RISE TO ANY SUBSTAN TIAL QUESTION OF LAW FOR THE OPINION OF THIS COURT. 36. NOW COMING TO THE FACTS OF THE PRESENT CASE, PE NALTY UNDER SECTION 271(1)(C) OF THE ACT HAD BEEN LEVIED ON VARIOUS ADD ITIONS AND WE PROCEED TO ADDRESS THE SAME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THE ASSESS EE TO HAVE CLAIMED DEDUCTION ON PRIOR PERIOD EXPENSES AMOUNTING TO RS. 54,56,428/-. THE ASSESSEE WAS REQUISITIONED TO GIVE THE DETAILS OF L IABILITY WHICH HAD ARISEN DURING THE YEAR TO PAY SAID EXPENSES. THE A SSESSEE FAILED TO FURNISH ANY DETAILS IN RESPECT THEREOF AND THE SAID AMOUNT PERTAINING TO EARLIER YEAR WAS ADDED BACK TO THE INCOME OF THE AS SESSEE. 37. THE TRIBUNAL (SUPRA) IN THE QUANTUM APPEAL IN I TA NO.321/CHD/2009 RELATING TO ASSESSMENT YEAR 2004-05 VIDE ORDER DATED 27.9.2011 VIDE PARA 6 AT PAGE 3 OF THE ORDER HAS RE MITTED THE ISSUE OF PRIOR PERIOD EXPENSES BACK TO THE FILE OF THE ASSES SING OFFICER. IN VIEW THEREOF, WE DELETE THE LEVY OF PENALTY UNDER SECTIO N 271(1)(C) OF THE ACT ON THE SAID. THE ASSESSING OFFICER IN ACCORDANCE W ITH LAW CAN INITIATE PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT AFTER ADJUDICATING THE ISSUE OF QUANTUM ADDITION. 38. THE NEXT ITEM OF RECOMPUTATION OF INCOME IN THE HANDS OF THE ASSESSEE WAS ON ACCOUNT OF NON ALLOWANCE OF SET OFF OF BROUGHT FORWARD LOSSES AND DEPRECIATION. THE FACTS RELATING TO THE SAID RECOMPUTATION WERE THAT THE ASSESSEE DURING THE YEAR UNDER CONSID ERATION HAD CLAIMED SET OFF OF BROUGHT FORWARD LOSSES AND DEPRECIATION OF EARLIER YEAR AMOUNTING TO RS.22,45,85,291/-. THE ASSESSING OFFI CER NOTED THAT THE ASSESSEE IN THE REVISED RETURN OF INCOME RELATING T O ASSESSMENT YEAR 2003-04 FILED ON THE SAME DATE AS ON THE DATE OF WH ICH RETURN OF INCOME FOR ASSESSMENT YEAR 2004-05 WAS FILED HAD DECLARED CARRY FORWARD OF 17 LOSSES/DEPRECIATION AT RS.10,56,51,159/- IN THE SAI D REVISED RETURN. HOWEVER, IN THE RETURN OF INCOME FILED FOR THE CAPT IONED ASSESSMENT YEAR THE SAID BROUGHT FORWARD LOSSES AND DEPRECIATION WE RE DECLARED AT RS.22,45,85,291/- AS AGAINST THE CORRECT CLAIM OF R S.10,56,51,159/-. THE BROUGHT FORWARD LOSSES WERE ADJUSTED AGAINST THE IN COME ASSESSED FOR ASSESSMENT YEAR 2003-04 AND THE ASSESSEE HAD NO FUR THER LOSSES TO CARRY FORWARD. THE ASSESSING OFFICER HOWEVER, HELD THE A SSESSEE TO HAVE FURNISHED INACCURATE PARTICULARS OF INCOME TO THE E XTENT OF RS.11.89 CRORES, WHICH WAS UPHELD BY THE CIT (APPEALS). 39. THE PLEA OF THE ASSESSEE VIS--VIS ITS CLAIM ON BROUGHT FORWARD LOSSES AND THEIR NON ALLOWANCE WAS THAT THE SAID LO SSES WERE REVISED BECAUSE OF THE ADDITIONS MADE IN THE EARLIER YEARS I.E. BECAUSE OF THE TREATMENT OF SUBSIDY RECEIVED BY THE ASSESSEE AS RE VENUE RECEIPT AS AGAINST THE CLAIM OF THE ASSESSEE THAT THE SAME WAS CAPITAL RECEIPT. THE ASSESSEE HAD FURNISHED A NOTE NO.3 IN THE COMPUTATI ON OF INCOME PLACED AT PAGES 16 TO 18 OF THE PAPER BOOK UNDER WHICH IT WAS REPORTED THAT: 3. THE FIGURE OF BROUGHT FORWARD LOSS/DEPRECIATION AMOUNTING TO RS.22,45,85,291 HAS BEEN WORKED OUT AFTER TAKING INTO ACCOUNT THE CLAIM OF SALES TAX SUBSIDY IN EARLIER YEARS ON THE BASIS OF ITATS ORDERS IN ITS OWN CASE FOR THE ASSESSMENT YEAR 1993-94. 40. THE ISSUE ARISING BEFORE US IS WHETHER IN THE ABOVE SAID FACTS AND CIRCUMSTANCES, THE ASSESSEE COULD BE SAID TO HAVE F URNISHED INACCURATE PARTICULARS OF INCOME MAKING IT EXIGIBLE TO THE LEV Y OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. PENALTY FOR CONCEALM ENT UNDER SECTION 271(1)(C) OF THE ACT IS ATTRACTED WHERE THE ASSESSE E HAS CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOM E. THE CLAIM OF SET OFF OF BROUGHT FORWARD LOSSES WAS MADE BY THE ASSES SEE IN ITS RETURN OF INCOME BY CONSIDERING THE LOSSES RETURNED IN THE EA RLIER YEARS. HOWEVER, UNDER THE PROVISIONS OF THE ACT THE SAID SET OFF OF BROUGHT FORWARD LOSSES ARE TO BE ALLOWED BY THE ASSESSING OFFICER AS ASSES SED IN THE HANDS OF 18 THE ASSESSEE FROM YEAR TO YEAR AND NOT AS CLAIMED B Y THE ASSESSEE FROM YEAR TO YEAR. THE SAID EXERCISE IS TO BE CARRIED O UT BY THE ASSESSING OFFICER WHILE COMPUTING INCOME OF THE ASSESSEE FOR THE CAPTIONED ASSESSMENT YEAR IN WHICH SUCH SET OFF IS TO BE ALLO WED AND AFTER CONSIDERING THE ASSESSED INCOME/LOSSES IN THE EARLI ER YEARS AND SETTING OFF OF THE BROUGHT FORWARD LOSSES BOTH ON ACCOUNT O F BUSINESS LOSSES AND/OR DEPRECIATION. THE ASSESSEE WHILE FURNISHING RETURN OF INCOME IS ENTITLED TO MAKE CLAIM OF THE SET OFF OF BROUGHT FO RWARD LOSSES ON THE BASIS OF ITS RETURNS OF INCOME FILED FOR RESPECTIVE YEARS, AS IN CERTAIN CASES, THE ASSESSMENTS OF THE EARLIER YEARS WOULD S TILL BE PENDING FOR DISPOSAL ON THE DATE OF FURNISHING THE RETURN OF IN COME. IN THE ABOVE SAID SCENARIO, WHERE THE ASSESSEE HAD MADE THE SAID CLAIM OF SET OFF OF BROUGHT FORWARD LOSSES AND DEPRECIATION ON THE BASI S OF FIGURES DISCLOSED IN THE EARLIER YEARS, IN THE RETURNS OF INCOME FILE D FOR THE SAID YEARS AND THE SAME WERE FOUND TO BE AT VARIANCE BECAUSE OF TH E ASSESSMENT BEING COMPLETED IN THE HANDS OF THE ASSESSEE, THE SAME CA NNOT BE HELD TO BE FURNISHING OF INACCURATE PARTICULARS OF INCOME BY T HE ASSESSEE. WE FIND NO MERIT IN THE STAND OF AUTHORITIES BELOW IN HOLDI NG THAT THE ASSESSEE BY FURNISHING THE SAID DETAILS HAD FURNISHED INACCURAT E PARTICULARS OF INCOME SPECIALLY IN VIEW OF THE NOTE APPENDED TO THE COMPU TATION OF INCOME UNDER WHICH IT HAS BEEN DECLARED THAT THE SAID FIGU RES OF BROUGHT FORWARD LOSSES HAD BEEN WORKED OUT AFTER ACCOUNTING FOR THE CLAIM OF SALES TAX SUBSIDY FOR THE EARLIER YEAR ON THE BASIS OF THE OR DERS OF THE TRIBUNAL. NO DOUBT THE ASSESSEE HAD REVISED ITS CLAIM OF BROU GHT FORWARD LOSSES IN ASSESSMENT YEAR 2003-04 IN THE REVISED RETURN FILED FOR THE SAID YEAR, BUT THAT IN ITSELF WOULD NOT TANTAMOUNT TO FURNISHING O F INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE. ACCORDINGLY , WE DIRECT THE ASSESSING OFFICER TO DELETE PENALTY LEVIED UNDER SE CTION 271(1)(C) OF THE ACT ON THE SAID NON ALLOWANCE OF SET OFF OF BROUGHT FORWARD LOSSES/DEPRECIATION IN THE HANDS OF THE ASSESSEE. 19 41. WE FIND SUPPORT FROM THE RATIO LAID DOWN BY THE HON'BLE KARNATAKA HIGH COURT IN CIT & ANR. VS. MAKINO ASIA (P) LTD. ( SUPRA) WHEREIN IDENTICAL CLAIM OF SET OFF OF BROUGHT FORWARD LOSSE S WAS BEFORE THE HON'BLE COURT AND IT WAS HELD AS UNDER: THERE CANNOT BE ANY DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS T HE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF H IS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, T HE LIABILITY WOULD ARISE. IN THE PRESENT CASE, IT CANNOT BE SAI D THAT THE ASSESSEE FURNISHED ANY INACCURATE PARTICULARS OF HI S INCOME IN THE RETURN AND HENCE THE LIABILITY WOULD NOT ARISE. IT IS TRUE, THE PROPRIETY DEMANDS THAT AN ASSESSEE WHO IS OTHERWISE NOT ENTITLED TO CLAIM SET OFF OF THE LOSS CARRIED FORWARD OF THE BU SINESS, SHOULD AVOID MAKING SUCH CLAIM. BUT SUCH CLAIM WOULD NOT ATTRACT LEVY OF PENALTY. 42. SIMILAR VIEW HAS BEEN LAID DOWN BY ALLAHABAD BE NCH OF THE TRIBUNAL IN ACIT VS. A.H.WHEELERS & CO.(P) LTD. (SU PRA). FOLLOWING THE ABOVE SAID RATIO WE FIND NO MERIT IN THE ORDER OF THE CIT (APPEALS) IN UPHOLDING THE PENALTY LEVIABLE ON SUCH NON ALLOW ANCE SET OFF OF BROUGHT FORWARD LOSSES AND DEPRECIATION IN THE CASE OF THE ASSESSEE AND THE PENALTY RELATABLE TO SUCH DISALLOWANCE IS DELET ED. 43. THE NEXT ITEM OF ADDITION IS THE ASSESSABILITY OF SALES TAX SUBSIDY OF RS.6,80,61,977/- RECEIVED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. THE ASSESSEE HAD TREATED THE SAID SUBSIDY AS CAPITAL RECEIPT IN ITS RETURN OF INCOME, BUT THE SAME WAS A SSESSED AS REVENUE RECEIPT IN THE HANDS OF THE ASSESSEE FOLLOWING THE RATIO LAID DOWN BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN ASSESSEES O WN CASE REPORTED IN 286 ITR 1 (P&H). THE TRIBUNAL (SUPRA) FOR THE INST ANT ASSESSMENT YEAR ALSO HELD THE SAID SUBSIDY TO BE REVENUE IN NATURE. HOWEVER, THE ASSESSEE HAD PREFERRED SLP AGAINST THE ORDER OF THE HON'BLE PUNJAB & HARYANA HIGH COURT AND THE QUESTION OF LAW HAS BEEN ADMITTED AND THE SLP IS PENDING BEFORE THE HON'BLE SUPREME COURT OF INDIA. THE ISSUE RAISED VIDE THE PRESENT APPEAL IS IN RELATION TO LE VY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON SUCH DEBATABLE ISS UE. IN CASES WHERE THE ASSESSEE HAD CLAIMED THE EXPENDITURE AS REVENUE IN NATURE BUT THE SAME 20 HELD TO BE CAPITAL EXPENDITURE IN THE HANDS OF THE ASSESSEE, THE ISSUE RELATABLE TO SUCH DISALLOWANCE OF EXPENDITURE IS A DEBATABLE ISSUE AND ADDITION MADE ON THE BASIS OF SUCH DEBATABLE ISSUE CANNOT TANTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. TH E CLAIM OF THE ASSESSEE BEING REJECTED IN THE INSTANT CASE I.E. TH E DEBATE BEING WHETHER THE SALES TAX SUBSIDY RECEIVED BY THE ASSESSEE WAS CAPITAL IN NATURE OR NOT WAS A DEBATABLE ISSUE. 44. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. TEK RAM (HUF) 300 ITR 354 (P&H) HAD HELD THAT WHERE THE IS SUE IS HIGHLY DEBATABLE IN AS MUCH AS TWO VIEWS WERE POSSIBLE ON THE SAID ISSUE AND WHERE THE CLAIM OF THE ASSESSEE ON THE ISSUE WAS BA SED ON ONE POSSIBLE VIEW, THE MAKING OF SUCH BONAFIDE CLAIM ON THE BASI S OF A POSSIBLE VIEW COULD NOT BE TREATED AS CONCEALMENT OF ITS INCOME B Y THE ASSESSEE OR FURNISHING OF INACCURATE PARTICULARS OF INCOME SO A S TO ATTRACT THE PENAL PROVISIONS OF SECTION 271 (1)(C) OF THE INCOME TAX ACT. 45. FURTHER SIMILAR ISSUE OF LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT AROSE BEFORE THE CHANDIGARH BENCH OF TRIBUN AL IN THE CASE OF DCIT VS. M/S BHUSHAN POWER & STEEL LTD. (SUPRA) AND THE TRIBUNAL VIDE ORDER DATED 25.9.2013 ON SIMILAR ISSUE OF LEVY OF P ENALTY UNDER SECTION 271(1)(C) OF THE ACT ON ISSUE OF HOLDING THE SALES TAX SUBSIDY AS CAPITAL IN NATURE HELD AS UNDER: 18. THE ISSUE ARISING VIDE PRESENT APPEAL IS IN RE LATION TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT ON SUCH DEBATABLE ISSUE. THE PLEA OF THE ASSESSEE IN THE PRESENT CASE WAS ADMITTED FO R ADJUDICATION BEFORE THE HIGHER FORUMS, MAKES THE ISSUE DEBATABLE ISSUE. THE ADDITION IN THE PRESENT CASE HAS BEEN MADE ON THE B ASIS OF SUCH DEBATABLE ISSUE THAT WHETHER THE SALES TAX SUBSIDY RECEIVED BY THE ASSESSEE WAS CAPITAL IN NATURE OR NOT. WE FURTHER FIND THAT SIMILAR ISSUE OF RECEIPT OF SUBSIDY UNDER THE WEST BENGAL I NCENTIVE SCHEME HAS BEEN HELD TO BE CAPITAL RECEIPT IN THE CASE OF CIT VS. RASOI LTD.(SUPRA) BY THE HON'BLE CALCUTTA HIGH COURT. TH E UNIT OF THE ASSESSEE HAD BEEN ESTABLISHED IN THE STATE OF WEST BENGAL AND THE CASE OF THE ASSESSEE IS THAT IT IS GOVERNED BY THE SAID SCHEME AS BEFORE THE HON'BLE CALCUTTA HIGH COURT. IN VIEW TH EREOF, THE ISSUE RAISED BEFORE US IS WHERE ADDITION HAS BEEN MADE IN RELATION TO SUCH DEBATABLE ISSUE, THE ASSESSEE COULD BE SAID TO HAVE FURNISHED INACCURATE PARTICULARS OF INCOME MAKING IT EXIGIBLE TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. 21 19. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. M/S GURDASPUR COOPERATIVE SUGAR MILLS (SUPRA) ON THE IS SUE WHETHER THE AMOUNT OF GRANT-IN-AID WAS CAPITAL RECEIPT OR R EVENUE RECEIPT BEING DEBATABLE ISSUE HELD THAT THE PENALTY U/S 271 (1)(C) OF THE ACT WAS NOT IMPOSABLE. THE RELEVANT FINDINGS OF THE HO N'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. M/S GURDASPUR COOPERA TIVE SUGAR MILLS (SUPRA) ARE AS UNDER: 3. WE FIND THAT THE RELIANCE ON THE ABOVESAID JUDGM ENT IS NOT TENABLE, AS IN THE AFORESAID CASE, THE DEDUCTIONS UNDER SECTION 80-O OF THE ACT WAS DECLINED FOR THE REASON THAT THE ASSESSEE HAS NOT P RODUCED ANY DETAILS OF THE EXPENSES ALLEGEDLY INCURRED BY IT. THE DELHI HI GH COURT OBSERVED (PAGE 170): 'THE ASSESSEE, FOR CLAIMING DEDUCTION UNDER SECTION 80-O OF THE ACT, WANTED THE SAME AT 50 PER CENT OF THE GROSS INCOME RECEIVE D IN CONVERTIBLE FOREIGN EXCHANGE IN INDIA PROVIDED BY IT TO ITS FOREIGN CLI ENTS. THE ASSESSING OFFICER, HOWEVER, WAS OF THE VIEW THAT ON CORRECT INTERPRETA TION UNDER SECTION 80-O, DEDUCTION IS RESTRICTED TO THE NET INCOME AND, THER EFORE, EXPENDITURE INCURRED IN INDIA FOR EARNING THE FOREIGN EXCHANGE HAD TO BE DE DUCTED. THE ASSESSING OFFICER, THEREFORE, WANTED THE ASSESSEE TO FURNISH THE DETAILS OF EXPENSES. AS THE ASSESSEE FAILED TO DO THE NEEDFUL IN RESPECT OF VAR IOUS PARTICULARS DEMANDED, THE ASSESSING OFFICER WAS LEFT WITH NO ALTERNATIVE BUT TO ESTIMATE SUCH EXPENDITURE IN THE RATIO OF PROPORTION OF FOREIGN INCOME TO THE TO TAL INCOME.' 5. IN THE PRESENT CASE, THERE IS NO DISPUTE ABOUT THE QUANTUM OF RECEIPT OF GRANT-IN-AID FROM THE STATE GOVERNMENT. THE ASSESSE E REFLECTED THE SAME AS CAPITAL RECEIPT, WHEREAS IT HAS BEEN TREATED AS TO BE REVENUE RECEIPT. THE ISSUE WHETHER THE AMOUNT OF GRANT-IN-AID IS CAPITAL RECEI PT OR A REVENUE RECEIPT, IS A DEBATABLE ISSUE. THE FINDINGS RETURNED IN THE JUDGM ENT RELIED UPON IS ON FEET OF NON-FURNISHING OF DETAILS OF EXPENSES. THE ISSUE WA S NOT DEBATABLE AS IN THE PRESENT CASE. THEREFORE, THE RELIANCE ON THE DIVISI ON BENCH JUDGMENT IS MISCONCEIVED. 6. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY ERROR IN T HE FINDINGS RECORDED BY THE TRIBUNAL WHILE SETTING ASIDE THE PENALTY. CONSEQUEN TLY, WE DO NOT FIND THAT THE ORDER OF THE TRIBUNAL GIVES RISE TO ANY SUBSTAN TIAL QUESTION OF LAW FOR THE OPINION OF THIS COURT. 20. SIMILAR PROPOSITION HAS ALSO BEEN LAID DOWN BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. TEK RAM (HU F) (SUPRA). 21, THE HON'BLE SUPREME COURT IN CIT, AHEMDABAD VS. RELIANCE PETROPRODUCTS PVT. LTD (SUPRA) HAVE LAID DOWN THE P ROPOSITION THAT A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REG ARDING THE INCOME OF THE ASSESSEE. 22. IN THE TOTALITY OF THE ABOVE SAID FACTS AND F OLLOWING THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN CIT , AHEMDABAD VS. RELIANCE PETROPRODUCTS PVT. LTD (SUPRA) AND THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. M/S GURDASPUR COOPERA TIVE SUGAR MILLS (SUPRA) AND CIT VS. TEK RAM (HUF) (SUPRA) WE HOLD THAT IN VIEW OF THE DEBATABLE ISSUE RAISED, THE ASSESSEE IS NOT EXIGIBLE TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT IN THE FAC TS OF THE PRESENT CASE WHERE THE CLAIM OF THE ASSESSEE THAT THE RECEI PTS WERE CAPITAL IN NATURE WAS REJECTED AND THE RECEIPTS WERE HELD T O BE REVENUE IN NATURE AND HENCE TAXABLE. UPHOLDING HE ORDER OF TH E CIT (APPEALS) WE DISMISS THE GROUNDS OF APPEAL RAISED B Y THE REVENUE IN ITA NO.70/CHD/2012. 22 46. FOLLOWING THE SAME FINDING, WE FIND NO MERIT IN HOLDING THE ASSESSEE TO HAVE FURNISHED INACCURATE PARTICULARS O F INCOME IN RESPECT OF SUCH DEBATABLE ISSUE. THE ASSESSEE IS NOT EXIGIBLE TO LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON THE AFORESAID TREATMENT OF SALES TAX SUBSIDY AS REVENUE IN THE HANDS OF THE ASSESSEE AND WE UPHOLD THE ORDER OF THE CIT (APPEALS) IN DIRECTING THE ASSESSING OFF ICER TO DELETE THE SAME. 47. THE NEXT ITEM OF DISALLOWANCE IS THE DISALLOWAN CE MADE UNDER SECTION 36(1)(III) OF THE ACT ON ACCOUNT OF DISALLO WANCE OF INTEREST PAID ON SECURED LOANS BEING RELATABLE TO INTEREST FREE A DVANCES MADE BY THE ASSESSEE. THE SAID ISSUE OF DISALLOWANCE UNDER SEC TION 36(1)(III) OF THE ACT WAS MADE IN THE CASE OF THE ASSESSEE FOLLOWING THE OBSERVATION MADE IN THE EARLIER YEARS WHICH HAS BEEN CONFIRMED BY TH E HON'BLE PUNJAB & HARYANA HIGH COURT IN ASSESSEES OWN CASE REPORTED IN 286 ITR 1. THE ASSESSEE HAS PREFERRED SLP BEFORE THE HON'BLE SUPRE ME COURT OF INDIA, WHICH HAS BEEN ADMITTED AND QUESTION OF LAW HAS BEE N FRAMED ON THIS ACCOUNT. FOLLOWING THE PARITY OF REASONING IN RESP ECT OF THE TREATMENT TO SALES TAX SUBSIDY AND THE QUESTION OF LAW PENDING A DJUDICATION BEFORE THE HON'BLE SUPREME COURT OF INDIA, WE CONFIRM THE ORDE R OF THE CIT (APPEALS) IN HOLDING THAT IN VIEW OF THE DEBATABLE ISSUE RAISED THE ASSESSEE CANNOT BE HELD TO HAVE FURNISHED INACCURAT E PARTICULARS OF INCOME AND HENCE NOT EXIGIBLE TO LEVY OF PENALTY UN DER SECTION 271(1)(C) OF THE ACT. 48. THE NEXT ITEM OF DISALLOWANCE IS IN RESPECT OF EXCESS DEPRECIATION CLAIMED BY THE ASSESSEE ON GENERATOR. THE ASSESSEE HAD CLAIMED DEPRECIATION @ 25% AND ADDITIONAL DEPRECIATION @ 20 % ON THE ADDITION MADE TO GENERATOR ACCOUNT DURING THE YEAR. THE ASS ESSEE WAS HELD ELIGIBLE FOR DEPRECIATION @ 10% IN VIEW OF THE JUDG MENT OF HON'BLE ALLAHABAD HIGH COURT IN JANTA SUGARS LTD. [202 CTR 578 (ALL)]. THE ASSESSEE WAS HELD NOT TO BE ENTITLED TO ANY CLAIM O F ADDITIONAL 23 DEPRECIATION. IN VIEW OF THE ABOVE SAID DISALLOWAN CE PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS LEVIED FOR FURNISH ING INACCURATE PARTICULARS OF INCOME. IN RESPECT OF THE RATE OF D EPRECIATION ALLOWABLE TO THE ASSESSEE, THE ISSUE WAS DEBATABLE AND AS POINTE D OUT BY THE ASSESSING OFFICER HAD BEEN SETTLED BY THE RECENT JUDGMENT OF THE HON'BLE ALLAHABAD HIGH COURT (SUPRA). IN VIEW THEREOF, WHERE THERE I S VARIANCE IN THE RATES OF DEPRECIATION TO BE ALLOWED ON THE ASSET, THE ISS UE AT BEST IS DEBATABLE AND SUCH DISALLOWANCE DOES NOT WARRANT LEVY OF PENA LTY UNDER SECTION 271(1)(C) OF THE ACT. HOWEVER, THE CLAIM OF THE AD DITIONAL DEPRECIATION ON THE SAID ASSET BY THE ASSESSEE WAS BOTH INCORREC T AND MISCONCEIVED, AS THERE IS NO PROVISIONS OF ALLOWANCE OF ADDITIONAL D EPRECIATION ON SUCH ASSET DURING THE PERIOD UNDER CONSIDERATION. THE ASSESSEE HAS MADE A FALSE CLAIM OF ADDITIONAL DEPRECIATION AND THE ASSE SSEE IS EXIGIBLE TO LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON SU CH WRONG CLAIM OF DEPRECIATION. 49. THE NEXT ADDITION MADE IN THE HANDS OF THE ASSE SSEE WAS ON ACCOUNT OF RECOMPUTATION OF DEDUCTION UNDER SECTION 80IA OF THE ACT. THE ASSESSEE WAS HELD TO BE ELIGIBLE FOR THE AFORESAID ADDITION. HOWEVER, CERTAIN ITEMS OF INCOME ON WHICH DEDUCTION UNDER SE CTION 80IA OF THE ACT WAS CLAIMED BY THE ASSESSEE WAS FOUND TO BE INC ORRECT. THE FIRST SUCH ITEM OF INCOME WAS THE MISC. INCOME OF RS.2,32 ,124/-. IN THE QUANTUM APPEAL FILED BY THE ASSESSEE, THE TRIBUNAL (SUPRA) VIDE PARA 9 AT PAGES 4 AND 5 OF THE ORDER HELD THAT THE MISC. INCO ME CLAIMED BY THE ASSESSEE WAS NOT DERIVED FROM ANY INDUSTRIAL UNDERT AKING. THE ASSESSEE WAS HELD NOT ENTITLED TO CLAIM DEDUCTION UNDER SECT ION 80IA OF THE ACT IN RESPECT OF SUCH MISC. INCOME FOLLOWING THE RATIO LA ID DOWN BY THE HON'BLE SUPREME COURT IN LIBERTY INDIA VS. CIT [317 ITR 218 (SC)]. THE ASSESSEE HAVING CLAIMED DEDUCTION UNDER SECTION 80IA OF THE ACT ON THE AFORESAID MISC. INCOME BY INCLUDING THE SAME IN THE ELIGIBLE PROFITS OF BUSINESS AND ITS DENIAL BEING DEBATABLE DOES NOT TANTAMOUNT TO 24 FURNISHING OF INACCURATE PARTICULARS OF INCOME BY T HE ASSESSEE AND MAKING IT EXIGIBLE TO LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 50. THE SECOND ITEM OF INCOME INCLUDED BY THE ASSES SEE IN THE PROFITS OF BUSINESS WHILE COMPUTING THE DEDUCTION UNDER SEC TION 80IA OF THE ACT WAS INTEREST INCOME OF RS.67,03,027/-. THE HON'BLE SUPREME COURT IN PANDIAN CHEMICALS LTD. (SUPRA) HELD THAT THE INTERE ST INCOME EARNED BY THE ASSESSEE COULD NOT BE HELD TO BE DERIVED FROM T HE INDUSTRIAL UNDERTAKING ENTITLED TO DEDUCTION UNDER SECTION 80I A OF THE ACT. THE ASSESSEE HAD FILED RETURN OF INCOME RELATING TO ASS ESSMENT YEAR 2004-05 ON 1.11.2004 I.E. THE DATE BY WHICH THE ISSUE WAS A LREADY SETTLED BY THE HON'BLE SUPREME COURT. THE PRINCIPLE LAID DOWN BY THE HON'BLE SUPREME COURT IN PANDIAN CHEMICALS LTD. (SUPRA) HAS BEEN APPLIED WHILE DECIDING THE QUANTUM APPEAL OF THE ASSESSEE BY THE TRIBUNAL AND VIDE PARA 16 IT HAS BEEN HELD THAT THE SAID INTEREST INC OME WAS NOT DERIVED FROM INDUSTRIAL UNDERTAKING AND HENCE WAS NOT ELIGI BLE FOR THE DEDUCTION UNDER SECTION 80IA OF THE ACT. IN VIEW OF THE SETT LED PRINCIPLE BY THE HON'BLE SUPREME COURT, WHICH WAS SETTLED PRIOR TO T HE DATE OF FURNISHING THE RETURN OF INCOME BY THE ASSESSEE AND THE SAID B EING THE LAW OF LAND ON THE SAID ISSUE, THE CLAIM MADE BY THE ASSESSEE I N ITS RETURN OF INCOME VIS--VIS INTEREST INCOME OF RS.67,03,027/- BEING I NELIGIBLE FOR DEDUCTION UNDER SECTION 80IA OF THE ACT TANTAMOUNTS TO FURNISHING OF INACCURATE PARTICULARS OF INCOME MAKING THE ASSESSE E EXIGIBLE TO LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE RE LIANCE OF THE LEARNED A.R. FOR THE ASSESSEE IN ITO VS. SHILPA FILAMENTS P . LTD. (SUPRA) IS MISPLACED AS THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT IN THE AFORESAID CASE WAS DELETED BECAUSE OF THE CLAIM OF THE ASSESSEE WAS HELD TO BE A BONAFIDE CLAIM ON THE BASIS OF LAW PREVAILI NG AT THAT TIME. FURTHER IN THE FACTS OF THE PRESENT CASE AS POINTED OUT IN PARAS HEREINABOVE, THE CLAIM OF THE ASSESSEE CANNOT BE SA ID TO BE BONAFIDE ONCE THE ISSUE HAD BEEN SETTLED BY THE HON'BLE SUPR EME COURT IN PANDIAN CHEMICALS LTD. (SUPRA). THUS THE ASSESSEE IS LIABL E TO LEVY OF PENALTY 25 UNDER SECTION 271(1)(C) OF THE ACT ON SUCH REWORKIN G OF DEDUCTION UNDER SECTION 80IA OF THE ACT ON INTEREST INCOME. ACCORD INGLY, WE UPHOLD THE ORDER OF THE CIT (APPEALS) IN THIS REGARD. 51. THE THIRD ITEM OF INCOME INCLUDED BY THE ASSESS EE AS BEING DERIVED FROM THE INDUSTRIAL UNDERTAKING WAS THE INSURANCE C LAIM AMOUNTING TO RS.2,00,61,091/- RECEIVED BY THE ASSESSEE BEING ELI GIBLE FOR THE DEDUCTION UNDER SECTION 80IA OF THE ACT. THE TRIBU NAL VIDE PARA 18 AT PAGE 11 OF THE ORDER HAVE APPLIED THE RATIO LAID DO WN BY THE HON'BLE JURISDICTIONAL HIGH COURT IN CIT VS. KHEMKA CONTAIN ERS (P) LTD. [275 ITR 559 (P&H)] IN HOLDING THAT THE INSURANCE CLAIM IS TO BE EXCLUDED FROM THE ELIGIBLE PROFITS OF BUSINESS FOR COMPUTING DEDUCTION UNDER SECTION 80IA OF THE ACT. HOWEVER, THE TRIBUNAL HAS ALSO NOTED THE FACT THAT THE HON'BLE DELHI HIGH COURT IN CIT VS. SPORTK ING INDIA LTD. (2010) [324 ITR 283 (DEL)] HAD DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. IN VIEW OF THE ABOVE SAID DIVERSION IN VIEWS ON THE SA ID ISSUE OF TREATMENT OF THE RECEIPTS FROM INSURANCE CLAIM BEING INCLUDIB LE OR NOT BEING INCLUDIBLE IN THE PROFITS OF BUSINESS, WHILE COMPUT ING DEDUCTION UNDER SECTION 80IA OF THE ACT I.E. WHETHER THE SAME IS DE RIVED OR NOT DERIVED FROM THE INDUSTRIAL UNDERTAKING, MAKES THE ISSUE DE BATABLE ISSUE AND ADDITIONS ON SUCH DEBATABLE ISSUE CAN NOT TANTAMOUN T TO FURNISHING OF INACCURATE PARTICULARS OF INCOME AS HELD BY US IN P ARAS HEREINABOVE. THE CLAIM OF THE ASSESSEE AT BEST COULD BE SAID TO BE D EBATABLE CLAIM WHICH DOES NOT MAKE THE ASSESSEE EXIGIBLE TO LEVY OF PENA LTY UNDER SECTION 271(1)(C) OF THE ACT. 52. THE NEXT ITEM OF DISPUTE IS THE DEDUCTION ALLOW ABLE UNDER SECTION 80HHC OF THE ACT. THE ASSESSEE HAD SHOWN TOTAL INC OME OF RS.6.22 CRORES WHICH INCLUDED THE NET INTEREST INCOME OF RS .46,21,181/- AS AGAINST GROSS INCOME OF RS.1.66 CRORES, WHICH INCRE ASES THE OTHER INCOME BY RS.120.47 LACS. THE ASSESSING OFFICER NOTED THA T WHILE COMPUTING THE BUSINESS INCOME ELIGIBLE FOR DEDUCTION UNDER SE CTION 80HHC OF THE 26 ACT, 90% OF RENT RECEIPTS AND DEPB RECEIPTS WERE EX CLUDED AND ASSESSEE WAS REQUISITIONED WHY 90% OF OTHER INCOME OF RS.622 .06 LACS SHOULD NOT BE REDUCED FROM THE PROFITS OF BUSINESS FOR THE PUR POSES OF DEDUCTION UNDER SECTION 80HHC OF THE ACT. THE ASSESSING OFFI CER RECOMPUTED DEDUCTION UNDER SECTION 80HHC OF THE ACT AT RS.2.42 CRORES AS PER ANNEXURE-A ANNEXED TO THE ASSESSMENT ORDER AS AGAIN ST RS.5.75 CRORES CLAIMED BY THE ASSESSEE. THE TRIBUNAL (SUPRA) VIDE PARAS 19 TO 29 HAVE DELIBERATED UPON THE COMPUTATION OF DEDUCTION UNDER SECTION 80HHC OF THE ACT IN RESPECT OF SUCH OTHER INCOME IN THE HAND S OF THE ASSESSEE. THE FIRST ITEM WAS THE EXCLUSION OF SCRAP SALE OF R S.1.33 CRORES FROM THE PROFITS OF BUSINESS, WHICH WAS NOT PRESSED BY THE A SSESSEE BEFORE THE TRIBUNAL AND HENCE THE SAME WAS DECIDED AGAINST THE ASSESSEE VIDE PARA 21 OF THE ORDER. THE SECOND ISSUE WAS THE SALES TA X SUBSIDY BEING TREATED AS BUSINESS INCOME AND WHETHER 90% ON SUCH RECEIPTS WAS TO BE EXCLUDED FROM THE PROFITS OF BUSINESS WHILE COMPUTI NG DEDUCTION UNDER SECTION 80HHC OF THE ACT. THE TRIBUNAL FOLLOWING T HE RATIO LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CAS E OF THE ASSESSEE ITSELF REPORTED IN 286 ITR 1 (P&H) HELD THAT THE SA LES TAX SUBSIDY AMOUNTING TO RS.6.81 CRORES WAS TO BE TREATED AS RE VENUE INCOME AND 90% OF THE SAID RECEIPTS WERE NOT TO BE EXCLUDED WH ILE COMPUTING ELIGIBLE PROFITS OF BUSINESS UNDER SECTION 80HHC OF THE ACT AS THE SAME DOES NOT FALL WITHIN PARAMETERS OF CLAUSE (BAA) TO SECTION 80HHC OF THE ACT. THE THIRD ISSUE WAS EXCLUSION OF 90% MISC. IN COME OF RS.1.27 CRORES FROM THE PROFITS OF BUSINESS. THE LEARNED A .R. FOR THE ASSESSEE DID NOT PRESS THE SAID GROUNDS OF APPEAL BEFORE THE TRIBUNAL IN THE QUANTUM PROCEEDINGS AND HENCE THE SAME WAS DISMISSE D. AS REGARDS INSURANCE CLAIM OF RS.2.00 CRORES THE TRIBUNAL HELD THAT THE SAME COULD NOT BE CONSIDERED AS PROFITS OF THE BUSINESS AND HE NCE SUCH RECEIPTS HAD TO BE EXCLUDED FROM THE PROFITS OF BUSINESS WHILE C OMPUTING DEDUCTION UNDER SECTION 80HHC OF THE ACT. 27 53. FURTHER THE AMOUNT OF DEPB RECEIPT WAS ALSO HEL D TO BE NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80HHC OF THE A CT IN VIEW OF THE DECISION OF HON'BLE BOMBAY HIGH COURT IN CIT VS. KA LAPATRU CHEMICALS [328 ITR 451 (BOM)]. ACCORDINGLY DEDUCTION @ 90% O N SUCH RECEIPTS WAS DENIED TO THE ASSESSEE. 54. FROM THE PERUSAL OF THE ORDER LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT BY THE ASSESSING OFFICER AND T HE CONSEQUENT APPELLATE ORDER BY THE CIT (APPEALS), WE FIND THAT THOUGH THE RECOMPUTATION OF DEDUCTION UNDER SECTION 80HHC OF T HE ACT WAS MADE ON VARIOUS ACCOUNTS BUT THE REFERENCE IS ONLY MADE TO THE SCRAP SALE DISALLOWED I.E. SUM OF RS.1.33 CRORES FROM THE PROF ITS OF BUSINESS FOR COMPUTING DEDUCTION UNDER SECTION 80HHC OF THE ACT WHILE HOLDING THE ASSESSEE TO HAVE FURNISHED INACCURATE PARTICULARS O F INCOME MAKING IT EXIGIBLE TO LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. SIMILARLY, THE CIT (APPEALS) HAS ALSO ADJUDICATED T HE SAID ISSUE. HOWEVER, THE LEARNED A.R. FOR THE ASSESSEE HAS FURN ISHED A CHART IN WHICH IT HAS TABULATED PARTICULARS OF ADDITION ON W HICH PENALTY WAS LEVIED AND ITEM-5 DEALS WITH THE DEDUCTION UNDER SE CTION 80HHC OF THE ACT BY EXCLUDING 90% OF RECEIPTS SALES TAX SUBSIDY, INSURANCE CLAIM, MISC. INCOME, DEPB ENTITLEMENT AND SCRAP SALE FROM THE PROFITS OF BUSINESS. WE PROCEED TO ADJUDICATE ALL THE ITEMS O F INCOME AS THE PENALTY HAS BEEN LEVIED ON THE RECOMPUTED DEDUCTION UNDER SECTION 80HHC OF THE ACT BY EXCLUDING 90% OF THE SAID ITEMS OF THE INCOME FROM THE ELIGIBLE PROFITS, WHILE COMPUTING DEDUCTIO N UNDER SECTION 80HHC OF THE ACT. 55. THE ISSUE RAISED BEFORE US IS LEVY OF PENALTY U NDER SECTION 271(1)(C) OF THE ACT ON SUCH RECOMPUTATION OF DEDUC TION UNDER SECTION 80HHC OF THE ACT ON ACCOUNT OF VARIOUS ITEMS OF INC OME. THE SAID ISSUE OF LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE A CT ON RECOMPUTATION OF DEDUCTION UNDER SECTION 80HHC OF THE ACT IS SQUA RELY COVERED BY THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN REL IANCE PETRO PRODUCTS 28 [322 ITR 38 (SC)]. THE HON'BLE SUPREME COURT HELD THAT WHERE THE ASSESSEE HAD FURNISHED ALL THE DETAILS OF ITS EXPEN DITURE AS WELL AS INCOME IN ITS RETURN, WHICH DETAILS IN ITSELF WERE NOT FOUND TO BE INACCURATE NOR COULD BE VIEWED AS CONCEALMENT OF IN COME ON ITS PART AND MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDI TURE, WHICH WAS NOT ACCEPTED BY THE REVENUE, THAT IN ITSELF WOULD NOT A TTRACT PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 56. WE FIND SUPPORT FROM THE ORDER OF THE CHANDIGAR H BENCH OF TRIBUNAL IN ACIT VS. PERFECT FORGINGS (2011) 60 DTR (CHD)(TRIB) 41. THE CHANDIGARH BENCH OF THE TRIBUNAL VIDE PARAS 15 AND 16 IN PERFECT FORGINGS (SUPRA) HELD AS UNDER: 15.IN VIEW OF THE ABOVE FACTS WHERE THE ASSESSEE H AD DISCLOSED COMPLETE PARTICULARS VIS--VIS ITS CLAIM OF DEDUCTION UNDER SECTION 80IB OF THE ACT IN THE RETU RN OF INCOME FILED BY IT, WHICH WAS ACCOMPANIED BY AUDITE D BALANCE SHEET, PROFIT & LOSS ACCOUNT AND ALSO AUDIT REPORT IN FORM NO.10CCB, THOUGH INCOMPLETE AS PER T HE ASSESSING OFFICER, THERE IS NO MERIT IN LEVY OF PEN ALTY U/S 271(1)(C) OF THE ACT, WHERE CLAIM OF ASSESSEE I S REJECTED. IN THE ASSESSMENT ORDER ALSO THERE IS NO CHARGE AGAINST THE ASSESSEE NOT TO HAVE DISCLOSED COMPLETE PARTICULARS OR INFORMATION REQUIRED TO COMPUTE THE INCOME FOR THE YEAR UNDER CONSIDERATION . THE QUESTION WHICH ARISES IN THE PRESENT CASE WAS WHETHER THE CLAIM MADE BY THE ASSESSEE FOR DEDUCTIO N UNDER SECTION 80IB OF THE ACT IN THE ABOVE SAID FAC TS AND CIRCUMSTANCES WAS A BONAFIDE CLAIM AND WHETHER THE REJECTION OF SUCH A CLAIM WOULD ATTRACT PENALTY LEVIABLE U/S 271(1)(C) OF THE ACT. WE FIND THAT TH E ASSESSEE HAD DISCHARGED ITS ONUS IN RESPECT OF ITS CLAIM OF DEDUCTION UNDER SECTION 80IB OF THE ACT. FIRST LY BY MAKING SUCH A CLAIM VIDE DISCLOSURE IN ITS RETURN O F INCOME AND ACCOMPANYING DOCUMENTS AND ALSO ITS BONAFIDES OF CLAIMING SUCH DEDUCTION IN THE YEAR UN DER APPEAL AFTER INSTALLATION OF THE MACHINERY. IN THE FACTS AND CIRCUMSTANCES OF THE CASE WHERE THE ASSESSEE HA D ACQUIRED NEW PLANT & MACHINERY OVER A PERIOD OF YEA RS, THOUGH THE UNIT WAS STARTED IN THE YEAR 1995, THE APPELLANT COULD CLAIM THE DEDUCTION IN ASSESSMENT Y EAR 2002-03 ONLY AFTER THE VALUE OF MACHINERY INSTALLED REACHED 80%, MERELY BECAUSE THE CLAIM OF DEDUCTION UNDER SECTION 80IB OF THE ACT WAS DISALLOWED, BEING A DEBATABLE ISSUE, THERE IS NO MERIT IN THE LEVY OF P ENALTY U/S 271(1)(C) OF THE ACT. 16. WE FIND SUPPORT FROM THE RATIO LAID DOWN BY THE CHANDIGARH BENCH OF THE TRIBUNAL IN ACIT VS. ARISUDANA SPINNING MILLS LTD. (SUPRA). THE TRIBUNA L VIDE PARA-8 OF THE ORDER HELD AS UNDER : 29 8. NOW, THE QUESTION IS AS TO WHETHER THE DENIAL OF THE CLAIM MADE IN THE RETURN OF INCOME CAN LEAD TO AN AUTOMATIC IMPOSITION OF PENALTY UNDER S. 271 (1)(C) OF THE ACT. IT IS SUFFICIENT TO SAY THAT THE ASSESSMENT PROCEEDINGS AND THE SUBSEQUENT PENALTY PROCEEDINGS ARE INDEPENDENT PROCEEDINGS. THE FINDINGS AND CONCLUSIONS DRAWN BY THE AUTHORITIES IN THE ASSESSMENT PROCEEDINGS ARE RELEVANT BUT CANNOT BE CONSTRUED AS CONCLUSIVE SO AS TO FASTEN THE ASSESSEE WITH THE CHARGE OF CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS THEREOF. A SIMILAR SITUATION WAS BEFORE THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF DEEP TOOLS (P) LTD (SUPRA). IN THE SAID CASE TOO, THE ASSESSEE HAD STAKED CLAIM FOR DEDUCTION U/S 80HHC OF THE ACT, WHICH WAS DECLINED. THE ASSESSING OFFICER LEVIED PENALTY UNDER S. 271 (1)(C) OF THE ACT. THE STAND OF THE ASSESSEE WAS THAT THE CLAIM WAS MISTAKEN BUT WAS BASED ON BONA FIDE CONSIDERATIONS. THE HON'BLE HIGH COURT OBSERVED THAT THE CLAIM, THOUGH UNTENABLE, WAS BASED ON THE REPORT OF A CHARTERED ACCOUNTANT IN TERMS OF S. 80HHC AND THE SAID FACT LED TO THE CONCLUSION THAT IT WAS A BONA FIDE MISTAKE. IN OUR VIEW, THE SAID PARITY OF REASONING IS APPLICABLE IN THE PRESENT CASE TOO. IN THE CASE OF T. ASHOK PAL V CIT (2007) 210 CTR (SC) 259: (2007) 292 ITR 11 (SC), HON'BLE SUPREME COURT ALSO OBSERVED THAT THE PENALTY UNDER SECTION 271 (1)(C) WAS NOT EXIGIBLE WHERE THE CLAIM OF THE ASSESSEE WAS BASED ON THE REPORT OF AN EXPERT. IN THE PRESENT CASE TOO, AS OBSERVED EARLIER, THE ACCOUNTS OF THE ASSESSEE ARE DULY AUDITED. THE RETURN OF INCOME WAS ACCOMPANIED BY THE AUDIT REPORT REQUIRED UNDER S. 80IA AND THERE IS NOTHING TO SUGGEST, RATHER THERE IS NO CHARGE AGAINST THE ASSESSEE, THAT THE REPORT OF THE AUDITOR WAS COLLUSIVE. 57. FOLLOWING THE ABOVE SAID PARITY OF REASONING IN THE FACTS OF THE PRESENT CASE WHERE THE ASSESSEE HAS FURNISHED COMPL ETE PARTICULARS IN RESPECT OF ITS ITEMS OF INCOME AS DETAILED ABOVE ME RELY BECAUSE THE SAID ITEMS OF INCOME WERE HELD TO BE NOT ELIGIBLE FOR DE DUCTION UNDER SECTION 80HHC OF THE ACT AND THE SAID DEDUCTION WAS RECOMPU TED BY EXCLUDING 90% OF THE SAID INCOME FROM THE ELIGIBLE PROFITS, T HE SAID RECOMPUTATION WOULD NOT TANTAMOUNT TO FURNISHING OF INACCURATE PA RTICULARS OF INCOME MAKING THE ASSESSEE EXIGIBLE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. ACCORDINGLY, WE DIRECT THE ASSESSING OFFI CER TO DELETE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT ON THE RE COMPUTED DEDUCTION UNDER SECTION 80HHC OF THE ACT. 30 58. THE TRIBUNAL HAD HELD THAT 90% OF RECEIPTS SALE S TAX SUBSIDY IS NOT TO BE EXCLUDED FROM PROFITS OF BUSINESS, WHILE COMP UTING DEDUCTION UNDER SECTION 80HHC OF THE ACT, HENCE NO RECOMPUTAT ION IS NECESSARY ON THIS ACCOUNT AND THE PENALTY LEVIED UNDER SECTION 2 71(1)(C) OF THE ACT IS THUS DIRECTED TO BE DELETED. 59. IN LINE WITH OUR OBSERVATIONS IN PARAS HEREINAB OVE THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS UPHELD ON THE FOLLOWING ADDITIONS/DISALLOWANCES MADE IN THE HANDS OF THE AS SESSEE: (A) ADDITIONAL DEPRECIATION ON ASSET. (B) DEDUCTION UNDER SECTION 80IA OF THE ACT ON INTE REST INCOME OF RS.67,03,027/-. 60. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 6 TH MARCH, 2014. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 6 TH MARCH, 2014 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH