SMT. SHUBHANGI R. DESHMUKH, Nagpur V. ACIT-CIRCLE-8, Nagpur

ITA 230/NAG/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1675 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2015
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 17-04-2014
• Court: TRIBUNAL
• Department Lawyers: NARENDRA KANE
• Keywords: Unexplained cash credit; Business income; Depreciation; Retrospective amendment; Question of law; Wrong claim; Scheme of amalgamation; Ignorance of law
• Section: 143(3); 92F; 139(5); 147; 27; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO. 230/NAG./2014 ( ASSESSMENT YEAR : 2008-09 ) SMT. SHUBHANGI R. DESHMUKH 917, TIPRE LANE, ITWARI, NAGPUR PAN AAWPD9657N APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX CIRCLE8, NAGPUR RESPONDENT ITA NO. 231/NAG./2014 ( ASSESSMENT YEAR : 2009-10 ) SMT. SHUBHANGI R. DESHMUKH 917, TIPRE LANE, ITWARI, NAGPUR PAN AAWPD9657N APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX CIRCLE8, NAGPUR RESPONDENT ASSESSEE BY : SHRI K.P. DEWANI REVENUE BY : SHRI NARENDRA KANE DATE OF HEARING 20.08.2015 DATE OF ORDER 28.08 .2015 O R D E R PER SHAMIM YAHYA, A.M. THESE APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGA INST THE RESPECTIVE ORDERS PASSED BY THE LEARNED COMMISSIONE R (APPEALS)II, SMT. SANDHYA RAJESH ASHTANKAR 2 NAGPUR, FOR THE ASSESSMENT YEAR 200809 AND 2009-10 RESPECTIVELY. THE SOLE DISPUTE IN THESE APPEALS IS, WHETHER OR NOT THE LEARNED CIT(A) WAS JUSTIFIED IN CONFIRMING THE PENALTY LEVIED BY T HE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ). 2. SINCE THE FACTS ARE IDENTICAL, WE ARE ADJUDICATING THE ISSUE WITH REFERENCE TO THE FACTS AND FIGURES OF THE ASSESSMENT YEAR 2008-09. IN THIS CASE, THE LEARNED CIT(A) NOTED THAT T HE ASSESSEE FILED HER RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION O N 30/09/2009 DECLARING TOTAL, INCOME AT RS.2013520/-. THE APPELLANT IN THE RETURN OF INCOME HAD CLAIMED DEDUC TION UNDER SECTION 80LA OF THE ACT. THE CLAIM OF THE APPELLANT UNDER SECTION 80IA OF THE ACT WAS DISALLOWED BY THE LD. AO IN THE ASSESSMENT FRAMED U/S 143(3) OF THE ACT VIDE ORDER DATED 24 TH NOVEMBER 2011 RESULTING IN AN ADDITION OF ` 27,65,300/-. THE ASSESSING OFFICER WHILE DENYING THE DEDUCTION OBSERVED THAT A PPELLANT IS NOT ENGAGED IN PRODUCTION OF ELECTRICITY AND APPELL ANT CANNOT BE SAID TO HAVE BEEN ENGAGED IN GENERATION, TRANSMISSI ON AND DISTRIBUTION OF POWER AND THUS, APPELLANT IS NOT EL IGIBLE FOR DEDUCTION CLAIMED U/S 80IA. THE ASSESSING OFFICER FURTHER OBSERVE THAT THE CLAIM OF THE APPELLANT IS WRONG AND NO APPEAL HAS BEEN FILED SMT. SANDHYA RAJESH ASHTANKAR 3 AGAINST THE ORDER PASSED BY THE ASSESSING OFFICER. O N THESE FACTS, THE ASSESSING OFFICER CONCLUDED THAT THE ASSESSEE HAS FURN ISHED INACCURATE PARTICULARS OF INCOME AS ENVISAGED UNDER SECTION 27 1(1)(C) OF THE ACT. THUS, THE ASSESSING OFFICER LEVIED PENALTY AT ` 7,24,596 UNDER SECTION 271(1)(C) VIDE ORDER DATED 28 TH JUNE 2013. 3. IN THE PENALTY PROCEEDINGS, THE ASSESSEE SUBMITTED AS UNDER:- DEDUCTION CLAIMED U/S 80-IA(4) IS BONAFIDE AND UND ER LEGAL ADVICE. THERE IS NO CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. PROVISIONS TO EXPLANATION TO SECTION 80 IA I NTRODUCED WITH RETROSPECTIVE EFFECT HAVE BEEN CHALLENGED AND THE DECISION IS PENDING. THUS, DEDUCTION U/S 80IA AS MADE IN RETURN OF INCOM E IS A DEBATABLE QUESTION OF LAW. REFERENCE IS GIVEN TO A CASE PATEL ENGINEERING LTD. VS. DCLT. THE CLAIM OF DEDUCTION WAS BONAFIDE AND ON BASIS OF LEGAL ADVICE RECEIVED. IT IS SETTLED PROPOSITION OF LAW TH AT THERE IS NO PRESUMPTION THAT EVERY PERSON KNOWS LAW. A MERE MAKING A CLAIM WHICH IS NOT SUSTAINABLE IN L AW, ITSELF WILL NO AMOUNT TO FURNISHING INACCURATE PARTICULARS OF INCO ME. THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS LTD. 322 ITR 158 (S C) IS CITED IN THIS CONTEXT. MERE WRONG CLAIM OF STATUTORY DEDUCTION CANNOT BE V ISITED WITH PENALTY U/S 271(1)(C). THREE CASES HAVE BEEN CITED. IT IS NOT MANDATORY TO LEVY PENALTY U/S 271 (I )(C) . CASE OF HINDUSTAN STEEL LTD. VS STATE OF ORISSA (1972) 83 ITR 26 (SC) HAS BEEN CITED. 4. HOWEVER, THE ASSESSING OFFICER WAS NOT SATISFIED. H E OBSERVED THAT HE DID NOT FIND THE CASE LAWS RELIED UPON BY THE ASSESSEE APPLICABLE WITHOUT MAKING ELABORATE UPON THE SAME. THE ASSESSING OFFICER IN PENALTY ORDER CONCLUDED AS UNDER:- SMT. SANDHYA RAJESH ASHTANKAR 4 ASSESSEE'S ABOVE SUBMISSION HAVE BEEN CAREFULLY PE RUSED AND CONSIDERED AND FOUND NOT ACCEPTABLE. WITH REGARD TO ASSESSEE'S CLAIM OF DEDUCTION U/S 80-IA(4) OF THE I.T. ACT, IT IS NEEDLESS TO SAY THAT THE ASSESSEE WAS NOT ENTITLED FOR SUCH DED UCTION, SINCE THE ASSESSEE IS MERELY ENGAGED IN THE ACTIVITY OF I NSTALLATION OF ELECTRIC LINES AND TRANSFORMERS FOR DISTRIBUTION OF ELECTRICITY. THE ASSESSEE COULD NOT ESTABLISH THAT SHE WAS CARRYING OUT THE ACTIVITY OF POWER' GENERATION, ITS TRANSMISSION AND DISTRIBUTION SO AS TO MAKE HER ELIGIBLE FOR DEDUCTION U/S 80-IA OF THE LT. ACT. AS PER THE SAID SECTION, THE BASIC CONDITION R EQUIRED TO BE SATISFIED BY THE ASSESSEE IS THAT IT SHOULD BE E NGAGED IN THE ACTIVITY OF GENERATION OF POWER OR GENERATION, TRAN SMISSION AND DISTRIBUTION OF POWER. IT WAS WELL WITHIN THE KNOWL EDGE OF THE ASSESSEE THAT SHE IS NOT DOING ANY ACTIVITY WHICH M AKES HER ELIGIBLE FOR CLAIMING DEDUCTION U/S 80-IA(4) OF THE LT. ACT. STILL THE ASSESSEE CLAIMED THE SAME IN THE RETURN OF INCO ME FILED, WHICH CLEARLY AMOUNTS TO FURNISHING OF INACCURATE P ARTICULARS OF INCOME. I AM, THEREFORE, OF THE CONSIDERED OPINION THAT THE ASSESSEE HAS COMMITTED DEFAULT WITHIN THE MEANING O F SECTION 271(1)(C) OF THE LT. ACT. THE CASE-LAWS RELIED UPON BY THE ASSESSEE IN HER SUBMISSION HAVE ALSO BEEN PERUSED A ND FOUND THAT THE FACTS OF THE INSTANT CASE ARE ENTIRELY DIF FERENT FROM THE FACTS OF THE SAID CITED CASE-LAWS AND HENCE NOT APP LICABLE. ASSESSEE'S FURTHER ARGUMENT THAT THE CLAIM MADE WAS BASED ON LEGAL ADVICE AND HENCE DO NOT ATTRACT PENALTY IS BA SELESS AND DO NOT CARRY MUCH WEIGHT. IGNORANCE OF LAW CANNOT BE A N EXCUSE. IT IS WORTHWHILE TO MENTION AT THIS STAGE THAT THE ASSESSEE HAS NOT PREFERRED AN APPEAL AGAINST THE ORDER PASSED BY A.O, WHICH SHOWS THAT THE WRONG CLAIM MADE BY THE ASSESSEE IN THE RETURN OF INCOME FILED IS ACCEPTABLE TO HER. THUS, DESPITE BEING FULLY AWARE THAT THE ASSESSEE DID NOT FULFILL THE VERY BA SIC CONDITIONS FOR CLAIMING DEDUCTION U/S 80IA(4) OF THE I.T. ACT I.E. AN UNDERTAKING SET UP FOR THE GENERATION OR GENERATION AND DISTRIBUTION OF POWER, SUCH CLAIM WAS MADE IN THE R ETURN OF INCOME FILED. IT WAS ONLY THE RESULT OF INITIATION OF PROCEEDINGS U/S 147 OF THE I.T. ACT THAT THE REVENUE WAS SAVED FROM SUFFERING THE LOSS OF REVENUE ON ACCOUNT OF WRONG C LAIM OF DEDUCTION U/S 80-IA(4) OF THE I.T. ACT CLAIMED BY T HE ASSESSEE. 5. UPON THE ASSESSEES APPEAL, THE LEARNED CIT(A) AFFI RMED THE ORDER OF THE ASSESSING OFFICER. IN THIS REGARD, THE L EARNED CIT(A) SMT. SANDHYA RAJESH ASHTANKAR 5 REFERRED TO THE DECISION OF THE HON'BLE DELHI HIGH C OURT IN CIT V/S HCIL KALINDEE ARSSPL IN ITA NO.480/12, DATED 29 TH JULY 2013, FOR THE PROPOSITION THAT RELYING UPON THE CERTIFICATES OF CHAR TERED ACCOUNTANT CANNOT ABSOLVE THE ASSESSEE FROM ITS LIABILITIES AND THAT WRONG CLAIM UNDER SECTION 80IA CAN LEAD TO PENALTY UNDER SECTION 271(1)(C). THE LEARNED CIT(A) ALSO RELIED UPON THE DECISION OF THE HON'BLE DELHI HIGH COURT IN CIT V/S ZOOM COMMUNICATION PVT. LTD., 329 ITR 510 (DEL.) FOR THE PROPOSITION THAT PENALTY UNDER SECTION 271(1)(C) IS LEVIABLE IF THE ASSESSEE MAKES A CLAIM WHICH IS WHOLLY UNTENABLE IN LAW AND ABSOLUTELY NO FOUNDATION ON WHICH IT COULD BE MADE. A CCORDINGLY, THE LEARNED CIT(A) AFFIRMED THE LEVY OF PENALTY. AGAINS T THIS ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS . WE SUMMARIZE THE SUBMISSIONS OF THE LEARNED COUNSEL FO R THE ASSESSEE IN THIS REGARD AS UNDER:- A) A.O. HAS LEVIED PENALTY UNDER SECTION 271(1)(C) OF I.T. ACT 1961 VIDE ORDER DATED 30105/2012 WHICH WAS CONFIRMED BY HON'BLE CIT(A) VIDE ORDER DATED 06/01/2014. B) THE ASSESSEE IS LADY AND IS NOT EDUCATED IN THE FIELD OF ACCOUNTING AND TAXATION AND THUS HAS TO DEPEND ON T HE SERVICES AND ADVISE OF ACCOUNTANTS AND PROFESSIONAL FOR MAKING COMPLIANCE UNDER THE PROVISION OF LT. ACT 19 61. C) THE ASSESSEE IS A PROPRIETOR OF SHRI GAJANAN ENG INEERING SERVICES WHICH IS ENGAGED IN THE BUSINESS OF INSTAL LATION OF DISTRIBUTION AND TRANSMISSION LINES FOR ELECTRICITY . THE SMT. SANDHYA RAJESH ASHTANKAR 6 ASSESSEE IN THE RETURN OF INCOME HAD CLAIMED DEDUCT ION ULS 80IA OF LT. ACT 1961 WHICH WAS DISALLOWED BY THE A. O. IN THE ASSESSMENT FRAMED ULS 143(3) OF LT. ACT 1961 VI DE ORDER DATED 24/11/2011 RESULTING IN AN ADDITION OF RS.42,29,620/. THE A.O. AT PARA 3.1 PAGE 3 OF THE ASSESSMENT ORDER OBSERVED THAT BY FINANCE ACT (NO.2) 2009 HAS INTRODUCED EXPLANATION TO SEC. 80LA WITH RETROSPECTIVE EFFECT FROM 1/4/2000 AND ASSESSEE BEING CONTRACTOR IS NOT ELIGIBLE FOR D EDUCTION CLAIMED U/S 80LA OF LT. ACT 1961. D) THE ASSESSEE HAS GIVEN COMPLETE DETAILS WITH REGAR D TO CLAIM OF DEDUCTION U/S 80LA AND NO FACTS GIVEN IN T HE RETURN HAS BEEN FOUND TO BE FALSE OR INCORRECT. THE CLAIM OF DEDUCTION IS BONAFIDE AND ON LEGAL ADVICE OF CONSUL TANT, SUBMISSION SO MADE BEFORE A.O. IS NOT FOUND TO BE I NCORRECT OR FALSE AND IS NOT DISPUTED. E) PERUSAL OF ASSESSMENT ORDER WOULD SHOW THAT DISALL OWANCE OF CLAIM OF DEDUCTION U/S 80IA(4) HAS BEEN MADE ON EXA MINING THE RETURN AND DOCUMENTS SUBMITTED ALONG WITH RETURN. A .O. HAD NOT TO MAKE ANY ENQUIRY OR COLLECTED FACTS FROM OUTSIDE TO MAKE DISALLOWANCE. A.O. ON APPRAISAL OF DOCUMENTS SUBMIT TED BY ASSESSEE HAS TAKEN VIEW DIFFERENT FROM ASSESSEE TO MAKE DISALLOWANCE OF STATUTORY CLAIM. ADDITION MADE ON A BOVE FACTS CANNOT BE VISITED WITH PENALTY U/S 271 (1 )(C) OF L T. ACT 1961. F) A.O. AT PARA 4 OF ASSESSMENT ORDER HAS REPRODUCED T HE PROVISIONS OF SEC. 80IA(4) AND HAS CONCLUDED THAT B ENEFIT CAN BE EXTENDED TO UNDERTAKINGS WHICH ARE ENGAGED IN GENERATION TRANSMISSION OR DISTRIBUTION OF POWER. REA DING OF BARE PROVISION OF SEC.80IA(4 )(IV) WOULD SHOW THAT UNDERTAKINGS SPECIFIED AT (A), (B), OR (C) ARE MUTUAL LY EXCLUSIVE AND IT IS NOT NECESSARY TO GENERATE POWER TO BE ELIGIBLE FOR DEDUCTION U/S 80IA(4) OF LT. ACT 1961. THE INTERPRETATION PLACED BY A.O. ON THE PROVISIONS IS LEG ALLY NOT CORRECT. THIS CLEARLY DEMONSTRATES THAT INTERPRETATION OF PROVISIONS IS COMPLEX AND DEBATABLE ISSUE. RELIANCE ON: I) ITAT ORDER IN ITA NO.237/COCH/2012 IN THE CASE OF M/S. KINFRA EXPORTS PROMOTIONS INDUSTRIAL PARKS LTD . VIDE ORDER DATED 28/06/2013. (P - 61,62,63) G) ASSESSEE CONSIDERING THE DEBATABLE POSITION OF LAW AND TO SMT. SANDHYA RAJESH ASHTANKAR 7 AVOID LITIGATION HAS ACCEPTED THE DISALLOWANCE AT T HE HANDS OF ASSESSEE AND PAID THE TAXES AND INTEREST THERE U PON PURSUANCE TO ASSESSMENT FRAMED. ASSESSEE FOR ASSTT. YEAR 2008-09 FOR WHICH NOTICE U/S 148 HAPPENED TO BE ISS UED HAD VOLUNTARILY WITHDRAWN DEDUCTION ORIGINALLY CLAIMED IN RETURN U/S 80IA(4) OF LT. ACT 1961 AND PAID THE TAXES THERE UP ON ALONG WITH INTEREST BEFORE ANY ENQUIRY NOTICE FROM DEPART MENT FOR THAT YEAR. AT THE TIME OF ASSESSMENT PROCEEDINGS TH ERE WAS NO TIME AVAILABLE TO REVISE THE RETURN U/S 139(5) OF L T. ACT 1961 WHEN THE DISPUTE AS TO ALLOWABILITY OF CLAIM WAS RA ISED. THE ABOVE FACTS CLEARLY DEMONSTRATES THE BONAFIDES OF E XPLANATION OF ASSESSEE IN RESPONSE TO PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT . H) THE PROVISIONS OF EXPLANATION DENYING BENEFIT OF D EDUCTION TO CONTRACTOR INTRODUCED WITH RETROSPECTIVE EFFECT HAS BEEN CHALLENGED IN WRIT PETITION NO. 219 OF 2010 IN THE CASE OF PATEL ENGINEERING BEFORE HON'BLE BOMBAY HIG H COURT AND THE SAME IS ADMITTED BY HON'BLE BOMBAY HI GH COURT AND PENDING FOR DISPOSAL. THE AFORESAID ISSUE IS ALSO PENDING FOR CONSIDERATION BEFORE HON'BLE GUJARAT HI GH COURT AND CALCUTTA HIGH COURT. THE ABOVE FACTUAL POSITION CLEARLY DEMONSTRATES THAT ALLOWANCE OF DEDUCTION U/ S 80LA AS MADE IN THE RETURN OF INCOME IS A DEBATABLE QUESTIO N OF LAW. IT IS SETTLED LAW THAT PENALTY IS NOT EXIGIBLE ON A DEBATABLE ISSUE. RELIANCE ON: I) HON'BLE DELHI HIGH COURT ORDER IN ITA NO.240/2009 I N THE CASE OF MIS. LIQUID INVESTMENT AND TRADING CO. VIDE ORDER DATED 05/10/2010. I) ISSUE COVERED IN FAVOUR OF ASSESSEE BY DECISION OF ITAT, NAGPUR BENCH, NAGPUR IN THE CASE OF MIS. ANKIT CONSTRUCTION VIDE ORDER DATED 11/0912014 IN ITA NO.404/NAG/2013 WHERE IN ORDER OF CIT(A) WAS SIMILA RLY WORDED AS THAT IN THE CASE OF ASSESSEE. J) A MERE MAKING OF CLAIM WHICH IS NOT SUSTAINABLE IN LAW WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS OF INCOME. RELIANCE ON: I) 322 ITR 158(SC) CIT VS. RELIANCE PETRO CHEMICALS LTD. K) A MERE ERRONEOUS CLAIM OF DEDUCTION COULD NOT ATTRA CT PENALTY UNDER THE PROVISIONS OF SECTION 271 (1 )(C) OF I.T. ACT SMT. SANDHYA RAJESH ASHTANKAR 8 1961. RELIANCE ON: I) 288 ITR 670 (DEL.) CIT VS. NATH BROS. EXIN INTERNATIONAL II) 288 ITR 570 (DEL.) CIT VS. INTERNATIONAL AUDIO VISUAL L) IN THE ORDER PASSED IMPOSING PENALTY AT PAGE 7 THE A.D. HAS OBSERVED THAT ASSESSEE HAS ACCEPTED THAT HER CL AIM WAS WRONG. THIS MAKES IT EVIDENT THAT PENALTY HAS B EEN IMPOSE BY A.D. FOR MAKING WRONG CLAIM. THE A.D. HAS NOT FOUND CLAIM OF ASSESSEE TO BE FALSE. IT IS SETTLED PROPOSITION OF LAW THAT MERE WRONG CLAIM OF STATUTORY DEDUCTION CANNOT BE VISITED WITH PENALTY U/S 271(1)(C) OF I.T. ACT 1961. RELIANCE ON : I) 322 ITR 73 (P&H) CIT VS. THE SHAHABAD CO-OPERATIVE SUGAR MILLS LTD. M) A.D. AT PARA 4.3 HAS OBSERVED THAT PENALTY PROCEEDI NGS U/S 271(1)(C) ARE SEPARATELY INITIATED. SUCH OBSERVATIO N IS LEGALLY NOT SUFFICIENT TO HOLD THAT A.D. IS SATISFI ED ABOUT CONCEALMENT OF INCOME IN ASSESSMENT PROCEEDINGS WHI CH IS CONDITION PRECEDENT FOR LEVY OF PENALTY U/S 271 (1 )(C) OF I.T. ACT 1961. RELIANCE ON: I) 83 CCH 0282 (KAR HC) CIT & ANR. VS. MANJUNATHA COTTON & GINNING FACTORY. N) SHOW CAUSE NOTICE ISSUED IN THE CASE OF ASSESSEE FO R LEVY OF PENALTY U/S 271(1)(C) DOES NOT SPECIFY AS TO NATURE OF DEFAULT I.E. WHETHER IT IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IT DOES NOT EV ER MENTION FOR WHICH MATTER PENALTY IS SOUGHT TO BE LEVIED AT THE HANDS OF ASSESSEE. NOTICE FOR LEVY OF PENALTY B EING NOT IN ACCORDANCE WITH LAW CONSEQUENT PENALTY LEVIED IS UNSUSTAINABLE. I) 83 CCH 0282 (KAR HC) CIT & ANR. VS. MANJUNATHA COTTON & GINNING FACTORY. II) ITAT ORDER IN ITA NO.537/BANG/2010 IN THE CASE OF M/S MAGANUR BUILDERS VIDE ORDER DATED 11/06/2015. SMT. SANDHYA RAJESH ASHTANKAR 9 7. PER CONTRA, THE LEARNED DEPARTMENTAL REPRESENTATIVE R ELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. HE SUBMITTED THAT THE ASSESSEE HAD MADE A CLAIM OF EXEMPTION / DEDUCTION UNDER SECTI ON 80IA, DESPITE KNOWING THAT THE ASSESSEE WAS NOT ELIGIBLE F OR THE SAME, HENCE, HE SUBMITTED THAT THE ASSESSEE HAD MADE A WRON G AND BOGUS CLAIM. ACCORDINGLY, HE SUBMITTED THAT PENALTY UNDER SECTI ON 271(1)(C) HAS BEEN RIGHTLY LEVIED IN THIS CASE. 8. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AND PER USED THE RECORDS. WE FIND THAT SECTION 271(1)(C) POSTULATES LE VY OF PENALTY FOR CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE P ARTICULARS OF INCOME. WE FIND THAT IN THIS CASE, THE ASSESSEE HAD GIVEN THE DETAILS OF ITS CLAIM UNDER SECTION 80IA, DULY CERTIFIED BY A CH ARTERED ACCOUNTANT. HENCE, IN THIS CASE, IT CANNOT BE SAID THAT THERE WAS ANY CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE. REGARDING THE CLAIM OF DEDUCTION UNDER SEC TION 80IA(4), IT IS THE SUBMISSIONS OF THE ASSESSEES COUNSEL THAT THE ISS UE WAS DEBATABLE AS TO WHETHER THE ASSESSEE WILL BE DENIED THE CLAIM O F EXEMPTION UNDER SECTION 80IA. HENCE, IT IS THE PLEA OF THE ASSES SEES COUNSEL THAT THE ASSESSEE HAD MADE A CLAIM UNDER SECTION 80IA UND ER A BONA FIDE BELIEF. WHEN A CLAIM IS MADE UNDER A BONA FIDE BELI EF AND THE SAME IS NOT EX-FACIE BOGUS, IN OUR CONSIDERED OPINION, IT IS SETTLED LAW THAT IN SMT. SANDHYA RAJESH ASHTANKAR 10 SUCH CASES, PENALTY UNDER SECTION 271(1)(C) CANNOT BE LEVIED. THE ASSESSEE HAD MADE A CLAIM OF DEDUCTION UNDER SECTIO N 80IA, STARTING FROM THE ASSESSMENT YEAR 2007-08. ASSESSMENT YEAR 200 8-09 WAS THE SECOND YEAR OF THE ASSESSEES CLAIM OF DEDUCTION UND ER SECTION 80IA. TO EXAMINE AS TO WHETHER THE ASSESSEES CLAIM CAN BE CONSIDERED AS EX-FACIE BOGUS, WE MAY REFER TO THE PROVISIONS OF SE CTION 801A(4), WHICH DEFINES THE UNDERTAKING WHICH IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA. SECTION 80IA READS AS UNDER:- DEDUCTIONS IN RESPECT OF PROFITS AND GAINS FROM IND USTRIAL UNDERTAKINGS OR ENTERPRISES ENGAGED IN INFRASTRUCTU RE DEVELOPMENT, ETC. 80-IA. (1) WHERE THE GROSS TOTAL INCOME OF AN ASSES SEE INCLUDES ANY PROFITS AND GAINS DERIVED BY AN UNDERTAKING OR AN ENTERPRISE FROM ANY BUSINESS REFERRED TO IN SUB-SECTION (4) (S UCH BUSINESS BEING HEREINAFTER REFERRED TO AS THE ELIGIBLE BUSIN ESS), THERE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, BE ALLOWED, IN COMPUTING THE TOTAL INCOME OF THE ASSES SEE, A DEDUCTION OF AN AMOUNT EQUAL TO HUNDRED PER CENT OF THE PROFITS AND GAINS DERIVED FROM SUCH BUSINESS FOR TEN CONSEC UTIVE ASSESSMENT YEARS. (2) THE DEDUCTION SPECIFIED IN SUB-SECTION (1) MAY, AT THE OPTION OF THE ASSESSEE, BE CLAIMED BY HIM FOR ANY TEN CONSECU TIVE ASSESSMENT YEARS OUT OF FIFTEEN YEARS BEGINNING FRO M THE YEAR IN WHICH THE UNDERTAKING OR THE ENTERPRISE DEVELOPS AN D BEGINS TO OPERATE ANY INFRASTRUCTURE FACILITY OR STARTS PROVI DING TELECOMMUNICATION SERVICE OR DEVELOPS AN INDUSTRIAL PARK OR DEVELOPS A SPECIAL ECONOMIC ZONE REFERRED TO IN CLA USE (III) OF SUB- SECTION (4) OR GENERATES POWER OR COMMENCES TRANSMI SSION OR DISTRIBUTION OF POWER OR UNDERTAKES SUBSTANTIAL REN OVATION AND MODERNISATION OF THE EXISTING TRANSMISSION OR DISTR IBUTION LINES : PROVIDED THAT WHERE THE ASSESSEE DEVELOPS OR OPERATES AND MAINTAINS OR DEVELOPS, OPERATES AND MAINTAINS ANY I NFRASTRUCTURE FACILITY REFERRED TO IN CLAUSE (A) OR CLAUSE (B) OR CLAUSE (C) OF THE EXPLANATION TO CLAUSE (I) OF SUB-SECTION (4), T HE PROVISIONS OF SMT. SANDHYA RAJESH ASHTANKAR 11 THIS SUB-SECTION SHALL HAVE EFFECT AS IF FOR THE WO RDS 'FIFTEEN YEARS', THE WORDS 'TWENTY YEARS' HAD BEEN SUBSTITUTED. (2A) NOTWITHSTANDING ANYTHING CONTAINED IN SUB-SECT ION (1) OR SUB- SECTION (2), THE DEDUCTION IN COMPUTING THE TOTAL I NCOME OF AN UNDERTAKING PROVIDING TELECOMMUNICATION SERVICES, S PECIFIED IN CLAUSE (II) OF SUB-SECTION (4), SHALL BE HUNDRED PE R CENT OF THE PROFITS AND GAINS OF THE ELIGIBLE BUSINESS FOR THE FIRST FIVE ASSESSMENT YEARS COMMENCING AT ANY TIME DURING THE PERIODS AS SPECIFIED IN SUB-SECTION (2) AND THEREAFTER, THIRTY PER CENT OF SUCH PROFITS AND GAINS FOR FURTHER FIVE ASSESSMENT YEARS . (3) THIS SECTION APPLIES TO AN UNDERTAKING REFERRED TO IN CLAUSE (II) OR CLAUSE (IV) OF SUB-SECTION (4) WHICH FULFILS ALL THE FOLLOWING CONDITIONS, NAMELY : (I) IT IS NOT FORMED BY SPLITTING UP, OR THE RECON STRUCTION, OF A BUSINESS ALREADY IN EXISTENCE : PROVIDED THAT THIS CONDITION SHALL NOT APPLY IN RESPECT OF A N UNDERTAKING WHICH IS FORMED AS A RESULT OF THE RE-E STABLISHMENT, RECONSTRUCTION OR REVIVAL BY THE ASSESSEE OF THE BU SINESS OF ANY SUCH UNDERTAKING AS IS REFERRED TO IN SECTION 33B, IN THE CIRCUMSTANCES AND WITHIN THE PERIOD SPECIFIED IN TH AT SECTION; (II) IT IS NOT FORMED BY THE TRANSFER TO A NEW BUS INESS OF MACHINERY OR PLANT PREVIOUSLY USED FOR ANY PURPOSE: PROVIDED THAT NOTHING CONTAINED IN THIS SUB-SECTION SHALL A PPLY IN THE CASE OF TRANSFER, EITHER IN WHOLE OR IN PART, O F MACHINERY OR PLANT PREVIOUSLY USED BY A STATE ELECTRICITY BOARD REFERRED TO IN CLAUSE (7) OF SECTION 2 OF THE ELECTRICITY ACT, 200 3 (36 OF 2003), WHETHER OR NOT SUCH TRANSFER IS IN PURSUANCE OF THE SPLITTING UP OR RECONSTRUCTION OR REORGANISATION OF THE BOARD UNDER PART XIII OF THAT ACT. EXPLANATION 1.FOR THE PURPOSES OF CLAUSE (II), ANY MACHINERY OR PLANT WHICH WAS USED OUTSIDE INDIA BY ANY PERSON OT HER THAN THE ASSESSEE SHALL NOT BE REGARDED AS MACHINERY OR PLAN T PREVIOUSLY USED FOR ANY PURPOSE, IF THE FOLLOWING CONDITIONS A RE FULFILLED, NAMELY : (A) SUCH MACHINERY OR PLANT WAS NOT, AT ANY TIME P REVIOUS TO THE DATE OF THE INSTALLATION BY THE ASSESSEE, USED IN I NDIA; (B) SUCH MACHINERY OR PLANT IS IMPORTED INTO INDIA FROM ANY COUNTRY OUTSIDE INDIA; AND SMT. SANDHYA RAJESH ASHTANKAR 12 (C) NO DEDUCTION ON ACCOUNT OF DEPRECIATION IN RES PECT OF SUCH MACHINERY OR PLANT HAS BEEN ALLOWED OR IS ALLOWABLE UNDER THE PROVISIONS OF THIS ACT IN COMPUTING THE TOTAL INCOM E OF ANY PERSON FOR ANY PERIOD PRIOR TO THE DATE OF THE INSTALLATIO N OF MACHINERY OR PLANT BY THE ASSESSEE. EXPLANATION 2.WHERE IN THE CASE OF AN UNDERTAKING, ANY MACHINERY OR PLANT OR ANY PART THEREOF PREVIOUSLY U SED FOR ANY PURPOSE IS TRANSFERRED TO A NEW BUSINESS AND THE TO TAL VALUE OF THE MACHINERY OR PLANT OR PART SO TRANSFERRED DOES NOT EXCEED TWENTY PER CENT OF THE TOTAL VALUE OF THE MACHINERY OR PLA NT USED IN THE BUSINESS, THEN, FOR THE PURPOSES OF CLAUSE (II) OF THIS SUB-SECTION, THE CONDITION SPECIFIED THEREIN SHALL BE DEEMED TO HAVE BEEN COMPLIED WITH. (4) THIS SECTION APPLIES TO (I) ANY ENTERPRISE CARRYING ON THE BUSINESS OF (I) DEV ELOPING OR (II) OPERATING AND MAINTAINING OR (III) DEVELOPING, OPER ATING AND MAINTAINING ANY INFRASTRUCTURE FACILITY WHICH FULFI LS ALL THE FOLLOWING CONDITIONS, NAMELY : (A) IT IS OWNED BY A COMPANY REGISTERED IN INDIA O R BY A CONSORTIUM OF SUCH COMPANIES OR BY AN AUTHORITY OR A BOARD OR A CORPORATION OR ANY OTHER BODY ESTABLISHED OR CONSTI TUTED UNDER ANY CENTRAL OR STATE ACT; (B) IT HAS ENTERED INTO AN AGREEMENT WITH THE CENT RAL GOVERNMENT OR A STATE GOVERNMENT OR A LOCAL AUTHORITY OR ANY O THER STATUTORY BODY FOR (I) DEVELOPING OR (II) OPERATING AND MAINT AINING OR (III) DEVELOPING, OPERATING AND MAINTAINING A NEW INFRAST RUCTURE FACILITY; (C) IT HAS STARTED OR STARTS OPERATING AND MAINTAI NING THE INFRASTRUCTURE FACILITY ON OR AFTER THE 1ST DAY OF APRIL, 1995: PROVIDED THAT WHERE AN INFRASTRUCTURE FACILITY IS TRANSFERRE D ON OR AFTER THE 1ST DAY OF APRIL, 1999 BY AN ENTERPRISE W HICH DEVELOPED SUCH INFRASTRUCTURE FACILITY (HEREAFTER REFERRED TO IN THIS SECTION AS THE TRANSFEROR ENTERPRISE) TO ANOTHER ENTERPRISE (H EREAFTER IN THIS SECTION REFERRED TO AS THE TRANSFEREE ENTERPRISE) F OR THE PURPOSE OF OPERATING AND MAINTAINING THE INFRASTRUCTURE FACILI TY ON ITS BEHALF IN ACCORDANCE WITH THE AGREEMENT WITH THE CENTRAL GOVE RNMENT, STATE GOVERNMENT, LOCAL AUTHORITY OR STATUTORY BODY , THE PROVISIONS OF THIS SECTION SHALL APPLY TO THE TRANSFEREE ENTER PRISE AS IF IT WERE THE ENTERPRISE TO WHICH THIS CLAUSE APPLIES AND THE DEDUCTION FROM PROFITS AND GAINS WOULD BE AVAILABLE TO SUCH TRANSF EREE ENTERPRISE FOR THE UNEXPIRED PERIOD DURING WHICH THE TRANSFERO R ENTERPRISE SMT. SANDHYA RAJESH ASHTANKAR 13 WOULD HAVE BEEN ENTITLED TO THE DEDUCTION, IF THE T RANSFER HAD NOT TAKEN PLACE. EXPLANATION.FOR THE PURPOSES OF THIS CLAUSE, 'INFR ASTRUCTURE FACILITY' MEANS (A) A ROAD INCLUDING TOLL ROAD, A BRIDGE OR A RAIL SYSTEM; (B) A HIGHWAY PROJECT INCLUDING HOUSING OR OTHER A CTIVITIES BEING AN INTEGRAL PART OF THE HIGHWAY PROJECT; (C) A WATER SUPPLY PROJECT, WATER TREATMENT SYSTEM , IRRIGATION PROJECT, SANITATION AND SEWERAGE SYSTEM OR SOLID WA STE MANAGEMENT SYSTEM; (D) A PORT, AIRPORT, INLAND WATERWAY, INLAND PORT OR NAVIGATIONAL CHANNEL IN THE SEA; (II) ANY UNDERTAKING WHICH HAS STARTED OR STARTS PR OVIDING TELECOMMUNICATION SERVICES, WHETHER BASIC OR CELLUL AR, INCLUDING RADIO PAGING, DOMESTIC SATELLITE SERVICE, NETWORK O F TRUNKING, BROADBAND NETWORK AND INTERNET SERVICES ON OR AFTER THE 1ST DAY OF APRIL, 1995, BUT ON OR BEFORE THE 31ST DAY OF MARCH , 2005. EXPLANATION.FOR THE PURPOSES OF THIS CLAUSE, 'DOME STIC SATELLITE' MEANS A SATELLITE OWNED AND OPERATED BY AN INDIAN C OMPANY FOR PROVIDING TELECOMMUNICATION SERVICE; (III) ANY UNDERTAKING WHICH DEVELOPS, DEVELOPS AND OPERATES OR MAINTAINS AND OPERATES AN INDUSTRIAL PARK OR SPECIA L ECONOMIC ZONE NOTIFIED BY THE CENTRAL GOVERNMENT IN ACCORDANCE WI TH THE SCHEME FRAMED AND NOTIFIED 79 BY THAT GOVERNMENT FOR THE PERIOD BEGINNING ON THE 1ST DAY OF APRIL, 1997 AND ENDING ON THE 31S T DAY OF MARCH, 2006 : PROVIDED THAT IN A CASE WHERE AN UNDERTAKING DEVELOPS AN INDUSTRIAL PARK ON OR AFTER THE 1ST DAY OF APRIL, 1 999 OR A SPECIAL ECONOMIC ZONE ON OR AFTER THE 1ST DAY OF APRIL, 200 1 AND TRANSFERS THE OPERATION AND MAINTENANCE OF SUCH INDUSTRIAL PA RK OR SUCH SPECIAL ECONOMIC ZONE, AS THE CASE MAY BE, TO ANOTH ER UNDERTAKING (HEREAFTER IN THIS SECTION REFERRED TO AS THE TRANS FEREE UNDERTAKING), THE DEDUCTION UNDER SUB-SECTION (1) S HALL BE ALLOWED TO SUCH TRANSFEREE UNDERTAKING FOR THE REMAINING PE RIOD IN THE TEN CONSECUTIVE ASSESSMENT YEARS AS IF THE OPERATION AN D MAINTENANCE WERE NOT SO TRANSFERRED TO THE TRANSFEREE UNDERTAKI NG : SMT. SANDHYA RAJESH ASHTANKAR 14 PROVIDED FURTHER THAT IN THE CASE OF ANY UNDERTAKING WHICH DEVELOPS, DEVELOPS AND OPERATES OR MAINTAINS AND OP ERATES AN INDUSTRIAL PARK, THE PROVISIONS OF THIS CLAUSE SHAL L HAVE EFFECT AS IF FOR THE FIGURES, LETTERS AND WORDS '31ST DAY OF MAR CH, 2006', THE FIGURES, LETTERS AND WORDS '31ST DAY OF MARCH, 2011 ' HAD BEEN SUBSTITUTED; (IV) AN UNDERTAKING WHICH, (A) IS SET UP IN ANY PART OF INDIA FOR THE GENERAT ION OR GENERATION AND DISTRIBUTION OF POWER IF IT BEGINS TO GENERATE POWER AT ANY TIME DURING THE PERIOD BEGINNING ON THE 1ST DAY OF APRIL , 1993 AND ENDING ON THE 31ST DAY OF MARCH, 80 [2017]; (B) STARTS TRANSMISSION OR DISTRIBUTION BY LAYING A NETWORK OF NEW TRANSMISSION OR DISTRIBUTION LINES AT ANY TIME DURI NG THE PERIOD BEGINNING ON THE 1ST DAY OF APRIL, 1999 AND ENDING ON THE 31ST DAY OF MARCH, 80 [2017]: PROVIDED THAT THE DEDUCTION UNDER THIS SECTION TO AN UNDERTA KING UNDER SUB-CLAUSE (B) SHALL BE ALLOWED ONLY IN RELAT ION TO THE PROFITS DERIVED FROM LAYING OF SUCH NETWORK OF NEW LINES FO R TRANSMISSION OR DISTRIBUTION; (C) UNDERTAKES SUBSTANTIAL RENOVATION AND MODERNIS ATION OF THE EXISTING NETWORK OF TRANSMISSION OR DISTRIBUTION LI NES AT ANY TIME DURING THE PERIOD BEGINNING ON THE 1ST DAY OF APRIL , 2004 AND ENDING ON THE 31ST DAY OF MARCH, 80 [2017]. EXPLANATION.FOR THE PURPOSES OF THIS SUB-CLAUSE, ' SUBSTANTIAL RENOVATION AND MODERNISATION' MEANS AN INCREASE IN THE PLANT AND MACHINERY IN THE NETWORK OF TRANSMISSION OR DISTRIB UTION LINES BY AT LEAST FIFTY PER CENT OF THE BOOK VALUE OF SUCH PLAN T AND MACHINERY AS ON THE 1ST DAY OF APRIL, 2004; (V) AN UNDERTAKING OWNED BY AN INDIAN COMPANY AND SET UP FOR RECONSTRUCTION OR REVIVAL OF A POWER GENERATING PLA NT, IF (A) SUCH INDIAN COMPANY IS FORMED BEFORE THE 30TH DAY OF NOVEMBER, 2005 WITH MAJORITY EQUITY PARTICIPATION B Y PUBLIC SECTOR COMPANIES FOR THE PURPOSES OF ENFORCING THE SECURIT Y INTEREST OF THE LENDERS TO THE COMPANY OWNING THE POWER GENERATING PLANT AND SUCH INDIAN COMPANY IS NOTIFIED BEFORE THE 31ST DAY OF DECEMBER, 2005 BY THE CENTRAL GOVERNMENT FOR THE PURPOSES OF THIS CLAUSE; (B) SUCH UNDERTAKING BEGINS TO GENERATE OR TRANSMI T OR DISTRIBUTE POWER BEFORE THE 31ST DAY OF MARCH, 2011; SMT. SANDHYA RAJESH ASHTANKAR 15 (VI) [***] (5) NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISION OF THIS ACT, THE PROFITS AND GAINS OF AN ELIGIBLE BUSI NESS TO WHICH THE PROVISIONS OF SUB-SECTION (1) APPLY SHALL, FOR THE PURPOSES OF DETERMINING THE QUANTUM OF DEDUCTION UNDER THAT SUB -SECTION FOR THE ASSESSMENT YEAR IMMEDIATELY SUCCEEDING THE INIT IAL ASSESSMENT YEAR OR ANY SUBSEQUENT ASSESSMENT YEAR, BE COMPUTED AS IF SUCH ELIGIBLE BUSINESS WERE THE ONLY SOURCE OF INCOME OF THE ASSESSEE DURING THE PREVIOUS YEAR RELEVANT TO THE INITIAL AS SESSMENT YEAR AND TO EVERY SUBSEQUENT ASSESSMENT YEAR UP TO AND INCLU DING THE ASSESSMENT YEAR FOR WHICH THE DETERMINATION IS TO B E MADE. (6) NOTWITHSTANDING ANYTHING CONTAINED IN SUB-SECTI ON (4), WHERE HOUSING OR OTHER ACTIVITIES ARE AN INTEGRAL PART OF THE HIGHWAY PROJECT AND THE PROFITS OF WHICH ARE COMPUTED ON SU CH BASIS AND MANNER AS MAY BE PRESCRIBED 81 , SUCH PROFIT SHALL NOT BE LIABLE TO TAX WHERE THE PROFIT HAS BEEN TRANSFERRED TO A SPEC IAL RESERVE ACCOUNT AND THE SAME IS ACTUALLY UTILISED FOR THE H IGHWAY PROJECT EXCLUDING HOUSING AND OTHER ACTIVITIES BEFORE THE E XPIRY OF THREE YEARS FOLLOWING THE YEAR IN WHICH SUCH AMOUNT WAS T RANSFERRED TO THE RESERVE ACCOUNT; AND THE AMOUNT REMAINING UNUTI LISED SHALL BE CHARGEABLE TO TAX AS INCOME OF THE YEAR IN WHICH SU CH TRANSFER TO RESERVE ACCOUNT TOOK PLACE. (7) THE DEDUCTION UNDER SUB-SECTION (1) FROM PROFIT S AND GAINS DERIVED FROM AN UNDERTAKING SHALL NOT BE ADMISSIBLE UNLESS THE ACCOUNTS OF THE UNDERTAKING FOR THE PREVIOUS YEAR R ELEVANT TO THE ASSESSMENT YEAR FOR WHICH THE DEDUCTION IS CLAIMED HAVE BEEN AUDITED BY AN ACCOUNTANT, AS DEFINED IN THE EXPLANA TION BELOW SUB- SECTION (2) OF SECTION 288, AND THE ASSESSEE FURNIS HES, ALONG WITH HIS RETURN OF INCOME, THE REPORT OF SUCH AUDIT IN T HE PRESCRIBED FORM 82 DULY SIGNED AND VERIFIED BY SUCH ACCOUNTANT. (8) WHERE ANY GOODS OR SERVICES HELD FOR THE PURPOS ES OF THE ELIGIBLE BUSINESS ARE TRANSFERRED TO ANY OTHER BUSI NESS CARRIED ON BY THE ASSESSEE, OR WHERE ANY GOODS OR SERVICES HEL D FOR THE PURPOSES OF ANY OTHER BUSINESS CARRIED ON BY THE AS SESSEE ARE TRANSFERRED TO THE ELIGIBLE BUSINESS AND, IN EITHER CASE, THE CONSIDERATION, IF ANY, FOR SUCH TRANSFER AS RECORDE D IN THE ACCOUNTS OF THE ELIGIBLE BUSINESS DOES NOT CORRESPOND TO THE MARKET VALUE OF SUCH GOODS OR SERVICES AS ON THE DATE OF THE TRANSF ER, THEN, FOR THE PURPOSES OF THE DEDUCTION UNDER THIS SECTION, THE P ROFITS AND GAINS OF SUCH ELIGIBLE BUSINESS SHALL BE COMPUTED AS IF T HE TRANSFER, IN EITHER CASE, HAD BEEN MADE AT THE MARKET VALUE OF S UCH GOODS OR SERVICES AS ON THAT DATE : SMT. SANDHYA RAJESH ASHTANKAR 16 PROVIDED THAT WHERE, IN THE OPINION OF THE ASSESSING OFFICER , THE COMPUTATION OF THE PROFITS AND GAINS OF THE ELIGIBL E BUSINESS IN THE MANNER HEREINBEFORE SPECIFIED PRESENTS EXCEPTIONAL DIFFICULTIES, THE ASSESSING OFFICER MAY COMPUTE SUCH PROFITS AND GAIN S ON SUCH REASONABLE BASIS AS HE MAY DEEM FIT. EXPLANATION.FOR THE PURPOSES OF THIS SUB-SECTION, 'MARKET VALUE', IN RELATION TO ANY GOODS OR SERVICES, MEANS (I) THE PRICE THAT SUCH GOODS OR SERVICES WOULD OR DINARILY FETCH IN THE OPEN MARKET; OR (II) THE ARM'S LENGTH PRICE AS DEFINED IN CLAUSE ( II) OF SECTION 92F , WHERE THE TRANSFER OF SUCH GOODS OR SERVICES IS A S PECIFIED DOMESTIC TRANSACTION REFERRED TO IN SECTION 92BA . (9) WHERE ANY AMOUNT OF PROFITS AND GAINS OF AN UND ERTAKING OR OF AN ENTERPRISE IN THE CASE OF AN ASSESSEE IS CLAIMED AND ALLOWED UNDER THIS SECTION FOR ANY ASSESSMENT YEAR, DEDUCTI ON TO THE EXTENT OF SUCH PROFITS AND GAINS SHALL NOT BE ALLOWED UNDE R ANY OTHER PROVISIONS OF THIS CHAPTER UNDER THE HEADING 'C.DE DUCTIONS IN RESPECT OF CERTAIN INCOMES', AND SHALL IN NO CASE E XCEED THE PROFITS AND GAINS OF SUCH ELIGIBLE BUSINESS OF UNDERTAKING OR ENTERPRISE, AS THE CASE MAY BE. (10) WHERE IT APPEARS TO THE ASSESSING OFFICER THAT , OWING TO THE CLOSE CONNECTION BETWEEN THE ASSESSEE CARRYING ON T HE ELIGIBLE BUSINESS TO WHICH THIS SECTION APPLIES AND ANY OTHE R PERSON, OR FOR ANY OTHER REASON, THE COURSE OF BUSINESS BETWEEN TH EM IS SO ARRANGED THAT THE BUSINESS TRANSACTED BETWEEN THEM PRODUCES TO THE ASSESSEE MORE THAN THE ORDINARY PROFITS WHICH M IGHT BE EXPECTED TO ARISE IN SUCH ELIGIBLE BUSINESS, THE AS SESSING OFFICER SHALL, IN COMPUTING THE PROFITS AND GAINS OF SUCH E LIGIBLE BUSINESS FOR THE PURPOSES OF THE DEDUCTION UNDER THIS SECTIO N, TAKE THE AMOUNT OF PROFITS AS MAY BE REASONABLY DEEMED TO HA VE BEEN DERIVED THEREFROM: PROVIDED THAT IN CASE THE AFORESAID ARRANGEMENT INVOLVES A SPECIFIED DOMESTIC TRANSACTION REFERRED TO IN SECTI ON 92BA , THE AMOUNT OF PROFITS FROM SUCH TRANSACTION SHALL BE DE TERMINED HAVING REGARD TO ARM'S LENGTH PRICE AS DEFINED IN CLAUSE ( II) OF SECTION 92F . (11) THE CENTRAL GOVERNMENT MAY, AFTER MAKING SUCH INQUIRY AS IT MAY THINK FIT, DIRECT, BY NOTIFICATION IN THE OFFIC IAL GAZETTE, THAT THE EXEMPTION CONFERRED BY THIS SECTION SHALL NOT APPLY TO ANY CLASS OF INDUSTRIAL UNDERTAKING OR ENTERPRISE WITH EFFECT FR OM SUCH DATE AS IT MAY SPECIFY IN THE NOTIFICATION. (12) WHERE ANY UNDERTAKING OF AN INDIAN COMPANY WHI CH IS ENTITLED TO THE DEDUCTION UNDER THIS SECTION IS TRANSFERRED, BEFORE THE EXPIRY SMT. SANDHYA RAJESH ASHTANKAR 17 OF THE PERIOD SPECIFIED IN THIS SECTION, TO ANOTHER INDIAN COMPANY IN A SCHEME OF AMALGAMATION OR DEMERGER (A) NO DEDUCTION SHALL BE ADMISSIBLE UNDER THIS SE CTION TO THE AMALGAMATING OR THE DEMERGED COMPANY FOR THE PREVIO US YEAR IN WHICH THE AMALGAMATION OR THE DEMERGER TAKES PLACE; AND (B) THE PROVISIONS OF THIS SECTION SHALL, AS FAR A S MAY BE, APPLY TO THE AMALGAMATED OR THE RESULTING COMPANY AS THEY WO ULD HAVE APPLIED TO THE AMALGAMATING OR THE DEMERGED COMPANY IF THE AMALGAMATION OR DEMERGER HAD NOT TAKEN PLACE. (12A) NOTHING CONTAINED IN SUB-SECTION (12) SHALL A PPLY TO ANY ENTERPRISE OR UNDERTAKING WHICH IS TRANSFERRED IN A SCHEME OF AMALGAMATION OR DEMERGER ON OR AFTER THE 1ST DAY OF APRIL, 2007. (13) NOTHING CONTAINED IN THIS SECTION SHALL APPLY TO ANY SPECIAL ECONOMIC ZONES NOTIFIED ON OR AFTER THE 1ST DAY OF APRIL, 2005 IN ACCORDANCE WITH THE SCHEME REFERRED TO IN SUB-CLAUS E (III) OF CLAUSE (C) OF SUB-SECTION (4). EXPLANATION.FOR THE REMOVAL OF DOUBTS, IT IS HEREB Y DECLARED THAT NOTHING CONTAINED IN THIS SECTION SHALL APPLY IN RE LATION TO A BUSINESS REFERRED TO IN SUB-SECTION (4) WHICH IS IN THE NATURE OF A WORKS CONTRACT AWARDED BY ANY PERSON (INCLUDING THE CENTRAL OR STATE GOVERNMENT) AND EXECUTED BY THE UNDERTAKING O R ENTERPRISE REFERRED TO IN SUB-SECTION (1). 9. AFTER CONSIDERING THE RELEVANT PROVISION AND EXPLANAT IONS, THE TRIBUNAL IN THE CASE OF PATEL ENGINEERING, 94 ITD 401 , HAD HELD THAT THE ABOVE DEDUCTION IS AVAILABLE ALSO TO A CONTRACTOR. HE NCE, THERE CANNOT BE ANY TWO OPINION THAT ASSESSEES CLAIM FOR THE ASS ESSMENT YEAR 2007-08, WAS A BONA FIDE CLAIM. NOW, WE HAVE TO EXAM INE WHETHER THE ASSESSEES CLAIM FOR SUBSEQUENT ASSESSMENT YEAR I.E. , 2008-09, CAN BE SAID TO BE BONA FIDE OR NOT AS THE ABOVE EXPLANATION TO SECTION 80IA, WAS SUBSTITUTED BY FINANCE ACT, 2009, WHICH READS AS UNDER:- SMT. SANDHYA RAJESH ASHTANKAR 18 EXPLANATION FOR THE REMOVAL OF DOUBTS, IT IS HERE BY DECLARED THAT NOTHING CONTAINED IN THIS SECTION SHALL AP PLY TO A PERSON WHO EXECUTES A WORKS CONTRACT ENTERED INTO W ITH THE UNDERTAKING OR ENTERPRISE, AS THE CASE MAY BE. 10. NOW, IT IS THE SUBMISSIONS OF THE LEARNED COUNSEL FO R THE ASSESSEE THAT SINCE THE ASSESSEE HAD MADE A CLAIM UNDER SECTION 80IA, IN THE ASSESSMENT YEAR 2007-28, IT WAS BUT NATURAL FOR HER TO CLAIM THE DEDUCTION FOR SUBSEQUENT ASSESSMENT YEAR. IN THIS REGA RD, THE LEARNED COUNSEL HAS PLEADED THAT THE AFORESAID EXPLANATION TO SE CTION 80IA, INTRODUCED WITH RETROSPECTIVE EFFECT ARE CHALLENGED I N W.P. NO.219 OF 2010, IN PATEL ENGINEERING LTD., BEFORE THE HON'BLE JURISDICTIONAL HIGH COURT AND THE SAME IS ADMITTED BY THE HON'BLE COURT AN D PENDING FOR DISPOSAL. THE LEARNED COUNSEL FURTHER SUBMITTED THAT THE AFORESAID ISSUE IS ALSO PENDING FOR CONSIDERATION BEFORE THE H ON'BLE GUJARAT HIGH COURT AND THE HON'BLE CALCUTTA HIGH COURT AS EVIDENT FR OM THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT. FROM THE A BOVE, IT IS EVIDENT THAT IT CANNOT BE SAID THAT THE ASSESSEES CLAIM WAS EX -FACIE BOGUS OR THERE WAS ANY FURNISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME BY THE ASSESSEE. IN THIS REGAR D, WE MAY GAINFULLY REFER TO THE DECISION OF THE HON'BLE JURIS DICTIONAL HIGH COURT IN CIT V/S NALIN P. SHAH AND OTHERS, ITA NO.49, 50 AND 51 OF 2013, WHEREIN IT WAS HELD AS UNDER:- SMT. SANDHYA RAJESH ASHTANKAR 19 IN THIS CASE, THE RESPONDENT-ASSESSEE HAD' DECLARED LONG TERM CAPITAL LOSS OF RS.4.39 CRORES WHICH WERE INCL USIVE OF LOSS INCURRED ON THE SALE OF US 64 UNITS. THE ASSESSING OFFICER DISALLOWED THE LOSS ON SALE US 64 UNITS ON THE GROU ND THAT WHERE INCOME FROM PARTICULAR SOURCE WAS EXEMPT FROM TAX THEN THE LOSS FROM SUCH SOURCE COULD NOT BE SET OFF FROM ANOTHER SOURCE UNDER THE SAME HEAD OF INCOME. IN VI EW OF THE ABOVE, THE ASSESSING OFFICER ALSO INITIATED PENALTY PROCEEDINGS AND IMPOSED PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX I\CT,'1961. 5. IN APPEAL, CIT (A) UPHELD THE ORDER OF ASSESSIN G OFFICER LEVYING PENALTY. 6. ON FURTHER APPEAL, THE TRIBUNAL IN THE IMPUGNED ORDER HELD THAT THE RESPONDENT-ASSESSEE HAD IN ITS RETURN OF I NCOME FILED A NOTE WITH ITS COMPUTATION OF INCOME DISCLOSING AL L DETAILS ABOUT THE SALE OF US 64 UNITS, THE LOSS AND RESULTA NT CARRY FORWARD. FURTHER, ALL DETAILS WERE DISCLOSED IN ITS RETURN OF INCOME AS IS EVIDENT FROM THE FACT THAT THE ASSESSI NG OFFICER GATHERED INFORMATION ABOUT THE CARRY FORWARD LOSS A ND SALE OF UNITS FROM RETURN FILED BY THE RESPONDENT-ASSESSEE. THE TRIBUNAL HELD THAT THE FROM THE AFORESAID FACTS AT THE HIQHEST IT CAN BE SAID THAT THE CLAIM OF THE ASSESSEE WAS NOT SUSTAINABLE IN LAW BUT THERE WAS NO FURNISHING OF INACCURATE PA RTICULARS OR CONCEALMENT OF INCOME ON THE PART OF THE RESPONDENT - ASSESSEE. THUS, THE PENALTY WAS SET ASIDE. WE FIND THAT THE SAME VIEW IS TAKEN BY THE APEX COURT IN THE MATTER OF CIT VIS. RELIANCE PETROPRODUCTS PVT. LTD. REPORTED IN [2010J 322 ITR 158 (SC). AS THE DECISION OF THE TRIBUNAL IS ESSENTIALL Y BASED ON FINDING OF FACT, WE SEE NO REASON TO ENTERTAIN T HE PROPOSED QUESTION OF LAW. SIMILARLY, IN THE CASE OF CIT V/S RELIANCE PETROPROD UCTS PVT. LTD. (SUPRA), THE HON'BLE SUPREME COURT HELD AS UNDER:- MERELY BECAUSE THE ASSESSEE CLAIMED DEDUCTION OF IN TEREST EXPENDITURE WHICH HAS NOT BEEN ACCEPTED BY THE REVE NUE, PENALTY UNDER SECTION 271(1)(C) IS NOT ATTRACTED; MEREL Y MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY SMT. SANDHYA RAJESH ASHTANKAR 20 ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PART ICULARS REGARDING THE INCOME OF THE ASSESSEE. SIMILARLY, WE MAY ALSO REFER TO THE DECISION OF THE HON'BLE DELHI HIGH COURT IN CIT V/S NATH BROTHERS, 288 ITR 670 (DE L.). IN THE SAID CASE, THE ASSESSEE HAD CLAIMED DIVIDEND INCOME AS H IS BUSINESS INCOME AND HAS CLAIMED DEDUCTION UNDER SECTION 80HH C. WHILE CONFIRMING THE DELETION OF PENALTY IN THAT CASE, THE HON'BLE DELHI HIGH COURT HELD AS UNDER:- WHAT IS REQUIRED TO BE CONSIDERED IS WHETHER THERE WAS ANY ENQUIRY THAT WAS REQUIRED TO BE MADE BY THE ASSESS ING OFFICER BEFORE CONCLUDING THAT THE ASSESSEE HAD FURN ISHED INACCURATE OR FALSE PARTICULARS. IN THIS CASE, WE ARE OF THE VIEW THAT NO SUCH ENQUIRY WAS REQUIRED TO BE MADE BU T THERE WAS ONLY THE NEED FOR APPLICATION OF THE LAW. O N THE LEGAL POSITION, THE ASSESSING OFFICER WAS NOT SATIS FIED AND DID NOT AGREE WITH THE ASSESSEE BUT THAT BY ITSELF IS N OT A GROUND TO INVOKE THE PENALTY PROVISIONS OF THE STATUTE . LEARNED COUNSEL FOR THE REVENUE RELIED UPON CIT VS VIDYAGAURI NATVERLAL & ORS., [1999] 153 CTR (GUJ.) 546. IN THAT CASE THE QUESTION THAT AROSE WAS OF UNEXPLAINED CASH CREDIT. THE GUJARAT HIGH COURT MADE A DISTINCTION BETWE EN A WRONG CLAIM AS OPPOSED TO A FALSE CLAIM. IN THAT CASE , THE ASSESSING OFFICER NEEDED TO MAKE AN ENQUIRY AS TO WH ETHER THE CLAIM OF THE ASSESSEE WAS RIGHT OR NOT. INSOFAR A S THE PRESENT CASE IS CONCERNED, THE DECISION CITED BY THE LE ARNED COUNSEL FOR THE REVENUE IS CLEARLY DISTINGUISHABLE. FROM THE ABOVE CASE LAWS IT IS EVIDENT THAT WHEN ASSESSE E HAS MADE A CLAIM OF DEDUCTION UNDER A BONA FIDE BELIEF A ND ALL THE PARTICULARS THEREOF ARE DISCLOSED IN THE RETURN THER E CANNOT BE A CASE OF SMT. SANDHYA RAJESH ASHTANKAR 21 CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN CASE, SUCH AS THE PRESENT ONE, THERE IS NO CASE OF ANY ENQUI RY MADE. THE CASE IS ONLY APPLICATION AND INTERPRETATION OF LAW. IN THIS CASE ALSO, WE FIND THAT ASSESSEE HAS MADE A CLAIM OF DEDUCTION UNDE R SECTION 80IA. ALL THE NECESSARY PARTICULARS WERE DULY DISCLOSED. A FTER GOING THROUGH THE PROVISIONIS AND THE AMENDMENTS AND RELEVANT CASE L AWS AS DISCUSSED ABOVE, WE ARE OF THE OPINION THAT THE ASSESS EES CLAIM CANNOT BE TERMED AS EX-FACIE BOGUS OR WHOLLY UNTENAB LE IN LAW. IN VIEW OF THE ABOVE, WE HOLD THAT THE LEARNED CIT(A ) WAS NOT JUSTIFIED IN CONFIRMING THE PENALTY LEVIED BY THE ASS ESSING OFFICER UNDER SECTION 271(1)(C) AND ACCORDINGLY THE SAME IS HEREBY CANCELLED. THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 11. IN THE RESULT, ASSESSEES APPEALS STAND ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28.08.2015 SD/ - MUKUL K. SHRAWAT JUDICIAL MEMBER SD/ - SHAMIM YAHYA ACCOUNTANT MEMBER NAGPUR, DATED: 28.08.2015 SMT. SANDHYA RAJESH ASHTANKAR 22 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, NAGPUR CITY CONCERNED; (5) THE DR, ITAT, NAGPUR; (6) GUARD FILE. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY A SSISTANT REGISTRAR ITAT, NAGPUR