M/s. Krishna Maruti Limited, New Delhi V. ACIT, New Delhi

ITA 4173/DEL/2014

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7400 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 30-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NAINA SOIN KAPIL SENIOR
• Keywords: Depreciation; Wrong claim; Revenue expenditure; Capital expenditure
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH D DD D : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI BEFORE SHRI BEFORE SHRI BEFORE SHRI G.D. AGRAWAL, G.D. AGRAWAL, G.D. AGRAWAL, G.D. AGRAWAL, VICE VICE VICE VICE PRESIDENT PRESIDENT PRESIDENT PRESIDENT AND AND AND AND SHRI SUDHANSHU SRIVASTAVA SHRI SUDHANSHU SRIVASTAVA SHRI SUDHANSHU SRIVASTAVA SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER ITA ITAITA ITA NO. NO. NO. NO. 4173/DEL/2014 4173/DEL/2014 4173/DEL/2014 4173/DEL/2014 ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : 2005 2005 2005 2005 - -- - 06 0606 06 M/S KRISHNA MARUTI LIMITED, M/S KRISHNA MARUTI LIMITED, M/S KRISHNA MARUTI LIMITED, M/S KRISHNA MARUTI LIMITED, B BB B- -- -5, CHIRAG ENCLAVE, 5, CHIRAG ENCLAVE, 5, CHIRAG ENCLAVE, 5, CHIRAG ENCLAVE, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 048. 110 048. 110 048. 110 048. PAN : AAACK1316N. PAN : AAACK1316N. PAN : AAACK1316N. PAN : AAACK1316N. VS. VS. VS. VS. ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -5(1), 5(1), 5(1), 5(1), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI GAUTAM JAIN, ADVOCATE AND SHRI LALIT MOHAN, CA. RESPONDENT BY : SMT. NAINA SOIN KAPIL, SENIOR DR. DATE OF HEARING : 08.01.2019 08.01.2019 08.01.2019 08.01.2019 DATE OF PRONOUNCEMENT : 09.01.2019 09.01.2019 09.01.2019 09.01.2019 ORDER ORDER ORDER ORDER PER G.D. AGRAWAL, PER G.D. AGRAWAL, PER G.D. AGRAWAL, PER G.D. AGRAWAL, VICE VICE VICE VICE PRESIDENT PRESIDENT PRESIDENT PRESIDENT : :: :- -- - THIS APPEAL BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2005-0 6 IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-IV, NEW DELHI DATED 27 TH MAY, 2014. 2. THE ONLY GROUND RAISED BY THE ASSESSEE IS AGAINST THE LEVY OF PENALTY OF `22,57,083/- UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961. 3. THE FACTS OF THE CASE AS NOTED IN THE PENALTY ORDER ARE REPRODUCED BELOW :- AMOUNT OF REVENUE EXPENDITURE CLAIMED BY THE ASSESSEE BEING 150% OF EXPENSES ON R&D 70,38,750 ITA-4173/DEL/2014 2 LESS : 100% OF REVENUE EXPENDITURE ALLOWED 46,92,500 AMOUNT DISALLOWED 23,46,250 AMOUNT OF CAPITAL EXPENDITURE CLAIMED BY THE ASSESSEE BEING 150% OF EXPENSES ON THE PURCHASE OF PLANT AND MACHINERY 3,79,82,700 LESS : 40% OF DEPRECIATION ALLOWABLE ON THE PURCHASE OF ABOVE TWO MACHINES FOR RS.26516377 1,06,06 ,550 AMOUNT DISALLOWED 2,73,76,249 THE LD.CIT(A) VIDE ORDER DATED 09.03/2009 IN APPEAL NO.72/07-08 PARTIALLY ALLOWED THE APPEAL OF THE ASSESSEE ON THIS ISSUE . THE LD.CIT(A) HELD THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTI ON UNDER SECTION 35(1)(IV) RATHER THAN UNDER SECTION 35(2AB). THE L D.CIT(A) HELD THAT THE MACHINES ON WHICH THE CLAIM OF 100% OF DEDUCTION UNDER SECTION 35(1) IS CLAIMED BEING USED RESEARCH AND DEVELOPMENT A RE SEPARATE AND DISTINCT FROM THE MACHINES WHICH THE ASSESSEE HAS USED FOR THE PURPOSE OF MANUFACTURING PROCESS. THEREFORE, CAPITAL EXPENDITURE TO THE EXTENT OF RS.3,41,60,592/- IS A ALLOWABLE DEDUCTI ON AS AGAINST THE DEPRECIATION ALLOWED BY THE AO. HOWEVER, THE CLAIM OF WEIGHTED DEDUCTION OF RS.1,14,66,322/- @ 150% ON R & D EQUIPM ENTS AMOUNTING TO RS.76,44,215/- IS NOT ALLOWED, THEREBY L D.CIT(A) CONFIRMED THE ADDITION TO THE EXTENT OF RS.38,22,10 7/- (RS.1,14,66,322/- MINUS RS.76,44,215/-). SIMILARLY, T HE DISALLOWANCE OF WEIGHTED DEDUCTION ON REVENUE EXPENDITURE TO THE EX TENT OF RS.23,46,050/- (RS.70,38,750/- MINUS RS.46,92,500/-) AS MADE BY THE AO IS ALSO CONFIRMED BY THE LD.CIT(A). THUS, IT IS EVIDENT THAT THE ASSESSEE HAS CONCEALED ITS INC OME AS WELL AS FURNISHED INACCURATE PARTICULARS BY CLAIMING WEIGHT ED DEDUCTION UNDER SECTION 35(2AB) AMOUNTING TO RS.61,68,157/- (R S.38,22,107/- PLUS RS.23,46,050/-), WHICH AS PER LAW IS NOT ALLOWABLE TO HIM AS THE ASSESSEE DOES NOT SATISFIED THE CONDITIONS TO BE FULFILLED UNDER SECTION 35(2AB). IN VIEW OF ABOVE, IT IS CLEAR THAT THE ASSESSEE HAS CLAIM ED WRONG DEDUCTION TO THE EXTENT OF RS.61,68,157/- THEREBY CO NCEALING OF ITS INCOME AS WELL AS FURNISHING OF INACCURATE PARTICULARS OF HIS INCOME WITH A VIEW TO EVADE TAXES. A PENALTY OF RS.22,57,08 3/- IS THEREFORE IMPOSED UNDER SECTION 271(1)(C) OF THE IT ACT AS PER FOLLOWING CALCULATION : 4. AT THE TIME OF HEARING BEFORE US, IT IS STATED BY T HE LEARNED COUNSEL THAT THE ASSESSEE DERIVES INCOME FROM MANUFACTUR ING OF DOOR ITA-4173/DEL/2014 3 TRIMS, ROOF HEAD LINER FOR AUTOMOBILES AND BODY PARTS FOR SCOOTERS ETC. THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE H AS INCURRED CERTAIN CAPITAL AS WELL AS REVENUE EXPENDITURE ON RE SEARCH AND DEVELOPMENT FOR DEVELOPING ITS PRODUCTS AND CLAIMED D EDUCTION U/S 35(2AB) WHICH IS PERMISSIBLE AT THE RATE OF 150% OF TH E ACTUAL EXPENDITURE INCURRED. THE ASSESSING OFFICER TREATED TH E EXPENDITURE TO BE GENUINE BUT HELD THAT IT WAS NOT INCURRED FOR ANY RESEARCH PURPOSES AND THEREFORE, ALLOWED DEDUCTION AT THE RATE OF 40% ON THE PURCHASES OF TWO MACHINERIES AND ALLOWED 100% OF THE REVENUE E XPENDITURE. THAT THE LEARNED CIT(A) ACCEPTED THE ASSESSEES CLAIM TH AT THE ENTIRE EXPENDITURE WAS INCURRED ON RESEARCH AND DEVELOPMENT. HOWEVER, HE HELD THE ASSESSEE TO BE ELIGIBLE FOR DEDUCTION U/S 35()1 )(IV) RATHER THAN 35(2AB). THUS, LEARNED CIT(A) ALLOWED THE DEDUCTION AT THE RATE OF 100% AS AGAINST 150% CLAIMED BY THE ASSESSEE OF THE TOTAL EXPENDITURE INCURRED BY THE ASSESSEE ON RESEARCH AND DEV ELOPMENT. IT RESULTED IN THE ADDITION OF `61,68,157/-. THAT THE ASSESSING OFFICER TREATED THE SAME AS FURNISHING OF INACCURATE PARTICUL ARS OF INCOME AND LEVIED PENALTY U/S 271(1)(C) OF THE ACT THEREON. H E STATED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HONBLE APEX COURT IN THE CASE OF CIT VS. RELIANCE PE TROPRODUCTS PVT.LTD. [2010] 322 ITR 158 (SC) AND THE FOLLOWIN G DECISIONS OF HON'BLE JURISDICTIONAL HIGH COURT :- (I) PRINCIPAL CIT VS. NEERAJ JINDAL [2017] 393 ITR 1 (DEL). (II) PRINCIPAL CIT VS. SAMTEL INDIA LTD. ITA NO.43 /2017. HE STATED THAT NO DETAILS OR PARTICULARS FURNISHED BY T HE ASSESSEE WERE FOUND TO BE INCORRECT, FALSE OR WRONG AND, THEREFORE , MERELY BECAUSE THE DEDUCTION IS ALLOWED AT THE RATE OF 100% AS AGAIN ST 150%, IT CANNOT BE SAID THAT THE ASSESSEE FURNISHED INACCURATE PAR TICULARS OF ITS ITA-4173/DEL/2014 4 INCOME. HE, THEREFORE, SUBMITTED THAT THE PENALTY L EVIED U/S 271(1)(C) OF THE ACT MAY BE CANCELLED. 5. LEARNED SENIOR DR, ON THE OTHER HAND, STATED THAT IT IS A CLEAR CASE OF FURNISHING OF WRONG PARTICULARS BY THE ASSESSEE. IT WAS A WRONG CLAIM OF DEDUCTION AT 150% WHEN THE ACTUAL DEDUCTIO N IS PERMISSIBLE AT 100%. SHE, THEREFORE, STATED THAT ON THESE FACTS, THE FOLLOWING DECISIONS OF HON'BLE JURISDICTIONAL HIGH COURT WOULD B E SQUARELY APPLICABLE :- (I) CIT VS. MORGAN FINVEST (P.) LTD. [2013] 213 TAX MAN 23 (DELHI)(MAG.). (II) CIT VS. ZOOM COMMUNICATION P.LTD. [2010] 327 ITR 510 (DELHI). 6. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BOTH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. IN THE CA SE OF RELIANCE PETROPRODUCTS PVT.LTD. (SUPRA), HONBLE APEX COURT HE LD AS UNDER :- WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED B Y THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING TH E PENALTY UNDER SECTION 271(1)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDIN G THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETU RN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. 7. THAT HON'BLE JURISDICTIONAL HIGH COURT HAS CONSIDE RED THIS DECISION AND SOME OTHER DECISIONS IN THE CASE OF SAMTEL INDIA LTD. (SUPRA) AND THEIR LORDSHIPS HELD AS UNDER :- 11. A GLANCE AT THE SECTION 271(1)(C) PRESENTS TWO ESSENTIALS -CONCEALMENT AND FURNISHING INACCURATE ITA-4173/DEL/2014 5 PARTICULARS OF INCOME. THE CURRENT APPEAL IS, HOWEVE R, ONLY CONCERNED WITH THE INTERPRETATION OF THE PHRASE FURNISHING INACCURATE PARTICULARS OF INCOME. THE RE VENUE CLAIMS THAT BY FURNISHING A WRONG CLAIM THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME.THE MEAN ING OF THE PHRASE FURNISHING INACCURATE PARTICULARS OF IN COME WAS EXPLAINED BY THE SUPREME COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS RELIANCE PETROPRODUCTS P VT LTD [(2010)322ITR158] BY BIFURCATING PARTICULARS A ND INACCURATE WHERE PARTICULAR WAS EXPLAINED TO INCLU DE THE DETAILS OF A CLAIM, OR THE SEPARATE ITEMS OF AN ACCOUN T. THE WORD INACCURATE WAS EXPLAINED AS NOT ACCURATE, NOT EXACT OR CORRECT; NOT ACCORDING TO TRUTH; ERRONEOUS; AS AN INACCURATE STATEMENT, COPY OR TRANSCRIPT. WHEN THESE WORDS ARE READ IN CONJUNCTION WITH EACH OTHER THEN I T MAY SEEM THAT THE DETAILS SUPPLIED IN THE RETURN ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TR UTH OR ERRONEOUS. NO DOUBT, THE EFFECT OF THAT JUDGMENT HAS BEEN EXPLAINED IN A LATER DECISION; YET ITS EMPHASIS ON THE LITERAL INTERPRETATION OF THE WORD INACCURATE HAS NOT BEEN DILUTED. 12. FROM THE FACTS OF THIS CASE IT IS CLEAR THAT THE ASSESSEE DISCLOSED ALL THE PARTICULARS OF HIS INCOME. THE A O HAS DISALLOWED HIS CLAIM WITHOUT HOLDING IT TO BE BOGU S OR FALSE. HENCE, THE GENUINENESS OF THE LOSS OCCURRED IS NO T AT QUESTION HERE. THE SUPREME COURT WHILE ELABORATING T HE SCOPE OF SECTION 271(1)(C) IN CIT VS RELIANCE PETROPRO DUCTS PVT LTD [2010] 322 ITR 158 HELD THAT- A GLANCE OF PROVISION OF SECTION 271(L) (C) WOULD SUGGEST THAT IN O RDER TO BE COVERED, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE INSTANT CASE WAS NOT THE CASE OF CONCEALMEN T OF THE INCOME. THAT WAS NOT THE CASE OF THE REVENUE E ITHER. IT WAS AN ADMITTED POSITION IN THE INSTANT CASE THAT N O INFORMATION GIVEN IN THE RETURN WAS FOUND TO BE INCO RRECT OR INACCURATE. IT WAS NOT AS IF ANY STATEMENT MADE OR ANY DETAIL SUPPLIED WAS FOUND TO BE FACTUALLY INCORRECT. HENCE, AT LEAST, PRIMA FACIE, THE ASSESSEE COULD NOT BE HELD GU ILTY OF FURNISHING INACCURATE PARTICULARS. THE REVENUE ARG UED THAT SUBMITTING AN INCORRECT CLAIM IN LAW FOR THE EXPENDITURE ON INTEREST WOULD AMOUNT TO GIVING INACC URATE PARTICULARS OF SUCH INCOME. SUCH CANNOT BE THE INTERPRETATION OF THE CONCERNED WORDS. THE WORDS ARE PLAIN AND SIMPLE. IN ORDER TO EXPOSE THE ASSESSEE TO THE PENALT Y ITA-4173/DEL/2014 6 UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY ANY STRETCH O F IMAGINATION, MAKING AN INCORRECT CLAIM IN LAW CANNO T TANTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS. [ PARA 7] SIMILARLY, IN THE PRESENT SCENARIO, THE ASSESSEE CANNOT B E PENALIZED FOR MAKING A CLAIM WHICH IN ITSELF IS UNSUSTAINABLE IN LAW. THE SUPREME COURT FURTHER HEL D IN THE RELIANCE PETROCHEMICALS CASE THAT- MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT, BY ITSELF, WOULD NO T ATTRACT THE PENALTY UNDER SECTION 271(1)(C). IF THE CONTENT ION OF THE REVENUE WAS ACCEPTED, THEN IN CASE OF EVERY RETU RN WHERE THE CLAIM MADE WAS NOT ACCEPTED BY THE ASSESSING OFFICER FOR ANY REASON, THE ASSESSEE WOULD INVITE PENAL TY UNDER SECTION 271(1)(C). 13. THE INTENTION OF THE PARLIAMENT CANNOT BE TAKEN TO HAVE BEEN TO PENALIZE EVERYONE WHO MAKES A WRONG CLA IM FOR DEDUCTION. THE LEGISLATURE DOES NOT INTEND TO PEN ALIZE EVERY PERSON WHOSE CLAIM IS DISALLOWED. THIS IS NOT THE A IM OF THE LEGISLATURE. THE TRIBUNAL IN THE FACTS OF THIS CASE, THEREFORE, CORRECTLY REACHED THIS CONCLUSION. THE QUE STION OF LAW IS ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE; THEREFORE, THE APPEAL HAS NO MERIT AND IS DISMISSED. 8. LEARNED SENIOR DR HAS RELIED UPON THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF MORGAN FINVE ST (P.) LTD. (SUPRA), WHEREIN THEIR LORDSHIPS SUSTAINED THE LEVY OF PENALTY U/S 271(1)(C) HOLDING THE CLAIM OF DEPRECIATION NOT BONA FIDE WITH THE FOLLOWING FINDING :- EVEN IF IT IS ASSUMED THAT THE ASSESSEE CONTINUED TO REMAIN THE OWNER OF THE PROPERTY THROUGHOUT THE YEA R, THE OTHER CONDITION OF SECTION 32, THAT THE PROPERTY SH OULD HAVE BEEN USED FOR THE PURPOSE OF THE ASSESSEES BUSINESS HAS NOT BEEN SATISFIED. THERE IS NO PROOF THAT THE DIR ECTOR RESIDED IN THE PROPERTY AND IT WAS ONLY A CLAIM MADE BY ITA-4173/DEL/2014 7 THE ASSESSEE IN THE COURSE OF THE ARGUMENTS. THE ASSESSING OFFICER HAS RIGHTLY BROUGHT OUT IN THE ASSESSMENT ORDER THAT HAVING REGARD TO THE SHORT PERIOD DURING WHICH THE ASSESSEE HELD THE PROPERTY, WHICH IT HAD ACQUIRED W ITH THE USE OF BORROWED FUNDS, AN INTENTION TO MAKE A QUI CK PROFIT ON THE PROPERTY DEAL CANNOT BE RULED OUT. IN THIS BACKGROUND, AND CONSIDERING THE FACT THAT THERE IS NO EVIDENCE TO SHOW USE OF THE PROPERTY DURING THE RELEV ANT PREVIOUS YEAR FOR THE PURPOSE OF THE ASSESSEE S BUSINESS, IT IS CLEAR THAT THE CLAIM OF DEPRECIATION WAS NOT BONA FIDE. MOREOVER, WHILE CLAIMING DEPRECIATION, THE COST OF T HE LAND WAS ALSO INCLUDED, CONTRARY TO THE PROVISIONS OF THE AC T UNDER WHICH NO DEPRECIATION IS ALLOWABLE ON LAND. 9. HOWEVER, THE FACTS IN THE CASE UNDER APPEAL BEFORE US ARE ALTOGETHER DIFFERENT. THE ASSESSEE HAS CLAIMED THAT IT HAS INCURRED CERTAIN EXPENDITURE PARTLY CAPITAL AND PARTLY REVEN UE FOR RESEARCH PURPOSES. THE GENUINENESS OF EXPENDITURE WAS NOT DOUBTE D BY THE ASSESSING OFFICER HIMSELF BUT HE OPINED THAT THE EXPENDI TURE WAS INCURRED FOR THE PURPOSE OF BUSINESS OF MANUFACTURING AND NOT FOR RESEARCH PURPOSES. THE CIT(A) ACCEPTED THAT THE EXPEN DITURE WAS INCURRED FOR RESEARCH PURPOSES. THE SAID ORDER OF LEA RNED CIT(A) HAS BECOME FINAL. THUS, THE ASSESSEES CLAIM THAT IT INCURRE D THE EXPENDITURE FOR THE PURPOSE OF RESEARCH HAS BEEN UPHEL D. THE ONLY DISALLOWANCE SUSTAINED BY THE LEARNED CIT(A) WAS WITH REGARD TO THE RATE OF DEDUCTION PERMISSIBLE FOR EXPENDITURE INCURRE D ON RESEARCH. THE ASSESSEE CLAIMED DEDUCTION AT THE RATE OF 150% I.E. , U/S 35(2AB) WHILE THE LEARNED CIT(A) ALLOWED DEDUCTION U/S 35(1) (IV). THEREFORE, IN OUR OPINION, THE ABOVE DECISION OF HON'BLE JURISDICTI ONAL HIGH COURT IN THE CASE OF MORGAN FINVEST (P.) LTD. (SUPRA) WOULD NOT BE APPLICABLE TO THE FACTS OF THE ASSESSEES CASE. 10. IN THE CASE OF ZOOM COMMUNICATION P.LTD. (SUPRA) , HON'BLE JURISDICTIONAL HIGH COURT HELD AS UNDER :- ITA-4173/DEL/2014 8 IN THE CASE OF RELIANCE PETROPRODUCTS P.LTD. [2010] 3 22 ITR 158 (SC), THE ADDITION MADE BY THE ASSESSING OFFICE R IN RESPECT OF THE INTEREST CLAIMED AS A DEDUCTION UNDER SECTION 36(1)(III) OF THE ACT WAS DELETED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) THOUGH IT WAS LAT ER RESTORED, BY THE TRIBUNAL, TO THE ASSESSING OFFICER. TH E APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE TRIBUNAL WAS ADMITTED BY THE HIGH COURT. IT WAS, IN THESE CIRCUMSTANCES, THAT THE TRIBUNAL CAME TO THE CONCLUSIO N THAT THE ASSESSEE HAD NEITHER CONCEALED THE INCOME NOR FILED INACCURATE PARTICULARS THEREOF. IN RECORDING THIS FINDING, THE TRIBUNAL FELT THAT IF TWO VIEWS OF THE CLAIM OF THE ASSESSEE WERE POSSIBLE, THE EXPLANATION OFFERED BY IT COULD NOT BE SAID TO BE FALSE. THIS, HOWEVER, IS NOT T HE FACTUAL POSITION IN THE CASE BEFORE US. THE FACTS OF T HE PRESENT CASE THUS ARE CLEARLY DISTINGUISHABLE. IT IS TRUE THAT MERE SUBMITTING A CLAIM WHICH IS INCOR RECT IN LAW WOULD NOT AMOUNT TO GIVING INACCURATE PARTICULA RS OF THE INCOME OF THE ASSESSEE, BUT IT CANNOT BE DISPUTED TH AT THE CLAIM MADE BY THE ASSESSEE NEEDS TO BE BONA FIDE. I F THE CLAIM BESIDES BEING INCORRECT IN LAW IS MALA FIDE , EXPLANATION 1 TO SECTION 271(1)(C) WOULD COME INTO PLAY AND WORK TO THE DISADVANTAGE OF THE ASSESSEE. 11. THUS, THEIR LORDSHIPS OF HON'BLE JURISDICTIONAL HI GH COURT HAVE HELD THAT MERE SUBMITTING A CLAIM WHICH IS INCORRECT IN LAW WOULD NOT AMOUNT TO GIVING INACCURATE PARTICULARS OF INCOME O F THE ASSESSEE BUT THE CLAIM MADE BY THE ASSESSEE NEEDS TO BE BONA FIDE . IF THE CLAIM BESIDES BEING INCORRECT IN LAW IS MALA FIDE, EXPLANAT ION 1 TO SECTION 271(1)(C) WOULD COME INTO PLAY. THEREFORE, THE PRE CISE QUESTION BEFORE US IS TO GIVE A FINDING WHETHER THE CLAIM OF THE ASSESSEE IS BONA FIDE OR NOT. AS WE HAVE ALREADY MENTIONED THAT IN THIS CASE, THE CLAIM OF THE ASSESSEE THAT IT INCURRED EXPENDITURE ON SCIENTIFIC RESE ARCH HAS ALREADY BEEN ACCEPTED BY THE LEARNED CIT(A), SO THERE IS NO QUESTION OF CLAIM BEING MALA FIDE. THE POSITION REMAINS AFTER THE ORD ER OF THE CIT(A) IS THAT THE ASSESSEES CLAIM THAT IT INCURRED EXPENDITURE O N SCIENTIFIC RESEARCH STOOD ACCEPTED BUT THE DEDUCTION IS ALLOWED A T THE RATE OF ITA-4173/DEL/2014 9 100% INSTEAD OF 150% AS CLAIMED BY THE ASSESSEE. IN OUR OPINION, MERELY BECAUSE THE RATE OF DEDUCTION IS REDUCED BY TH E CIT(A), IT CANNOT BE SAID THAT THE CLAIM OF THE ASSESSEE IS MALA FI DE OR INCORRECT. THAT HON'BLE JURISDICTIONAL HIGH COURT IN A RECENT D ECISION I.E., ORDER DATED 9 TH JULY, 2018 IN THE CASE OF SAMTEL INDIA LTD. (SUPRA) HAS RE- EXAMINED THE DECISION OF RELIANCE PETROPRODUCTS PVT.L TD. (SUPRA) AND HELD THAT UNLESS THE DETAILS SUPPLIED IN THE RETURN OF INCOME ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TR UTH OR ERRONEOUS, IT CANNOT BE SAID TO BE INACCURATE PARTICULARS. IN THE CASE UNDER APPEAL BEFORE US, ADMITTEDLY, THE PARTICULARS OF EXPENDITUR E INCURRED BY THE ASSESSEE HAVE BEEN ACCEPTED TO BE TRUE AND ACCURATE BY THE ASSESSING OFFICER HIMSELF BECAUSE HE HAS NOT DOUBTED THE GENUINE NESS OF THE EXPENDITURE INCURRED. HE ONLY DISPUTED WHETHER THE EXPENDITURE WAS INCURRED FOR NORMAL BUSINESS OF MANUFACTURING OR FOR R ESEARCH WORK. THIS CLAIM IS ALSO ACCEPTED BY THE LEARNED CIT(A) THAT THE EXPENDITURE WAS INCURRED FOR RESEARCH PURPOSES. THE DISALLOWANCE WA S MADE ONLY BECAUSE THE DEDUCTION WAS ALLOWED AT A LESSER RATE THA N WHAT WAS CLAIMED BY THE ASSESSEE. ON THESE FACTS, IN OUR OPINION , THE DECISION OF HONBLE APEX COURT IN THE CASE OF RELIANCE PETROP RODUCTS PVT.LTD. (SUPRA) AND THE RECENT DECISION OF HON'BLE JURISDICTIO NAL HIGH COURT IN THE CASE OF SAMTEL INDIA LTD. (SUPRA) WOULD BE SQUAREL Y APPLICABLE. RESPECTFULLY FOLLOWING THE SAME, WE CANCEL THE PENALT Y LEVIED UNDER SECTION 271(1)(C) OF THE ACT. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON 09.01.2019. SD/- SD/- (SUDH (SUDH (SUDH (SUDH ANSHU SRIVASTAVA ANSHU SRIVASTAVA ANSHU SRIVASTAVA ANSHU SRIVASTAVA ) )) ) ( (( ( G.D. AGRAWAL G.D. AGRAWAL G.D. AGRAWAL G.D. AGRAWAL ) )) ) JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER VICE VICE VICE VICE PRESIDENT PRESIDENT PRESIDENT PRESIDENT VK. ITA-4173/DEL/2014 10 COPY FORWARDED TO: - 1. APPELLANT : M/S KRISHNA MARUTI LIMITED, M/S KRISHNA MARUTI LIMITED, M/S KRISHNA MARUTI LIMITED, M/S KRISHNA MARUTI LIMITED, B BB B- -- -5, CHIRAG ENCLAVE, NEW DELHI 5, CHIRAG ENCLAVE, NEW DELHI 5, CHIRAG ENCLAVE, NEW DELHI 5, CHIRAG ENCLAVE, NEW DELHI 110 048. 110 048. 110 048. 110 048. 2. RESPONDENT : ASSISTANT COMMISSIO ASSISTANT COMMISSIO ASSISTANT COMMISSIO ASSISTANT COMMISSIONER OF INCOME TAX, NER OF INCOME TAX, NER OF INCOME TAX, NER OF INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -5(1), NEW DELHI. 5(1), NEW DELHI. 5(1), NEW DELHI. 5(1), NEW DELHI. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR