Deputy Commissioner of Income-tax, Circle - 14, Pune V. M/s. Lifestyle Leisures Private Limited, Pune

ITA 580/PUN/2019

AI Insights

The case involves an appeal by the Revenue against the order of the CIT(A)-7, Pune, which had deleted a penalty imposed on M/s. Lifestyle Leisures Private Limited for the assessment year 2015-16. The penalty was originally levied by the Assessing Officer under section 271(1)(c) of the Income Tax Act, 1961, concerning the disallowance of interest expenditure under section 14A, rule 8D(2)(ii) of the Income Tax Rules, 1962. The Revenue contended that the assessee's claim of the expenditure amounted to furnishing of inaccurate particulars of income, as the assessee had disallowed the amount on a suo moto basis during scrutiny. However, the CIT(A) found that the assessee had not earned any exempt income in the relevant year, rendering the disallowance and subsequent penalty inappropriate.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 137234 (ITAT-PUNE)
• Duration Of Justice: 5 year(s) 10 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 16-10-2022
• Assessment Year: misc
• Appeal Filed On: 11-01-2017
• Other Referred Cases: PCIT vs. Ballarpur Industries Ltd., CIT vs. Corrtech Engineering Pvt. Ltd., CIT vs. Chettinad Logistics (P.) Ltd.
• Laws Referred To: Income Tax Act, 1961, Income Tax Rules, 1962
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: HARI KRISHAN
• Keywords: Earning of tax free income
• Section: 271(1)(c); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.580/PUN/2019 िनधाᭅरण वषᭅ / Assessment Year: 2015-16 DCIT, Circle-14, Pune. Vs. M/s. Lifestyle Leisures Private Limited, S.No.191, Tech Park One, Tower-E, Off Airport Road, Yerwada, Pune- 411006. PAN : AAACL6291P Appellant Respondent आदेश / ORDER PER S. S. GODARA, JM: This Revenue’s appeal for assessment year 2015-16 arises against the CIT(A)-7, Pune’s order dated 11.01.2019 passed in case no. PN/CIT(A)-7/Cir-14/10022/2018-19, involving proceedings u/s 271(1)(c) of the Income Tax Act, 1961; in short “the Act”. Heard both the parties. Case file perused. 2. Coming to the Revenue’s sole substantive grievance raised in the instant appeal challenging correctness of the CIT(A)’s action deleting section 271(1)(c) penalty of Rs.1,15,08,340/- levied by the Assessing Officer vide order dated 27.04.2018, we note at the outset Revenue by : Shri Ramnath P. Murkunde Assessee by : Shri Hari Krishan Date of hearing : 17.10.2022 Date of pronouncement : 17.11.2022 ITA No.580/PUN/2019 2 that the same hardly requires us to delve deeper in the relevant factual matrix. Suffice to say, the impugned penalty pertains to section 14A interest expenditure disallowance (proportionate basis) under Rule 8D(2)(ii) of the Income Tax Rules, 1962. The Revenue’s case all along has been that the assessee had disallowed the impugned quantum sum of Rs.3,38,58,018; on suo moto basis, during the course of scrutiny only and therefore, it’s impugned action of having claimed the said expenditure amounts to furnishing of inaccurate particulars of income attracting section 271(1)(c) of the Act. 3. We note from a perusal of the CIT(A)’s clinching detailed discussion in para 6 page 8 that the assessee had not even derived any exempt income in the relevant previous year. That being the case, various judicial precedents i.e. PCIT vs. Ballarpur Industries Ltd. Income Tax Appeal No.51/2016 dated 13.10.2016 (Bombay), CIT vs. Corrtech Engineering Pvt. Ltd. (2014) 372 ITR 97 (Guj.) and CIT vs. Chettinad Logistics (P.) Ltd. (2018) 95 taxmann.com 250 (SC) have already held that even such a quantum disallowance in absence of exempt income itself is not sustainable. That being the case, we find no merit in Revenue’s vehement argument seeking to revive the impugned penalty. The CIT(A)’s finding under challenge stand upheld accordingly. ITA No.580/PUN/2019 3 4. This Revenue’s appeal is dismissed in above terms. Order pronounced on this 17 th day of November, 2022. Sd/- Sd/- (DR. DIPAK P. RIPOTE) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे / Pune; ᳰदनांक / Dated : 17 th November, 2022. Sujeet आदेश कᳱ ᮧितिलिप अᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A)-7, Pune. 4. The Pr. CIT-6, Pune. 5. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, “A” बᱶच, पुणे / DR, ITAT, “A” Bench, Pune. 6. गाडᭅ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.