ACIT, Chandigarh V. M/s MDC Pharmaceuticals Pvt. Ltd., Chandigarh

ITA 697/CHANDI/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0682 (ITAT-CHANDIGARH)
• Duration Of Justice: 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 11-02-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 25-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Proportionate interest
• Section: 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 697/CHD/2012 (ASSESSMENT YEAR : 2007-08) THE A.C.I.T., VS. M/S MDC PHARMACEUTICALS PVT. LTD., CIRCLE 2(1), 52, INDUSTRIAL AREA, PHASE-1, CHANDIGARH. CHANDIGARH. PAN: AACCM4527B (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AKHILESH GUPTA, DR RESPONDENT BY : NONE DATE OF HEARING : 11.02.2013 DATE OF PRONOUNCEMENT : 28.02.2013 O R D E R PER SUSHMA CHOWLA, J.M, : THE APPEAL FILED BY THE REVENUE IS AGAINST THE ORDE R OF THE CIT (APPEALS), CHANDIGARH DATED 19.04.2012 RELATING TO ASSESSMENT YEAR 2007-08 AGAINST THE PENALTY LEVIED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. THE ONLY EFFECTIVE GROUND OF APPEAL RAISED BY TH E REVENUE READS AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, LD. CIT(A) HAS ERRED IN HOLDING THAT PENALTY U/S 271(1) (C) COULD NOT BE LEVIED ON THE DISALLOWANCE OF INTEREST ON AC COUNT OF DIVERSION OF INTEREST BEARING FUND TO SISTER CONCER N WITHOUT CHARGING ANY INTEREST. 3. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS A GAINST THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. THE ASSESSING OFF ICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAD MADE ADDITION ON ACCO UNT OF DISALLOWANCE OF INTEREST UNDER SECTION 36(1)(III) OF THE ACT ON INTEREST FREE ADVANCES 2 MADE BY THE ASSESSEE. FURTHER ADDITION WAS MADE BY RESTRICTING THE DEDUCTION UNDER SECTION 80IC OF THE ACT. THE ASSES SING OFFICER LEVIED PENALTY U/S 271(1)(C) OF THE ACT AMOUNTING TO RS.4, 65,544/- ON THE ABOVE SAID ADDITION. 4. THE CIT (APPEALS) DELETED THE PENALTY LEVIED ON THE DISALLOWANCE OF THE PROPORTIONATE INTEREST UNDER SECTION 36(1)(I II) OF THE ACT HOLDING THE ASSESSEE NOT TO HAVE FURNISHED INACCURATE PARTI CULARS OF INCOME. THE CIT (APPEALS), HOWEVER, UPHELD THE LEVY OF PENALTY ON THE DISALLOWANCE OF DEDUCTION UNDER SECTION 80IC ON THE GROUND ON MI SCELLANEOUS INCOME. 5. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF TH E CIT (APPEALS) IN DELETING THE PENALTY LEVIED BY THE ASSESSING OFFICE R ON DISALLOWANCE OF INTEREST ON DIVERSION OF INTEREST FREE FUNDS TO SIS TER CONCERN BY THE ASSESSEE. 6. DESPITE SERVICE OF NOTICE NONE APPEARED ON BEHAL F OF THE ASSESSEE AND BECAUSE OF SMALLNESS OF THE ISSUE WE PROCEED TO DECIDE THE PRESENT APPEAL AFTER HEARING THE LEARNED D.R. FOR THE REVEN UE. ON THE PERUSAL OF THE RECORD IT TRANSPIRES THAT THE PENALTY U/S 27 1(1)(C) OF THE ACT HAS BEEN LEVIED ON THE DISALLOWANCE OF INTEREST UNDER S ECTION 36(1)(III) OF THE ACT RELATABLE TO THE INTEREST FREE ADVANCES MAD E BY THE ASSESSEE AS AGAINST THE INTEREST EXPENDITURE ON INTEREST BEARIN G FUNDS. IN THE ABOVE SAID FACTS AND CIRCUMSTANCES THE ASSESSING OFFICER HAS FAILED TO ESTABLISH THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICUL ARS OF INCOME IN CONNECTION WITH THE SAID DISALLOWANCE. THE ASSESSE E HAD FURNISHED COMPLETE PARTICULARS OF ITS INCOME AND EXPENDITURE AND HAD ALSO FURNISHED THE DETAILS OF INTEREST BEARING FUNDS AND ALSO INTEREST FREE ADVANCES MADE BY IT. THE CASE OF THE REVENUE WAS T HAT IN VIEW OF THE MIXED FUNDS AVAILABLE WITH THE ASSESSEE, PROPORTION ATE DISALLOWANCE IS TO 3 BE MADE OUT OF INTEREST EXPENDITURE RELATABLE TO TH E INTEREST FREE ADVANCES MADE BY THE ASSESSEE. WE ARE IN AGREEMENT WITH THE ORDER OF THE ASSESSEE THAT THE ASSESSEE HAVING FURNISHED COM PLETE PARTICULARS OF INCOME AND MERE DISALLOWANCE OF INTEREST IN THE HAN DS OF THE ASSESSEE UNDER SECTION 36(1)(III) OF THE ACT DOES NOT WARRAN T LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. THE GROUND OF APPEAL RAISED BY THE REVENUE IS DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH DAY OF FEBRUARY, 2013. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 18 TH FEBRUARY, 2013 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH