The Tax Publishers2019 TaxPub(DT) 5383 (Pune-Trib)

INCOME TAX ACT, 1961

Section 271(1)(c)

Where addition was deleted in quantum appeal by the Tribunalm, there was no reason to sustain penalty under section 271(1)(c).

Penalty under section 271(1)(c) - Validity - Addition deleted in quantum appeal -

The issue relates to the deletion of penalty on the issue of expenses incurred for increase in share capital after amalgamation process, not covered under section 35DD. CIT(A) allowed the stamp duty expenses as eligible for amortization under section 35DD but fees for increase in authorized share capital was found as not eligible in view of the decision of the Delhi High Court. Tribunal set aside the order of the CIT(A) on this issue and directed the AO to delete the addition from the hands of the assessee. Held: Since the quantum had been deleted, there was no justification in sustaining the penalty. Further, the Rajasthan High Court in the case of CIT v. Cosmopolitan Trading Corporation (2005) 274 ITR 640 (Raj) : 2005 TaxPub(DT) 50 (Raj-HC) and Punjab & Haryana High Court in the case of CIT v. Prakash Industries Ltd. (2010) 322 ITR 622 (P&H) : 2010 TaxPub(DT) 926 (P&H-HC) had held that when the entire additions had been deleted in the quantum appeal, no reason survives for sustaining the penalty. Thus, the Bench sustained the deletion of penalty from the hands of assessee on this issue.

<>b>Followed:CIT v. Cosmopolitan Trading Corporation (2005) 274 ITR 640 (Raj) : 2005 TaxPub(DT) 50 (Raj-HC) and CIT v. Prakash Industries Ltd. (2010) 322 ITR 622 (P&H) : 2010 TaxPub(DT) 926 (P&H-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2002-03


INCOME TAX ACT, 1961

Section 271(1)(c)

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