Income Tax Appellate Tribunal - Delhi
Jagan Lamps Ltd. , New Delhi vs Department Of Income Tax on 21 October, 2010
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'D' DELHI
BEFORE SHRI C.L. SETHI AND SHRI K.G. BANSAL
ITA No. 1944(Del)/2010
Assessment year: 2003-04
Income-tax Officer, M/s Jagan Lamps Ltd.,
Ward 4(1), New Delhi. Vs. 14, DDA Transport Centre,
Punjabi Bagh, New Delhi.
PAN-AAACJ0689D
(Appellant) (Respondent)
Appellant by : Shri Maneesh Bahuguna, Sr. DR.
Respondent by: Shri Harish Kapoor, C.A.
ORDER
PER K.G. BANSAL : AM The only substantive ground taken in this appeal is that the ld. CIT(A) erred in deleting the penalty of Rs. 2,48,020/-, levied by the AO u/s 271(1)(c) of the Income-tax Act, 1961 ("the Act" for short). It is also mentioned that he ignored the fact that the assessee furnished inaccurate particulars of income by claiming deduction u/s 10B of the Act.
2. The facts of the case are that the assessee had filed the return of income on 28.11.2003 declaring total income of Rs. 6,06,100/-. The assessment was completed on 22.2.2006 u/s 143(3) at the total income of Rs. 13,09,150/-. In this assessment, the interest income earned by the assessee, amounting to Rs. 9,90,928/-, was considered to be taxable under the residuary head and not the income derived from eligible 2 ITA No. 1944(Del)/2010 undertaking. Penalty proceedings were also initiated u/s 271(1)(c), which were completed on 27.3.2009 levying the minimum penalty of Rs. 2,48,020/-. This order was set aside by the ld. CIT(A). His findings are that -(a) the assessee had disclosed all material facts, and (b) mere raising a legal claim does not amount to furnishing inaccurate particulars of income.
3. Before us, the ld. counsel for the assessee fairly submitted that the interest received on fixed deposits does not constitute income derived from the eligible undertaking. This view finds support from the decision of Hon'ble Delhi High Court in the case of CIT Vs. Shri Ram Honda Power Equipments (2007) 289 ITR 475. However, it is mentioned that this judgment was delivered on 12.1.2007 while the assessee had filed the return of income on 28.11.2003. Therefore, the assessee did not have the benefit of this judgment when the return was filed. Before the delivery of this judgment, there was a confusion as to whether such income could be taken as income of the business income or it had to be taxed under the residuary head. Therefore, it was contended that while the addition might have been rightly made to the total income, the levy of penalty was not justified. In reply, the ld. DR relied on the orders of the authorities below.
4. We have considered the facts of the case and the submissions made before us. We are of the view that at the time of filing of the return, there was a debate as to whether interest on fixed deposits made out of surplus funds of the business was taxable as business income or income from other sources. In view thereof, the claim of exemption u/s 10B was a 3 ITA No. 1944(Del)/2010 legal claim, which was rightly denied in computing the total income. However, the assessee had furnished full facts in regard to its claim by way of an audit report. There is no averment in the orders of lower authorities about the falsity in facts or inaccuracy therein. Thus, the case is squarely covered by the decision of Hon'ble Supreme Court in the case of CIT Vs. Reliance Petro Products (P) Ltd. (2010) 322 ITR 158. Relying on this decision, it is held that levy of penalty by the AO was not justified.
5. In the result, the appeal is dismissed.
The order was pronounced in the open court on 21 October, 2010.
Sd/- sd/-
(C.L. Sethi) (K.G.Bansal)
Judicial Member Accountant Member
Date of order: 21st October, 2010.
SP Satia
Copy of the order forwarded to:
M/s Jagan Lamps Ltd., New Delhi.
ITO, Ward 4(1), New Delhi.
CIT(A)
CIT
The DR, ITAT, New Delhi.
Assistant Registrar.