THE HIGH COURT OF DELHI AT NEW DELHI

%                                      Judgment delivered on: 27.02.2013

+       ITA 47/2013


COMMISSIONER OF INCOME TAX, DELHI                              ... Appellant

                                        versus

MADHUSHREE GUPTA                                               ... Respondent
Advocates who appeared in this case:
For the Appellant            : Mr Suruchi Aggarwal
For the Respondent           : Mr V. N. Jha

CORAM:-
HON'BLE MR JUSTICE BADAR DURREZ AHMED
HON'BLE MR JUSTICE R.V.EASWAR

                                  JUDGMENT

BADAR DURREZ AHMED, J (ORAL)

1.       This appeal is directed against the Tribunal's order dated

25.05.2012 in ITA No. 1589/Del/2005 pertaining to the assessment year

2001-02. It arises out of the penalty order passed by the Assessing

Officer under Section 271(1)(c) of the Income Tax Act, 1961. A penalty

of ` 18,79,303/- had been imposed upon the respondent. The

Commissioner of Income Tax (Appeals) confirmed the penalty, which

had been deleted by the Tribunal by virtue of the impugned order.








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2.      The Assessing Officer had noted that the assessee had claimed

current year's losses amounting to ` 80,65,000/- pertaining to the

business of the assessee in respect of the share trading business. The

respondent / assessee had set off this loss against the amount of profit

after claiming deduction under Section 80HHC of the said Act. The

Assessing Officer held that the deduction under Section 80HHC was

allowable on the gross total income as defined under Section 80AB read

with Section 80HHC.        The gross total income, according to Section

80AB, was the income of the assessee after setting off the current year's

losses.       Consequently, the Assessing Officer had, in the quantum

proceedings, disallowed the deduction of ` 53,17,841/- out of the total

deduction of ` 1,03,61,340/- claimed by the assessee /respondent.



3.      The learned counsel for the respondent pointed out that the

Tribunal had placed reliance on the decision in the case of CIT v.

Reliance Petroproducts Private Limited: 322 ITR 158 (SC) wherein it

was held that mere making of a claim, which is not sustainable in law,

would not, ipso facto, amount to furnishing inaccurate particulars




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regarding the income of the assessee and would, therefore, not

automatically result in a penalty order against the assessee.



4.      The learned counsel for the appellant placed reliance on the

decision of this Court in the case of CIT v. Zoom Communication

Private Limited: 327 ITR 510 (Del), wherein this Court, after examining

the decision of the Supreme Court in Reliance Petroproducts Private

Limited (supra), had observed that the Court cannot overlook the fact that

only a small percentage of the income tax returns are picked up for

scrutiny and if the assessee makes a claim which is not only incorrect in

law but is also wholly without any basis and the explanation furnished by

him for making such a claim is not found to be bonafide, it would be

difficult to say that he would still not be liable to penalty under Section

271(1)(c) of the Act. Therefore, the issue to be examined in the present

case is whether the claim made by the assessee is wholly without any

basis and the explanation furnished by the assessee for making such a

claim is not bonafide.




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5.      The learned counsel for the respondent pointed out that the reason

for making the claim in the manner indicated above was that there were

decisions of the Bombay High Court in the case of CIT v. Shirke

Construction Equipments Limited: [2000] 246 ITR 429 (Bom) and also

of the Kerala High Court in the case of CIT v. Smt. T. C. Usha: [2004]

266 ITR 497 (Ker) which supported the position adopted by the

respondent / assessee in its return. It is only subsequently that the matter

was settled by the Supreme Court in the case of IPCA Laboratory Ltd. v.

DCIT: [2004] 266 ITR 521 (SC), wherein the Supreme Court held that

the provisions of Section 80AB had an overriding effect over all the other

sections in Chapter VI-A including Section 80HHC. The decision in

IPCA Laboratory Ltd (supra) came subsequent to the filing of the return.

Therefore, it cannot be said that the claim made by the respondent /

assessee was not bona fide or without any basis. We agree with the

submission made by the learned counsel for the respondent / assessee.

The present case is not covered by the ratio laid down in Zoom

Communication Private Limited (supra). The Tribunal has arrived at the

correct decision relying upon the decision of the Supreme Court in









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Reliance Petroproducts Private Limited (supra). No question of law

arises for our consideration.

        The appeal is dismissed.

                                   BADAR DURREZ AHMED, J



                                        R.V.EASWAR, J

FEBRUARY 27, 2013
SR




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