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Asstt. Commissioner of Income Tax, CC-38, Room No.31(1), Ground floor, Aayakar Bhavan, M K Road, Mumbai-400020 Vs. M/s SKIL Infrastructure Ltd., SKIL House,209, Bank Street cross Lane, Fort, Mumai-400023
July, 15th 2014
                     ,                  ""          
       IN THE INCOME TAX APPELLATE TRIBUNAL "E" BENCH, MUMBAI

BEFORE HON'BLE S/SHRI H.L. KARWA, PRESIDENT AND B.R.BASKARAN (AM)
         .. ,                               .. ,   
                     ./I.T.A. No.2725/Mum/2013
                   (   / Assessment Year :2008-09 )


  Asstt. Commissioner of Income      /         M/s SKIL Infrastructure Ltd.,
  Tax, CC-38,                        Vs.       SKIL House,209,
  Room No.31(1), Ground floor,                 Bank Street cross Lane,
  Aayakar Bhavan, M K Road,                    Fort,
  Mumbai-400020                                Mumai-400023
         ( /Appellant)                ..       (    / Respondent)

           . /   . /PAN/GIR No. : AABCS7689E



             / Appellant by                :   Cap.Pradeep Shorya Arya
               /Respondent by :                Shri Ruturaj H Gunjan



               / Date of Hearing
                                                   : 10.7.2014
              /Date of Pronouncement : 10.7.2014


                                   / O R D E R


 Per B.R.BASKARAN, Accountant Member:

       The appeal filed by the revenue is directed against the order dated

 23.01.2013 passed by Ld CIT(A)-39, Mumbai and it relates to the assessment

 year 2008-09.


 2.   The revenue is assailing the decision of Ld CIT(A) in deleting the penalty of

 Rs.36,30,472/- levied by the AO u/s 271(1)(c) of the Act.
                                          2                   I.T.A. No.2725/Mum/2013






3.       The facts that led to levy of penalty are set out in brief.   The assessee

company is engaged in the business of developing infrastructure facilities. In its

return of income, the assessee claimed an amount of Rs.24,81,000/- relating to

amortization of preliminary expenses as deduction u/s 35D of the Act. During

the year under consideration, the deduction u/s 35D was allowable only to an

Industrial Undertaking. The AO took the view that the assessee company does

not fall in the category of "Industrial Undertaking" and hence disallowed the said

Claim.     The assessee had also claimed a sum of Rs.1.55 crores as legal

expenses, which included a sum of Rs.82,00,000/- paid to M/s Ernst & Young

towards Professional fees for services rendered in listing of the shares of the

assessee company. The AO took the view that the amount paid towards listing

of shares of the company would be covered by the deduction prescribed u/s 35D

of the Act.      Since the assessee company does not fall in the category of

"Industrial Undertaking" and hence disallowed the said claim also. Though the

assessee contended before the AO that the term "industrial" has been omitted

from sec. 35D of the Act by the Finance Act 2008, yet the AO took the view that

the said amendment takes effect from AY 2009-10 only and accordingly held that

the said amendment does not apply to the year under consideration.


4.       The AO levied a penalty of Rs.36,30,472/- u/s 271(1)(c) calculated @

100% of the tax sought to evaded by claiming the above said two amounts. In

the appeal filed by the assessee, the ld CIT(A) deleted penalty on the reasoning

that the impugned additions have resulted due to wrong interpretation of law.

Aggrieved, the revenue has filed this appeal before us.
                                        3                   I.T.A. No.2725/Mum/2013



5.     The Ld D.R placed strong reliance on the order passed by the AO. He

submitted that wrong claim of deduction would also amount to concealment of

particulars of income, since the disallowance of the said claim would increase the

total income.


6.    On the contrary, the Ld A.R submitted that the assessee was under

bonafide belief that the amendment brought out by the Finance Act 2008 have

retrospective application.    Accordingly he submitted that the impugned

disallowances have resulted due to difference of opinion on interpretation of law.

Accordingly he contended that the Ld CIT(A) was justified in deleting the penalty

levied by the AO.


7.    We have heard the rival contentions and perused the record. We notice

that the assessee has amortized preliminary expenses and accordingly claimed a

sum of Rs.24,81,000/- u/s 35D of the Act. Out of the legal and professional fee

claimed by the assessee, the AO took the view that a sum of Rs.82.00 lakhs is

covered by sec. 35D of the Act.      However, the AO took the view that the

assessee is not entitled to claim deduction u/s 35D of the Act, since the assessee

cannot be considered as falling in the category of "industrial undertaking". The

assessee's contention that the amendment brought out by Finance Act, 2008

w.e.f. 1.4.2009, whereby the term "industrial" was omitted is curative in nature

and hence it shall have retrospective effect, was not accepted by the assessing

officer. The AO took the view that the said amendment is substantive in nature

and hence it shall have prospective effect. The Ld CIT(A) has noticed that the

explanation offered by the assessee is a bonafide one. Before Ld CIT(A), the

assessee had placed reliance on the decision rendered by Hon'ble Supreme Court
                                         4                   I.T.A. No.2725/Mum/2013



in the case of Alom Extrusions Ltd (319 ITR 306)(SC), wherein the Apex Court

had held that the amendment brought out in sec. 43B of the Act is retrospective

in nature.





8.     The explanations offered by the assessee would show that the assessee

was under bonafide belief that the amendment brought out by Finance Act, 2008

is retrospective in nature.   The said belief was not found to be false by the

assessing officer. Thus, we find merit in the contentions of the assessee that the

impugned disallowances have occurred due to difference of opinion about the

interpretation of law. Though the Ld D.R would contend that the amendment

was made effective from 1.4.1989 and hence there is no scope for two

interpretation, yet we are unable to accept the said contentions. In our view,

the belief entertained by the assessee cannot be considered as altogether wrong.

Accordingly, in our view, the Ld CIT(A) was justified in deleting the penalty

levied u/s 271(1)(c) of the Act. Accordingly we uphold his order.


9.     In the result, the appeal filed by the revenue is dismissed.



       The above order was pronounced in the open court on 10th July, 2014.


            10th July, 2014    

             Sd                                              sd

(.. / H.L. KARWA)                             (..  ,/ B.R. BASKARAN)
  / PRESIDENT                                   /Accountant Member

            th
  Mumbai: 10 July,2014.



. ../ SRL , Sr. PS
                            5               I.T.A. No.2725/Mum/2013




        /Copy of the Order forwarded to :
1.  / The Appellant
2.  / The Respondent.
3.     () / The CIT(A)- concerned
4.      / CIT concerned
5.      ,     ,                   /
     DR, ITAT, Mumbai concerned
6.     / Guard file.
                                              / BY ORDER,
          True copy
                                        (Asstt. Registrar)
                              ,  /ITAT, Mumbai

 
 
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