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M/s. Indobuilt Storage Systems Pvt. Ltd. 130, Runwal Commercial Complex, LBS Marg, Mulund Vs. ACIT-10(3) Mumbai
July, 04th 2014
                       MUMBAI BENCH "I", MUMBAI
                 DR. S.T.M. PAVALAN, JUDICIAL MEMBER

                            ITA No. 436/Mum/2012
                           Assessment Year: 2008-09

         M/s. Indobuilt Storage                ACIT-10(3)
         Systems Pvt. Ltd.                     Mumbai
         130, Runwal Commercial          Vs.
         Complex, LBS Marg, Mulund
         (W), Mumbai-80
         PAN:-AAACI 4993 H
               (Appellant)                               (Respondent)

                          Assessee by     :    Shri B.N. Rao
                           Revenue by     :    Shri Sunil Agrawal

                      Date of hearing  : 02.07.2014
                 Date of Pronouncement : 02.07.2014



      This appeal filed by the Assessee is directed against the order of the
Ld.CIT(A)-22, Mumbai dated 30.12.2011 confirming the penalty levied by the AO u/s
271(1)(c) of the Act for the Assessment Year 2008-09.

2.    The relevant facts are that the assesse, a company engaged in the business
of manufacturing of slotted angles while declaring a total income of Rs.86,43,690/-,
had claimed an excess deduction of Rs.24,16,574/- u/s 80IB of the Income Tax Act.
The said excess claim was due to the inclusion in the profit of Daman unit which was
eligible for deduction u/s 80IB, an amount of Rs.22,50,000/- being interest based on
a notional account entry allocating the same from non u/s 80IB unit to the above
unit. Further, the assessee had claimed deduction u/s 80IB in respect of
miscellaneous receipts of Rs.1,66,574/- which comprised of FDR interest. Since the
said incomes included under profit of the u/s 80IB unit are not eligible for claiming
deduction u/s 80IB as the same were not derived from the manufacturing activity
and also because of the fact that the interest of Rs.22,50,000/- was only a notional
ITA No. 436/Mum/2012 2 M/s. Indobuilt Storage Systems Pvt. Ltd. Assessment Year: 2008-09 accounting entry, the said amounts were disallowed added to the income of the assessee. Consequently in the penalty proceeding, the AO was of the view that the assesse concealed its income to the extent of Rs.24,16,574/- by claiming wrongful deduction to that extent. Therefore, the AO levied the impugned penalty @ 100% of Rs.10,89,948/- being the tax on income sought to be evaded. 3. Having heard both the sides and perused the material on record, it is relevant to state that the assesse had claimed deduction u/s 80IB for its Daman unit amounting to Rs.1,73,62,306/-. In the assessment framed u/s 143(3), the AO asked the assessee to submit the unit wise profit and loss and the details thereof. The assessee vide its letter dated 28.07.2010 submitted the details and also vide its letter dated 18.08.2010 wherein it has been stated that the said amount of Rs.22.50 lakhs shown as income in Daman unit has been missed out to be added back in the Atgaon unit as disallowable in the statement of total income. Similar is the position with the other miscellaneous receipts of Rs.1,66,574/-. On disclosure of the said mistake in the computation of income, the AO disallowed the said amounts for the purpose of calculating the claim of deduction u/s 80IB.

Considering the entire factual aspect of the case, we are inclined to accept argument of the Ld. AR that there was a bona fide mistake in claiming deduction and the same has been brought to the notice of the AO which resulted in the disallowance of the said amounts. In view of the fact that the assessee has included the said amounts due to bona fide mistake, the authorities below are not justified in making/confirming the levy of impugned penalty and thus the same is deleted. 4. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on this 2nd day of July, 2014. Sd/- Sd/- (N.K. BILLAIYA) (DR. S.T.M.PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated: 02.07.2014. *Srivastava Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The CIT(A) Concerned, Mumbai The DR "I" Bench //True Copy// By Order Dy/Asstt. Registrar, ITAT, Mumbai.
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