Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: ACCOUNTING STANDARDS :: due date for vat payment :: list of goods taxed at 4% :: VAT Audit :: form 3cd :: Central Excise rule to resale the machines to a new company :: cpt :: VAT RATES :: articles on VAT and GST in India :: ACCOUNTING STANDARD :: TDS :: TAX RATES - GOODS TAXABLE @ 4% :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ARTICLES ON INPUT TAX CREDIT IN VAT :: empanelment
 
 
From the Courts »
 Micro Spacematrix Solution P Ltd vs. ITO (ITAT Delhi)
 CIT vs. Greenfield Hotels & Estates Pvt. Ltd (Bombay High Court)
 IndiaBulls Financial Services Ltd vs. DCIT (Delhi High Court)
 Maharao Bhim Singh of Kota vs. CIT (Supreme Court)
 Ravneet Takhar Vs. Commissioner Of Income Tax Ix And Ors.
 Jaiprakash Associates Ltd. Vs. Commissioner Of Income Tax
 Formula One World Championship Limited Vs. Commissioner Of Income Tax, International Taxation-3 And Anr.
 Commissioner Of Income Tax International Taxation-3 Delhi Vs. Formula One World Championship Ltd. And Anr.
 Reliance Communications Ltd vs. DDIT (ITAT Mumbai)
  Sushila Devi vs. CIT (Delhi High Court)
 Ashok Prapann Sharma vs. CIT (Supreme Court)a

Elan Equity Services Pvt. Ltd., 24, Medha Apartments, Mayur Vihar-1, Delhi. Vs. ITO Ward-11(1), New Delhi.
August, 21st 2014
          IN THE INCOME TAX APPELLATE TRIBUNAL
                DELHI BENCH "G" NEW DELHI
     BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER
                           AND
             SHRI C.M. GARG : JUDICIAL MEMBER

                         ITA No. 5135/Del/2012
                         Asstt. Yr: 2005-06
Elan Equity Services Pvt. Ltd.,       Vs. ITO Ward-11(1),
24, Medha Apartments,                       New Delhi.
Mayur Vihar-1, Delhi.
PAN: AABCE 4021 F

( Appellant )                                ( Respondent )

            Appellant by        :     Shri Sanjay Gupta CA
            Respondent by       :     Smt. Shalini Verma Sr. DR

            Date of hearing     :     08-07-2014
            Date of order       :     14-08-2014.

                                 ORDER

PER S.V. MEHROTRA, A.M::

      This appeal, by the assessee, is directed against order dated 13-07-
2012 passed by the      CIT(A)-XIII, New Delhi in appeal no. 55/11-12,
confirming the penalty levied u/s 271(1)(c) of the I.T. Act relating to A.Y.
2005-06.


2.    Brief facts of the case are that assessee, a registered broker of NSE,
had filed its return of income declaring loss of Rs. 8,61,703/-. Besides this,
the assessee company also claimed carry forward of unabsorbed depreciation
of Rs. 5,95,522/-. The assessing officer noticed that during the year under
consideration the assessee had no business activity and therefore he required
                                       2                           ITA 5135/Del/2012
                                                         Elan Equity Services Pvt. Ltd.

the assessee to explain as to why the interest earned should to be assessed as
income from other sources and other expenses claimed should not be
disallowed.


2.1.   The assessee's response, as noted by assessing officer, was as under:
       "The assessee is a registered broker of NSE and the
       membership of the NSE was obtained in the year February
       2006. the assessee has performed trial run in the March 2006
       itself, as trading is totally linked with the connectivity of the
       network. The first trading was started on 03-4-2006 (Monday)
       as 1st & 2nd April being holiday.

       Further, vide letter dated 31-10-2008 the assessee company,
       stated that after getting the NSE certificate its business was set
       up and ready to commence. Thus, the business had commenced
       during the year under consideration. The assessee being a
       share broker of NSE and ahs to obtain certificate from the NSE
       which was obtained by the assessee on 16-01-2006. Since the
       assessee has completed all the formalities for carrying business
       but could not do any business as non availability of prospective
       clients."




2.2.   Considering the above reply, the assessing officer concluded that
assessee company did not commence business during the year under
consideration. He observed that process of setting up of business cannot be
held as commencement of business. He concluded that business of the
assessee company commenced from the first working day of next
assessment year i.e. 3-4-2006. He accordingly taxed the interest income
under the head income from other sources.

2.3.   As regards the expenses claimed by the assessee out of ROC fees of
Rs. 11,000/-, the assessing officer observed as under:
                                         3                          ITA 5135/Del/2012
                                                          Elan Equity Services Pvt. Ltd.

       "The assessee company has claimed ROC fees of Rs. 11,000/-.
       The assessee company raised share capital during the year
       under consideration for which incurred expenses to pay to
       ROC. Normal expenses of Rs. 1,500/- are allowed and balance
       amount is disallowed as capital expenditure.

       Further, in earlier year, i.e. year of formation of company, the
       assessee company had subscribed capital of Rs. 1,00,000/- on
       which it is entitled to expenses of Rs. 5,000/- under section 35D
       of the Act and these expenses are to be amortized in five
       instalments of Rs. 1,000/- each. Thus, expenses of Rs. 1,000/-
       are allowed and balance amount is disallowed as capital
       expenditure."

2.4.   The assessing officer computed assessee's income as under:
             "Interest income ­ as discussed                 Rs. 2,84,694/-
       Less: Filing fee ­ as discussed above     1,500
             Preliminary expenses ­do-           1,000
             Audit fee                           11,000      Rs. 13,500/-
                     Income from other sources assessed      Rs. 2,71,194/-

2..5. Assessing officer, accordingly, initiated penalty proceedings u/s
271(1)(c) of the Act.

2.6.   In the penalty order, the assessing officer observed that assessee filed
a very cryptic reply and stated that it had produced all the relevant
information and there was no concealment of facts and it was further stated
that the additions were made due to difference of opinion regarding date of
commencement of business. The assessee had relied on the decision of
Hon'ble Supreme Court in the case of Reliance Petro Products Pvt. Ltd. 189
ITR 322.

2.7.   The assessing officer levied penalty of Rs. 4,31,126/- for the
following reasons:
                                          4                          ITA 5135/Del/2012
                                                           Elan Equity Services Pvt. Ltd.

   (i)       The assessee claimed entire expenses and depreciation for the
             complete year before setting up of its business, which is
             completely against the provisions of law and basic principle of
             accountancy.
   (ii)      CIT(A) had held that date of grant of certificate of registration, as
             granted by NSE, should be taken as date of setting up of business
             as to carry on the business of stock and share broking. Without the
             grant of certificate of registration by NSE, business regarding stock
             and share broking cannot be said to be set up. There cannot be any
             difference of opinion as regards the date of commencement of
             business.
   (iii)     There is no disclosure in the notes on account or in the audit report
             regarding the set up/ commencement of business during the year
             under consideration.
   (iv)      It is a case of wrong deduction of the claim as made by the
             assessee and therefore in view of the decision of Hon'ble Delhi
             High Court in the case of CIT Vs. Escorts Finance Ltd. 183
             Taxman 453, penalty u/s 271(1)(c) is leviable.
   (v)       The assessee has not been able to substantiate its claimed made
             during the assessment proceedings, hence as well as in the
             appellate proceedings.
2.8.      Before ld. CIT(A), the assessee submitted that it had not concealed
any income as there was no item of receipt which was suppressed. The
assessee had furnished all the particulars which were required to be
submitted in this case. The assessee further pointed out that additions were
made purely on difference of opinion on the issue of commencement of the
business. The assessee further referred to the decision of ld. CIT(A) wherein
                                         5                          ITA 5135/Del/2012
                                                          Elan Equity Services Pvt. Ltd.

he had neither agreed with the conclusion of assessing officer in taking the
date of commencement of business as 3-4-2006, nor agreed with                      the
assessee taking the date of setting up of business on 25-4-2005 ( the date on
which application for the membership was submitted). On the contrary, he
held that the date when certificate of registration as granted by NSE should
be taken as date of setting up of business in the case of the business of the
assessee. Thus, the assessee submitted that it was merely a case of difference
of opinion and, therefore, no penalty can be levied. The assessee relying on
the decision in the case of Reliance Petro Products (supra), pointed out that
as in the said decision, in the present case also the details of the explanation
filed by the assessee were not found to be inaccurate but only the assessing
officer observed that assessee had advanced a wrong claim/ deduction. The
assessee further pointed out that, in any view of the matter, the assessing
officer had wrongly calculated penalty amount because depreciation was
allowable as per the Act, since date of commencement of the business had
been taken as 16-1-2006.


2.9.      Ld. CIT(A) did not accept the assessee's contention for the following
reasons:
   (i)       The assessee is a registered share broker of National Stock
             Exchange.
   (ii)      The date of setting up of the business will be the date on which
             registration was granted by NSE to the assessee for conducting
             share broking business.
   (iii)     The registration by NSE was not granted during the year, therefore,
             business of stock and share trading cannot be said to be set up
             during the year. Therefore, the argument of the assessee that the
                                          6                           ITA 5135/Del/2012
                                                            Elan Equity Services Pvt. Ltd.

              additions were made based on difference of opinion regarding the
              date of commencement of business, cannot be accepted.
     (iv)     The assessee had not mentioned in the notes or in the audit report
              regarding setting up or commencement of business. Therefore,
              there was no full and complete disclosure also.
     (v)      The claim made by the assessee was ex facie bogus, which was not
              sustainable at all.
2.10. Ld. CIT(A), inter alia, referred to the decision in the case of CIT Vs.
Zoom Communication Pvt. Ltd., wherein Hon'ble Delhi High Court has
held that if assessee made a claim, which is not only incorrect in law but is
also wholly without any basis and explanation furnished by him for making
such a claim is not found to be bona fide, explanation 1 to section 271(1)(c)
would come into play and assessee will be liable to penalty.


3.         Ld. Counsel for the assessee submitted that assessee had applied to
NSE on 25-4-2005 which date was treated as the date of setting up of
business and the expenses incurred thereafter were claimed as business
expenses. The assessing officer, however, took the date of first dealing on
the stock exchange, which was 3-4-2006 as the date of commencement of
assessee's business. He, therefore, had disallowed the entire expenses
claimed by assessee. Ld. CIT(A) took the date of grant of registration by
NSE viz. 16-1-2006 as the date of setting up of business and allowed the
expense thereafter. The entire dispute is in regard to the claim of expenses
made for the period 25-4-2005 to 16-1-2006.


3.1.       Ld. Counsel referred to page 33 & 34 of the PB, wherein application
for obtaining membership for capital market and future and option segment
                                       7                           ITA 5135/Del/2012
                                                         Elan Equity Services Pvt. Ltd.

with NSE dated 25-4-2005 is contained. Along with the application various
annexures were filed and the details of directors and dealers with supporting
documents were furnished. The balance-sheet of 31-3-2005 with auditors
report was also filed. The reference letter      from HDFC bank was also
furnished. The assessee had given all the details of its office premises etc. as
per the requirement of SEBI. The SEBI vide its letter dated 16-1-2006
contained at pages 35 & 36 of the PB, granted the registration as a stock
broker to the assessee company and, thereafter, the assessee became eligible
to trade on stock exchange.


3.2.   With the background of these facts, ld. Counsel submitted that the
claim of assessee in respect of various expenses claimed for the period from
25-4-2005 to 15-1-2006 could not be said to be a mala fide claim because
assessee had complied with all the requirements for obtaining the
membership of NSE on 25-4-2005. therefore, the assessee's business had
been set up and only the commencement of business was awaited which
also became clear on 16-1-2006.


3.3.   Ld. Counsel referred to the decision of the ITAT in the case of
Whirlpool of India Ltd. v. JCIT 114 TTJ 211 and pointed out that in this
case assessee had, by placing all the facts before assessing officer, taken the
position that the business was set up on 1-11-1995 with which assessing
officer did not agree. This does not amount to furnishing of any inaccurate
particulars of income. In this case the company was engaged in rendering
financial services and the Tribunal concluded that it was possible to say that
the business was set up when the directors are appointed; staff, such as,
regional and branch managers are appointed and their salaries were paid;
                                           8                              ITA 5135/Del/2012
                                                                Elan Equity Services Pvt. Ltd.




computers are acquired and installed and the company is ready to commence
business. It was held that it cannot be said that business was set up only
when the bank account was opened on 1-2-1996 because prior thereto the
company, though it did not have a bank account, was incurring the
expenditure through K. India Ltd. or E Machinery Ltd. The Tribunal had,
inter alia, observed as under:

       "The assessee is a financial company authorized to advance
       loans for interest to facilitate customers to purchase consumer
       durables, though the business is not limited to advancing
       monies for acquiring consumer durables. In the case of a
       company engaged in rendering financial services, it is possible
       to say that the business is set up when the directors are
       appointed, staff such as regional and branch managers are
       appointed and their salaries are paid, computers are acquired
       and installed and the company is ready to commence business."

3.4.   The assessee in its written submissions made before the ld. CIT(A), as
contained at page 25 onwards of the PB, inter alia, has submitted as under:


       "As per object clause of the memorandum of association of the assessee,
       the main object of the assessee was to carryon the business of stock and
       share broking. The Company was incorporated on 24.11.2004 under the
       Indian Companies Act, 1956 with authorized Capital of Rs. 200 Lacs
       being minimum capital for the companies obtaining membership of Stock
       Broker. To carry on the business activities it has to be registered with
       National Stock Exchange (NSE) and/or Bombay Stock Exchange. The
       assessee decided to get registered with NSE. There are certain
       requirements such as qualified persons, minimum area and the Net worth
       etc to be complied with for getting registered. As per the requirement of
       minimum two qualified persons and minimum Net worth of Rs. 100 lacs
       besides deposit of Rs 125 lacs. The assessee issued capital of Rs. 150 Lacs
       and appointed two qualified persons on the board and applied for the
       Membership of NSE on 25.04.2005. NSE vide its letter dated 14.06.2005
       asked to complete certain formalities which were complied with. After
       interviewing and the necessary formalities issued letter in the month of
       Sep, 2005 for deposit of Rs 127 lacs and the same was deposited in NSE
                                                  9                                 ITA 5135/Del/2012
                                                                          Elan Equity Services Pvt. Ltd.

        on 08.11.2005. Finally NSE issued membership certificate on 16.01.2006
        and asked to furnish bank guarantee of Rs 25.00 lacs. To carry out
        activities equipment such as VSAT, Servers has to be installed and the
        same was dispatched on 07.03.2006 by NSE. The assessee has claimed
        revenue expenditure of Rs 1146396.88 which was incurred after applying
        for the membership i.e after setting up of the Business. The above
        significance of dates can be summarized as follows:

S.No.   Particulars                                        Dates
1.      Incorporation of the Company                       24-11-2004
2.      Application for Empanelment with NSE               25-04-2005
3.      Letter for further formalities                     14-06-2005
4.      Letter for Interview                               05-08-2005
5.      Demand Advise                                      02-09-2005
6.      SEBI Registration                                  28-10-2005
7.      Receipt of Deposit of Rs. 127 Lacs                 08-11-2005
8.      Certificate of Registration                        16-01-2006
9.      SEBI Registration for Capital Market               20-01-2006
10.     SEBI Registration for Future & opinion             24-01-2006
11.     Deposit of Bank Guarantee                          07-02-2006
12.     Activation of Vsat                                 21-02-2006
13.     Dispatch of VSAT                                   07-03-2006
14.     Enablement for Trading in F&O Segment              14-03-2006
15.     First Transaction                                  03-04-2006


        Dictionary meaning of Setting Up is creation, foundation, establishment,
        development, production, institution, constitution, formation, inception, origination .
        Further formation means The act or process of forming something or of taking form.
        By going through the dictionary meaning setting up means to act or process of
        forming. The assessee has started process of obtaining membership of the exchange
        on 25.04.2005 the date on which application was submitted.



4.      Ld. DR submitted that mere filing of an application with the SEBI for
grant of membership cannot be taken to be the date for setting up of business
because by mere filing of the application with the SEBI it cannot be held
that the assessee was ready to commence business.

5.      We have considered the rival submissions and have perused the record
of the case. The company was incorporated on 24-11-2004 under the Indian
                                      10                          ITA 5135/Del/2012
                                                        Elan Equity Services Pvt. Ltd.

Companies Act with the authorized capital of Rs. 2,00,00,000/- being
minimum capital for the company obtaining membership of stock broker. As
per the object clause of memorandum of association of the assessee, the
main object of the assessee was to carry on the business of stock and share
broker. To carry on the business activity, it has to be registered with NSE
and/ or Bombay Stock Exchange. There are certain requirements, such as,
qualified persons, minimum area and the net worth etc. to be complied with
for getting registered.   As per the requirements, minimum two qualified
persons and minimum worth of Rs. 1,00,00,000/-, besides deposit of Rs.
1,25,00,000/-, was required . To comply with this, the assessee issued capital
of Rs. 1,50,00,000/- and appointed two qualified persons on the Board and
applied for the membership of NSE on 25-4-2005. NSE vide its letter dated
14-6-2005 asked to complete certain formalities which were complied with.
After necessary formalities were completed, NSE issued letter in the month
of September 2005 for deposit of Rs. 1,27,00,000/- and the same was
deposited in NSE on 8-11-2005. Finally, NSE issued membership certificate
on 16-1-2006 and asked to furnish bank guarantee of Rs. 25,00,000/- to
carry out activities equipment such as VSAT, servers had to be installed
and the same was dispatched on 7-3-2006 by NSE.

5.1.   From the above uncontroverted factual aspects it is evident that from
the date of incorporation of company itself, the assessee's intention was to
obtain the membership of stock exchange and in order to pursue that object
the assessee had to comply with various legal requirements. It is true that
assessee could not commence the business without registration being granted
but the fact of overwhelming legal requirements to be complied with by
assessee before getting the registration cannot be over looked.
                                           11                              ITA 5135/Del/2012
                                                                 Elan Equity Services Pvt. Ltd.

5.2.   The assessee's claim is that from the date it filed application with
NSE viz. 25-4-2005 it had set up its business and only the formal
registration from NSE was awaited. In the backdrop of these facts the
assessee's submission is that it was highly debatable whether the date of set
up should be taken as 25-4-2005 considering the requirement to be fulfilled
or only after the formal registration is granted by NSE should the business
be taken as set up. The submission is that it is highly debatable issue.

5.3.   We find considerable force in            this submissions        of the assessee
because though it is true that assessee could not commence the business but
a the same time it cannot be ignored that from incorporation the intention of
the assessee was for obtaining NSE membership and various formalities had
to be fulfilled before application for registration could be made. In this
regard we may refer to the following observations of ITAT Delhi Bench in
the case of Whirlpool of India Ltd. (supra) observing in para 3 as under:


       "3.      Section 3 of the Income Tax Act defines "previous year" and it
       says that the first previous year commences from the date of "setting up
       of the business". It is well-settled that there is a difference between the
       date of setting up of a business and the date of commencement of the
       business and this distinction has been brought out by the Bombay High
       Court in Western Vegetable Products Ltd. v. CIT(1954) 26 ITR 151
       (Born) by observing that when a business is established and is ready to
       commence business then it can be said that it has been "set up" , but before
       it is ready to commence business it is not "set up". There may be an
       interregnum between the date of setting up of the business and the date of
       actual commencement of the business, under the Act all Expenses incurred
       after the date of setting up are allowed as a deduction under section 28.
       This decision has been applied by the Hon'ble Delhi High Court in its
       recent judgment, 17-9-2007 in ITA Nos." 1687 and 1688 of2006 in the
       case of CIT v. Hughes Escort Communications Ltd. (reported at (2007)
       213 CTR (Del) 45'Ed. ) (copy of the judgment filed before us) and it has
       been held that where the business has been set up, though the same has not
       been commenced, the expenditure incurred after the date of setting up has
                                     12                              ITA 5135/Del/2012
                                                           Elan Equity Services Pvt. Ltd.

to be allowed as deduction. But the question as to when it can be said that
a business is "set up" must largely depend on the facts of each case and the
nature of the business. There can be no hard and fast~ rule by which it can
be determined as to when the business was set up. In the judgment of the
Bombay High Court cited supra, it was a case of a manufacturing concern.
It was held that the business was set up when the first order of purchase of
raw material was placed and not when the factory was started (at a later
point of time). In CIT v. Sarabhai Sons (P) Ltd. (1973) 90 ITR 318 (Guj),
the Gujarat High Court was dealing with a company established for the
manufacture of scientific instruments. It was held that the purchase of
land, placing of orders for machinery and raw materials were merely
operations for the setting up of the business and the business was actually
set up only when the machinery was installed and the factory was ready to
commence business. In Prem Conductors (P) Ltd. v. CIT 1976 CTR (Guj)
324 : (1977) 108 ITR 654 (Guj), the Gujarat High Court held that even
securing orders by a manufacturing concern in advance of production can
amount to setting up of the business. In CIT v. Sarabhai Management
Corpn. Ltd. (1991) 192 ITR 151 (SC), the Supreme Court, affirming the
view of the Gujarat High Court in Sarabhai Management Corporation Ltd.
v. CIT (1976) 102 ITR 25 (Guj) held that in the case of a company formed
for leasing of property it could not be said that the business was not set up
till the first lease took place; the earlier part of the activities, namely,
engaging staff, buying the equipment and making the staff familiar with
the same are all part of the business and the business can be said to be set
up even earlier. A case of marine processing industry was dealt with by
the Gujarat High Court in CIT v. Western India Sea Foods (P) Ltd. (1993)
199 ITR 777 (Guj). There, it was held that the act of acquiring a godown
in the month of August in anticipation of the arrival of fish in the waters in
the month of October was held to amount to setting up of the business.
The Madras High Court was dealing with the case of a company formed
for selling property time-share in CIT v. Club Resorts (P) Ltd. (2006) 287
ITR 552 (Mad). It was held that the acts of appointing staff for canvassing
sales of the property timeshares, renting of office premises, etc. amounted
to setting up of the business even though the construction of the property
was yet to begin. A case of a hotel hospitality industry was considered
again by the Gujarat High Court in Hotel Alankar v. CIT (1982) 133 ITR
866 (Cuj). While recognizing that the question whether a business is set up
or not was essentially one of fact and that it would largely depend upon
the facts of each case and the nature of the business; the High Court noted
that in the case of a hotel (boarding and lodging house) due weight must
be given to the fact that it cannot commence its activities overnight. It was
pointed out that the business of boarding and lodging would necessarily
comprise of variegated activities commencing from the stage of
acquisition of a proper and suitable building making it more suitable for
the hotel business, purchasing linen, cutlery, furniture, etc., appointing
staff of managers, cooks, bearers and ultimately reaching the stage of
                                            13                             ITA 5135/Del/2012
                                                                 Elan Equity Services Pvt. Ltd.

       receiving customers and that it would be de hors commercial sense to hold
       that one would be reaching the stage of having set up the business only
       when one reaches the stage of receiving customers. It was ultimately held
       that where there are several integrated activities to be undertaken serially,
       one forming the foundation for the other, it can be said that the business
       was 'set up' when the first of such activities was undertaken. It was
       ultimately held that the business was set up when the building was
       acquired and was placed at the disposal of the firm. In ITO v. M
       Voradarajan (1989) 34 TTJ (Mad) 247 : (1989) 30 ITD 414 (Mad), the
       Madras Bench of the Tribunal held in the case of a sole-selling agent that
       his business could be said to have been set up once he obtained the sole-
       selling agency and it could not be said that it was set up only when he
       obtained the first business."


5.4.   The question, whether a business can be said to have been set up, is
dependent on the facts of each case and largely on the nature of business
proposed to be undertaken. In the present case the nature of business
proposed to be undertaken was such that without complying with various
requirements, the assessee could not make application for registration. The
application could be made to SEBI only when the assessee had fulfilled/
complied with basic conditions necessary for grant of registration.
Therefore, it cannot be disputed that there can be one point of view that the
business had been set up after all the necessary formalities had been fulfilled
for making the assessee eligible for filing the application with SEBI. Only
the permission for commencement of business was awaited. The business
was ready for commencement subject to grant of registration. Therefore, in
our opinion, under such circumstances it cannot be said that assessee's
explanation of claiming expenses for the period 25-4-2005 to 15-1-2006
could be branded as mala fide. The assessee having complied with all the
requirements was sanguine of getting registration and therefore treated its
business as being set up from the date of making application. Further, the
assessee's intention since beginning was to act as member of NSE also has
                                        14                           ITA 5135/Del/2012
                                                           Elan Equity Services Pvt. Ltd.

to be given due weightage. Considering the highly debatable nature of its
claim    we are of the opinion that penalty is not leviable in this case.
Moreover, the assessee having filed all the relevant information along with
the return, it cannot be said that assessee had concealed particulars of its
income to attract penalty u/s 271(1)(c). In coming to this conclusion we are
fortified by the ratio of decision of Hon'ble Supreme Court in the case of
Reliance Petro Products Ltd. v. CIT 322 ITR 158. In                view of above
discussion, the penalty levied u/s 271(1)(c) is deleted.
6.      In the result, assessee's appeal is allowed.

Order pronounced in open court on 14-08-2014.



      Sd/-                                             Sd/-
( C.M. GARG )                                   ( S.V. MEHROTRA )
JUDICIAL MEMBER                                 ACCOUNTANT MEMBER

Dated:14-08-2014.
MP
Copy to :
  1. Assessee
  2. AO
  3. CIT
  4. CIT(A)
  5. DR

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Quality Assurance Services Testing and Re-testing

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions