DCIT Rg. - 3(3), MUMBAI v. M/s. RELIANCE CAPITAL LTD., MUMBAI

ITA 2319/MUM/2006 | 2000-2001
Pronouncement Date: 18-11-2011 | Result: Dismissed

Appeal Details

RSA Number 231919914 RSA 2006
Assessee PAN AAACR5054J
Bench Mumbai
Appeal Number ITA 2319/MUM/2006
Duration Of Justice 5 year(s) 7 month(s)
Appellant DCIT Rg. - 3(3), MUMBAI
Respondent M/s. RELIANCE CAPITAL LTD., MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 18-11-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted H
Tribunal Order Date 18-11-2011
Date Of Final Hearing 14-10-2011
Next Hearing Date 14-10-2011
Assessment Year 2000-2001
Appeal Filed On 17-04-2006
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH: MUMBAI BEFORE SHRI P.M. JAGTAP ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR JUDICIAL MEMBER ITA NO.2319/MUM/2006 (ASSESSMENT YEAR: 2000-01) DY. COMMISSIONER OF INCOME TAX RANGE-3(3) AAYAKAR BHAVAN M.K. ROAD MUMBAI -400 020 ....... APPELLANT VS M/S. RELIANCE CAPITAL LTD. 570 RECTIFIER HOUSE 3RD FLOOR NAIGAUM CROSS ROAD WADALA MUMBAI -400 01 ..... RESPONDENT PAN: AAACR 5054 J APPELLANT BY: SHRI GOLI SRINIVAS RAO RESPONDENT BY: SHRI JITENDRA SANGHAVI DATE OF HEARING: 14.10.2011 DATE OF PRONOUNCEMENT: 18.10.2011 O R D E R PER R.S. PADVEKAR JM IN THIS APPEAL THE REVENUE HAS CHALLENGED THE IMPUG NED ORDER OF THE LD. CIT (A) 3 MUMBAI DATED 9.01.2006 FOR THE A.Y. 2000-01 DELETING THE PENALTY LEVIED BY THE A.O. U/S.271(1)( C) OF THE ACT. THE REVENUE HAS TAKEN THE FOLLOWING EFFECTIVE GROUND:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT (A) ERRED IN DELETING THE PENA LTY OF ` 1 23 14 867/- LEVIED U/S.271(1)(C) OF THE ACT IN RE SPECT OF DISALLOWANCE U/S 14A AND DISALLOWANCES OF DEDUCTION U/S.35D BOTH OF WHICH WERE CONFIRMED IN THE FIRST APPEAL. ITA 2319/MUM/2006 M/S. RELIANCE CAPITAL LTD. 2 2. THE CONTROVERSY IS REVOLVING AROUND THE TWO ADDI TIONS MADE BY THE A.O. (I) DISALLOWANCE OF THE EXPENDITURE U/S.14 A AND (II) DISALLOWANCE OF EXPENSES U/S.35D OF THE ACT. 3. THE ASSESSEE COMPANY FILED THE RETURN OF INCOME FOR THE A.Y. 2001-02 ON 30.11.200 DECLARING AN INCOME OF ` 22 64 90 680/- UNDER THE NORMAL PROVISIONS OF THE ACT AND ALSO U/S.115JA DECLARING THE BOOK PROFITS OF ` ` 14 14 76 270/-. THE ASSESSMENT OF ASSESSEE WAS COMPLETED U/S.143(3) OF THE ACT VIDE ASSESSMENT ORD ER DATED 27.12.2002 AND A.O. MADE VARIOUS DISALLOWANCES AND ADDITIONS AND FINALLY DETERMINED THE INCOME OF ` 38 13 11 060/-. THE A.O. MADE DISALLOWANCE OF ` 4 CRORE ON ACCOUNT OF EXPENSES ATTRIBUTABLE FOR EARNING OF THE EXEMPT INCOME. HOWEVER ON APPEAL T HE LD. CIT (A) DELETED ` 3 CRORE AND SUSTAINED THE DISALLOWANCE OF ` 1 CRORE. THE ASSESSEE HAS MADE THE CLAIM U/S.35D OF ` 2 21 06 248/- BUT A.O. RESTRICTED THE CLAIM TO ` 1 19 578/- ON THE BASIS OF PRECEDING ASSESSMENT YEARS. IN THE PENALTY ORDER THE A.O. HAS NOTED THAT DISALLOWANCES HAVE BEEN MADE IN ENTIRETY ON THE BAS IS OF THE CLAIM OF THE ASSESSEE AND STAND TAKEN BY THE DEPARTMENT ON I T FROM A.YS. 1994-95 TO 1999-2000. AS THE CLAIM ON ADDITIONAL D EDUCTION WAS DISALLOWED IN ALL THE ABOVE PRECEDING YEARS THE CL AIM WAS ALSO DISALLOWED ON THE REASON THAT THE ASSESSEE IS NOT O PERATING ANY INDUSTRIAL UNDERTAKING NOR IT HAS SET-UP ANY IND USTRIAL UNDERTAKING DURING THE YEAR AND HENCE THE CONDITION MENTIONED I N SEC.35D(I)(II) ARE NOT FULFILLED. THE A.O. THEREFORE LEVIED THE PENALTY OF ` 1 23 14 867/- WHICH WAS 100% OF THE ALLEGED TAX SOU GHT TO BE EVADED ON THE FOLLOWING DISALLOWANCES:- (I) EXPENSES ATTRIBUTABLE FOR EARNING EXEMPT INCOME ` 1 CRORE (II) CLAIM OF DEDUCTION U/S.35D ` 2 19 86 670/- 4. IN THE PENALTY ORDER THE A.O. ALSO OBSERVED THA T SO FAR AS COMPUTATION OF BOOK PROFIT U/S.115JA IS CONCERNED:- ITA 2319/MUM/2006 M/S. RELIANCE CAPITAL LTD. 3 (I) DISALLOWANCE OF INTEREST RELATING TO DIVIDEND INCOM E OF ` 3 CRORE (II) INCOME CLAIMED AS EXEMPT U/S.10(23)(A) OF ` 9 CRORE (III) UNPAID OLD OUTSTANDING LIABILITY OF ` 28 33 711/- (IV) ADJUSTMENT OF LEASE EQUALISATION RESERVES AMOUNTING TO ` 21 20 96 875/-. ARE ALSO LIABLE TO PENALTY. THE ASSESSEE CHALLENGE D THE PENALTY ORDER BEFORE THE LD. CIT (A) RAISING THE SERIOUS GRIEVANC E FOR LEVY OF THE PENALTY U/S.271(1)(C) ON THE TWO ADDITIONS. THE LD . CIT (A) DELETED THE PENALTY AT ENTIRETY LEVIED BY THE A.O. AS UNJUSTIF IED. 5. SO FAR AS PENALTY ON THE DISALLOWANCE ON THE EXP ENDITURE ALLEGED TO BE ATTRIBUTABLE FOR EARNING THE EXEMPT INCOME IS CONCERNED I.E. DISALLOWANCE UNDER SEC. 14A THE LD. CIT (A) GAVE THE FOLLOWING REASON FOR DISALLOWING THE PENALTY:- 5. I HAVE CAREFULLY CONSIDERED THE MATTER. AS REGAR DS THE DISALLOWANCE OF EXPENDITURE OF RS.1 CRORE ATTRIBUTA BLE TO EARNING OF DIVIDEND INCOME I AM INCLINED TO AGREE WITH THE APPELLANT THAT THIS DISALLOWANCE HAS BEEN MADE PURELY ON ESTIMATE BASIS. ADMITTEDLY THE APPELLANT HAD MORE THAN SUFFICIENT OF ITS OWN FUNDS TO COVER INVESTMENTS MADE IN THE SHARES WHICH YIELDED DIVIDEND INCOME. THERE IS NO DISPUTE ON THIS COUNT EITHER IN THE ASSESSMENT ORDER ON IN THE APPELLATE ORDER. THE CIT (A) WAS QUITE CATEGORICAL IN THIS REGARD. LIE HELD THUS CONSIDER ING THUS THE APPELLANTS NET OWNED FUNDS ARE SUBSTANTIALLY HIGHER THAN THE INVESTMENT IN STOCK-IN-TRADE WHICH HAS GIVEN RISE T O DIVIDEND INCOME AND THE FACT THAT A MAJOR PART OF INVESTMEN TS HAVE BEEN MADE IN EARLIER YEARS AND ALSO THE FACT THAT DIVIDEND AS A PERCENTAGE OF YIELD ON THE MARKET VALUE OF INVESTME NT IS VERY MINIMAL ONLY 25% OF DISALLOWANCE OF INTEREST REGAR DED AS RELATABLE TO THE EARNING OF DIVIDEND INCOME BY THE ASSESSING ITA 2319/MUM/2006 M/S. RELIANCE CAPITAL LTD. 4 OFFICER CAN BE ATTRIBUTABLE TO EARNING OF DIVIDEND INCOME. THE DISALLOWANCE MADE ON THIS ACCOUNT IS REDUCED TO RS. 1 CRORE THUS THE CONTENTION OF THE APPELLANT THAT NO INTER EST EXPENSES HAVE BEEN INCURRED ON EARNING THE DIVIDEND INCOME H AS NOT BEEN DISPROVED. THE DISALLOWANCE WAS MADE MERELY BECAUSE SIMILAR DISALLOWANCES HAD BEEN MADE IN THE EARLIER YEARS. T HERE WAS NO FINDING OF FACT THAT INTEREST BEARING BORROWED FUND S HAD ACTUALLY BEEN INVESTED IN THE SHARES WHICH YIELDED DIVIDEND INCOME. IN THE ABSENCE OF ANY SUCH FINDING OF FACT IN MY CONS IDERED OPINION THERE CAN BE NO CASE FOR HOLDING THAT THE ASSESSEE HAD EITHER CONCEALED OR FURNISHED INACCURATE PARTICULARS OF IN COME FOR THIS REASON ALONE THE PENALTY LEVIED WITH RESPECT TO DIS ALLOWANCE OF EXPENDITURE FROM DIVIDEND INCOME IS LIABLE TO BE CA NCELLED . 5.1. EVEN UNDER THE LAW PREVALENT DURING THE AY IN QUESTION PENALTY CAN NOT BE LEVIED FOR ANY DISALLOWANCE MADE U/S 14 A. THIS SECTION WAS INTRODUCED EFFECTIVE FROM ASSESSME NT YEAR 2002-03 WITH RETROSPECTIVE EFFECT FROM 1ST APRIL 1 962. IT IS SETTLED LAW THAT PENALTY U/S. 271(1 )(C) CAN NOT BE LEVIED FOR ANY ADDITION MADE ON THE BASIS OF ANY PROVISION HAVING RETROSPEC TIVE EFFECT INTRODUCED AFTER THE FILING OF THE RETURN OF INCOME . THUS IF A CLAIM WAS NOT PROHIBITED BY LAW AT THE TIME OF FILING THE RETURN NO PENALTY CAN BE LEVIED ON DISALLOWANCE OF SUCH CLAIM PURSUANT TO ANY AMENDMENT IN LAW MADE WITH RETROSPECTIVE EFFECT . IT HAS BEEN HELD BY THE HONBLE SUPREME COURT IN CIT VS OM KAR SHARAN & SONS (1992) 195 ITK 1 (SC) AND BRIJ MOHAN VS CIT (1979) 120 ITR 1 (SC) THAT PENALTY IS GOVERNED BY THE LAW AS I T STOOD AT THE TIME WHEN THE RETURN WAS FILED. APPLYING THIS RATI O TO THE FACTS OF THE INSTANT CASE IT IS SEEN THAT THE PROVISIONS OF SECTION 14A WERE INTRODUCED BY FINANCE ACT 2001 WITH RETROSPECTIVE E FFECT FROM 1.4.1962. RETURN OF INCOME FOR THE AY UNDER CONSID ERATION WAS FILED BY THE APPELLANT COMPANY ON 30.11.2000 I.E. B EFORE THE DATE ITA 2319/MUM/2006 M/S. RELIANCE CAPITAL LTD. 5 OF INTRODUCTION OF S. 14A. THE DISALLOWANCE WHICH HAS INVITED LEVY OF PENALTY WAS MADE U/S.14A. IT IS NOT POSSIB LE FOR ANY ASSESSEE TO ANTICIPATE THE AMENDMENT OF OR INTRODUC TION OF ANY PROVISION RETROSPECTIVELY WHICH HAS THE EFFECT OF D ISTURBING THE CLAIMS MADE BY THE ASSESSEE AT THE TIME OF FILING T HE RETURN. IN THIS VIEW OF THE MATTER PENALTY IN RESPECT OF THE SAID DISALLOWANCE OF ` 1 CRORE IS NOT EVEN TENABLE UNDER THE LAW. FOR THE REASONS GIVEN IN PARA 5 AND 5.1 THE LEVY O F PENALTY IN RESPECT OF THE DISALLOWANCE OF ` 1 CRORE U/S.14A IS DIRECTED TO BE CANCELLED. 6. SO FAR AS PENALTY ON THE DISALLOWANCE OF THE EXP ENDITURE U/S.35D IS CONCERNED THE LD. CIT (A) GAVE FOLLOWIN G REASONS:- 5.2. AS REGARD DISALLOWANCE MADE U/S. 35D I AM IN CLINED TO AGREE WITH THE APPELLANT THAT THE SAME WAS MADE ON THE BASIS OF DIFFERENCE OF OPINION. THE APPELLANT FOR REASONS G IVEN BY IT ASSERTED THAT IT WAS ENTITLED TO THE DEDUCTION U/S. 35D. THE ASSESSING OFFICER REJECTED THE CLAIM ON THE GROUND THAT THE ASSESSEE WAS NOT AN INDUSTRIAL UNDERTAKING. HOWEVER THAT MAY BE THERE IS NO DISPUTE THAT ALL THE MATERIAL FACTS HAD BEEN DISCLOSED BY THE ASSESSEE. A SIMILAR CASE WHERE PE NALTY WAS LEVIED FOR CLAIMING DEDUCTION ON A RATHER INGENIOUS AND CONVOLUTED INTERPRETATION OF THE LAW IS THE NOW WEL L KNOWN CASE OF IPCA LABORATORIES LTD. IN THAT CASE DEDUCTION CL AIMED U/S 80 HHC FOR AY 1996-97 HAD BEEN DISALLOWED AS THERE WER E NO EXPORT PROFITS ON WHICH THE DEDUCTION COULD BE CLAI MED. THE DISALLOWANCE WAS CONFIRMED BY THE C1T (A) AND ITAT. THE DISALLOWANCE WAS UPHELD BY THE BOMBAY HIGH COURT AS REPORTED AT 251 ITR 401 AND LATER EVEN BY THE SUPREME COURT 266 1TR 521. IN THE MEANWHILE PENALTY OF ` 3.48 CRORE WAS LEVIED U/S 271(1)(C). CIT (A) CONFIRMED THE PENALTY ON THE GRO UND THAT THE ITA 2319/MUM/2006 M/S. RELIANCE CAPITAL LTD. 6 ASSESSEE HAD RESORTED TO AN INGENIOUS AND CONVOLUTE D METHOD FOR CLAIMING THE DEDUCTION. HOWEVER THE PENALTY WAS CA NCELLED BY THE MUMBAI ITAT- E BENCH IN ITA NO. 11 22/MURN/2002 DT. 19.9.2002 . IT WAS HELD THAT PENALTY CANNOT BE LEVI ED EVEN BY INVOKING EXPLANATION ITO S 271(1)(C) AS THE ASSESS EE HAD MADE FULL AND TRUE DISCLOSURE OF ALL MATERIAL FACTS AND CLAIM OF DEDUCTION WAS BASED ON CERTAIN TRIBUNAL DECISIONS S UPPORTING THE ASSESSEE. IN THE CASE OF CIT V. HARSHVARDHAN CHEM. & MINERALS LTD. (259 ITR 212 (RAJ.) THE ISSUE BEFORE THE COURT WAS WITH RESPECT TO LEVY OF PENALTY U/S. 271(1 )(C) OF THE ACT IN RESPECT OF DISALLOWANCE OF DEDUCTION U/S. 80-HH AND S. 80-I OF THE ACT. THE COURT APPROVED THE FINDINGS OF THE TRIBUNAL THUS: THE CONSISTENCY OF THE ASSESSEES CONDUCT IS FURTH ER ESTABLISHED FROM THE FACT THAT IT FILED AN APPEAL AGAINST THE A SSESSMENT ORDER THOUGH IT WAS LATER NOT PRESSED DUE TO THERE BEING NO TAX EFFECT. FROM THE FOREGOING DISCUSSION IT FOLLOWS THAT SUCH A DEDUCTION COULD BE AN ARGUABLE CONTROVERSIAL OR A DEBATABLE QUESTION. IN SUCH A SITUATION THE CLAIM COULD NOT BE SAID TO BE FALSE. IF IHIS WERE NOT SO IT WOULD BECOME IMPOSSIBLE FOR ANY ASS ESSEE TO RAISE ANY CLAIMS OR CLAIM ANY DEDUCTIONS WHICH ARE DEBATA BLE. ILLS NOT CERTAINLY THE INTENTION OF THE LEGISLATURE TO MAKE PUNISHABLE SUCH CLAIMS OR DEDUCTIONS UNDER SECTION 271(1) (C) OF TH E ACT. IF THE ARE NOT ACCEPTED. THE DELHI TRIBUNAL IN THE CASE OF NUC HEM LTD. V. DCIT 49 LTD 441 (DEL.) HELD THAT: IF AN ASSESSEE INTERPRETS THE LAW IN A PARTICULAR W AY DISCLOSING ALL THE RELEVANT LADS IN THE RETURNS SO THAT IF THE LEGAL POSITION TAKEN BY HIM IS NOT ACCEPTED. LIT/I TAX CAN BE IMPOSED BUT IT CANNOT BE SAID THAT THE ASSESSEE HAD FILED FALSE RETURN. THIS IS WHAT HAS BEEN HELD BY THE HON BLE MADHYA PRADESH HIGH COURT IN THE CASE OFAGRL. IMPLE MENTS DEALERS SYNDICATE V. CST [1971] 27 STC 227. IN THE INSTANT ITA 2319/MUM/2006 M/S. RELIANCE CAPITAL LTD. 7 CASE THE VIEW TAKEN BY THE ASSESSEE IS HIGHLY DEBAT ABLE. THIS VIEW HAS NOT BEEN ACCEPTED BY THE AO CIT(A). M ERE REJECTION OF THE APPELLANTS EXPLANATION WILL NOT M AKE THE EXPLANATION FALSE OR THE CLAIM FRAUDULENT AND MALA FIDE SO AS TO BE LIABLE FOR PENALTY. 5.3. HOWEVER THAT MAY BE THERE IS ALSO MERIT IN TH E CONTENTION OF THE APPELLANT THAT THE CLAIMS MADE FOR DEDUCTION U/ S. 35D DURING THE YEAR UNDER CONSIDERATION WAS NOT THE FIRST YEAR OF THE CLAIM. THE INITIAL YEAR OF THE CLAIM WAS IN THE EARLIER YE ARS. UNDER THE THEN PROVISIONS OF SECTION 35D THE DEDUCTION HAD T O BE CLAIMED OVER A PERIOD OF 10 YEARS FROM THE YEAR IN WHICH TH E ELIGIBLE EXPENDITURE WAS INCURRED. ACCORDINGLY THOUGH THE E XPENDITURE HAD BEEN INCURRED AND CLAIMED IN THE EARLIER YEARS DEDUCTION U/S. 3 5D WAS BEING CLAIMED BY THE APPELLANT OVER A PERIOD OF 10 YEARS WHICH INCLUDES THE ASSESSMENT YEAR UNDER CON SIDERATION. AS BROUGHT OUT ABOVE THE CLAIMS MADE IN THE INITIA L YEARS HAD BEEN DISALLOWED AND THE ASSESSEE IS IN APPEAL BEFOR E THE TRIBUNAL AGAINST THE SAID DISALLOWANCE. IN ORDER TO MAINTAIN AND KEEP ALIVE ITS CLAIM IT BECOMES NECESSARY FOR THE ASSESSEE TO MAKE THE CLAIM OF DEDUCTION IN EACH OF THE 10 YEARS FROM THE YEAR IN WHICH THE ELIGIBLE EXPENDITURE WAS INCURRED. IF THIS IS NOT DONE AND THE APPEAL IS EVENTUALLY DECIDED IN FAVOUR OF T HE ASSESSEE THE CLAIM WILL BE LOST IN THE YEARS IN WHICH IT HAS NOT BEEN MADE. THAT BEING SO THERE CAN BE NO QUESTION OF ANY CONC EALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME DURI NG THE ASSESSMENT YEAR UNDER CONSIDERATION AS ALL THE RELE VANT FACTS WITH RESPECT TO THE CLAIM IN QUESTION WERE ALREADY ON THE RECORD OF THE DEPARTMENT IN THE EARLIER YEARS. THE CLAIMS HAD BEEN EXAMINED AND REJECTED IN EARLIER YEARS AND FOLLOWIN G THE SAME STAND CLAIM FOR ASSESSMENT YEAR UNDER CONSIDERATION WAS ALSO REJECTED. SINCE THERE WAS NO FRESH CLAIM DURING THE ASSESSMENT ITA 2319/MUM/2006 M/S. RELIANCE CAPITAL LTD. 8 YEAR UNDER CONSIDERATION I AM INCLINED TO AGREE WI TH THE APPELLANT THAT MERELY MAINTAINING DURING THE ASSESS MENT YEAR UNDER CONSIDERATION THE CLAIM EARLIER MADE CANNOT B E CONSTRUED AS CONCEALMENT OR FURNISHING OF INACCURATE PARTICUL ARS OF INCOME. 5.4. FOR THE REASONS GIVEN IN PARA 5.2 & 5.3 THE PE NALTY LEVIED WITH RESPECT TO DISALLOWANCE OF CLAIM U/S. 35D IS A LSO DIRECTED TO BE CANCELLED. 7. NOW THE REVENUE IS IN APPEAL BEFORE US. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTI ES AND PERUSED THE RECORDS. WE FIND THAT SO FAR AS THE ISSUE OF T HE DISALLOWANCE OF EXPENDITURE ATTRIBUTABLE FOR EARNING THE EXEMPT INC OME IS CONCERNED THE SAME IS SQUARELY COVERED IN FAVOUR OF THE ASSES SEE BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS LTD. 322 ITR 158. IN THE CASE OF RELIANCE PETRO PRODUCTS LTD. THEIR LORDSHIPS HAVE HELD THAT MERELY BECAUSE THE C LAIM IS DISALLOWED WHICH OTHERWISE IS BONA FIDE CLAIM NO PENALTY CAN BE LEVIED. IN THE PRESENT CASE WE FIND THAT THE DISALLOWANCE IS MADE ON THE AD HOC BASIS WHICH WAS REDUCED BY THE LD. CIT (A). WE TH EREFORE FOLLOWING THE PRINCIPLES LAID DOWN IN THE CASE OF RELIANCE PE TRO PRODUCTS LTD. (SUPRA) CONFIRM THE ORDER OF THE LD. CIT (A). 9. SO FAR AS PENALTY LEVIED ON THE DISALLOWANCE OF THE DEDUCTION U/S.35D IS CONCERNED WE FIND THAT IT IS NOT THE FI RST YEAR OF THE CLAIM. UNDER THE PROVISION OF SCE.35D THE DEDUCTION IS TO BE CLAIMED OVER A PERIOD OF 10 YEARS FROM THE YEAR IN WHICH IS THE EL IGIBLE EXPENDITURE WAS INCURRED AND AS THE ASSESSEE WAS CLAIMING THE E XPENDITURE U/S.35D WHICH WAS SPREAD OVER FOR THE PERIOD OF 10 YEARS THE ASSESSEE CLAIMED THE EXPENDITURE IN THIS YEAR ALSO. MOREOVE R WE FIND THAT THE SAID ISSUE ITSELF IS BEFORE THE TRIBUNAL AND WHICH IS A DEBATABLE ISSUE. ITA 2319/MUM/2006 M/S. RELIANCE CAPITAL LTD. 9 THE CLAIM IS REJECTED ONLY ON THE INTERPRETATION ON THE PROVISIONS OF SEC.35D. WE ARE OF THE OPINION THAT MERELY BECAUSE CLAIM OF SEC.35D IS DISALLOWED THAT CANNOT BE THE REASON TO LEVY THE PENALTY BY HOLDING THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICUL ARS OF INCOME OR CONCEALED THE PARTICULARS OF INCOME WHEN CLAIM OF D EDUCTION IS REJECTED ON LEGAL INTERPRETATION. AFTER GIVING OUR ANXIOUS CONSIDERATION TO THE REASONS RECORDED BY THE LD. CIT (A) IN OUR OPINION THE LD. CIT (A) HAS RIGHTLY DELETED THE PENALTY LEVIED BY THE A .O. WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT ( A) AND ACCORDINGLY THE SAME IS CONFIRMED. 10. IN THE RESULT REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 1 8TH NOVEMBER 2011. SD/- SD/- ( P.M. JAGTAP ) ACCOUNTANT MEMBER ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI DATE : 18TH NOVEMBER 2011 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A)- XXXIII MUMBAI. 4) THE CIT-3 MUMBAI. 5) THE D.R. H BENCH MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T. MUMBAI *CHAVAN ITA 2319/MUM/2006 M/S. RELIANCE CAPITAL LTD. 10 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 18.10.2011 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 21.10.2011 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER