1.   Dy. Commissioner of income Tax Vs. Crew Bos Products Pvt. Ltd., ITA NO.  1948/DEL/2013, Date of Order: 08.08.2014, ITAT - Delhi

Penalty u.s 271(1)(c.) cannot be levied merely because an amount is not allowed or taxed as income

Hon’ble Supreme Court in the case of M/s Hindustan Steel Ltd. vs State of Orissa (1972) 83 ITR 26(SC) and decision of Hon’ble High Court of Delhi in Escorts Finance Ltd. (2009) 226 CTR (Del) 105 held that where facts are clearly disclosed in the return, penalty cannot be levied merely because an amount is not allowed or taxed as income. Turning to the facts and circumstances of the present case, admittedly, the assessee made claim of deduction u/s 80HHC of the Act which was reduced during the reassessment proceedings finalized u/s 263/143(3) of the Act and  a substantial part of the claim of the assessee for deduction u/s 80HHC of the Act was reduced and the AO held that the assessee was entitled to claim deduction u/s 80HHC of the Act of Rs.25,13,742 or against the deduction of Rs.58,00,945 as claimed by the assessee in its return of income.

In this factual matrix, while the AO passed an order of reassessment in pursuance toorder of CIT u/s 263 of the Act and on recomputation of deduction, the AO allowed the claim of the assessee for deduction u/s 80HHC Act at a lower figure but even in this situation, it cannot be inferred that the assessee has concealed its particulars of income or has furnished inaccurate particulars of its income. Thus, we come to a conclusion that the CIT was right in following decision of Hon’ble Supreme Court in the case of CIT vs Reliance Petroproducts Pvt. Ltd. (supra).

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2.  M/s District Cooperative Bank Limited Vs. ACIT, ITA Nos. 2984/Del/2013 & 2985/Del/2013, Date of Order: 08.08.2014, ITAT - Delhi

Dividend is not exempt under Section 10(34) read with Section 115-O if the companies from whom the assessee received the dividend has not paid dividend distribution tax, on account of mutuality

That the dividend is not exempt under Section 10(34) read with Section 115-O because the companies from whom the assessee received the dividend has not paid dividend distribution tax. His claim is that the dividend received by the assessee company is exempt on account of mutuality because those companies which paid dividend to the assessee are also either cooperative banks or the companies which are basically rendering services to the cooperative societies.

When the assessee claims any exemption on the ground of mutuality, the burden is upon the assessee to establish so. In this case, the learned counsel could not justify how the dividend received by the assessee from three different companies is covered under the concept of mutuality. The assessee has received the dividend on account of assessee’s investment in those companies. The dividend is not the contribution to the assessee by those companies and moreover, the assessee is not rendering services to them. In view of the above, we hold that the assessee’s contention that dividend received from those companies is exempt on account of mutuality is untenable. The same is rejected.

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