Penalty under section 271(1)(c) – disallowance of expenditure – ACIT, CIRCLE 4(1), NEW DELHI Versus M/s JAGRAN AGENTS PVT. LTD. – ITAT Delhi

ACIT, CIRCLE 4(1), NEW DELHI Versus M/s JAGRAN AGENTS PVT. LTD.

Penalty under section 271(1)(c) – disallowance of expenditure – bifurcation of expenditure one on account of interest payment of ₹ 40,76.035/- and second on account of misc. expenditure of ₹ 2,32,282/- – CIT(A) deleted the penalty levy – Held that:- This is the first year of the company operation. The company has only been set up in this year and the only activity performed by the company is purchase of lands. In this purchase the assessee has incurred interest expenditure. The assessee has also incurred routine administrative expenditure necessary to run the company. The company has also written off preliminary expenses. As regards the issue of debiting the routine and administrative expenses and preliminary expenses to the profit and loss account, we find that it cannot be said that it is a bogus or wrong claim. Hence, levy of penalty on disallowance of these expenses cannot be sustained.

As regards the issue of charging off in the profit and loss account, the interest expenditure we note that same was incurred on the purchase of land. Assessee has not started any specific project. Hence, the interest expenditure incurred in this regard has been charged to the profit and loss account. The above charging of all the expenditure to the profit and loss account cannot be said to be ex-facie bogus claim. It is certainly a debatable issue. When the matter is debatable, the assessee cannot be visited with the levy of penalty u/s. 271(1)(c). – Decided in favour of assessee.

Source – TMI

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