The Ito-12(1)(1), Aa... v. M/S. Siddhivinayak H...

N.K. Billaiya, A.M.:— These are appeals by the Revenue against the order of the Ld. CIT(A)-23, Mumbai dated 10.12.2013 pertaining to Assessment year 2007-08 and 2008-09.

2. In both these appeals, the grievance of the Revenue is same and it relates to the deletion of the penalty levied u/s. 271(1)(c) of the Act in respect of additions/disallowance made in respect of the claim u/s. 80IB(10) of the Act.

3. At the very outset, the Ld. Counsel for the assessee brought to our notice the order of the Hon'ble High Court of Bombay in ITA Lodging No. 228 of 2013 wherein the following substantial question of law were admitted.

a) Whether on the facts and in the circumstances of the case the Tribunal was justified in law and on facts in denying the deduction to the appellant under section 80IB(1) of the Income Tax Act as claimed without appreciating the facts of the case that the appellant had complied with all the conditions of Section 80IB(10) of the Act?

b) Whether on the facts and in the circumstances of the case the Tribunal was right in law in not appreciating that even if the condition of built up area introduced by Finance (No. 2) Act, 2004 was only with effect from 1st April, 2005, the same could not be made applicable to the present case inasmuch as that even if the area of the combined flats was to be taken into consideration the same would not be more than 1000 Sq.ft as elevations/projections and balconies could not be included in the definition of “built up area”?

4. It is the say of the Ld. Counsel that once the substantial question of law is admitted in respect of quantum additions, no penalty can be levied invoking the provisions of Sec. 271(1)(c) of the Act. Reliance was placed on the decision of the Hon'ble High Court of Bombay in the case of CIT v. Nayan Builders and Developers, 368 ITR 722.

5. We have carefully perused the order of the levy of penalty u/s. 271(1)(C) of the Act. Undisputedly, the penalty has been levied on the denial of the claim of deduction u/s. 80IB(10) of the Act. It is also an undisputed fact that the Hon'ble High Court has admitted substantial question of law for adjudication on the impugned disallowances. Thus, the facts of the case in hand are squarely covered by the decision of the Hon'ble High Court of Bombay in the case of Nayan Builders & Developers (supra) wherein the Hon'ble High Court has held as under:

“Held, dismissing the appeal, that the imposition of penalty was found not to be justified and the appeal was allowed. As a proof that the penalty was debatable and arguable issue, the Tribunal referred to the order on the assessee's appeal in quantum proceedings and the substantial questions of law which had been framed therein. Thus, there was no case made out for imposition of penalty and the penalty was rightly set aside”.

Respectfully following the decision of the Hon'ble Jurisdictional High Court (supra), we decline to interfere with the findings of the Ld. CIT(A).

6. In the result, both the appeals filed by the Revenue are dismissed.