Commissioner Of Income Tax – 20, Mumbai v. M/S.arpanna Development Corporation

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.734 OF 2011 Commissioner of Income Tax – 20, Mumbai..Appellant. Versus M/s.Arpanna Development Corporation..Respondent. Mr.Abhay Ahuja for the appellant.Mrs.Usha Dalal for the respondent. CORAM : J.P. Devadhar &M.S. Sanklecha, JJ. DATE : 30[th] January 2013 P.C. : 1.In this appeal by the Revenue for assessment year 2001-2002, following question of law has been proposed for our consideration. “Whether on the facts and in the circumstances of the case, and in law the Tribunal erred in deleting the penalty under Section 271(1)(c) of the Income Tax Act, 1961 amounting to Rs.5,00,000/- ?” 2.The respondent – assessee while computing the cost of FSI has also included the interest cost. The assessing officer disallowed the interest cost holding that the same could not be added to the cost of FSI, resulting in addition of Rs.2.40 crores. 3.In appeal, the Commissioner of Income Tax (A) held that the interest cost has to be allocated to the cost of FSI, however, according to him the computation of interest cost had to be on the basis different from that was done by the respondent – assessee. In the proceedings before the Commissioner of Income Tax (A), addition was restricted to Rs.12.61 lakhs instead of Rs.2.40 crores as done by the assessing officer. The aforesaid order of the Commissioner of Income Tax (A) in quantum proceedings has been accepted both by the Revenue as well as the assessee. 4.In penalty proceedings under Section 271(1)(c) of the Act, the assessing officer imposed penalty of Rs.5,00,000/- which has been upheld by the Commissioner of Income Tax (A). The Tribunal in the impugned order dated 18[th] January 2010 has held that the Commissioner of Income Tax (A) had also made estimation on the basis of FSI available in the portion sold and the total FSI. Therefore, both the respondent – assessee as well as the Commissioner of Income Tax (A) had proceeded on estimated basis. The difference in the amount was only on account of different method adopted for computation of interest by the assessee and by the Commissioner of Income Tax (A). In any event, even if the excess amount was disallowed by the Commissioner of Income Tax (A), deduction would have been allowed to the assessee in the subsequent years. The explanation offered by the assessee of making a claim by following a particular method of computing interest is found by the Tribunal to be bona fide and no case of concealment of income was made out by the Revenue before the Tribunal. 5.The decision of the Tribunal is based on finding of fact. Consequently, no occasion to entertain the proposed question of law arises. Accordingly, the appeal is dismissed with no order as to costs. (M.S. Sanklecha, J.) (J.P. Devadhar, J.)