Itxa/2578/2011 Of The Commissioner Of Income Tax -5 v. Welex Laboratories Pvt. Ltd

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 2578 OF 2011 Commissioner of Income Tax-5..Appellant.V/s.M/s. Welex Laboratories Pvt. Ltd...Respondent. Mr. Suresh Kumar, for the Appellant.Mr. S. G. Dalal, for the Respondent. P.C:- CORAM: J.P.DEVADHAR & M.S.SANKLECHA,JJ.DATE : 20[th] MARCH, 2013. In this Appeal by the Revenue for the Assessment Year 2003- 04, following question has been raised for our consideration:- Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in canceling the penalty under Section 271(1)(c) of the Income Tax Act, 1961? 2The Respondent-Assessee claimed exemption under Section 10B of the Income Tax Act, 1961 (the said Act) in respect of its unit at Navapur Road, Tarapur. During the Assessment Proceedings, it was noticed that the said unit was originally the DTA unit and converted into 100% EOU during the relevant Assessment Year. The Assessing Officer S.R.JOSHI disallowed the claim of exemption under Section 10B of the said Act and also imposed a penalty under Section 271(1)(c) of the said Act. 3The Respondent-Assessee did not contest on merits of the claim. However, so far as penalty was concerned, the Respondent-Assessee contested the same and filed an Appeal to the CIT(A). The CIT(A) upheld the order of the Assessing Officer imposing penalty under Section 271(1)(c) of the said Act. 4In Appeal, the Tribunal recorded a finding of fact that the claim made by the Respondent-Assessee was on the basis of certification done by the Chartered Accountant. Further, the Affidavit of Chartered Accountant was also filed in support of his understanding that the Respondent-Assessee was entitled to the benefit of Section 10B of the said Act. Moreover, the Central Board of Direct Tax (CBDT) has issued a clarification on this issue that the benefit of Section 10B of the said Act is not available to the DTA units converted in to 100% EOU. This clarification was issued by the CBDT after the Respondent-Assessee had filed its return. The CBDT circular itself establishes that there was confusion on the issue. Taking all these factors into account, the Tribunal held that the claim was a bonafide claim even though the claim was not sustainable in law. The Tribunal held that the explanation given by the Respondent-Assessee was satisfactory and bonafide. In that view of the matter, the penalty was deleted. 5Since the decision of the Tribunal is based on finding of fact, we see no reason to entertain the proposed question of law. 6Accordingly, appeal is dismissed with no order as to costs. (M.S.SANKLECHA,J.) (J.P.DEVADHAR,J.)