Itxa/659/2017 Of Pr. Commissioner Of Income -Tax-1 v. Shamrao Vithal Co Op Bank

Priya Soparkar 1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.659 OF 2017 Pr.Commissioner of Income-Tax-1 … Appellant V/s. Shamrao Vithal Co-Op bank … Respondent --- Mr.Suresh Kumar for the Appellant.Mr.Rajeev Wagley i/by M/s DSR Legal for the Respondent. --- CORAM : AKIL KURESHI AND S.J.KATHAWALLA, JJ. DATE : JUNE 06, 2019. P.C.:- 1. Revenue has filed this appeal against the judgmentof the Income Tax Appellate Tribunal (“Tribunal” for short).Following question is presented for our consideration:- “Whether on the facts and circumstances ofthe case and in law, the ITAT erred in deletingpenalty to the extent of Rs.1,41,30,553/- asimposed by the Assessing Officer U/s 271(1)(C) of the Income Tax Act, 1961 on accountof incorrect claim of amortization of 1/5th ofcost of acquisition of three co-operativebanks in excess of consideration (liabilities)over the net assets as a revenue expense U/s 37(1) of the Income-tax Act, 1961 as theconditions specified in Explanation 1 to Priya Soparkar Section 271(1)(c) of the Income Tax Act, 1961are squarely applicable to the facts of thecase? 3.Respondent-assessee is a Co-operative Bank. Issue pertains to the assessment year 2007-08 and arise out ofpenalty proceedings. The assessee had incurredexpenditure for acquisition of 3 Co-operative Banks.Claiming directives of RBI contained in its circular, thebank amortized such expenditure over a span of 5years. The revenue was of the opinion that theexpenditure was capital in nature and that the claim ofexpenditure would be governed by the Income Tax Act,1961 and not by the directives of RBI. The expenditurewas therefore disallowed. The Assessing Officer alsoinstituted penalty proceedings and eventually imposedthe penalty. The CIT (Appeals) and the Tribunal deletedthe penalty upon which this appeal is filed by therevenue. 4.Having heard learned counsel for the parties andhaving perused documents on record, we see no error in Priya Soparkar 909 itxa 659-17-o the view of the Tribunal. The Tribunal recorded that inrelation to the assessee’s claim of expenditure twoviews were possible. Even otherwise the revenue hasnot made out any case of concealment of income orconcealment of particulars of any income. As is welllaid down through series of judgments of SupremeCourt, merely raising a bonafide claim even if ultimatelyfound to be not sustainable is not a ground for impositionof penalty. In the result, Income Tax Appeal is dismissed. (S.J.KATHAWALLA, J.) (AKIL KURESHI, J.) ….