ORDER SHEET ITA 820 OF 2008 IN HIGH COURT AT CALCUTTA Special Jurisdiction (Income Tax) ORIGINAL SIDE COMMISSIOENR OF INCOME TAX, CENTRAL-II,KOLKATA Versus M/S. M.K. SHAH EXPORTS LTD BEFORE: Hon'ble JUSTICE GIRISH CHANDRA GUPTA Hon'ble JUSTICE ARINDAM SINHA Date : 9th April, 2015. For appellant : Mr.M.P.Agarwal,Advocate For respondent/assessee : Mr.J.P.Khaitan,Sr.Advocate Court : appeal arises out of judgement dated 25th July, 2008 pertaining to assessment year 2001-02. question of law suggested by revenue reads as follows : Whether, on facts and in circumstances of case, Income-tax Appellate Tribunal is correct in deleting penalty of Rs.37,23,008 imposed 2 under section 271(1)(c) of Income Tax Act, 1961, for wrongly claiming exemption under section 10B of Act, in respect of interest not derived as Profits and Gains of Business ? assessing officer imposed penalty for following reasons : assessee company had claimed exemption u/s 10B on interest income arising out of fixed deposits which is not eligible for exemption claim u/s 10B. As assessee company has furnished inaccurate particulars of income, I am satisfied that penalty u/s 271(1)(c) imposed should be @100% on quantum of tax sought to be evaded by virtue of claiming inaccurate particulars of income. CIT(Appeal), however, deleted penalty imposed, inter alia, for following reasons : In this case, appellant has not concealed any particulars of income, all facts was on records, difference was only regarding treatment of interest income for purpose of calculation of deduction U/s.10B of I.T.Act. learned Tribunal concurring with views of CIT(A) dismissed appeal of revenue. revenue has come up in appeal. Mr.Agarwal, learned advocate appearing for appellant reiterated that income earned from interest could not have been basis for claiming benefit under section 10B. By making aforesaid claim, assessee had 3 claimed benefits which were not legally receivable by him and thus assessee avoided to pay tax. Therefore penalty was rightly imposed. Mr.Khaitan, learned Senior Advocate submitted that neither any inaccurate particulars were furnished nor was there any concealment of income. He contended that it will appear from order of assessing officer himself that fact that sum of Rs.82,30,421/- was earned from interest was duly disclosed by assessee. assessee s contention was that it was 100% export oriented undertaking. interest was earned by fruitfully utilizing surplus funds. income out of interest arose because deposits with bank were required to be made for purpose of availing packing credit facility without which business of export could not have been continued. assessee was of opinion that interest earned is also eligible for benefit under section 10B. He drew our attention to judgement of Apex Court in case of CIT v. Reliance Petroproducts Pvt.Ltd. reported in (2010) 322 ITR 158 (SC) wherein Apex Court opined that by any stretch of imagination, making incorrect claim in law cannot tantamount to furnishing inaccurate particulars. He contended that in light of law laid down by Apex Court judgements rendered by CIT and learned Tribunal are perfectly justified and there is no reason why this Court should interfere. 4 We have considered submissions of learned counsel appearing for parties and are of opinion that there can be no gainsaying that assessee had raised legal contention which was not finally accepted. When that is position, then authoritative judgement of Supreme Court in case of Reliance Petroproducts (supra) relied upon by Mr.Khaitan leaves no manner of doubt that view taken by CIT and Tribunal was correct view. Therefore, question suggested by revenue is answered in affirmative and in favour of assessee. appeal is admitted and disposed of. (GIRISH CHANDRA GUPTA, J.) (ARINDAM SINHA, J.) ssaha AR(CR) Commissioner of Income-tax, Central - II, Kolkata v. M/s. M. K. Shah Exports Ltd