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2014 (2) TMI 236 - HC - Income TaxDepreciation allowance u/s 158B(b) of the Act - Interpretation of the words undisclosed income – Held that:- The words "or any expense, deduction or allowance claimed under the Act which is found to be false" was inserted by the Finance Act, 2002 with retrospective effect from 1.7.1995 –Relying upon TCV Engineering Ltd. v. Assistant Commissioner of Income Tax 2006 (3) TMI 86 - MADRAS High Court] - the expenditure claimed by the assessee was found by the Assessing Officer to be unreasonable and there was no finding that it was false - unless and until the Revenue gives a categorical finding that the whole expenditure of deduction is totally false, the disallowance could not be considered for making the block assessment - It is not a case where the expenditure was found to be unreasonable, which involves an element of estimation and that - the assessee could not have claimed depreciation when the asset was being let out and not being used for the purpose of the business - the Assessing Officer did not use the words that the claim is false - the appellant was regularly claiming depreciation on buildings occupied by the tenants - the building has not been used for the assessee's business and no depreciation could be allowed. Significance of the Word “False” – Held that:- The meaning of the word "false" cannot be divorced from the context in which the word occurs and the statutory setting - A penalty provision in a taxing statute is distinguished from a provision creating an offence and the former does not involve the concept of mens rea. The claim for depreciation was made quite without any basis - In view of the amended definition of "undisclosed income" such claim would render it undisclosed income - Merely because it is not in so many words mentioned that the claim is made falsely in the facts of this case it does not mean it is not made falsely - The word "false" in this context need be given only the wide meaning as the direct impact is that amount included will be assessed as undisclosed income -where there can be no explanation from the assessee for illegaly claiming depreciation, there is no need for relegating the matter for regular assessment - The possibility of penalty cannot be a reason to require that it can be treated as undisclosed income only when the claim is found to be made deliberately - the claim is made as it is clear from the facts without any foundation as the claim was made when the building was let out in which circumstances, there is absolutely no scope for claiming depreciation – Decided against Assessee.
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