Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2018 (8) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (8) TMI 1981 - AT - Income TaxPenalty u/s 271(1)(c) - disallowance of depreciation on leased assets capitalised in preceding Assessment Year - HELD THAT:- What one can understand from the discussion is that as per the AO, not only the installation, but use of the asset by the lessee was also essential so as to enable the assessee-lessor to claim depreciation. In our considered opinion, whether or not the proposition canvassed by the AO is merited is not the issue before us. Levy of penalty u/s 271(1)(c) of the Act, and for that purpose, we find that none of the particulars filed by the assessee could be said to be incorrect. Claim was made on a bona fide ground, based on the understanding of the then subsisting judgment in the case of First Leasing Co. of India [1992 (11) TMI 83 - KARNATAKA HIGH COURT] as well as the judgment of Shaan Finance (P). Ltd. [1995 (9) TMI 60 - MADRAS HIGH COURT]. Under these circumstances, in our view, the penalty u/s 271(1)(c) of the Act is not justifiable and, therefore, we hereby affirm this aspect of the decision of CIT(A) also, albeit on a different ground. Excess depreciation allowed in respect of vehicles - merit of depreciation claimed by the assessee @ 40% on trucks - HELD THAT:- Notably, the higher rate of depreciation @ 40% was allowable in case of vehicles which were used in the business of running them on hire. Initially, in the assessment proceedings, depreciation claimed @ 40% was allowed as such, but the Commissioner vide his order dated 06.03.2003 passed u/s 263 of the Act directed the Assessing Officer to modify the depreciation allowable on vehicles and restricted the same to 20% and not at 40%, as claimed by the assessee. We are narrating these aspects only to bring home the point that the claim of depreciation made by the assessee on trucks @ 40% in return of income, and which stood accepted initially in the assessment u/s 143(3) of the Act, was not a claim which was patently inadmissible on the face of it. It is also worthwhile to note that this aspect of the controversy sprung-up only consequent to the judgment of the Hon'ble Bombay High Court in the case of Kotak Mahindra Finance Ltd. [2003 (4) TMI 30 - BOMBAY HIGH COURT] and it was not a case where the claim of assessee was bona fidely wrong from the beginning itself. At this stage, we may also put on record an assertion made by the learned representative for the assessee, and which has not been controverted, which is to the effect that in the preceding as well as in the subsequent assessments, the Assessing Officer himself has allowed depreciation on trucks leased out @ 40%. Considering all these aspects, in our view, restricting the allowance of depreciation on trucks from 40% to 20% would not justify levy of penalty u/s 271(1)(c) of the Act in the facts and circumstances of the present case. Thus, on this aspect also, we find no reasons to distract from the ultimate decision of CIT(A) in deleting the penalty, albeit on a different ground.
|