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2017 (8) TMI 565 - AT - Income TaxLevy of penalty on depreciation disallowed on non-existing assets - Held that:- The disallowance of depreciation on non-existing fixed assets has been deleted by the Coordinate Bench in all the three years under consideration are concerned, the very basis for levy of penalty doesn’t stand. Accordingly, the levy of penalty under section 271(1)(c) is deleted in respect of all the three years under consideration.Decided in favour of assessee. Levy of penalty on depreciation disallowed u/s 32(1)(iii) read with 43 (1) and explanation 10 thereto - Held that:- The observations of the auditor are in relation to noncompliance with the various accounting standards as prescribed by the ICAI which have to be followed while preparing the financial statements. At the same time, the assessee’s explanation is that being a 100% owned undertaking of Rajasthan Government, it is governed by the instructions approved by Government for Rajasthan State Electricity Board's, The Electricity (Supply) Annual Accounts Rules, 1995 and Accounting Instructions which cannot be lost sight off. In our view, these are plausible explanation relating to variation in the accounting policies followed by the assessee company given the nature of business the assessee company is engaged in and related electricity regulations which it must comply with. These are statutory requirements which the assessee company is required to follow while preparing its financial statements. However, the fact remains that there is complete disclosure of all material facts in the financial statements so far as issue relating to determination of actual cost of the assets are concerned. The material facts so disclosed in the financial statements have infact been considered by the AO while recalculating the depreciation claim of the assessee company. Thus respectfully following the decision of the Hon’ble Supreme Court in case of Reliance Petroproducts (2010 (3) TMI 80 - SUPREME COURT) wherein held a mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee, we hereby delete the levy of penalty under section 271(1)(c) in respect of disallowance of depreciation under section 32(1)(iii) read with section 43(1) and explanation 10 thereto in respect of all three years under consideration. - Decided in favour of assessee.
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