TMI Blog2011 (8) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... e of bona fide mistake as the assessee had claimed depreciation treating the earth moving equipment to be one block assets consisting of tippers and excavators and claiming depreciation @ 40% on the entire block of earth moving equipment - since the entire block consisting of excavators and tippers was taken under the head ‘earth moving equipment’, the explanation given by the assessee was that inadvertently, in respect of excavators are the depreciation was claimed at 40% instead of 25% - On the contrary, it was better for him to claim depreciation @ 25% in this year resulting into higher written down value in the next year for claim of depreciation of a higher amount on higher written down value thereby reducing the tax liability - Appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on at 5% on this amount. In the process, claim of Rs.42,656/- was disallowed as excessive. (iii) The assessee had claimed depreciation @ 40%on earth moving equipment which consisted of excavators and tippers. As per the rules, only tippers were eligible for higher rate of depreciation at 40% and not excavators. When the assessee was confronted with this, it revised its claim, claiming 25% of depreciation instead of 40%. This resulted in disallowance of excess depreciation in the sum of Rs.65,89,097/-. 3. All the aforesaid disallowances were accepted by the assessee. At the same time, while passing the assessment order, the Assessing Officer, also initiated penalty proceedings. Show cause notice was given in this behalf which was rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that account also was thus treated as a false claim. 5. Insofar as claim for deduction of fee paid to ROC is concerned, as per the Assessing Officer this fee was paid for increase of authorized share capital which could not be treated as revenue expenditure in view of the categorical judgment of the Apex Court in PSIDC Ltd. Vs. Commissioner of Income Tax, 225 ITR 792 and, therefore, the claim was palpably false. 6. The CIT (A) concurred with the aforesaid approach of the Assessing Officer holding that in view of Explanation-I to Section 271 (1) (c) of the Act disallowances of above claims deem to be the income in respect of which particulars had been concealed by the assessee within the meaning of Section 271(1)(c) of the Act and co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deleting of penalty on this count as well. 9. We may state at the outset that entire thrust of argument of the counsel for the appellant was to justify the penalty imposed on wrong claim of depreciation at higher rate on excavators. It was argued that the Schedule clearly provides that on excavators the depreciation allowable is at 25% and it is tippers on which depreciation is to be allowed is 40% by mixing the acquisition cost of tippers with excavators, the assessee had claimed depreciation at 40% on both excavators and tippers which was contrary to the specific provisions and thus Explanation-I to Section 271 (1)(c) clearly attracted as it would amount to giving inaccurate and false particulars and concealing material particulars fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. Assessment was also completed at loss of Rs. 23,33,321/-. Therefore, excess claim of depreciation was not advantageous to the assessee. Had depreciation been claimed @ 25%, it would have resulted in higher depreciation in the succeeding years which would, , have consequently reduced the total income of succeeding years. It indicates that excess claim of depreciation was not a device, rather it was an inadvertent error. 12. Thus by making claim of depreciation at higher rate in this year, where the income tax return was at loss, the assessee did not gain any mileage. On the contrary, it was better for him to claim depreciation @ 25% in this year resulting into higher written down value in the next year for claim of depreciation of a h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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