9911796707
TMI Blog2012 (11) TMI 171X X X X Extracts X X X X X X X X Extracts X X X X ..... d Industrial Gaskets from OEM and also from local markets. In the assessment proceedings, the AO made the following additions in the scrutiny assessment vide order dated 8.12.2009:- 1. Additional depreciation disallowed 12,77,824/- 2. Disallowance u/s 14A of the I.T.Act. 2,09,365/- 3. Disallowance of sales promotion expenses 60,000/- 3. In the penalty proceedings, the assessee submitted that concealment penalty be not levied, it being a case of mere disallowance of expenses where there was no willful default in furnishing particulars of income and no inaccurate particulars of income had been furnished; that the assessee company was under a bona fide belief that the provisions of section 14 A of the Act read with Rule 8D of the Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come and that in any accuracy made in such books of account or otherwise which results in keeping off or hiding a portion of its income amounts to furnishing of inaccurate particulars of its income. For this, the AO placed reliance on "CIT v. Indian Metal & Ferro Alloys Ltd.", 117 CTR (Ori) 378. 5. By virtue of the impugned order, the ld. CIT(A) cancelled the penalty. Aggrieved, the Department is in appeal. 6. Challenging the impugned order, the ld. DR has contended before us that the ld. CIT(A) has erred in cancelling the penalty correctly levied by the AO; that while doing so, the ld. CIT(A) has failed to consider that as per Explanation 1 to Section 271(1)(c) of the Act, penalty is leviable if the assessee has furnished inaccurate part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28.1.2010 (copy at Assessee's Paper Book ["APB" for short] 1 to 3), the assessee submitted as follows before the AO in response to the penalty notice:- "1. Additional depreciation -Rs. 12,77,824/-: In our return, we have claimed additional depreciation of Rs. 2,60,58,579/- as per section 32(1)(ii)(a) of the Act on the total additions to the block "plant & machinery" and accordingly we have claimed Rs. 2,60,58,579/- as additional depreciation. Total value of addition in block machinery was Rs. 25,47,13,327/-, details of these had already been provided to you. List of assets consisted of an item of Rs. 59,51,586/- which was shown as 'item less than Rs. 1.00 lakh and various running items', and also consisted of freight and unloading charges ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nditure incurred for earning exempted income under section 14A of the Income Tax Act and Rule 8D of the Income Tax Rules. In this connection we did not incur any interest expenses (direct or indirect) during the year ended 31st March, 2007 on earning of exempted income received on invested fund. The funds were collected through a fresh public issue of equity capital of Rs. 50.00 crores (Rs. 4.90 crores as equity capital and Rs. 45.10 crores as share premium) during the year ended 31st March, 2006. These funds were invested only during the intermediary period till the time used for setting up the new project for which public issue was made. As per provision of section 14A, there was no such method prescribed to determine the amount of indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s (copy at APB 79 to 86)were filed by the assessee, maintaining the same stand as was taken before the AO. 10. Apropos the disallowance of additional depreciation, the assessee has claimed additional depreciation of Rs. 2,60,58,579/- on the total additions to the block of plant and machinery, which amounted to Rs. 25,47,13,327/-. Complete break up along with copies of invoices and bills/receipts of Rs. 59,51,586/- was given to the AO vide its aforesaid letter dated 28.1.2010. These documents evidenced the expenditure to be related to installation of equipment. The explanation offered was that as such, the expenses had been rightly claimed as part of the cost of the asset and, therefore, eligible for additional depreciation. Pertinently, n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levy of concealment penalty. 12. In this regard, even discounting the assessee's stand of penalty not being leviable on disallowance made on estimated basis, it is seen that as held by the Hon'ble Bombay High Court in the case of "Godrej and Boyce Manufacturing Co. Ltd. V. DCIT", 234 ITR 1(Bom), the provisions of Rule 8D of the Rules are not applicable retrospectively and are applicable for and from assessment year 2008-09. Further, nothing has been brought on record to show that any expenditure had been incurred either directly or indirectly, for earning the exempted income. The funds collected came through a fresh public issue of equity capital. No nexus has been shown between the interest expenditure and the investment. Then, in "CIT v ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
