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TMI Blog2013 (12) TMI 1099X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s. 271(1)(c) of the Act vide his order dated 27.06.2008. 2. The only issue in this appeal of revenue is against the order of CIT(A) deleting the penalty levied by AO u/s. 271(1)(c) of the Act on wrong claim made of depreciation. For this, revenue has raised following four grounds: "1. That, on the facts and in circumstances of the case, and in law, the CIT(Appeals) erred in cancelling the penalty order u/s. 271(1)(c) of the Act, ignoring the fact that the assessee had made wrong claim of deprecíation on Portal & e-Commerce Site on which depreciation is not admissible as per law. 2. That, on the facts and in circumstances of the case, the CIT(Appeals) erred in cancelling the penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-tax Act, 1961. Internet based business, better known as E-Commerce, is a generic term that describes the electronic mode of doing business. It uses a group of technologies to communicate with customers or companies to disseminate or gather the business information or to conduct business transactions. Since neither the Companies Act nor Income-tax provide any specific clause towards payment of such Web Portal & E Commerce Site, the company in its fair information, after discussing with many people in the know, thought that as far as the cost of Portal E Commerce Site is the VIRTUAL FIXED ASSET of the Company like any other asset and which has a certain market value. As such expenditure incurred on developing the VIRTUAL PORTAL COMMERCE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that is, Portal and e-Commerce Site had been treated as asset by the assessee and the same was duly reflected in the Schedule of Fixed Assets in the balance sheet. The assessee filed its return of income claiming the depreciation on Portal & e-Commerce as being plant and machinery. Once the 'Portal and e-Commerce Site' were classified as Plant and Machinery in the balance sheet, the assessee had, as a natural corollary, charged depreciation on the value of the same. Under these circumstances the charging of depreciation on 'Portal and e-Commerce Site' cannot be held to be an act of concealment or furnishing of inaccurate particulars of income by the assessee. The assessee had fully disclosed the material facts in the return of income. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the case, there would be no question of inviting the penalty under section 271(1)(c) of the Act. A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the return cannot amount to the inaccurate particulars." We find that the AO disallowed depreciation on the basis that the expenses incurred on developing Portal & e-Commerce Site cannot be treated as fixed asset, hence, depreciation on the same cannot be allowed at the rate applicable to Plant and Machinery. According to AO, we Website is also not an intangible asset to similar to know how, patent, copy right, trade mark, license etc. as mentioned in section 2(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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