TMI Blog2014 (2) TMI 476X X X X Extracts X X X X X X X X Extracts X X X X ..... be said that the assessee has furnished inaccurate particulars of income and/ or the assessee has concealed its income – Relying upon CIT v. Reliance Petroproducts (P.) Ltd. [2010 (3) TMI 80 - SUPREME COURT] - merely because the claim of the assessee has not been accepted but the assessee has made the bonafide claim, the provisions of section 271(1)( c ) of the Act are not attracted – thus, the levy of penalty in the case is not justified – Decided in favour of Assessee. - I.T.A. No.3363 and 3371/Mum/2011 - - - Dated:- 7-2-2014 - Shri B. R. Mittal,(JM) And Rajendra (AM),JJ. For the Appellant : Shri Nitesh Joshi For the Respondent : Shri M. L. Perumal ORDER Per B. R. Mittal, JM: The assessee has filed these two appeals for assessment years 1995-96 and 1996-97 against two separate orders of ld. Commissioner of Income Tax(A) both dated 22.2.2011 disputing the confirmation of levy of penalty u/s 271(1)( c ) of the Income Tax Act, 1961 (the Act) of Rs.1,36,27,500/- in each of the assessment years under consideration. 2. Since the relevant facts and the issue involved in both the appeals are identical, we have heard these appeals together and dispose off by a com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being 50%, as the said transaction had taken place in the second half of the financial year. The assessee filed appeal before the First Appellate Authority. 3.1 The ld. CIT(A) vide his order dated 20.3.2002 (copy placed at pages 38 to 43 of the paper book) held that the assessee was entitled to claim depreciation and the addition of Rs.1,97,50,000/- made by AO was deleted. Department filed appeal before the Tribunal being ITA No.3373/Mum/2002 (AY-1995-96) and the Tribunal vide order dated 28.2.2007 (copy placed at pages 15 to 37 of the paper book) stated that the Hon'ble Apex in the case of Shan Finance Pvt Ltd reported in 231 ITR 308, held that where the assessee is engaged in the business of leasing, then the lessor is entitled to depreciation /investment allowance. However, by the decision of Hon'ble Apex Court in the case of Asea Brown Boveri Ltd V/s Industrial Finance Corporation of India, (2006) 154 Taxman 512(SC) there is a sea change, wherein it has been held that in case of finance lease, it is the lessee who, for all practical purposes, is owner of the assets and not the lessor. Thus, the said position would have an impact on the case of assessee before the Tribunal. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he return. Hence, assessee is in appeal before the Tribunal. 4. Similar are the facts in respect of appeal for the assessment year 1996-97 as the assessee claimed 50% depreciation in the assessment year 1996-97 amounting to Rs.1,97,50,000/- which was disallowed and consequently penalty at the rate of 150% of the tax sought to be evaded on the said amount was levied which worked out to Rs.1,36,27,500/-. Ld. CIT(A) also confirmed the same. Hence, assessee is in appeal before the Tribunal. 5. Ld. AR submitted that the penalty has been imposed merely because the transaction has been considered as finance transaction but the genuineness of the transaction entered into by assessee with RSEB is not in dispute. Ld. AR referred para 15 of the order of ITAT in quantum appeal and stated that the Tribunal has categorically stated that the agreement between the parties are legal in respect of said transactions. Ld. AR further submitted that assessee filed compilation of decisions of various High Courts as well as Tribunal and also the decision of Hon'ble Apex Court in the case of Shan Finance Pvt Ltd (supra) wherein it was held that if the assessee is engaged in the business of leasing, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a finance lease transaction, the lessee, who is not the legal owner of the leased assets, can be presumed or held to be the owner thereof in the absence of any specific enabling provisions in the Act and based on such an analogy, whether the appellant owner/lessor of the leased asset can be denied the depreciation allowance in respect of such leased asset?" He submitted that the appeal is pending before the Hon'ble High Court and is yet to be disposed off. Ld. AR submitted that the assessee has not filed any wrong particulars of income and the claim of depreciation has been disallowed in view of above decision of the Hon'ble Apex Court and therefore levy of penalty u/s 271(1)( c ) of the Act on account of disallowance of depreciation on the leased asset is not justified. 6. On the other hand, ld. DR relied on the orders of authorities bellow. 7. We have carefully considered the submissions of ld. Representatives of the parties and the orders of authorities below. We agree with the ld. AR that before the decision of the Hon'ble Apex Court in the case of Asea Brown Bovery Ltd (supra) the issue as to whether the assessee is entitled to depreciation in respect of transaction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... offered explanation which has not been accepted but it is not false or is not of the nature that the assessee is not able to substantiate its explanation, the provisions of section 271(1)( c ) of the Act is not attracted. Merely because, the claim made by assessee is not accepted but at the time of making the claim it was a debatable issue and possible view could be taken in favour of assessee, we are of the considered view that in such a case it cannot be said that the assessee has furnished inaccurate particulars of income and/ or the assessee has concealed its income. Such an issue has also been considered by Hon'ble Apex Court in the case of CIT v. Reliance Petroproducts (P.) Ltd. [2010] 322 ITR 158(SC), wherein the Honble Apex Court has held that merely because the claim of the assessee has not been accepted but the assessee has made the bonafide claim, the provisions of section 271(1)( c ) of the Act are not attracted. Moreover, it is also observed that the appeal filed by assessee against the order of Tribunal disputing the confirmation of disallowance of depreciation to the assessee has been admitted by Hon'ble Jurisdictional High Court (supra), it fortifies the contention ..... X X X X Extracts X X X X X X X X Extracts X X X X
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