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TMI Blog2015 (12) TMI 1463X X X X Extracts X X X X X X X X Extracts X X X X ..... (v) Disallowance under section 14A. 3. However, the Assessing Officer found that the assessee extended its co-operation at the time of scrutiny proceedings and the issue is also debatable in nature. Therefore, the same was not considered for levy of penalty under section 271(1)(c) of the Act. Similarly, an addition of Rs. 14,11,73,333 was also made towards long-term capital loss. Therefore, this addition of Rs. 14,11,73,333 was also not considered for levy of penalty. However, the Assessing Officer levied penalty on the following additions made in the assessment order : (i) Claim of depreciation under the block "buildings" (ii) Loss on sale of current assets (iii) Claim of bad debts (iv) Investments written off (v) Irrecoverable project expenses written off. 4. Referring to the first addition on which penalty was levied, regarding depreciation on the block of assets, the learned Departmental representative pointed out that the assessee converted the capital asset, namely, the land at Cenotaph Road, into stock-in-trade in the financial year 1994-95. However, the buildings erected on that land continued to be shown as fixed assets and depreciati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s account towards loss on sale of current assets, the assessee would not have admitted the addition. 7. Referring to the claim of bad debts, the learned Departmental representative submitted that the assessee has written off bad debts to the extent of Rs. 5,26,59,000 and debited the same to profit and loss account. According to the learned Departmental representative, the total sundry debtors as on March 31, 2006 was Rs. 2.58 crores and, as on March 31, 2007, it was Rs. 2.90 crores. When the debts continued to exist, according to the learned Departmental representative, it is not known from where these bad debts have emanated. However, the assessee claimed the same as bad debts and the Assessing Officer rejected the claim of the assessee and added the same to the taxable income. 8. Referring to the investments written off, the learned Departmental representative submitted that the assessee has written off investments to the extent of Rs. 4,09,09,000. The learned Departmental representative clarified that actually these are all the actual value of the shares held by the assessee-company in its wholly owned subsidiary company M/s. Beacon Pumps Ltd. as on March 31, 2006. The assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d). The learned Departmental representative has also placed her reliance on an unreported decision of the Delhi Bench of this Tribunal referred to by the Revenue in its grounds of appeal at ground No. 2.4 in Chadha Sugars P. Ltd. v. Asst. CIT in I.T.A. No. 1773(Del)/2010 dated December 23, 2011 [2012] 17 ITR (Trib) 316 (Delhi). According to the learned Departmental representative, the Commissioner of Income-tax (Appeals) committed an error in deleting the penalty levied by the Assessing Officer, mainly placing reliance on the decision of the judgment of the apex court in CIT v. Reliance Petroproducts Pvt. Ltd. [2010] 322 ITR 158 (SC). 11. On the contrary, Shri S. Subramanian, the learned representative for the assessee, submitted that penalty under section 271(1)(c) of the Act can be levied either on concealing the particulars of income or furnishing inaccurate particulars of such income. In this case, according to the learned representative, no part of the income was concealed by the assessee. Moreover, the assessee has not furnished any inaccurate particulars regarding its income. According to the learned representative, after furnishing all the details of income, making a claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owed the similar claim of the assessee. In the assessee's own case for the assessment year 2008-09, the claim of the assessee was allowed by this Tribunal in I.T.A. No. 803/ Mds/2012. Similarly, Pune Bench of this Tribunal in Atlas Copco (India) Ltd. and Delhi Bench of this Tribunal in LPS Bossard Pvt. Ltd. allowed the claim of the assessee in respect of the loss on sale of current assets. Therefore, according to the learned representative, the claim of the assessee ought to have been allowed while computing total income. Merely because an addition was made disallowing the claim of the assessee, according to the learned representative, that cannot be a reason to levy penalty under section 271(1)(c) of the Act. The learned representative further submitted that making a claim of loss on sale of current assets, after furnishing of particulars of income, does not amount to furnishing of inaccurate particulars. In other words, a claim made by the assessee for deduction from the total income computed cannot be treated as furnishing of inaccurate particulars of income. The learned representative placed his reliance on the judgment of the apex court in CIT v. Reliance Petroproducts Pvt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Himachal Pradesh Mineral and Industrial Development Corporation [1998] 234 ITR 509 (HP). The learned representative further submitted that even this Tribunal in DCIT v. Rambal Properties in I.T.A. No.1271/Mds/2010 for the assessment year 2006-07 allowed the investments written off. Referring to the claim of depreciation under the block buildings to the extent of Rs. 84,20,996, the learned representative submitted that the Assessing Officer found that the assessee's claim of long-term capital loss of Rs. 14,11,73,333 cannot be a basis for levying penalty. The fact remains that the land was converted into stock-in-trade in the financial year 1994-95 relevant to the assessment year 1995-96. Once the land was converted into stock-in-trade and the building continues as capital asset in the books of account, nothing wrong in claiming depreciation on building. The learned representative further submitted that when a land and building were sold by way of a single sale deed, the entire sale consideration has to be treated as business receipt because the land cannot be transferred without the building. In other words, the purchaser would not be willing to purchase the land unless the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 322 ITR 73 (P&H), deleted the penalty levied by the Assessing Officer. The Commissioner of Income-tax (Appeals) has also placed his reliance on the judgments of the Madras High Court in CIT v. Kamy Software Solutions P. Ltd. [2008] 214 CTR 403 (Mad) and in S. V. Kalyanam v. ITO [2010] 327 ITR 477 (Mad). The Commissioner of Income-tax (Appeals) further found that the details furnished by the assessee are not inaccurate particulars of income, therefore, it would not attract penalty. The question now arises for consideration is when the assessee has furnished entire details of income by disclosing the same in the return of income, audit statements, etc., whether a claim with regard to depreciation on block buildings, loss on sale of current assets, claim of bad debts, investments written off and irrecoverable project expenses written off, would amount to furnishing inaccurate particulars of income. It is pertinent to note that the Assessing Officer himself at para 8.1 of the penalty order found that the addition made with regard to claim of- (i) ROC fees ; (ii) loss on exchange variation ; (iii) reversal of provisions of sales tax ; (iv) miscellaneous additions ; and (v) disallowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctly by the provisions of section 271(1)(c) of the Act. The apex court further found that by any stretch of imagination making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars of income. The apex court, after referring to its earlier judgments in Dilip N. Shroff v. Joint CIT [2007] 291 ITR 519 (SC) and in Union of India v. Dharamendra Textile Processors [2008] 306 ITR 277 (SC), found that 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. Such a claim made in the return cannot amount to inaccurate particulars. After referring to its earlier judgment in Sree Krishna Electricals v. State of Tamil Nadu [2009] 23 VST 249 (SC), the apex court found that the situation was still better as no fault has been found with the particulars submitted by the assessee in its return. In this case also, other than the claim made by the assessee with regard to five items of deduction, namely, claim of depreciation under block buildings, loss on sale of current assets, claim of bad debts, investments written off and irrecoverable project expenses written off, no f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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