TMI Blog2015 (12) TMI 1463X X X X Extracts X X X X X X X X Extracts X X X X ..... dered opinion that the assessee has not furnished any inaccurate particulars regarding its income. In view of the judgment of the apex court in CIT v. Reliance Petroproducts Pvt. Ltd. [2010 (3) TMI 80 - SUPREME COURT] the assessee cannot be by any stretch of imagination construed as to have furnished any inaccurate particulars of income. - Decided in favour of assessee - I. T. A. No. 600 /Mds/ 2012 (assessment year 2007-08). - - - Dated:- 16-9-2015 - N. R. S. GANESAN (Judicial Member) and CHANDRA POOJARI (Accountant Member) Mrs. Jayanthi Krishnan for the appellant. S. Subramanian, Chartered Accountant, for the respondent. ORDER The order of the Bench was delivered by 1. N. R. S. Ganesan (Judicial Member).-This appeal of the Revenue is directed against the order of the Commissioner of Income-tax (Appeals)- III, Chennai, dated December 28, 2011 and pertains to the assessment year 2007-08. 2. Smt. Jayanthi Krishnan, the learned Departmental representative, submitted that the Assessing Officer levied penalty under section 271(1)(c) of the Income-tax Act, 1961 (in short the Act ). Referring to the penalty order, the learned Departmental representative poi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sale value of the building, the balance taxable component comes to ₹ 14,85,94,241. The learned Departmental representative further submitted that the written down value of the block building has got extinguished by absorption of the sale proceeds of the building. Therefore, the depreciation was found to be ineligible. Accordingly, the Assessing Officer disallowed the claim of ₹ 84,20,996 treating the same as a wrong claim and added the same to the taxable income. In view of the above factual situation, according to the learned Departmental representative, the assessee has furnished inaccurate particulars with regard to claim of depreciation to the extent of ₹ 84,20,996. 6. Referring to the issue of loss on current assets, the learned Departmental representative pointed out that the assessee has made an entry in the profit and loss account towards loss on sale of current assets to the extent of ₹ 2,08,14,610. The assessee explained before the Assessing Officer that loss on sale of current assets to the extent of ₹ 2,08,14,610 was actually a provision made in the books of account for obsolete and irrecoverable current assets. In view of this exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent was made in the capital domain, therefore, it has to be necessarily treated as capital loss and not as revenue loss. The learned Departmental representative further pointed out that the expenditure relates to subsidiary company of the assessee. Since the project was shelved, the assessee claims that the expenditure cannot be converted into profit. The assessee claimed this expenditure as revenue loss. According to the learned Departmental representative, this cannot be allowed as revenue loss. Therefore, the Assessing Officer added the same to the total income. 10. The learned Departmental representative further pointed out that the assessee has made incorrect claim of expenditure during the course of assessment proceedings. The learned Departmental representative placed her reliance on the judgment of the apex court in Union of India v. Dharamendra Textile Processors [2008] 306 ITR 277 (SC) and submitted that section 271(1)(c) of the Act indicates claim of strict liability on the assessee for concealment or for giving inaccurate particulars of income while filing the return. According to the learned Departmental representative, penalty being a civil liability, wilful concea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unts, a copy of which is available at page 58 of the paper book, the learned representative submitted that investments written off to the extent of ₹ 4.09 crores, bad debts written off to the extent of ₹ 5.27 crores, irrecoverable project expenses to the extent of ₹ 5.44 crores and loss on disposal of investments in subsidiaries to the extent of ₹ 9.21 crores were all disclosed in the notes on accounts. According to the learned representative, the audit reports were prepared and signed on August 13, 2007, which were much before the issue of notice under section 143(2) of the Act, i.e., on July 22, 2008. The learned representative further submitted that the Revenue authorities could not point out any discrepancy either in the income or expenditure claimed by the assessee during the course of survey operation. The entire particulars regarding income and expenditure claim made by the assessee are available in the audited accounts which were filed along with return of income. The learned representative further submitted that it is not the case of the Revenue that these particulars were unearthed during the course of survey operation. In fact, the assessee volunt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me was transferred while the Project Division itself was transferred to the assessee and the assessee itself offered the income from the said Project Division as its income, according to the learned representative, it has to be allowed as bad debts in the hands of the assessee since the debts were actually written off. Therefore, the learned representative submitted that the assessee has a legally contestable case. Therefore, merely because the claim of the bad debts was disallowed, according to the learned representative, this cannot be treated as furnishing inaccurate particulars of income. 14. Now coming to the issue of irrecoverable project expenses written off to the extent of ₹ 5,43,83,000, the claim was made as project expenses incurred by the assessee. However, the same could not be billed on the customers on becoming irrecoverable. Therefore, the same was written off. According to the learned representative, the irrecoverable project expenses are cost overruns on fixed contract projects which cannot be billed. Therefore, it becomes irrecoverable. According to the learned representative, this was included under the head Expenses in Schedule 10(4) of the audited a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al, by order dated February 19, 2014 (Best and Crompton Engineering Ltd. v. Asst. CIT [2014] 30 ITR (Trib) 688 (Chennai)), found that the assessee is eligible for depreciation. The Tribunal found that unabsorbed depreciation from the assessment year 1997-98 up to the assessment year 2001-02 was carried forward to the assessment year 2002-03 and became part thereof and were available for carry forward and set off against the profits and gains of subsequent years without any limit whatsoever. In view of the above, according to the learned representative, making a claim of depreciation on the building cannot be construed to be furnishing inaccurate particulars of any income. 16. We have considered the rival submissions on either side and perused the relevant material on record. The Assessing Officer levied penalty in respect of five items of disallowance/expenditure, namely, (i) claim of depreciation under block buildings ; (ii) loss on sale of current assets ; (iii) claim of bad debts ; (iv) investments written off ; (v) irrecoverable project expenses written off, on the ground that the assessee has furnished inaccurate particulars of income. However, on appeal by the assessee, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the particulars of its income or furnished inaccurate particulars of such income. In the case before us, it is not the case of the Revenue that the assessee concealed any particulars of its income. The specific case of the Revenue before this Tribunal is that the assessee has furnished inaccurate particulars of its income. As observed earlier, the question arises for consideration is when the assessee has furnished all the particulars/details of its income, and claimed deduction in respect of depreciation on block of buildings, loss on sale of current assets, claim of bad debts, investments written off and irrecoverable project expenses written off, as deduction/expenditure, whether this would amount to furnishing inaccurate particulars of its income ? The apex court in CIT v. Reliance Petroproducts Pvt. Ltd. [2010] 322 ITR 158 (SC) considered an identical question. In the case before the apex court, the interest expenditure claimed by the assessee was disallowed and was added to the total income of the assessee. Simultaneously, penalty proceedings under section 271(1)(c) of the Act was also initiated on account of concealment of income/furnishing of inaccurate particulars of inco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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