Contact us   Feedback   Annual Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (3) TMI 411 - ITAT DELHI

2016 (3) TMI 411 - ITAT DELHI - [2016] 47 ITR (Trib) 204 - Penalty u/s 271(1)(c) - Excess claim of deprecation under TUF Scheme and capital subsidy - Held that:- Penalty imposed by the AO cannot be held as sustainable and the first appellate authority rightly deleted the same. Our conclusion also gets support from the landmark judgment of the Hon'ble Supreme Court in the case of CIT Vs. Reliance Petro Products Pvt. Ltd [2010 (3) TMI 80 - SUPREME COURT] and judgment of CIT Vs. Brahmaputra Consort .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Shri Rakesh Gupta, Adv Shri Sonil Agarwal, Adv ORDER PER CHANDRA MOHAN GARG, JUDICIAL MEMBER This appeal filed by the Revenue is directed against the order of the CIT(A)-XII, New Delhi, dated 18/06/2012 in appeal No. 59/11-12 for A.Y 2006-07. 2. The only issue involved in this appeal is in relation to the ld. CIT(A) s order deleting the penalty of ₹ 1,91,33,400/- imposed by the AO on account of Excess claim of deprecation of ₹ 5,42,93,162/- under TUF Scheme and capital subsidy of &# .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

unal in this second appeal. 4. We have heard the rival submissions and have perused the relevant material on record. The ld. DR contended that wrong claims were made by the assessee in quantum proceedings and therefore, the AO made disallowances/additions on account of excess claim of depreciation and on account of disallowance out of capital subsidy. The ld. DR further contended that the stand of the assessee is that he claimed deprecation on the basis of news published in Financial Express New .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

on wrong premise and the ld. CIT(A) was quite justified in deleting the same. He has drawn our attention towards the operative para 8 of the impugned order and submitted that the assessee disclosed all relevant facts during the assessment proceedings. Hence he cannot be held responsible for guilty of concealment of particulars of income or furnishing of inaccurate particulars of income. The ld. AR contended that the issue of disallowance of capital subsidy was a debatable issue and in the light .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

on the orders of the ITAT, Ahmedabad D Bench in the case of ITO Vs. M/s Deshraj Texturised Pvt. Ltd ITA No. 660/Ahd/2010 for A.Y 2005-06 dated 7.9.2012 and Bench B in the case of Piparia Syntex Pvt. Ltd Vs. ITO ITA No. 2084/Ahd/2011 for A.Y 2007-08 order dated 30.05.2014 and submitted that the issue of penalty is squarely covered in favour of the assessee by these orders of the Tribunal. 6. On careful consideration of the above rival submissions from the order of the ld. CIT(A), we note that the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

reciation benefits for textile machinery installation under the Technology Upgradation Fund Scheme(TUFS) Fresh investments under TUFS-an interest subsidy scheme to promote capacity building in the textile industry-will continue to benefit from 50% depreciation in the first year. Further, the eligibility criteria for the extra depreciation benefit would be benchmarked on the TUFS norms with regard to the sophistication levels of the machine installed. The special dispensation will be co-terminus .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

larly with regard to subsidy of ₹ 25,50,000/-, the assessee had also claimed depreciation. There was no concealment nor a case of furnishing inaccurate particulars. This case is covered by case of CIT Vs. Reliance Petro Produdcted Pvt. Ltd. (2010) 322 ITR 158 and CIT Vs. Brahmputra Consortium Ltd. (Delhi High Court) ITA 1582 OF 2010 wherein it is held that:- The assessee argued that it had revised the computation because it claimed depreciation of 40% on tippers and excavators by mistake a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

#39; 23,33,321/-. Therefore, excess claim of depreciation was not advantageous to the assessee. Had depreciation been claimed @ 25%, it would have resulted in higher depreciation in the succeeding years which would, , have consequently reduced the IT A 1582 OF 2010 Page 7 of 8 total income of succeeding years. It indicates that excess claim of depreciation was not a device, rather it was an inadvertent error. 12. Thus by making claim of depreciation at higher rate in this year, where the income .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ted by the Supreme Court in a recent judgment in the case of CIT Vs. Reliance Petroproducts Pvt. Ltd. (2010) 322 1TR 158. 14. We are, thus, of the opinion that no substantial question of law arises in this appeal which is accordingly dismissed. (A.K. SIKRI) In view of the facts stated above, the penalty of ₹ 1,91,33,400/- u/s 271(1)( c) imposed by the AO on two addition i.e of ₹ 5,42,93,162 on account of depreciation claimed and for amount of ₹ 25,50,000/- on account of subsidy .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

case relating to assessment year 2004-05. The Tribunal in consolidated order passed in ITA No. 1445/Chd/2010 in appeal filed by the assessee and ITA No. 290/Chd/2011 in the appeal filed by the revenue, vide order dated 06.03.2014 deleted the penalty levied under section 271(l)(c) of the Act on the said issue of sales tax subsidy observing as under : 43. The next item of addition is the assessability of sales tax subsidy o\ ₹ 6,80,61,977/- received by the assessee during the year under con .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

b & Haryana High Court and the question of law has been admitted and the SLP is pending before the Hon'ble Supreme Court of India. The issue raised vide the present appeal is in relation to levy of penalty under section 271(1)(c) of the Act on such debatable issue. In case where the assessee had claimed the expenditure as revenue in nature but the same held to be capital expenditure in the hands of the assessee, the issue relatable to such disallowance of expenditure is a debatable issue .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

on the said issue and where the claim of the assessee on the issue was based on one possible view, the making of such bonafide claim on the basis of c possible view could not be treated as concealment of its income by the assessee of furnishing of inaccurate particulars of income so as to attract the penal provisions of section 271 (1)(c) of the Income Tax Act. 44. Further similar issue of levy of penalty under section 271(l)(c) of the Act arose before the Chandigarh Bench of Tribunal in the ca .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

debatable, issue. The addition in the present case has been made on the basis of such debatable issue that whether the sales tax subsidy received by the assessee was capital in nature or not. We further find that similar issue of receipt of subsidy under the West Bengal Incentive Scheme has been held to be capital receipt in the case of CIT Vs. Rasoi Ltd.(supra) by the Hon'ble Calcutta High Court. The unit of the assessee has been established in the State of West Bengal and the case of the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nt-in-aid was capita receipt or revenue receipt being debatable issue held that the penalty u/s 271(1)(c, of the Act was not imposable. The relevant findings of the Hon'ble Punjab & Haryana High Court in CIT Vs. M/s Gurdaspur Cooperative Sugar Mills (supra) are as under: 3. We find that the reliance on the above said judgment is not tenable, as in the aforesaid case, the deductions under section 80-0 of the Act was declined for the reason that the assessee has not produced any details of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

oreign exchange had to be deducted. The Assessing Officer, therefore, wanted the assessee to furnish the details of expenses. As the assessee failed to do the needful in respect of various particulars demanded, the Assessing Officer was left with no alternative but to estimate such expenditure in the ratio of proportion of foreign income to the total income." 4. In the present case, there is no dispute about the quantum of receipt of grant-in-aid from the State Government. The assessee refl .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y the Tribunal while setting aside the penalty. Consequently, we do not find that the order of the Tribunal gives rise to any substantial question of law for the opinion of this court. 20. Similar proposition has also been laid down by the Hon'ble Punjab & Haryana High Court in CIT s. Tek Ram (HUF) (supra). 21. The Hon'ble Supreme Court in CIT, Ahamadabad Vs. Reliance Petroproducts Pvt Ltd (supra) have laid down the proposition that "A mere making of the claim, which is not sust .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

esses is not exigible to levy of penalty u/s 271(1 )(c) of the Act in the facts of the present case where the claim of the assessee that the receipts were capital in nature was rejected and the receipts were held to be revenue in nature and hence taxable. Upholding the order of the CIT (Appeals) we dismiss the grounds of appeal raised by the Revenue in ITA No.70/Chd/2012. " 46. Following the same finding, we find no merit in holding the assessee to have furnished inaccurate particulars of i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

penalty with regard to capital subsidy cannot be held as sustainable and the ld. CIT(A) was right in deleting the same. 9. In the case of ITO Vs. M/s Deshraj [supra] the Tribunal upheld the first appellate order which deleted the penalty on excess claim of depreciation on TUF scheme with the following findings: 7. Before us the Ld. D.R. submitted that the assessee has claimed higher depreciation on the machinery purchased for texturizing of yarn. Though it was not entitled to the higher rate of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

urther submitted that it was not a case of furnishing of inaccurate particulars of income and concealment of income. 9. The Ld. A.R. further placed reliance on the decision of Ahmedabad Tribunal in the case of Eagle Fibres Pvt. Ltd., in ITA No.3003/Ahd/208 & ITA No.3295/Ahd/2008 dated 23-12-2010. 10. We have heard the rival submissions and perused the material on record. The factual position on the basis of assessment orders and submissions that emerges is that assessee had availed loan from .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

er TUFS scheme. The assessee was under a bonafide belief that since it has purchased machinery by availing loan from Bank under TUF Scheme, it was eligible for depreciation @ 50% on the machinery purchased. The claim of depreciation was not altogether bogus. The dispute was only with respect to the rate of depreciation. The belief of the assessee is not found to be untrue or false by the A.O. On these facts it cannot be said that assessee has furnished inaccurate particulars and is therefore lia .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the assessee had claimed the depreciation at 50%. According to A.O., the eligible depreciation as per the Income tax Rules was only 25%, hence, the same was restricted to that extent only. The excess claim of depreciation was affirmed by the Ld. CIT (A) in first appeal. Consequent thereupon the A.O. has though it proper to levy the penalty. However, when the question of levy of penalty was challenged, Ld. CIT (A) has noted, as per the paragraph reproduced above, that the machineries were only pu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

depreciation, then in our considered view that though the rate of depreciation as per A.O. was correct but assessee s action should not be held as concealment of income or furnishing of inaccurate particulars. It is also evident that still the assessee is harping upon the interpretation of Appendix Annexure to I.T. Rules, 1962 for the purpose of higher depreciation allowance, therefore, this fact itself proves that the correct entitlement of depreciation was a debatable issue. To buttress this v .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ate Limited (supra) and since nothing has been brought on record, to the contrary by the Revenue and relying on the decision of Hon ble Apex Court in the case of Reliance Petroproducts (supra) we do find any reason to interfere in the order of the CIT (A). 10. Furthermore, in the case of Piparia Syntex Pvt. Ltd Vs. ITO, the ITAT Ahmedabad B Bench deleted the penalty on similar issue of excess claim of deprecation on TUF Scheme with the following findings: 2. Brief facts of the case are that duri .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ocuments it could not be ascertained as if machineries are eligible under TUFS or not. Therefore, AO was of the view that it was established that the assessee-company engaged in the field of texturising the POY which was not covered by either of the process as covered by the provision of Rule 5 of the Income Tax Rules. Hence, depreciation claimed on plant and machinery at ₹ 48,35,632/- being 50% of WDV at ₹ 96,77,264/- was restricted to the depreciation allowable at normal rate as pr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

c) of the Act for concealment of income. This action of AO was confirmed by Ld. CIT(A). 4. Aggrieved by this order of Ld. CIT(A) now the assessee is before us. 5. At the time of hearing at the outset learned counsel of the assessee submitted that the issue involved in this appeal is covered by the order of Hon ble Tribunal in the case of ITO vs. Hanuman Filament P. Ltd vide ITA No. 2819/Ahd/2009 dated 17/12/2009 in which on identical facts the Hon ble Tribunal has deleted the penalty by observin .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rded as conclusive for the purposes of the penalty proceedings. It is, therefore, necessary to re-appreciate and reconsider the matter also as to find out as to whether the addition made in the quantum proceedings actually represents the concealment on the part of the assessee as engaged in sec. 271(1)(c) of the Act and whether it is a fit case to impose the penalty by invoking the said provisions. The issue as to whether or not the assessee is entitled to higher rate of depreciation is highly d .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

facts relevant thereto, the disallowance of such claim automatically lead to the conclusion that there was concealment of particulars of his income by the assessee or furnishing of accurate particulars of such income. What is to be seen is whether the said claim made by the assessee was bon-fide and whether all the material facts relevant thereto have been furnished and once it is so established, the assessee cannot be held liable for concealment penalty u/s. 271(1 )(c) of the Act. Since all the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the case of CIT v. P.K. Narayanan [1999] 238 ITR 905 (Ker) Hon ble Punjab & Haryana High Court in the case of CIT vs. Ajaib Singh & Co. (2001) 170 CTR (P & H) 489: (2002) 253 ITR 630 (P & H) have observed that merely because certain expenses claimed by the assessee are disallowed by an authority, it cannot mean that particulars furnished by the assessee were wrong. It was held that mere disallowance of expenses per- se cannot be meant that assessee has furnished inaccurate parti .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version