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Income Tax Officer Versus. M/s. Deshraj Texturizers Private Ltd.,

2012 (9) TMI 1013 - ITAT AHMEDABAD

Penalty u/s. 271(1)(c) - no penalty could be levied merely on disallowance of a deduction, which was made by taking a different view. - I.T.A. No. 660 /AHD/2010. - Dated:- 7-9-2012 - SHRI MUKUL KR.SHRAWAT JM & SHRI ANIL CHATURVEDI A.M. Appellant by : Mr. Phagu Oram,Sr. D.R. Respondent by : Mr. Ankur A. Shah. ORDER PER: SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER. In this case, the Revenue has filed appeal against the order of Ld. CIT ( A)-I, Surat dated 8-1-2010 for the assessment year 2005-06. .....

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bserved that the assessee had claimed the depreciation of ₹ 21,67,087/- @ 50% on the machinery purchased under TUF Scheme. The A.O. was of the view that the assessee is not entitled to the depreciation for the reason that only plant and machinery used in weaving processing and garment sector of Textile Industry and purchased under TUF Scheme on or before 1-4-2004 are eligible for depreciation @ 50%.Since the assessee has purchased the machinery for texturizing of Yarn, the assessee was not .....

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as not legible for the same. The A.O. was of the view that penalty under provision of section 271(1)(c) was a civil liability and therefore willful concealment is not an essential ingredient and that mens-rea is also not essential for imposing the penalty. He, relying on the decision of Union of India & Others vs. Dharmendra Textile Processors & Ors. (2008) 306 ITR 277 held that the assessee had concealed income of ₹ 10,33,544/- by furnishing inaccurate particulars of income and th .....

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Since loan was made available to it under TUF scheme it was under bonafide belief that it was also entitled to depreciation on the purchase of machinery under TUF Scheme at 50%. CIT (A) after considering the contentions of the assessee deleted the penalty imposed by A.O. by holding as under:- 2.3. I have considered the submission made by the appellant and the observation of the A.O. I agree with the appellant that it is a bonafide claim, since the appellant had been allowed loan by the Bank und .....

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en depreciation would also be allowable. Hence, the penalty levied by the A.O. is deleted and these grounds of appeal are allowed. 6. Aggrieved by the action of CIT (A), the Department is now in appeal before us. 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 depreciation the assessee has claimed higher depreciation for which the assessee has furnished inacc .....

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oncealment 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 bank under TUF Scheme for purchase of machinery. As per Income Tax Rules, Appendix I, Part-III .....

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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 liable to penalty u/s.271(1)(c ). In the case of Eagle Fibres Pvt. Ltd. (supra) the Coordinate Ben .....

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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 purchased out of the loan given by the Bank under a TUF Scheme floated by Ministry of Textile. Th .....

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