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M/s. SPL Industries Ltd. Versus Asstt. Commissioner of Income Tax, Circle-9 (1) , New Delhi.

2016 (7) TMI 737 - ITAT DELHI

Penalty under section 271(1)(c) - excess depreciation claimed in plant and machinery purchased under the TUF Scheme - Held that:- The facts and circumstances of the case being identical to the assessment year 2006-07, respectfully following the above precedent in the case of the assessee itself wherein it was held that merely because claim of the assessee was not accepted or not found to be acceptable by the Revenue does not amount to concealment of particulars of income or furnishing of inaccur .....

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ACIT (DR) ORDER PER O.P. KANT, A.M.: This appeal of the assessee is directed against order dated 12/08/2013 of learned Commissioner of Income-tax (Appeals)-XII, New Delhi, for assessment year 2007-08, in respect of penalty levied under section 271(1)(c) of the Act, raising following grounds: 1. That having regard to the facts and circumstances of the case, the Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. Assessing officer in levying the penalty of ₹ 69,10,800/- .....

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on facts in confirming the levy of penalty under section 271 (1 )(c) on the addition made in the assessment order under section 143(3) dtd. 24-12-2009 as the same addition is also contrary to law and facts. 4. That having regard to the facts and circumstances of the case, Id. CIT(A) erred in law and on facts in confirming the action of the Id. AO in levying penalty u/s 271(1)(c) which is bad in law being beyond jurisdiction and barred by limitation and contrary to the principles of natural justi .....

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odify, and amend any grounds of appeal before or at the time of hearing of appeal. 7. That above grounds of appeal is without prejudice to each other. 2. The facts in brief are that assessment under section 143(3) of the Act was completed on 24/12/2009, wherein excess claim of depreciation on plant and machinery under Technology Upgradation Fund Scheme (TUFS) scheme of Government of India was disallowed. The assessee company made additions to plant and machinery under the TUFS Scheme and claim d .....

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de in the year under consideration, was after 01/04/2004, therefore, the assessee was not eligible for depreciation at the rate of 50% as claimed, as against the depreciation at the rate of 15% available normally on plant and machinery. In the assessment order, the penalty under section 271(1)(c) of the Act was initiated. The addition made on the issue was upheld by the learned Commissioner of Income-tax (Appeals). The Assessing Officer again issued a show cause notice on 01/03/2012 proposing le .....

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which amounted to ₹ 69,10,800/-. On appeal, the learned Commissioner of Income-tax (Appeals) also confirmed the penalty levied. Aggrieved, the assessee is in appeal before the Tribunal. 3. The grounds no. 1 to 5 raised by the assessee are in respect of the penalty levied of ₹ 69, 10, 800/-. 3.1 At the outset, the ld. Authorized Representative of the assessee submitted that in assessment year 2006-07 also penalty of ₹ 1,91,33,400/- was levied by the AO on account of excess clai .....

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e mistake was committed by the assessee in assessment year 2006-07, how it was repeated again in assessment year 2007-08 and, thus, it cannot be said that it was a bonafide mistake on the part of the assessee. 3.3 In the rejoinder, the ld. AR submitted that by the time the issue came up in assessment of assessment year 2006-07, the return of income for assessment year 2007-08 was already filed and the period for revising the return was also over and, therefore, there was no malafide intention on .....

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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 depreciation the assessee has claimed higher depreciation for which the assessee has furnished inaccurate particulars of inco .....

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. 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-Ill, itemNo.6, machinery and plant .....

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r 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 Bench, on similar facts had delete .....

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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. The assessee was under an impress .....

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hould 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 view, we place reliance on a latest decision of Hon ble Apex Court in the case of CIT vs. Reliance Petroproducts (P) Ltd., repo .....

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f 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 during the course of assessment proceedings AO on verification of details filed by the assessee company observed that assessee has .....

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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 prescribed for the block of asset under the head Plant and Machinery @ 15% on the WDV which comes ou .....

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ed 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 observing as under:- 6.1. The penalty u/s. 271(1)(c) of the Act is leviable if the AO is satisfied in the .....

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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 debatable. In the case under consideration, it is apparent that all the relevant facts have been di .....

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here 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 material facts relevant to the said claim had been furnished by the assessee, in our opinion it i .....

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t 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 particulars of its income. In the case under consideration, we find that the assessee had given all the .....

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ected the concealment. In CIT vs. Harshvardhan Chemicals & Minerals Ltd (259 ITR 212) Hon ble Rajasthan High Court upheld the finding of the Tribunal that when the assessee has claimed some amount though that is debatable in such cases, it cannot be said that the assessee has concealed any income or furnished inaccurate particulars for evasion of the tax. In view of the above and since no contrary binding decision was cited by the revenue, penalty imposed by AO and sustained by Ld. CIT(A) is .....

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