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2016 (8) TMI 376 - ITAT MUMBAI

2016 (8) TMI 376 - ITAT MUMBAI - TMI - Penalty levied u/s. 271(1)(c) - additional depreciation claimed u/s. 32 (ii) r. w. s. 32(iia) on the addition to the plant and machinery - Held that:- We find that the assessee had claimed additional depreciation at the rate of 20% though the plant and machinery was used only for period of six months, that during the assessment proceedings it submitted letter to the AO to reduce the additional depreciation, that the Chartered Accountant had, in the audit re .....

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sallowance of expenditure incurred on account of increase in share capital - Held that:- There is no ambiguity about the nature of the expenditue. The expenses incurred by the assessee for issuing shares on right basis cannot be treated as revenue expenditure. It is neither a debatable issue nor there are two opinions about the said expenditure. The assessee had made a patently wrong claim. There is a difference between a debatable claim and a wrong claim. In the first instance because of the di .....

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he AO the assessee had indirectly admitted the charge leveled by him. However, considering the fact that it had agitated the issue before the FAA and he had decided the issue on merits, we want to hold that his order does not suffer from any legal infirmity. So, confirming the same, effective ground of CO is decided against the assessee. - ITA/4428/Mum/2012, CO/144/Mum/2013 - Dated:- 5-8-2016 - Shri Rajendra, Accountant Member and C. N. Prasad, Judicial Member Revenue by :Shri R. K. Sahu-DR Asse .....

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30. 98 crores. ITA/4428/Mum/2012: 2. Effective ground of appeal is about deleting the penalty levied by the AO u/s. 271(1)(c), amounting to ₹ 21. 86 lakhs. During the assessment proceedings, the AO found that the assessee had claimed additional depreciation of ₹ 43. 72 lakhs u/s. 32 (ii) r. w. s. 32(iia) of the Act on the addition to the plant and machinery to the tune of ₹ 2. 18 crores, that the new plant and machinery was put to use after 30/09/2005, that the depreciation was .....

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er of the AO, the assessee preferred an appeal before the First Appellate Authority(FAA). Before him, it did not press the ground with regard to disallowance of depreciation. He confirmed the AO s action of disallowing the expenditure of ₹ 16. 85 lakhs for increasing the authorised share capital. After receiving the order of the FAA, the AO revived the penalty proceedings and directed the assessee to file its explanation. As per the AO, during the passing of the penalty order the assessee .....

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ection 271(1)(c) of the Act, he levied a penalty of ₹ 13. 03 lakhs. 4. Aggrieved by the penalty order of the AO, the assessee filed an appeal before the FAA. Before him, it was argued that there was an inadvertent mistake in claiming additional depreciation that instead of claiming additional depreciation at the rate of 10% it had claimed depreciation at the rate of 20%, that the material facts were disclosed in the audit report wherein the date of addition of assets had been mentioned, th .....

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the FAA held that the claim of additional depreciation at the rate of 20%, instead of 10%, was an inadvertent mistake and the fact was disclosed in the audit report, that the assessee had also agreed that there was a mistake in the course of assessment proceedings by filing letter dated 10/11/2008 before the AO, that it was a case of mistake and not a case of concealment of income. Therefore he held that penalty levied by the AO on account of disallowance of 10% of additional depreciation was n .....

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d stated that assessee had considered particulars of income, that AO had rightly levied the penalty. The Authorised Representative(AR) stated that it was an inadvertent mistake, all the details were made available in the audit report, that the tax consultant had advised to claim additional depreciation at the rate of 20%, that the assessee had reduced the claim during the assessment proceedings. He referred to the pages 24-27 of the paper book. 6. We have heard the rival submissions and perused .....

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inaccurate particulars of income for considering the particulars of income. It was an inadvertent mistake. The assessee had acted on the advice of a professional and his advice was found not as per the provisions of the Act. In our opinion, both the cases, relied upon by the DR, are not applicable to the facts of the case. Therefore, we hold that the order of the FAA does not suffer from any legal infirmity. In confirming his order, we decide the effective ground of appeal against the AO. CO/144 .....

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rease in autho - rised share capital. The Hon ble Supreme Court, in the year 1997, had, while deciding the case of Punjab State Industrial Development Corporation Ltd. (supra) held as under: The fees paid to the Registrar of Companies for expansion of the capital base of a company is directly related to the capital expenditure incurred by the company and although incidentally that would certainly help in the business of the company and may also help in profit-making, it still retains the charact .....

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