TMI Blog2011 (1) TMI 1465X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. 3. Briefly stated the assessee is engaged in the business of manufacture of pharmaceutical formulations. Assessee filed return of income on 31.01.2005 declaring income at Nil in the normal computation and income of ₹ 5,02,036/- as book profit under section 115JB being advance tax of ₹ 2,50,000/- + TDS under self assessment tax of ₹ 37,654/-. The A.O., while completing the assessment under section 143(3) noticed that the assessee claimed additional depreciation of ₹ 1,08,89,316/- as per provisions of section 32(iia) on the investment made in the assets to the tune of ₹ 725.95 lakhs. The assessee claimed 100% of the additional depreciation stated to be on legal advice by the counsel whereas the A.O. was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to 50% as per second proviso. He submitted that assessee s total income was determined at Nil because of carry forward depreciation and whether the depreciation is claimed of 100% or 50% it does not make any difference as the assessee has still unabsorbed depreciation to be set off, therefore, the claim is a bonafide claim and not a malafide claim to evade tax. It is further submitted that the assessee has neither concealed any particulars of income nor furnished any inaccurate particulars and proceedings under section 271(1)(c) were initiated for inaccurate claim of depreciation. Following the principles established by the Hon'ble Supreme Court in the case of Reliance Petroproducts (P) Ltd. 322 ITR 158 making a claim which was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntitled for 50% of the normal rate and accordingly penalty was correctly levied. 6. We have considered the issue. As seen from the facts of the case the assessee filed Nil return of income after set off of carried forward unabsorbed depreciation and the assessment also resulted in Nil income eventhough additional depreciation to the extent of ₹ 53,75,457/- was disallowed. The order itself indicates that the balance amount of depreciation to be carried forward was to the tune of ₹ 82,60,889/- and additional depreciation of the year of ₹ 55,13,859/- was also allowed to be carried forward. The assessee has offered income under section 115JB on the book profit of ₹ 66,93,816/- and the tax at 7.5% of the above calculat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income in respect of which particulars have been concealed or inaccurate particulars have been furnished. Since the incomes are determined under section 115JB and return income and assessed income under that provision being same, none of the clauses of Explanation 4 can be invoked in levying penalty on determining tax sought to be evade . 7. Be that as it may, as seen from the order of the A.O. under section 143(3), the proceedings under section 271(1)(c) were separately initiated on the issue of inaccurate claim of additional depreciation. This cannot be a reason for initiating penalty proceedings. Section 271(1)(c) warrants penalty where there is concealment of income or furnishing of inaccurate particulars. Making a claim which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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