TMI Blog2017 (7) TMI 1342X X X X Extracts X X X X X X X X Extracts X X X X ..... SHRI KUL BHARAT, JM AND SHRI VIKRAM SINGH YADAV, AM For the Appellant : Shri S.L. Chandel(Addl. CIT) For the Respondent : Shri Mahendra Gargieya (Advocate) ORDER PER SHRI KUL BHARAT, JM. The Appeal by the Revenue is directed against the order of Ld. CIT (Appeals), Kota, dated 26.09.2016 pertaining to assessment year 2012-13. The only effective ground has raised in this appeal, which reads as under:- 1. Deleting penalty of ₹ 17,12,639/- imposed /s 271(1)(c) of the Act. 2. Briefly, stated the facts are that, while framing the assessment u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act). The Assessing Officer initiated penalty proceedings u/s 271(1)(c) of the Act for concealing the income. As per the Assessing Officer, the assessee had claimed excessive depreciation on UID Kit claiming to be part of the computer. Subsequently, the penalty u/s 271(1)(c) of the Act was imposed vide order dated 29/09/2015. Against this, the assessee preferred an appeal before Ld. CIT(A), who after considering the submissions deleted the penalty. 3. Now, the revenue is in appeal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provide input, processing, storage and various output devices. The various output devices being the printer, scanner are Computer peripherals which are crucial part of a Computer system. In the context of preparation of Aadhar card, without the help of these peripherals beings IRIS scanner, fingerprint scanner etc there was no use of the laptop alone. In fact, in technical sense, the entire gamut of all these items has to held as a Computer Only. 3.3.1 The law is well settled that in the context of S.32 claiming depreciation, one has to find as a matter of fact that all the subjected assets taken together has been designed in such a manner so as to serve the technical requirement of the assessee. On this aspect, kindly refer the Hon'ble Allahabad high Court in CIT v/s Kanodia Warehoiusing Corpn. (1980) 121 ITR 996 (All) which has laid down test as to whether the subject-matter involved is a plant or not, P. 1001 reads as under: It would be seen that the test is whether the subject-matter involved, that is, a building or a structure or a part thereof, constitutes an apparatus or a tool of the trade of the taxpayer or it is merely a space where the taxpaye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er any furnishing of inaccurate particulars of income nor it was a case of concealment of income. None of the details furnished in ROI, was found incorrect. 6.1 For this proposition, kindly refer - When the issue is debatable, then penalty is not required as per the ration laid down in the case of CIT v/s HArshvardhan Chemicals 186 CTR 552 (Raj.) (DPB 1-3): Penalty under s. 271(1) (c) --Concealment--Debatable claims- Wrong deductions claimed by assessee under ss. 80HH and 80-I--Additions made on that account-When the assessee has claimed some deductions which are debatable, it cannot be said that it has concealed any income or furnished inaccurate particulars of income for evasion of tax--Tribunal justified in cancelling the penalty under s. 271(1) (c) 6.2 In the case of ITO v/s M/s Registhan Woolen Carpet Factory, ITA No. 292/JP/2001, the penalty was cancelled by CIT (A). It was observed by Hon'ble ITAT Jaipur Bench that: It may be mentioned that quantum proceedings are not binding in the penalty proceedings as both are the independent proceedings as per the ratio laid down in the case of Durga Kamal Rice Mills vs. CIT. 265 ITR 25 (Ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are carried on, it would amount to a plant but where the structure plays no part in the carrying on of those activities but merely constitutes a place within which they are carried on, it cannot be regarded as a plant. A Full Bench of the Hon'ble Supreme Court in the case of CIT vs. Kamataka Power Corporation (2000) 162 CTR (SC) 249 : (2001) 247 ITR 268 (SC) held at p. 268 (short notes) that : The question whether a building can be treated as plant, basically, is a question of fact and where it is found as a fact that a building has been so planned and constructed as to serve an assessee's special technical requirements, it will qualify to be treated as a plant...... 7. In view of the above facts and following the ratio of the decisions including the decision of the hon'ble Supreme Court in the case of Karnataka Power Corporation (supra), we are of the view that the printer and scanner are integral part of the computer system, therefore, they are to be treated as computer for the purposes of allowing higher rate of depreciation, i.e., 60 per cent and accordingly, we decline to interfere in the order passed by the learned CIT (A) on this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR 0435 (Delhi Trib.) (DPB 7-20) wherein, it was held that Peripherals such as printers, scanners, NT server, etc form integral part of the Computer and the same, therefore, are eligible for depreciation @ 60 per cent applicable to a computer. 8. Covered issue: 8.1 It has been held that merely assessee made a wrong claim of depreciation, no penalty u/s 271 (1) can be imposed as held in the cases of CIT v/s Jawahar Kala Kendra (2014) 369 ITR 0132 (Raj) (DPB 21-23). 8.2 Recently the Hn'ble Rajasthan High Court has reiterated its view in the case of Pr. CIT v/s M/s Modern Denim Ltd. in DBITA No. 33/2017 vide order dated 10.05.2017 wherein, in para 3 the Hon'ble High Court has approved the ITAT order in the decision of CIT v/s Dharamshi B. Shah 366 ITR 140 (Jaipur Trib.) and the same was followed and the PAra 2.4 2.5 were quoted, the relevant extract of which is as under: .......... The Ld. CIT (A) has given a categorical finding that the assessee had disclosed all material facts pertaining to the claim of depreciation admissible under section 32 of the Act. It is thus a case where there is difference of opinion in terms of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat is clearly not the intendment of the legislature. 8.6 Also kindly refer DCIT v/s M/s Brandix India Apparel City (P) Ltd. in ITA No. 14(Vizag (2015 dated 23.12.2016, CIT v/s Madhushree Gupta (2013) 84 CCH 89, Devsons (P) Ltd. v/s CIT (2010) 329 ITR 0483 (Del.) and M/s Tanushree Logistics (P) LTd. v/s DCIT in ITA No. 66/JP/2016 vide order dated 16.08.2016. 9. The word concealment inherently carried with it the element of mens rea. To impose a penalty u/s 271 (1) (c); it has to be proved that the assessee has consciously made the concealment or furnished inaccurate particulars of his income. The said principle has been reiterated in Virtual Soft Systems Ltd. v/s CIT (2007) 207 CTR (SC) 7..: (2007) 289 ITR 83 (SC) held that: 24. Sec. 271 of the Act is a penal provision and there are well established principles for the interpretation of such a penal provision. Such a provision has to be construed strictly and narrowly and not widely or with the object of advancing the object and intention of the legislature. 6. We have heard the rival contentions, perused the material available on record. There is no dispute with regard to the position, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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