9911796707
TMI Blog2022 (7) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... ded to componentize the assets into respective class of assets in its books of accounts and provide for depreciation following the component accounting principles, it was also decided to align the tax books with books of accounts and revised tax depreciation on land and P&M component was calculated for earlier years. The Bank has suo moto reversed excess depreciation claim on land and hence penalty should not be levied under section 271 ( 1 )(c) of the Act. 2.1 Before us, Ld. Counsel for the assessee contended that the order levying penalty was highly unjustified and unsustainable in law since it had been levied on addition made to the income of the assessee on suo moto admission of the same by the assessee even before the same was detected by the Revenue. 3. Drawing our attention to the facts of the case, Ld.Counsel for the assessee stated that during appellate proceedings for the impugned assessment year before the ld. CIT(A),the assessee had suo moto requested reversal of excess depreciation claimed on two properties owned by the assessee bank, one in Mumbai and other in Bangalore, to the extent claimed on the land component included in the cost of the same. He pointed out tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nery (P&M) during FY 2018-19). In this regard, our submission is as under: 1. The details of the aforementioned two properties ore mentioned as under: 2. In case of Axis House. Mumbai, the properly was purchased by the Bank as a single unit with no separate consideration being paid for land. The Bank does not have any ownership right in the underlying land. The Bank has only been granted an exclusive and perpetual irrevocable right to use, occupy and enjoy the land. Such a right to use the land tantamounts to license as no title or interest has been created conveyed passed in favour of the Bonk in respect of such land. At the time of acquisition in May 2011, the Bonk had obtained a legal opinion whereby it was opined that the Bank is not required to separately capitalize the land and building components in it's books of accounts. Accordingly, the properly was capitalized as building under the head premises and the entire amount of consideration was subjected to depreciation over the useful life of 60 years. Further, along with the building, the Bank has also procured following items of P&M - (i) Elevators (ii) Power Backup DG Sets (iii) Chillers (iv) Fire Protecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lier years and is enclosed as Annexure. 10, Subject to the disclosures in the above paragraph the Bank wishes to submit that it had treated the assets in it's tax Books in the manner it was disclosed in it's account books. Now given that the treatment of the components are changing in it's account books, the Bank is suo rnoto making the same changes in it's tax books. Accordingly the Bank is going ahead and making consequential adjustments in fixed as.se f reporting and depreciation. 11. Section 251 of the Act provides power to CIT(A) to confirm, reduce, enhance or annul the assessment. We request your Honour to kindly enhance the income for AY 2015-16 by Rs.6.78 crores (Rs. 6.59 + 0.39 - 0.19 - 0.002 crores) pertaining to the excess depreciation claimed on the value of land component as reduced by lower depreciation claimed on plant and machinery as provided in annexure. 12. For all the remaining assessment years, the Bank is making an application to the relevant appellate/assessment authorities for the addition of income. 4. That accordingly addition of the excess depreciation claimed by the assessee, as admitted by it during appellate proceedings was made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during appellate proceedings and there was no detection of this extra depreciation claimed by the assessee till then either by the AO or the Ld.CIT(A),that despite the same the assessee was charged with having concealed/furnished inaccurate particulars of income and penalty levied amounting to Rs.2,30,74,971/-,to the extent of 100% of tax sought to be evaded on the same. 6. Ld. Counsel for the assessee contended that the assessee in all honestness and truthfulness had made this suo moto admission to the Ld. CIT(A) of excess depreciation claimed and had given reasons for the same also, as having been bonafidely claimed excess earlier on the basis of legal opinion given to it and it was reversed subsequently on account of the MCA notification requiring it to do so. He contended that this honest act of the assessee had been punished by the Ld. CIT(A) by charging him with having concealed/inaccurate particulars of income and levying penalty there on. Ld. Counsel for the assessee contended that there was no case for levy of penalty in view of the suo moto admission of the assessee, even before detection by the Revenue and more particularly on the issue of componentisation of land and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, he had to be absolved from penalty." In the peculiar fact of the present case, the so-called voluntary disclosure was made at the time of appellate proceedings. Thus, it was not a voluntary disclosure. Further, the appellant-assessee besides stating it is a mistake, has not offered any explanation. Therefore, the explanation under Section 271(l)(c) of the Act was not found to be satisfactory and penalty imposed by AO is required to be sustained. Reliance is also placed on decision of Hon'ble Bombay High court in the case of Samson Maritime Ltd. Vs CIT[2017] 88 taxmann.com 671 wherein it is held as under: "Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income (Disallowance of claim, effect of) - Assessment year 2007-08 - Where assessee debited foreign exchange loss to its determined non-tonnage income, when in fact, no foreign exchange loss was involved in respect of its non-tonnage business and explanation of such mistake was found not satisfactory by authorities, penalty was rightly levied under section 271(1)(c) [In favour of revenue]!" The Hon'ble Madras High court in the case of Khandelwal Steel & Tube Traders Vs ITO [2018] 95 taxman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bonafide, based on a legal opinion taken and the reversal of the same in the impugned year was at the instance of the assessee itself to align its books with an MCA notification, and was at no point detected by the Revenue. 10. The letter of the assessee addressed to the Ld.CIT(A),dated 22-03-2019 P.B 1-3,during appellate proceedings for the impugned year in quantum proceedings, surrendering the excess depreciation, reveals that the properties/premises on which excess depreciation was claimed, one in Mumbai and the other in Bangalore, were purchased in January 2011 and February 2012 resp. and depreciation claimed on entire assets since then ,including the land and Plant and Machinery component therein. The consideration paid for purchasing the property did not bifurcate between the different assets purchased, i.e land, building and Plant and Machinery. One consolidated amount was paid. Further in the case of the Mumbai property the assessee did not acquire any ownership rights in the underlying land but only exclusive and irrevocable right to use occupy and enjoy the land. In the case of the Bangalore property the assessee had initially acquired it on lease for three years and the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
