M/s. Injectcare Parenterals Pvt.Ltd., Ahmedabad V. The ACIT.,Circle-4, Ahmedabad

ITA 2147/AHD/2013

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3665 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 30-05-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 19-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B P K
• Assessee Lawyers: PF JAIN
• Keywords: Depreciation; Question of law; Reasonable cause; Wrong claim; Bonafide mistake; Revenue expenditure; Capital expenditure
• Section: 143(3); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMEDABAD BEFORE SHRI R. P. TOLANI, JM, & SHRI MANISH BORAD , AM. ITA NO.2147/AHD/2013 ASST. YEAR: 2007-08 INJECT CARE PARENTERALS P. LTD. DEVASHISH BUILDING, 1 ST FLOOR, ELLISBRIDGE, AHMEDABAD. VS. ACIT, CIRCLE-4, AHMEDABAD. APPELLANT RESPONDENT PAN AABCL 0232J APPELLANT BY SHRI P. F. JAIN, AR RESPONDENT BY SHRI B.P.K. PANDA, SR.DR DATE OF HEARING: 30/5/2016 DATE OF PRONOUNCEMENT: /6/2016 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER . THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LD. CIT(A) VIII, AHMEDABAD, DATED 11.7.2013 IN APPEAL NO.CIT(A)- VIII/ACIT/CIR.4/13/12-13 PASSED AGAINST ORDER U/S 2 71(1)(C) OF THE IT ACT, 1961 (IN SHORT THE ACT) FOR ASST. YEAR 2007-08 FRAMED ON 15.3.2012 BY ACIT CIRCLE-4, AHMEDABAD. ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL :- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE LEVY OF PENALTY ON THE DISALLOWANCE OF RS.9,59,886/ - BEING AMOUNT SPENT ON CABLES ON THE GROUND OF FURNISHING INACCURATE ITA NO. 2147/AHD/2013 ASST. YEAR 2007-08 2 PARTICULARS OF INCOME WITHOUT PROPERTY APPRECIATING THE FACTS OF THE APPELLANT. 2. ON FACTS OF THE APPELLANT NO SUCH PENALTY OUGHT TO HAVE BEEN LEVIED. 3. THE APPELLANT CRAVES LEAVE, TO ADD TO ALTER AND/ OR MODIFY ANY GROUND OF APPEAL. 2. BRIEFLY STATED FACTS AS CULLED OUT FROM THE RECO RDS ARE THAT THE ASSESSMENT U/S 143(3) OF THE ACT FOR ASST. YEAR 200 7-08 WAS FRAMED ON 24.12.2009 AT AN ASSESSED LOSS OF RS.37,87,178/- AFTER MAKING ADDITION OF RS.28,76,411 AND PENALTY PROCEEDINGS U/ S 271(1)(C) OF THE ACT WERE INITIATED; AGAINST WHICH ASSESSEE WENT IN APPEAL BEFORE LD. CIT(A) AND GOT PART RELIEF VIDE LD. CIT(A)S ORDER DATED 17.01.2011. 3. PURSUANT TO THE ORDER OF LD. CIT(A), LD. ASSESSI NG OFFICER INITIATED PENALTY PROCEEDINGS FOR IMPOSITION OF PEN ALTY U/S 271(1)(C) OF THE ACT ON THE ADDITION CONFIRMED BY LD. CIT(A) REL ATING TO CLAIMING OF EXPENDITURE OF RS.959886/- SPENT ON LAYING OF CABLE S FOR 950 KVA TRANSFORMER AS REVENUE EXPENDITURE WHICH WAS DENIED BY LD. ASSESSING OFFICER BY TREATING THE SAME AS CAPITAL I N NATURE. LD. ASSESSING OFFICER WAS NOT CONVINCED WITH THE REPLY OF ASSESSEE AND IMPOSED PENALTY U/S 271(1)(C) OF THE ACT. PENALTY W AS CONFIRMED ON ANOTHER ISSUE ALSO RELATING TO PAYMENT OF RS.93552/ - ON ACCOUNT OF LEGAL AND PROFESSIONAL CHARGES FOR NON-FURNISHING O F COPIES OF BILL(S). 4. ON APPEAL BEFORE LD. CIT(A) AGAINST THE ORDER U/ S 271(1)(C) OF THE ACT PENALTY WAS CONFIRMED ON THE DISALLOWANCE O F EXPENDITURE OF ITA NO. 2147/AHD/2013 ASST. YEAR 2007-08 3 RS.959886/- AND DELETED PENALTY ON DISALLOWANCE OF EXPENDITURE OF RS.93552/- BY OBSERVING AS UNDER :- 2.3 DECISION: I HAVE CAREFULLY CONSIDERED THE PENALTY ORDER AND T HE SUBMISSION GIVEN BY THE APPELLANT. IT IS NOTED THAT THE PENALTY HAS BEEN IM POSED ON TWO ISSUES. FOR THE SAKE OF CONVENIENCE AND CLARITY THE ISSUES ARE DISC USSED SEPARATELY AS UNDER:- I) THE FIRST ISSUE WHICH HAVE BEEN CONSIDERED FOR PENALTY IS THE ELECT RIC POWER EXPENSES OF RS. 9,59,886/- ON ACCOUNT OF ELECTRIC P OWER. THE APPELLANT HAS CLAIMED THESE EXPENSES AS REVENUE WHEREAS THE A.O HELD TO B E CAPITAL EXPENDITURE. THE FACTS ARE THAT THE APPELLANT STARTED MANUFACTURING PHARMACEUTICALS FROM 1/2/2003 AND SEPARATE UNIT WAS SET UP AT VAPI, SILVASA WHICH STARTED COMMERCIAL PRODUCTION IN MAY 2006. THE APPELLANT MADE CERTAIN PAYMENTS TO DA KSHIN GUJARAT ELECTRICITY BOARD ON 17/8/2005 OUT OF WHICH AN AMOUNT OF RS. 9, 58,382/- WAS ADJUSTED BY THE ELECTRICITY BOARD TOWARDS CABLE LINE CHARGES WHICH WAS CLAIMED AS REVENUE EXPENDITURE. THE ENTRY FOR THIS ADJUSTMENT WAS PASS ED BY THE APPELLANT ON 27/9/2006, WHEREAS THE COMMERCIAL PRODUCTION STARTE D IN MAY 2006. THE CIT(A) UPHELD THE ADDITION MADE BY THE A.O AND ACCORDINGLY THE PENALTY HAS BEEN IMPOSED BY THE A.O . IT HAS BEEN EXPLAINED BY THE APPELLANT THAT THE ABO VE EXPENDITURE COULD NOT BE CAPITALIZED AS THERE WAS TIME LAG OF 6 MONTHS BETWE EN THE DATE OF PRODUCTION AND THE APPROPRIATION OF THE EXPENSES OUT OF THE DEPOSI TS. THERE WAS AN INADVERTENT ERROR OF NOT INCLUDING IT IN PREOPERATIVE EXPENSES. THE A PPELLANT DURING THE APPELLATE STAGE FOR THE QUANTUM PROCEEDINGS CLAIMED THAT SINCE IT W AS NOT IN THE OWNER OF THE P & M IT SHOULD BE TAKEN AS A REVENUE EXPENDITURE. THE AP PELLANT HAS FURTHER SUBMITTED THAT THE MISTAKE WAS A BONAFIDE ONE. THE FACT REMAINS THAT THE EXPENDITURE PERTAIN TO TH E PERIOD PRIOR TO COMMENCEMENT OF PRODUCTION AND THEREFORE, IRRESPECTIVE OF THE NA TURE OF EXPENDITURE THAT IS CAPITAL OR REVENUE, IT HAS TO BE CAPITALIZED IN THE BOOKS OF A CCOUNT AND THE APPELLANT SHOULD HAVE CLAIMED DEPRECIATION ON THE SAME. THEREFORE, T HERE IS AN INCORRECT CLAIM MADE BY THE APPELLANT WHICH HAS RESULTED INTO CONCEALMEN T OF INCOME. THE CLAIM IS EX- FACIE NOT ADMISSIBLE. THE ISSUE IS NOW TO BE ANALYZ ED FROM THE POINT WHETHER THERE WAS A BONAFIDE MISTAKE OR REASONABLE CAUSE FOR MAKI NG SUCH CLAIM. IT IS NOTED THAT THE APPELLANT HAD NO BONAFIDE REASON OR REASONABLE CAUSE FOR NOT CAPITALIZING THE EXPENDITURE. THE DEPOSIT WITH THE ELECTRICITY BOARD WAS MADE IN THE MONTH OF AUGUST 2005, THE POWER WAS CONNECTED BY THE ELECTRI CITY BOARD IN THE MONTH OF OCTOBER 2005 AND THE COMMERCIAL PRODUCTION STARTED IN MAY 2006. THE ADJUSTMENT OF THE AMOUNT OF RS. 9,58,382/- HAS BEEN MADE BEFORE COMMENCEMENT OF PRODUCTION AND THERE IS NO DOUBT AB OUT IT. THE CLAIM OF THE APPELLANT THAT THE JOURNAL ENTRY WAS PASSED AFTER 6 MONTHS OF START OF PRODUCTION ITA NO. 2147/AHD/2013 ASST. YEAR 2007-08 4 AND IT RESULTED IN THE WRONG CLAIM IS WITHOUT ANY M ERIT AS THERE WAS NO BONAFIDE REASON TO PASS SUCH JOURNAL ENTRY SO LATE. NO REASO N HAVE BEEN GIVEN BY THE APPELLANT FOR THE DELAY. THEREFORE, THE CLAIM OF BO NAFIDE OR THE REASONABLE CAUSE HAS NO MERIT. THE APPELLANT HAS FURTHER RELIED ON CERTAIN JUDGEME NTS SUCH AS GUJARAT TEXTILE CO. P. LTD. (99 ITR 514) WHEREIN PENALTY WAS HELD T O BE NOT IMPOSABLE ON ACCOUNT OF EXPENDITURE HELD TO BE CAPITAL NATURE AS AGAINST REVENUE CLAIMED BY THE ASSESSEE. THIS JUDGEMENT AND THE OTHER JUDGEMEN T CLAIMED BY THE APPELLANT IS NOT APPLICABLE TO THE CURRENT FACTS AS THERE IS NO DISPUTE ABOUT THE NATURE OF EXPENDITURE IN THE PRESENT CASE. THE EXPENDITURE CL EARLY PERTAINS TO PREOPERATIVE PERIOD WHEREAS IN THE CASES QUOTED BY THE APPELLANT , THERE WAS A DOUBT ABOUT THE NATURE OF THE CLAIM. IN VIEW OF THE ABOVE CLEAR FACTS, I AM CONSTRAINED TO HOLD THAT THE IMPOSITION OF PENALTY U/S. 271(1)(C ) ON THE APPELLANT WAS JUSTIF IED ON THIS ISSUE. THE ACTION OF THE A.0 IS ACCORDINGLY UPHELD. THEREFORE, THIS ISSU E IS DISMISSED. II) THE SECOND ISSUE ON THE PENALTY HAS BEEN IMPOSED TO RELATED TO PAYME NT OF RS. 93,552/- ON ACCOUNT OF LEGAL AND PROFESSIONAL C HARGES. THE APPELLANT COULD NOT FURNISH THE COPIES OF THE BILL AS THE SAME WERE MISPLACED. THE FACTS SHOW THAT THE GENUINENESS OF THE EXPENSES HAS NOT BEEN DISPRO VED BY THE A.O. THE PAYMENT HAS BEEN PAID BY A/C. PAYEE CHEQUES AND TDS HAS ALSO BEEN DEDUCTED. THE A.O ON HIS PART HAS NOT BROUGHT ANYTH ING ON RECORD WHICH PROVES OR ESTABLISHES THAT THE EXPENDITURE CLAIMED BY THE APPELLANT WAS FALSE. IT WAS A DIFFERENT MATTER THAT DUE TO NON-AVAILABILITY OF TH E BILL THE APPELLANT COULD NOT SUBSTANTIATE THE CLAIM BEFORE THE A. 0 AND THE ADDI TION WAS MADE. THE EXPENDITURE HAS NOT BEEN TO PROVED TO BE BOGUS AND THEREFORE, IT CANNOT BE HELD TO BE CONCEALMENT OF INCOME AND NO PENALTY CANNOT BE I MPOSED FOR THE SAME. THE PENALTY IMPOSED BY THE A 0 ON THIS ISSUE THEREFORE, DIRECTED TO BE DELETED. 5. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNA L AGAINST THE ORDER OF LD. CIT(A) CONFIRMING PENALTY U/S 271(1)(C ) OF THE ACT FOR CLAIMING EXPENDITURE OF RS.959,886/- RELATING TO LA YING OF CABLE AS REVENUE EXPENDITURE AND NOT CAPITAL EXPENDITURE. 6. LD. AR SUBMITTED THAT THE PAYMENT OF RS.959,886/ - WAS MADE TO DAKSHIN GUJARAT VIJ COMPANY LTD. .(DGVCL) FOR LA YING CABLES FOR 950 KVA TRANSFORMERS AND CLAIMED AS REVENUE EXPENDI TURE BECAUSE ITA NO. 2147/AHD/2013 ASST. YEAR 2007-08 5 DGVCL IS OPEN TO USE THE TRANSFORMER, CABLES, ACCES SORIES ETC. SITUATED AT ASSESSEES PREMISES FOR SUPPLYING OF EL ECTRICITY TO OTHER CUSTOMERS AND PAYMENT MADE BY THE ASSESSEE TO DGVCL IS MERELY CONTRIBUTION OF THE TOTAL COST ON TRANSFORMER. HE F URTHER SUBMITTED THAT THERE IS A CLEAR STIPULATION EVIDENCING THE OWNERSH IP AND LIBERTY OF DGVCL REGARDING THE USE OF TRANSFER FOR SUPPLYING E LECTRICITY TO OTHER CUSTOMERS. THEREFORE, AS THE OWNERSHIP IS NOT VESTE D WITH THE ASSESSEE BUT TO DGVCL IT WAS CLAIMED AS REVENUE EXP ENDITURE. HOWEVER, THE LOWER AUTHORITIES DENIED ASSESSEES CL AIM OF REVENUE EXPENDITURE AND TREATED IT AS CAPITAL EXPENDITURE B UT CERTAINLY THERE WAS NO FURNISHING OF INACCURATE PARTICULARS OR EVID ENCE SHOWING CONCEALMENT OF INCOME AT ANY STAGE AND, THEREFORE, LD. CIT(A) WAS NOT CORRECT IN CONFIRMING THE PENALTY U/S 271(1)(C) OF THE ACT. 7. IN SUPPORT OF HIS SUBMISSIONS, LD. AR PLACED REL IANCE ON THE JUDGMENT OF HON. SUPREME COURT IN THE CASE OF CIT V S. RELIANCE PETROPRODUCTS PVT. LTD. 322 ITR 158 (SC) AND THE DE CISION OF THE CO- ORDINATE BENCH IN THE CASE OF AREEZ PIROZSHA KHAMBA TTA VS. ACIT IN ITA NO.1574/AHD/2012 FOR ASST. YEAR 2006-07 DATED 1 8.07.2014 . 8. ON THE OTHER HAND, LD. DR ALONG WITH SUPPORTING THE ORDERS OF LOWER AUTHORITIES ALSO PLACED RELIANCE ON THE DECIS ION OF HON. DELHI HIGH COURT IN THE CASE OF CIT VS. ZOOM COMMUNICATIO N PVT. LTD. IN ITA NO.07/2010 DATED 24.05.2010. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THROUGH THIS APPEAL, ASSESSEE IS AGGRIEV ED WITH THE ACTION ITA NO. 2147/AHD/2013 ASST. YEAR 2007-08 6 OF LD. CIT(A) UPHOLDING THE PENALTY ON THE DISALLOW ANCE OF RS. 9,59,886/- BEING SPENT ON CABLES ON THE GROUND OF F URNISHING INACCURATE PARTICULARS OF INCOME. WE OBSERVE THAT A SSESSEE COMPANY SET UP A NEW UNIT AT VAPI SILVASA ROAD TO MANUFACT URE BUFFERED DRY POWDER (INJECTABLES) REQUIRING LARGER QUANTITY OF E LECTRICITY ENERGY WHICH WAS OBTAINED FROM DAXIN GUJARAT ELECTRICITY B OARD AND MADE PAYMENT OF RS.33,21,710/- ON 17.8.2005. ELECTRICITY BOARD REQUIRED POWER LOAD BY OCTOBER, 2005 BUT DUE TO FIRE AT VAPI UNIT, COMMERCIAL PRODUCTION COMMENCED IN MAY, 2006. OUT OF THE TOTAL DEPOSIT HELD WITH DGVCL A SUM OF RS.959,886/- WAS ADJUSTED BY DG VCL TOWARDS CABLE LAYING CHARGES OF 950 KVA AND ENTRY FOR SUCH ADJUSTMENT WAS PASSED IN THE BOOKS OF ACCOUNT BY THE ASSESSEE ON 2 7.09.2006 AND CLAIMED AS REVENUE EXPENDITURE. HOWEVER, LD. ASSESS ING OFFICER TREATED THE SAME AS CAPITAL IN NATURE AND IS FURTHE R CONFIRMED BY LD. CIT(A). 10. NOW EXAMINING THE ABOVE FACTS IN THE LIGHT OF P ROVISIONS OF SECTION 271(1)(C) OF THE ACT WHICH DEALS WITH IMPOS ITION OF PENALTY IF AN ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS IN COME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, WE OBSERVE T HAT THERE IS NO DISPUTE ON THE PART OF REVENUE AS REGARDS THE FIGUR E OF EXPENDITURE OF RS.9,59,886/- AS THE SAME HAVE BEEN FURNISHED ACCUR ATELY IN THE BOOKS OF ACCOUNT. 11. LD. AR PLACED RELIANCE ON THE DECISION OF HON. SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. (SUPRA) WHEREIN IT HAS BEEN HELD THAT IF INFORMATION GIVEN IN RETURN IS NOT ITA NO. 2147/AHD/2013 ASST. YEAR 2007-08 7 FOUND TO BE INCORRECT, SIMPLY BY MAKING INCORRECT C LAIM, IT DOES NOT AMOUNT TO CONCEALMENT OF PARTICULARS. BY NO STRETCH OF IMAGINATION MAKING AN INCORRECT CLAIM TANTAMOUNTS TO FURNISHING INACCUTATE PARTICULARS. WHEN THE DETAILS SUPPLIED BY THE ASSES SEE IN THE RETURN ARE NOT FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE , THERE IS NO QUESTION TO INVITE PENALTY U/S 271(1)(C). A CLAIM W HICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO F URNISHING INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE. 12. WE FURTHER OBSERVE THAT LD. DR REFERRED AND REL IED ON THE DECISION OF HON. DELHI HIGH COURT IN THE CASE OF CI T VS. ZOOM COMMUNICATION ITA NO.07/2010 DATED 24.5.2010 WHEREI N THE HON. COURT HAS DISTINGUISHED THE CASE BEFORE THEM WITH T HE FACTS IN THE CASE OF RELIANCE PETRO PRODUCTS PVT. LTD. (SUPRA) A ND HAS OBSERVED AS UNDER :- 21. WE FIND THAT THE ASSESSEE BEFORE US DID NOT EX PLAIN EITHER TO THE INCOME TAX AUTHORITIES OR TO THE INCOME TAX APPELLATE TRIBUNAL AS TO IN WH AT CIRCUMSTANCES AND ON ACCOUNT OF WHOSE MISTAKE, THE AMOUNTS CLAIMED AS DEDUCTIONS IN THIS CASE WERE NOT ADDED, WHILE COMPUTING THE INCOME OF THE ASSESSEE COMPANY. WE CA NNOT LOSE SIGHT OF THE FACT THAT THE ASSESSEE IS A COMPANY WHICH MUST BE HAVING PROFESSI ONAL ASSISTANCE IN COMPUTATION OF ITS INCOME, AND ITS ACCOUNTS ARE COMPULSORILY 1 SUBJECTED TO AUDIT. IN THE ABSENCE OF ANY DETAILS FROM THE ASSESSEE, WE FAIL TO APPRECIATE HOW SUCH D EDUCTIONS COULD HAVE BEEN LEFT OUT WHILE COMPUTING THE INCOME OF THE ASSESSEE COMPANY AND HO W IT COULD ALSO HAVE ESCAPED THE ATTENTION OF THE AUDITORS OF THE COMPANY. 22. THE EXPLANATION OFFERED BY THE ASSESSEE COMPANY WAS NOT ACCEPTED EITHER BY THE ASSESSING OFFICER OR BY THE COMMISSIONER OF INCOME TAX(APPEALS). THE VIEW OF INCOME TAX APPELLATE TRIBUNAL REGARDING ADMISSIBILITY OF THE D EDUCTION ON ACCOUNT OF WRITTEN OFF OF CERTAIN ASSETS, UNDER SECTION OF THE ACT IS WHOLLY ERRONEOUS. THE TRIBUNAL HAS NO T RECORDED A ITA NO. 2147/AHD/2013 ASST. YEAR 2007-08 8 FINDING THAT THE EXPLANATION FURNISHED BY THE ASSES SEE IN RESPECT OF THE DEDUCTION DUE TO CERTAIN ASSETS BEING WRITTEN OFF WAS A BONAFIDE EXP LANATION. THE TRIBUNAL HAS NOWHERE HELD THAT IT WAS DUE TO OVERSIGHT THAT THE AMOUNT OF THI S DEDUCTION COULD NOT BE ADDED WHILE COMPUTING THE INCOME OF THE ASSESSEE COMPANY. 23. AS REGARDS DEDUCTION ON ACCOUNT OF INCOME TAX P AID BY THE ASSESSEE, THE TRIBUNAL FELT THAT SINCE NO PERSON WOULD CLAIM THE SAME AS DEDUCTION, TO EVADE PAYMENT OF TAX, THE CLAIM MADE BY THE ASSESSEE WAS NOT MALAFIDE. IN THE ABSENCE OF THE ASSESSEE COMPANY TELLING THE ASSESSING OFFICER AS TO WHO COMMITTED THE OVERSIGHT RESULTING IN FAILURE TO ADD THIS AMOUNT WHILE COMPUTING THE INCOME OF THE ASSESSEE, UNDER W HAT CIRCUMSTANCES THE OVERSIGHT OCCURRED AND WHY IT WAS NOT DETECTED BY THOSE WHO C HECKED THE INCOME TAX RETURN BEFORE IT WAS FILED AND LATER BY THE AUDITORS OF THE ASSESSEE COMPANY, WE CANNOT ACCEPT THE GENERAL VIEW TAKEN BY THE TRIBUNAL. IN OUR VIEW, NO SUCH VI EW COULD HAVE REASONABLY BEEN TAKEN, ON THE FACTS AND CIRCUMSTANCES PREVAILING IN THIS CASE AND, THEREFORE, THE DECISION OF THE TRIBUNAL IN THIS REGARD SUFFERS FROM THE VICE OF PERVERSITY. WE CANNOT ACCEPT THE GENERAL PROPOSITION THAT NO PERSON WOULD EVER CLAIM THE AMOUNT OF INCOM E TAX AS A DEDUCTION WITH A VIEW TO AVOID PAYMENT OF TAX. NO HARD AND FAST RULE IN THIS REGARD CAN BE LAID DOWN AND EVERY CASE WILL HAVE TO BE DECIDED CONSIDERING THE FACTS AND C IRCUMSTANCES IN WHICH SUCH A DEDUCTION IS CLAIMED, COUPLED WITH AS TO WHETHER THE EXPLANATION OFFERED BY THE ASSESSEE FOR MAKING THE CLAIM, IS SHOWN TO BE BONAFIDE OR NOT. 24. FOR THE REASONS GIVEN IN THE PRECEDING PARAGRAP HS, WE ANSWER THE QUESTION OF LAW FRAMED IN THIS CASE IN FAVOUR OF THE REVENUE AND AGAINST T HE ASSESSEE. THE INCOME TAX APPELLATE TRIBUNAL ERRED IN LAW IN DELETING THE PENALTY IN RE SPECT OF THE AMOUNT OF RS.I LAKH CLAIMED AS DEDUCTION ON ACCOUNT OF PAYMENT OF INCOME TAX AND T HE AMOUNT OF RS.I3,24,539/- DEBITED UNDER THE HEAD EQUIPMENT WRITTEN OFF, IN THE PROFIT AND LOSS ACCOUNT OF THE ASSESSEE. THE APPEAL STANDS DISPOSED OF ACCORDINGLY. 13. FROM GOING THROUGH THE DECISION REFERRED AND RE LIED BY THE LD. DR WE OBSERVE THAT THE ISSUE IN THAT CASE RELATED T O CLAIM OF INCOME- TAX PAID AS REVENUE EXPENDITURE AND WRITE OFF OF RS .1324539/- UNDER ITA NO. 2147/AHD/2013 ASST. YEAR 2007-08 9 THE HEAD EQUIPMENT AND FOR MAKING SUCH INCORRECT CL AIM PENALTY IMPOSED U/S 271(1)(C) OF THE ACT WAS CONFIRMED. HOW EVER, WE OBSERVE THAT THE FACTS OF THE CASE IN THE APPEAL BE FORE US ARE FAIRLY DIFFERENT BECAUSE AT THE TIME WHEN THE EXPENDITURE OF RS.959886/- WAS BOOKED IN THE BOOKS AS REVENUE EXPENDITURE THE ASSESSEE WAS HAVING CERTAIN BELIEF WHICH WAS DULY SUPPORTED WITH THE AGREEMENT WITH DGVCL EVIDENCING THAT THE OWNERSHIP AND LIBERT Y REGARDING THE USE OF TRANSFORMER FOR SUPPLY OF ELECTRICITY TO OTH ER CONSUMERS WILL REST UPON THE DGVCL ONLY AND, THEREFORE, COST OF LAYING OF CABLES ATTACHED TO THE TRANSFORMER WAS TREATED AS REVENUE EXPENDITURE. CERTAINLY IN SUCH A SITUATION WHEN BOTH THE POSSIBL E VIEWS I.E. REVENUE OR CAPITAL EXPENDITURE ARE GOING SIDE BY SI DE AND THERE REMAINS A THIN LINE TO DIFFERENTIATE THE SAME. ALS O DISPUTE IS NOT IN REGARD TO THE QUANTUM OF EXPENDITURE BUT IT IS WITH REGARD TO NATURE I.E. CAPITAL/REVENUE. EVEN IF LD. ASSESSING OFFICER HAS TREATED THE AMOUNT OF RS.9,59,886/- AS CAPITAL EXPENDITURE, CER TAINLY ASSESSEE WILL BE ENTITLED TO CLAIM DEPRECIATION BUT THE CRUX IS, IT IS ALLOWABLE EXPENDITURE. SUCH SITUATION CERTAINLY DOES NOT CALL FOR A PENALTY U/S 271(1)(C) OF THE ACT. SO, ASSESSEE CANNOT BE HELD F OR FURNISHING INACCURATE PARTICULARS. 14. WE ALSO OBSERVE THAT ASSESSEE HAS DECLARED BUSI NESS LOSS OF RS.66,63,589/- IN ITS E-RETURN FILED ON 31.10.2007 WHICH FURTHER SUBSTANTIATE THE VIEW THAT ASSESSEE WAS NOT HAVING ANY BENEFIT BY CLAIMING A REVENUE EXPENDITURE SO AS TO EVADE INCOM E-TAX. ITA NO. 2147/AHD/2013 ASST. YEAR 2007-08 10 15. IN SUCH SITUATION, WE ARE OF THE VIEW THAT CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE DECISION OF HON. SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. ( SUPRA) AND THEREFORE, ASSESSEE SHOULD NOT BE VISITED WITH PENA LTY U/S 271(1)(C) OF THE ACT. WE ACCORDINGLY, SET ASIDE THE ORDERS OF LO WER AUTHORITIES AND ALLOW THE APPEAL OF THE ASSESSEE. 16. OTHER GROUNDS ARE GENERAL IN NATURE, HENCE NO A DJUDICATION IS NEEDED. 17. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST JUNE, 2016 SD/- SD/- (R.P. TOLANI) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 01/6/2016 MAHATA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD ITA NO. 2147/AHD/2013 ASST. YEAR 2007-08 11 1. DATE OF DICTATION: 31/05/2016 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 31/05/2016 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 1/6/2016 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: