Appeal details
Counselvise Citation
28524514 RSA 2014
Assessee PAN
Bench
Appeal Number
Duration Of Justice
11 month(s) 29 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
13-02-2015
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
B
Assessment Year
2006-2007
Appeal Filed On
14-02-2014
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.285/PN/2014 ASSESSMENT YEAR: 2006-07 DRILBITS INTERNATIONAL PVT. LTD., PLOT NO.66, MIDC INDUSTRIAL AREA, SATPUR, NASHIK 422007 . APPELLANT PAN: AACCD1726B VS. THE DY. COMMISSIONER OF INCOME TAX, CIRCLE-1, NASHIK . RESPONDENT APPELLANT BY : RAJENDRA C SINGHVI AND PRADEEP SAGAR RESPONDENT BY : B.C. MALAKAR DATE OF HEARING : 22-01-2015 DATE OF PRONOUNCEMENT : 13-02-2015 ORDER PER SUSHMA CHOWLA, JM: THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF C IT(A)-I, NASHIK, DATED 31.12.2013 RELATING TO ASSESSMENT YEAR 200 6-07 AGAINST LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE HON'BLE COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIRMING THE ORDER PASSED BY THE DEPUTY COMMISSIO NER OF INCOME TAX WHEREBY THE APPELLANT WAS LEVIED WITH A PENALTY U/ S. 271(1)(C) OF RS. 1611,132/- ON THE GROUND THAT BY CLAIMING DEDUCT ION FOR DEPRECIATION ALLOWANCE U/S. 32(1)(II) ON LEASEHOLD RIGHT S IN LAND OWNED BY MIDC AS BUSINESS OR COMMERCIAL RIGHTS, AND T HUS AN INTANGIBLE ASSET, THE APPELLANT FURNISHED INACCURATE P ARTICULARS OF INCOME U/S. 271(1)(C) R.W. EXPLANATION THERETO. ITA NO.285/PN/2014 DRILBITS INTERNATIONAL PVT. LTD 2 1.1 THE HON'BLE COMMISSIONER OF INCOME-TAX (APPEALS) FAILED TO APPRECIATE- A) THAT PENALTY U/S.271(1)(C) CAN BE LEVIED ONLY WHEN A N ASSESSEE IS FOUND HAVING- EITHER ...CONCEALED PARTICULARS OF INCOME; OR ....FURNISHED INACCURATE PARTICULARS OF INCOME; B) THAT THE COMMON THREAD IN BOTH THESE DEFAULTS IS PARTICULARS OF INCOME WHICH AN ASSESSEE IS REQUIRED TO FURNISH ONLY IN HIS/ITS RETURN OF INCOME AND NOT INCOME PER SE AS ONLY PARTICULARS OF INCOME CAN BE FURNISHED IN THE RETUR N AND NO INCOME IN PHYSICAL FORM CAN BE IMPORTED OR BROUGHT I N THE RETURN OF ONE'S INCOME; C) THAT BOTH THESE DEFAULTS COVERED BY SECTION 271(1)(C) ARE DISTINCT AND CANNOT CO-EXIST QUA THE SAME INCOME AS ONCE THE CHARGE IS THAT OF CONCEALMENT I.E. NON FURNISHING, TH ERE CANNOT BE A CHARGE FOR INACCURATE FURNISHING OF PARTICULAR S OF INCOME AND VICE A VERSA. D) THAT THE LEVY OF PENALTY U/S.271(1)(C) ON BOTH THE COU NTS CAN BE THE RESULT OF EITHER UNCERTAINTY AS TO THE C HARGE OR NON APPLICATION OF MIND TO THE ISSUE BEFORE LEVYING PENALTY . 1.2 THE HONBLE COMMISSIONER OF INCOME-TAX (APPEALS) ER RED IN UPHOLDING THE ORDER LEVYING PENALTY U/S.271(1)(C) ON TH E GROUND NOT ONLY OF FURNISHING INACCURATE PARTICULARS OF INCOME BUT ALSO ON THE GROUND OF CONCEALMENT OF INCOME WHEN THE ORDER PASS ED BY THE LD.AO WAS ONLY ON THE GROUND OF FURNISHING INACCURATE PARTICULARS OF INCOME. 1.3 THE HON'BLE COMMISSIONER OF INCOME-TAX (APPEALS) E RRED IN CONFIRMING THE ORDER PASSED BY THE DEPUTY COMMISSIO NER OF INCOME TAX LEVYING PENALTY WITHOUT ESTABLISHING PARTICULARS O F INCOME FURNISHED IN THE RETURN OF INCOME AND IN THE ACCOUN TS SUBMITTED AS INACCURATE AND WITHOUT CONSIDERING PLAUSIBLE EXPLANAT IONS OFFERED BY THE APPELLANT FOR ITS CLAIM FOR DEDUCTION OF DEPRE CIATION ALLOWANCE ON LEASEHOLD RIGHT AS BUSINESS AND COMMERCIAL RIGHTS AN D THUS AN INTANGIBLE ASSET U/S. 32(1)(II) OF THE ACT. 1.4 THE HON'BLE COMMISSIONER OF INCOME-TAX (APPEALS) ER RED IN CONFIRMING THE ORDER PASSED BY THE DEPUTY COMMISSIO NER OF INCOME- TAX LEVYING PENALTY U/S.271(1)(C) OF THE INCOME TAX ACT WHEN THE APPELLANT HAD DISCHARGED ITS PRIMARY BURDEN BY COGENT EXPLANATIONS- A) WHEREBY DIFFERENCE BETWEEN LAND - A NON DEPRECIATING ASSET AND LEASEHOLD I.E. RIGHT TO USE LAND WAS EXPLAINE D WITH REFERENCE TO THE PROVISIONS OF TRANSFER OF PROPERTY ACT,, INCOME TAX ACT AND THE CASE LAWS DECIDED BY THE SUPREME CO URT AND HIGH COURTS IN TAX PROCEEDINGS; AND ITA NO.285/PN/2014 DRILBITS INTERNATIONAL PVT. LTD 3 B) LEASEHOLD RIGHT WAS EXPLAINED AS FALLING WITHIN THE DEFINITION OF THE TERM AN INTANGIBLE ASSET AND THAT THE ID. AO WAS UNABLE TO REBUT THE SAME. 1.5 THE HON'BLE COMMISSIONER OF INCOME-TAX (APPEALS) ER RED IN CONFIRMING THE ORDER PASSED BY THE DEPUTY COMMISSIO NER OF INCOME TAX LEVYING PENALTY BY HOLDING THE CLAIM FOR DEDUCTION OF DEPRECIATION ALLOWANCE U/S. 32(1)(II) ON LEASEHOLD RIGHT IN LAND AS WRONG CLAIM MADE WITH MALAFIDE INTENTION TO EVADE TAX DISREGARDING THE SUBMISSIONS OF THE APPELLANT THAT THE APPELLANT W AS ONLY GRANTED RIGHT TO USE LAND THAT WAS OWNED BY MIDC AN D THAT SUCH A RIGHT TO USE THE SAND WAS A BUSINESS OR COMMERCIAL RI GHTS AND ACCORDINGLY AN INTANGIBLE ASSET BEING A RIGHT IN REM AND TRANSFERABLE RIGHT. 1.6 THE HON'BLE COMMISSIONER OF INCOME-TAX (APPEALS) ER RED IN CONFIRMING LEVY OF PENALTY FOR BOTH THE ALLEGED DEFAUL TS COVERED BY SEC 271(1)(C) OF THE INCOME-TAX ACT BY INVOKING DEEMI NG PROVISIONS OF EXPLANATION 1 TO SEC.271(1)(C) IN RESPECT ALLEGED FURNI SHING INACCURATE PARTICULARS OF INCOME AS EXPLANATION COU LD HAVE BEEN INVOKED ONLY WHEN THE CHARGE WAS THAT OF CONCEALMEN T OF PARTICULARS OF INCOME AND NOT THAT OF FURNISHING IN ACCURATE PARTICULARS OF INCOME. 3. THE ISSUE IN THE PRESENT APPEAL IS AGAINST THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 4. THE BRIEF FACTS OF THE CASE ARE THAT, THE ASSESSEE WA S ENGAGED IN THE BUSINESS OF MANUFACTURING OF DRILLING EQUIPMENTS FOR OIL FIELDS , BLAST HOLE DRILLING AND WATER WELL DRILLING APPLICATIONS. THE ASSESSING OFFICER AFTER RECEIPT OF ORDER OF TRANSFER PRICING OFFICER UNDER SECT ION 92CA(3) OF THE ACT, DATED 20.10.2009 PROPOSED THE ASSESSMENT PRO CEEDINGS BY PROPOSING ADDITIONS ON ACCOUNT OF FOLLOWING:- (A) DEPRECIATION CLAIMED BY THE COMPANY ON LEASE HOLD LAND RS.47,87,204/- (B) DEPRECIATION CLAIMED ON TECHNICAL KNOW-HOW FEES DISALLOWED RS.1,27,00,000/- (C) ADJUSTMENT TO INTERNATIONAL TRANSACTION DETERMINED BY TPO U/S 92CA(4) OF THE ACT RS.58,54,128/- ITA NO.285/PN/2014 DRILBITS INTERNATIONAL PVT. LTD 4 5. THE DRAFT ASSESSMENT ORDER WAS PROVIDED TO THE ASS ESSEE WHO FILED THE OBJECTIONS BEFORE THE DISPUTE RESOLUTION PANEL UNDER SECTION 144C(2) OF THE ACT, WHICH ISSUED THE DIRECTIONS UNDER SECTION 144C (5) OF THE ACT. THEREAFTER, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT R.W.S. 144C ON 29.09.2010. PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT WERE INITIATED. THE ASSES SEE CARRIED THE MATTER TO THE TRIBUNAL, WHICH IN TURN, HAD DELETED TH E ADDITION ON ACCOUNT OF DEPRECIATION CLAIMED ON TECHNICAL KNOW-HOW FEES AND ALSO DELETED THE ADJUSTMENT TO THE INTERNATIONAL TRANSACTION DETERMINED BY THE TPO. THE ONLY ADDITION UPHELD BY THE TRIBUNAL WAS T HE CLAIM OF DEPRECIATION ON LEASEHOLD LAND AT RS.47,87,204/-. PURSUAN T TO THE ORDER OF TRIBUNAL, NOTICE UNDER SECTION 274 R.W.S. 271(1)(C) OF THE A CT WAS ISSUED TO THE ASSESSEE. THE CLAIM OF THE ASSESSEE WAS T HAT THE ASSESSEE WAS HAVING LEASEHOLD RIGHTS IN THE LAND AND HAD CLAIMED DE PRECIATION ON THE SAID LEASEHOLD LAND UNDER SECTION 32(1)(II) OF THE ACT. IN CASES THE DEPRECIATION WAS NOT ALLOWABLE ON SUCH LEASEHOLD RIGHTS, THE N AMORTIZATION OF COST OVER THE LEASE PERIOD SHOULD BE ALLOWED. IN ANY CA SE, THE CLAIM OF DEDUCTION EVEN IF IT WAS WRONG, COULD NOT BE TR EATED AS CONCEALMENT OF INCOME. THE ASSESSING OFFICER WAS OF THE VI EW THAT THE CASE OF THE ASSESSEE FITS INTO DEFAULT CREATED UNDER SEC TION 271(1)(C) READ WITH EXPLANATION -1. THE ALTERNATE PLEA MADE BY THE ASSE SSEE OF REASONABLE CAUSE FOR DEFAULT WAS ALSO REJECTED BY THE AS SESSING OFFICER AND THE ASSESSEE WAS HELD TO HAVE FURNISHED IN-ACCURATE PARTICULARS OF INCOME WITHIN MEANING OF SECTION 271(1)(C) READ WITH EXPLANAT ION 1 OF THE ACT AND PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS LEVIED AT RS.16,11,372/-. ITA NO.285/PN/2014 DRILBITS INTERNATIONAL PVT. LTD 5 6. THE CIT(A) UPHELD THE LEVY OF PENALTY UNDER SECTION 27 1(1)(C) OF THE ACT AND REJECTING THE PLEA OF THE ASSESSEE THAT THE PR OVISIONS OF SECTION 32(1)(II) OF THE ACT WERE APPLICABLE AS THE LEASEHOLD RIGHTS ON LAND WERE INCLUDED UNDER THE SAID SUB-CLAUSE. 7. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 8. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESS EE PRESSED THAT AFTER INCORPORATION ON 04.03.2005, THE ASSESSEE HAD ACQUIRED A RUNNING UNIT, WHICH ALSO INCLUDED LEASEHOLD RIGHTS IN LAND. THE ASSESSEE CLAIMED DEPRECIATION ON THE SAID LEASEHOLD RIGHTS ALONG WITH THE DEPRECIATION ON TECHNICAL KNOW-HOW FEES. THE LEARNED AUT HORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE D EPRECIATION WAS BOOKED AS PER COMPANIES ACT. HOWEVER, IN THE INCOME TAX RETURNS, THE DEPRECIATION ON LAND WAS CLAIMED AS IT WAS RIGHT IN LEASEHOLD LAND SINCE THE ASSESSEE HAD ACQUIRED LAND AND INTANGIBLE ASSETS. TH E ACQUISITION OF BUSINESS OR COMMERCIAL RIGHTS COULD NOT BE RESTRICTED ONL Y TO THE INTANGIBLE ASSETS. ANOTHER CONTENTION RAISED BY THE LEARN ED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE WAS THAT THE ASSESSEE HAD FULLY DISCLOSED ALL THE MATERIAL FACTS AND THE CLAIM NOT BEING ACCEPTABLE, DO ES NOT MAKE THE ASSESSEE LIABLE TO LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 9. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVE NUE PLACED RELIANCE ON THE ORDER OF CIT(A) AND POINTED OUT THAT THE ASSESSEE IN THE RETURN OF INCOME HAD CLAIMED DEPRECIATION UNDER DIFFERENT HE ADS AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A DIFFERENT CLAIM WAS MADE BY THE ASSESSEE. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED TH E RECORD. THE ISSUE ARISING IN THE PRESENT APPEAL IS IN RELATION TO LEVY OF PENALTY UNDER ITA NO.285/PN/2014 DRILBITS INTERNATIONAL PVT. LTD 6 SECTION 271(1)(C) OF THE ACT ON DENIAL OF CLAIM OF DEPRECIATION O N LEASEHOLD RIGHTS IN LAND ACQUIRED BY THE ASSESSEE AS PART OF THE ACQUISITION OF A RUNNING UNIT DURING THE YEAR. PENALTY UNDER SECTION 271(1 )(C) OF THE ACT IS LEVIABLE WHERE THE ASSESSEE CONCEALS ITS INCOME OR FUR NISHES IN- ACCURATE PARTICULARS OF INCOME. THE EXPLANATION 1 TO SE CTION 271(1)(C) OF THE ACT FURTHER PROVIDES THAT WHERE IN RESPECT OF THE FACTS MATERIAL TO THE COMPUTATION TO TOTAL INCOME OF ANY PERSON UNDER TH E ACT, SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION WHICH IS FOUND TO BE FALSE OR SUCH PERSON OFFERS AN EXPLANATION WHIC H HE HAS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANA TION IS BONAFIDE, THEN THE AMOUNT ADDED OR DISALLOWED IN COMPUTING TOTAL INC OME OF SUCH PERSON AS RESULT THEREOF, SHALL FOR THE PURPOSES OF CLAUSE (C) TO SECTION 271(1) OF THE ACT BE DEEMED TO REPRESENT THE INCOME IN R ESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. MEANING OTHERWISE, IN CA SES GOVERNED BY EXPLANATION 1, WHERE THE EXPLANATION OFFERED BY THE PERSON IS FOUND TO BE FALSE, NOT BONAFIDE OR WHERE THE EXPLANATION HAS NOT BEEN SUBSTANTIATED WITH AND IN CASES WHERE THE PERSON FAILS TO OFFER ANY EXPLANATION, ARE THE CASES WHERE THE PERSON IS HELD TO H AVE CONCEALED PARTICULARS OF HIS INCOME AND IS LIABLE TO LEVY OF PENALTY UND ER SECTION 271(1)(C) OF THE ACT. 11. NOW, COMING TO THE FACTS OF THE PRESENT CASE, THE AS SESSEE HAD ACQUIRED A RUNNING UNIT OF GREAVES COTTON LIMITED, SITUATED AT NASHIK, WHICH IN TURN, WAS ENGAGED IN THE MANUFACTURING OF DRILLING EQ UIPMENT FOR OIL FIELDS, BLAST HOLE DRILLING (MINING) AND WATERWAY DRILLING APPLICATION. AS PER THE AGREEMENT, ALL THE MOVABLE AND IMMO VABLE PROPERTIES OF THE SAID UNIT WERE ACQUIRED BY THE ASSESS EE. THE UNIT WAS SITUATED ON A LEASEHOLD LAND, WHICH WAS TAKEN FROM MAHARAS HTRA ITA NO.285/PN/2014 DRILBITS INTERNATIONAL PVT. LTD 7 INDUSTRIAL DEVELOPMENT CORPORATION. AT THE TIME OF ENTER ING INTO THE AGREEMENT, THE ASSESSEE HAD VALUED THE LEASEHOLD RIGHTS IN THE SAID LAND AT RS.4,18,17,600/-. THE ASSESSEE CLAIMED DEPRECIATION ON SUCH LEASEHOLD LAND. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE P LEA OF THE ASSESSEE WAS THAT THE LEASEHOLD RIGHTS WERE INTANGIB LE ASSETS ON WHICH DEPRECIATION WAS ALLOWABLE UNDER SECTION 32(1)(II) OF THE ACT. THE CLAIM OF THE ASSESSEE WAS NOT ACCEPTED BY THE ASSESSING OFFICER AND THE DEPRECIATION WAS DISALLOWED. THE TRIBUNAL VIDE ORDER DATED 23.08.2011 CONFIRMED THE ORDER OF ASSESSING OFFICER AND DISMISSED THE C ONTENTION OF ASSESSEE. PURSUANT TO WHICH, PENALTY UNDER SECTION 271(1 )(C) OF THE ACT WAS LEVIED AT RS.16,11,372/- HOLDING THAT THE ASSESSEE H AD FURNISHED IN- ACCURATE PARTICULARS IN RESPECT OF THE INCOME AND DID NO T DISCLOSE THE CORRECT INCOME IN THE RETURN OF INCOME. THE SAID ORDER OF THE ASSESSING OFFICER WAS UPHELD BY THE CIT(A). 12. THE CLAIM OF THE ASSESSEE BEFORE US WAS THAT IT HAD CLAIMED THE DEPRECIATION ON THE SAID LEASEHOLD RIGHTS ON LAND, AS THE S AME WERE INTANGIBLE ASSETS AND ELIGIBLE FOR DEDUCTION UNDER SECTION 3 2(1)(II) OF THE ACT. THE SAID SECTION PROVIDES THAT DEPRECIATION ON INTAN GIBLE ASSETS I.E. KNOW-HOW, PATENTS, COPY RIGHTS, TRADE MARKS, LICENSES, FRA NCHISE OR ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE B EING INTANGIBLE ASSETS ACQUIRED ON OR AFTER 01.04.1998. THE FIRST ASPECT TO BE NOTED IN THE PRESENT CASE IS THE CLAIM MADE BY THE ASSE SSEE IN THE RETURN OF INCOME. THE PERUSAL OF THE COMPUTATION OF INCOME PLACED AT PAGES 8 AND 9 OF THE PAPER BOOK REFLECTS THE CLAIM OF DEPRECIATION UNDER THE INCOME TAX ACT AT RS.2,57,96,236/-. THE DETAILS OF THE SA ID DEPRECIATION CHART AS PER THE INCOME TAX ACT ARE AVAILABLE AT PAGE 10 OF THE PAPER BOOK, IN WHICH DEPRECIATION @ 10% HAS BEEN CLAIMED AT BUILD ING, WHERE ITA NO.285/PN/2014 DRILBITS INTERNATIONAL PVT. LTD 8 THE TOTAL VALUE OF THE BUILDING IS RS.6,97,77,990/-. THE LEAR NED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FAIRLY POINTED OUT THAT THE SAID VALUE OF THE BUILDING INCLUDES THE VALUE OF LAND I.E. RS.4, 18,17,600/- WHICH IS THE LAND IN DISPUTE. THE PERUSAL OF THE SAID DEPRE CIATION CHART FURTHER REFLECTS THAT THE ASSESSEE HAD CLAIMED DEPRECIATIO N ON VARIOUS BLOCKS OF ASSETS I.E. (1) BUILDING, (2) FURNITURE AND FITTINGS, (3) MAC HINERY & PLANT AND (4) INTANGIBLE ASSETS @ 25%. AS PER THE SCHE DULE D ATTACHED TO THE BALANCE SHEET ALSO, THE LEASEHOLD LAND AND THE FACTORY B UILDING AND THE OFFICE BUILDINGS WERE SHOWN SEPARATELY ON WHICH DEPREC IATION WAS CLAIMED AS PER THE COMPANIES ACT. THE SAID DEPRECIATION C HART IS PLACED AT PAGE 4 OF THE PAPER BOOK. THE ASSESSEE CLAIMS THAT IT HAD REVISED ITS CLAIM OF DEPRECIATION DURING THE COURSE OF ASSESSMENT PRO CEEDINGS ALLEGING THAT IT WAS ENTITLED TO THE DEPRECIATION @ 25% ON THE VALUE OF LEASEHOLD LAND AS DEPRECIATION WAS ALLOWABLE UNDER SECTION 32(1)(II) OF THE ACT. THE TRIBUNAL WHILE DECIDING QUANTUM APPEAL, VIDE ORDE R DATED 23.08.2011 HAD HELD THAT THE DEPRECIATION EVEN IN THE AME NDED SECTION 32(1)(II) OF THE ACT WAS ALLOWABLE ON THE RESTRICTED CATEGORIES OF TANGIBLE ASSETS OR INTANGIBLE ASSETS, WHICH ARE IN SPECIFICALLY ENUMER ATED IN THE SECTION. 13. THE TRIBUNAL FURTHER HELD THAT THE PROVISIONS OF THE ACT CANNOT BE INTERPRETED TO MEAN THAT LEASEHOLD RIGHTS GRANTING SUCH TYPE OF OWNERSHIP OVER LAND, ETC. WOULD ALSO QUALIFY AS INTANGIBLE ASS ETS FOR THE PURPOSE OF DEPRECIATION UNDER THE ACT. ACCORDING TO THE TRIBUNAL, THIS WOULD LEAD TO A CONFLICTING SITUATION WHERE LAND ACQUIRED ON FREEHOLD BASIS WOULD NOT BE ELIGIBLE FOR DEPRECIATION BUT SIMILAR LAND AC QUIRED ON LEASEHOLD BASIS WOULD BE ELIGIBLE FOR DEPRECIATION THAT TOO AT A HIGHER RATE. IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE, TH E TRIBUNAL ITA NO.285/PN/2014 DRILBITS INTERNATIONAL PVT. LTD 9 CONFIRMED THE ACTION OF THE AO IN DISALLOWING THE CLAIM OF DEP RECIATION ON LEASEHOLD RIGHTS OVER THE LAND TREATING THE SAME AS INTAN GIBLE ASSET U/S 32(1)(II) OF THE ACT. 14. IN VIEW THEREOF, WHERE THE TRIBUNAL HAS COME TO A FIN DING THAT THE ASSESSEE IS NOT ENTITLED TO THE DEPRECIATION EVEN UNDER SECTION 32(1)(II) OF THE ACT IN RESPECT OF LEASEHOLD RIGHTS OF LAND, THE CONTENT ION OF THE ASSESSEE THAT IT WAS NOT CLAIMING DEPRECIATION ON LAND PER SE BUT WAS CLAIMING DEPRECIATION ON LEASEHOLD RIGHTS IN LAND WHICH WERE B USINESS OR COMMERCIAL RIGHTS AND THEREFORE, INTANGIBLE ASSETS UNDER S ECTION 32(1)(II) OF THE ACT, DOES NOT STAND THE TEST OF TIME. WHERE THE EXPLANATION TENDERED BY THE ASSESSEE IN RESPECT OF ITS CLAIM ON DEP RECIATION ON THE LEASEHOLD RIGHTS OF LAND WAS FOUND TO BE UNTENABLE, EXPLANAT ION 1 TO SECTION 271(1)(C) OF THE ACT IS CLEARLY ATTRACTED AND THE ASSESSEE IS EXIGIBLE TO LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. EVEN OTHERWISE, THE PERUSAL OF THE RECORD REFLECTS THAT THE AS SESSEE IN THE RETURN OF INCOME HAD CLAIMED THE DEPRECIATION ON LAND PERS E AND NOT ON INTANGIBLE ASSETS. THE SAID CLAIM WAS AGAINST THE PROVISIONS OF THE ACT AND WAS THUS NOT BONAFIDE CLAIM MADE BY THE ASSESSEE. O N THIS ACCOUNT ALSO, THE ASSESSEE IS LIABLE TO LEVY OF PENALTY UNDER SECTION 271(1)(C) OF TH E ACT. 15. ANOTHER CONTENTION RAISED BY THE ASSESSEE WAS THAT MERE LY BECAUSE THE CLAIM BY IT HAD BEEN HELD TO BE NOT CORRECT, WOULD NO T AMOUNT TO FURNISHING OF IN-ACCURATE PARTICULARS OF INCOME. RELIANCE IN TH IS REGARD WAS PLACED ON THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN PRICE WATERHOUSE COOPERS VS. CIT & ANOTHER (2012) 348 ITR 30 6 (SC). THE SAID PLEA OF THE ASSESSEE DOES NOT STAND BECAUSE IT IS U NDISPUTED THAT THE CLAIM MADE BY THE ASSESSEE, WAS NOT BONAFIDE. THE CLA IM OF THE ITA NO.285/PN/2014 DRILBITS INTERNATIONAL PVT. LTD 10 ASSESSEE IN ANY CASE, WAS NOT SUSTAINABLE IN LAW AND IN VIE W OF THE ABOVE, WHERE THE EXPLANATION OF THE ASSESSEE IS NOT FOUND TO BE BONAFIDE, THE ASSESSEE IS LIABLE TO LEVY OF PENALTY UNDER SECTION 271 (1)(C) OF THE ACT. ACCORDINGLY, WE UPHOLD THE ORDER OF CIT(A) IN CONFIRMING THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 16. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON THIS 13 TH DAY OF FEBRUARY, 2015. SD/- SD/- (G.S. PANNU) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 13 TH FEBRUARY, 2015. GCVSR COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-I, NASHIK; 4) THE CIT-I, NASHIK; 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE
