` IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H, MUMBAI . . , !' # $## #% , & !' ' BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER ITA NO. : 3023/MUM/2006 (ASSESSMENT YEAR: 2000-01) INDUSIND BANK LTD, 8 TH FLOOR, TOWER ONE, ONE INDIABULLS CENTRE, 841, SENAPATI BAPAT MARG, ELPHISTON RD.(WEST), MUMBAI -400 013 PAN: AAACI 1314 G VS DY. COMMISSIONER OF INCOME TAX CIRCLE -2(3), ROOM NO. 555, AAYAKAR BHAVAN, MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI H P MAHAJANI SHRI D S MAINKAR RESPONDENT BY : MS SONIA KUMAR /DATE OF HEARING : 22-01-2014 / DATE OF PRONOUNCEMENT : 29-01-2014 ! ( O R D E R $## #% , : PER VIVEK VARMA, JM: THE APPEAL ARISES FROM THE ORDER OF CIT(A) -23, MUMBAI, DATE D 08.03.2006, WHEREIN, THE ASSESSEE HAS TAKEN THE FOLLOWING GROUND: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING PENALTY INVOKED U/S 271(1)(C) OF RS. 2,27,90,773/- ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION ON LEASED ASSETS. THE LEARNED CIT(A) FAILED TO APPRECIATE THE FACT THAT THE APPELLANT HAS NEITHER CONCEALED INCOME NOR FURNISHED INACCURATE PARTICULARS OF INCOME. 2. THE SOLITARY ISSUE PERTAINS TO LEVY OF PENALTY O F RS. 2,27,90,773/- U/S 271(1)(C) AND SUSTAINED BY THE CIT(A). 3. THE BASIC AND BRIEF FACTS ARE THAT THE ASSESSEE IS A BANK, WHOSE ONE OF THE BUSINESSES IS LEASING OF ASSETS. THE ASSESSEE H AD BEEN CLAIMING DEPRECIATION ON THE ASSETS LEASED BY IT FOR A NUMBE R OF YEARS. THE DEPARTMENT INDUSIND BANK LTD ITA 3023/MUM/2006 2 CONSISTENTLY WAS OF THE VIEW THAT THE DEPRECIATION WAS NOT ALLOWABLE. AS MENTIONED IN THE ASSESSMENT ORDER, THE CLAIM OF DEPRECIATION ON ASSETS LEASED UPTO AY 1999-2000 HAS BEEN DISALLOWED BY MAK ING DETAILED DISCUSSION IN ASSESSMENT ORDER PASSED UPTO 1999-2000. THEREFOR E, THE CLAIM OF DEPRECIATION ON THESE ASSETS WHICH HAVE BEEN LEASED PRIOR TO THE PRESENT ASSESSMENT YEAR IS DISALLOWED, RELYING ON THE DISCU SSION HELD IN EARLIER ASSESSMENTS . 4. ON THIS BASIS, THE AO ADDED BACK THE AMOUNT OF R S. 2,27,90,773/-, WHICH WAS SUSTAINED BY THE CIT(A) AND, BEFORE THE I TAT, THE ISSUE WAS NOT PRESSED IN QUANTUM PROCEEDINGS. 5. IN THE INSTANT PROCEEDINGS THE AR PLACED BEFORE US THE HISTORY OF THE CASE, AS TO HOW THE ISSUE HAS BEEN DEALT WITH BY TH E VARIOUS AUTHORITIES AND ITAT FROM ASSESSMENT YEAR 1995-96 TO ASSESSMENT YEA R 2004-05 AY DEPRE- CIATION CAPITAL RECOVERY NET DIS- ALLOWANCE STATUS OF QUANTUM PROCEEDINGS PENALTY LEVIED STATUS OF PENALTY ORDER REMARKS YES /NO AMT. 95-96 77781841 77781841 KVSS ACCEPTED NO. NA NA IMMUNITY FROM PENALTY UNDER KVSS 96-97 245321045 245321045 SETTLEMENT COMMISSION NO. NA NA IMMUNITY FROM PENALTY AS PER SC ORDER 97-98 317831622 106939605 210892017 SETTLEMENT COMMISSION NO. NA NA IMMUNITY FROM PENALTY AS PER SC ORDER 98-99 176947475 112739716 64207759 SPECIAL BENCH ORDER YES 97274434 PENDING BEFORE ITAT 99-00 130097756 115657123 14440633 SPECIAL BENCH ORDER YES 97274434 CIT(A) DELETED PENALTY PENALTY LEVIED ON TRANSACTION WITH INDO GULF (NEW TRANSACTION WHICH WAS BEFORE SPECIAL BENCH). NO PENALTY ON OTHER TRANSACTION ENTERED INTO IN EARLIER YEARS 00-01 22790773 125505287 -102714514 ITAT ORDER- GROUND NOT PRESSED YES 22790773 PENDING BEFORE ITAT 01-02 12000948 144061315 -132060367 ITAT ORDER- YES 12000948 ITAT DELETED PENALTY NO PENALTY LEVIED IN RESPECT OF TRANSACTIONS OF THE EARLIER YEAR. ITAT HELD IT TO BE A LEGAL CLAIM 02-03 8945433 65632687 -56687254 GROUND NOT PRESSED YES 8945433 PENDING BEFORE ITAT 03-04 7587741 29387245 -21799504 ITAT ORDER- NO NA NA NO PENALTY LEVIED BY AO 04-05 5670905 51649243 -45978338 GROUND NOT PRESSED NO NA NA NO PENALTY LEVIED BY AO 6. THE AR FURTHER CLARIFIED THAT THE REVENUE HAD IM POSED PENALTY IN THE SUBSEQUENT YEAR AS WELL, ON THE CLAIM OF DEPRECIATI ON, PERTAINING TO ASSETS LEASED IN PRECEDING YEARS. IT WAS POINTED OUT THAT, IN THE SUBSEQUENT YEAR, INDUSIND BANK LTD ITA 3023/MUM/2006 3 THE PENALTY HAS BEEN DELETED BY THE ITAT, THOUGH, I T WAS PRIMARILY DONE, TAKING THE VIEW THAT THE ISSUE WAS DEBATABLE. AS PER THE UNDISPUTED HISTORY UPTO ASSESSMENT YEAR 1999-2000, THE ISSUE HAS SEEN THE QUIETUS. IN ANY CASE, THE ISSUE/FACTS INVOLVED IN THE CURRENT YEAR AS WELL AS IN THE ASSESSMENT YEAR 2001-02, ARE IDENTICAL AND SINCE TH E ISSUE IS DEBATABLE, PENALTY SHOULD BE DELETED. THE AR FURTHER POINTED O UT THAT ASSESSEES OWN CASE ON THE SAME ISSUE HAS BEEN ADMITTED BY THE HON BLE BOMBAY HIGH COURT IN ITA NO. 760/2012, ORDER DATED 05.03.2013, WHEREIN THE FOLLOWING QUESTION HAD BEEN RAISED, THE ORDER OF THE HONBLE BOMBAY HIGH COURT, IS AS UNDER, P.C:- HEARD. 2 ADMIT ON THE FOLLOWING SUBSTANTIAL QUESTIONS OF L AW:- (I) WHETHER ON THE FACTS AND IN CIRCUMSTANCES OF TH E CASE AND IN LAW, THE TRIBUNALS CONCLUSION THAT THE LEASE AGREEMENT DATE D 04.09.1997 IS A FINANCE LEASE CAN BE UPHELD BOTH IN FACT AND IN LAW ? (II) WHETHER ON THE FACT AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE TRIBUNALS FINDING THAT THE APPELLANT WAS NOT E NTITLED TO DEPRECIATION UNDER SECTION 32 OF THE ACT IS SUSTAINABLE? (III) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE TRIBUNAL IS RIGHT IN HOLDING THAT IN A FIN ANCE LEASE THE LESSEE IS THE OWNER OF THE LEASED ASSET AND NOT THE LESSOR AN D HENCE ONLY THE LESSEE IS ENTITLED TO DEPRECIATION UNDER SECTION 32 OF THE ACT? 7. THE AR, BESIDES BRINGING INTO OUR NOTICE, THE AS SESSEES OWN CASE HAVING BEEN ADMITTED IN APPEAL U/S 260A BY THE HON BLE BOMBAY HIGH COURT, CITED A NUMBER OF DECISIONS, WHICH ARE PERTA INING TO THE ISSUE IN QUESTION AND CANCELLATION OF PENALTY. THE AR, THERE FORE, PLEADED THAT THE PENALTY SHOULD BE DELETED. 8. THE DR PLACED RELIANCE ON THE ORDERS OF THE REVE NUE AUTHORITIES. 9. WE HAVE HEARD THE ARGUMENTS AND HAVE ALSO PERUSE D THE VARIOUS STATEMENTS AND ORDERS OF THE COORDINATE BENCH OF TH E ITAT IN ASSESSEES OWN CASE AND ALSO THE ORDER OF HONBLE BOMBAY HIGH COUR T, ADMITTING THE APPEAL U/S 260A ON THE ISSUE, I.E. WHETHER DEPRECIATION IS COMPUTABLE AND ALLOWABLE ON LEASED ASSETS. THIS ISSUE HAD BEEN THE BONE OF C ONTENTION, WHICH APPARENTLY HAS TWIN SIDES. THE ISSUE UNDOUBTEDLY, I S DEBATABLE AND SINCE, THE ISSUE BEING SEIZED WITH THE HONBLE BOMBAY HIGH COURT, THE DECISION OF THE COORDINATE BENCH GATHERS MUCH RELEVANCE WHERE I T WAS HELD IN ITA NO. 4040/MUM/2007 (COPY ATTACHED) AT PAGE 5 PARA 11, INDUSIND BANK LTD ITA 3023/MUM/2006 4 IN SO FAR AS DEPRECIATION CLAIM IS CONCERNED, WE FIND THAT IT IS A LEGAL CLAIM MADE BY THE ASSESSEE AND EVEN THE SAME CLAIM WAS MA DE IN THE EARLIER YEARS. THE CIT(A) GAVE A FINDING THAT THE ASSESSEE NEITHER CONCEALED ITS INCOME NOR FURNISHED INACCURATE PARTICULARS OF INCOME AND THE CLAIM IS CONTINUOUS ONE, 10. AS MENTIONED EARLIER, THE ISSUE HAS BEEN DEALT WITH IN THE CASES CITED BEFORE US, ONE OF THE CASE, WHERE BOTH OF US WERE P ARTY, I.E. IN THE CASE OF DCB LTD VS DCIT, ITA NO. 3006/MUM/2001 AND CONNECTE D APPEALS HAD HELD THAT, AFTER HAVING EXAMINED ALL THE TRANSACTIONS WHICH HAVE BEEN IMPUGNED BEFORE US, WE ARE OF THE OPINION THAT THE ASSESSEE IS ENTITLED FOR THE CLAIM OF DEPRECIATION.. . AND ALSO PLACED RELIANCE ON THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF ICDS LTD. VS CIT, REPORTED IN 350 ITR 527 ( SC). 11. AS HELD BY THE COORDINATE BENCH IN ASSESSMENT Y EAR 2001-02, THIS IS NEITHER THE CASE OF INACCURATE PARTICULARS OF INCOM E OR CONCEALMENT OF INCOME. WE ARE OF THE OPINION, THAT PENALTY IN THES E CIRCUMSTANCES IS NOT EXIGIBLE. WE THEREFORE REVERSE THE ORDER OF THE CIT (A) AND DIRECT THE AO TO CANCEL THE PENALTY. 12. TAKING INTO CONSIDERATION THE ENTIRE SCENARIO, WE ARE OF THE CONSIDERED OPINION THAT THE BASIC ISSUE IS IN FAVOUR OF THE AS SESSEE AND CONSIDERING THAT PENALTY IS NOT EXIGIBLE. 13. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JANUARY, 2014. SD/- SD/- ( . . ) ( $## #% ) !' !' (P.M. JAGTAP) (VIVEK VARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 29 TH JANUARY, 2014 / COPY TO:- INDUSIND BANK LTD ITA 3023/MUM/2006 5 1) / THE APPELLANT. 2) / THE RESPONDENT. 3) THE CIT (A)-XXXIII, MUMBAI 4) THE CIT, CITY -II, MUMBAI, 5) ! '# $% , & '# , '() / THE D.R. H BENCH, MUMBAI. 6) !*+ , COPY TO GUARD FILE. &-./ / BY ORDER / / TRUE COPY / / 0 / 1 (2 & '# , '() DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI *%41 . . * CHAVAN, SR. PS