ITO (E), New Delhi V. S.D. College Society (Lahore), New Delhi

ITA 4148/DEL/2013

• Counselvise Citation: 414820114 RSA 2013
• Duration Of Justice: 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2006-2007
• Appeal Filed On: 05-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RENUKA JAIN GUPTA
• Keywords: Capital asset; Depreciation; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : G: NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI I. C. SUDHIR, JUDICIAL MEMBER ITA NO. 4148/DEL/2013 ASSESSMENT YEAR: 2006- 2007 ITO (E) VS. S. D. COLLEGE SOCIETY (LAHORE) TRUST WARD-1, 2411, 24 TH FLOOR BHUPINDER BHAWAN E-2, PRATYAKASH KAR BHAWAN, PAHAR GANJ CIVIC CENTRE NEW DELHI 110 005. (PAN AADTS5793H) (APPELLANT) (RESP ONDENT) APPELLANT BY : SMT RENUKA JAI N GUPTA, SR. DR RESPONDENT BY : NONE ORDER PER I.C. SUDHIR, JUDICIAL MEMBER THE REVENUE HAS QUESTIONED FIRST APPELLAT E ORDER WHEREBY THE LD. CIT(A) HAS DELETED THE PENALTY U/S 271(1)(C) LEVIED BY THE AO. 2. IN SUPPORT OF THE GROUND THE LD. DR SUBMIT TED THAT THE ASESSEE HAD FURNISHED INACCURATE PARTICULARS OF ITS INCOME BY C LAIMING DEPRECIATION IN RESPECT OF CAPITAL ASSET THE COST OF WHICH WAS ALRE ADY ALLOWED BY WAY OF APPLICATION OF INCOME. SHE SUBMITTED THAT THE CLAIM OF DEPRECIATION IN RESPECT OF CAPITAL ASSET WAS NOT ALLOWED SINCE THE ASSESSEE IS NOT ELIGIBLE FOR THE SAME AS THE COST OF THOSE ASSETS WERE ALREADY A LLOWED BY WAY OF APPLICATION OF INCOME ON ACCOUNT OF INCURRING THE C APITAL EXPENDITURE TOWARDS AND IN FURTHERANCE OF THE OBJECT OF THE INS TITUTION AND THE SAME ITA NO. 4148/DEL/2013 2 AMOUNTS TO A DOUBLE DEDUCTION. WITHOUT APPRECIATING THIS MATERIAL FACT THE LD. CIT(A) HAS COME TO THE CONCLUSION THAT PENAL PR OVISIONS ARE NOT ATTRACTED SINCE ASSESSEE HAD DISCLOSED ALL THE NECE SSARY FACTS RELATING TO THE CLAIMED DEPRECIATION AS IT WAS ALSO A DEBATABLE ISS UE. 3. HAVING GONE THROUGH THE ORDERS OF THE AU THORITY BELOW, WE FIND THAT PENALTY U/S 271(1) OF THE ACT ON ACCOUNT OF F URNISHING INACCURATE PARTICULARS OF ITS INCOME HAD BEEN LEVIED ON THE DI SALLOWANCE OF THE CLAIMED DEPRECIATION IN RESPECT OF CAPITAL ASSETS, WHICH WA S DISALLOWED ON THE BASIS THAT THE COST OF THE ASSET WAS ALSO ALLOWED BY WAY OF APPLICATION OF INCOME ON ACCOUNT OF INCURRING THE CAPITAL EXPENDITURE TOW ARDS AND IN FURTHERANCE OF THE OBJECTS OF THE INSTITUTION, AS THE SAME AMOU NTS TO A DOUBLE DEDUCTION. IN SUPPORT OF ITS CONTENTION THAT THE AS SESSEE HAD NOT FURNISHED INACCURATE PARTICULARS OF ITS INCOME, IT WAS SUBMIT TED THAT THE ASSESSEE HAD DISCLOSED ALL THE NECESSARY AND MATERIAL FACTS RELA TING TO THE CLAIMED DEPRECIATION ALLOWED BY THE AO IN THE EARLIER ASSES SMENT AND IN THE ASSESSMENT FOR THE ASSESSMENT YEAR 2007-08. IT WAS SUBMITTED FURTHER THAT DURING THE ASSESSMENT YEAR 2008-09 THE AO HAD DISAL LOWED THE DEPRECIATION WHICH WAS ALLOWED IN THE APPEAL. SEVERAL DECISIONS INCLUDING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIAN CE PETROPRODUCTS PVT. LTD. (2010) 322 ITR 158 (SC) WERE CITED. CONSIDERIN G THESE THE LD. CIT(A) HAS DELETED THE PENALTY WITH THIS FINDING THAT THE ISSUE OF ELIGIBILITY OF CLAIMED DEPRECIATION IN RESPECT OF CAPITAL ASSET WA S SETTLED BY THE HONBLE ITA NO. 4148/DEL/2013 3 DELHI HIGH COURT IN THE CASE OF VISHWA JAGRITI MISS ION (FULL CITATION NOT GIVEN) WITH THIS FINDING THAT EVEN UNDER NORMAL COM MERCIAL ACCOUNTING PRINCIPLES, THERE IS AUTHORITY FOR THE PROPOSITION THAT DEPRECIATION IS A NECESSARY CHARGE IN COMPUTING THE NET INCOME. THERE IS NO DISPUTE ON THE RATIO THAT MERELY ON DISALLOWING THE CLAIMED EXPEND ITURE THE PENALTY CANNOT BE LEVIED AGAINST THE ASSESSEE. IN THE PRESENT CASE WE FIND THERE WAS REASON FOR THE ASSESSEE TO NURTURE A BONAFIDE BELIE F THAT IT IS ELIGIBLE FOR CLAIMING THE DEDUCTION AS IN THE PREVIOUS YEAR ASSE SSMENT YEAR AND SUBSEQUENT ASSESSMENT YEARS 2007-08 AND 2008-09 THE SIMILAR CLAIMED DEPRECIATION WAS ALLOWED. THUS THE ISSUE WAS DEBAT ABLE. BESIDES THERE IS NO ALLEGATION THAT THE ASSESSEE HAD SUPPRESSED ANY MATERIAL INFORMATION WHILE CLAIMING THE SAID DEPRECIATION DURING THE YEA R. CONSIDERING THESE FACTS IN TOTALITY, WE ARE OF THE VIEW THAT IN THE PRESENT CASE IT CANNOT BE HELD BEYOND DOUBT THAT WHILE CLAIMING THE SAID DEPRECIAT ION THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME OR HAD C ONCEALED THE PARTICULARS OF INCOME, THE LD. CIT(A) WAS THUS JUSTIFIED IN DEL ETING THE PENALTY IN QUESTION. THE GROUND IS ACCORDINGLY REJECTED. 4. THE APPEAL IS DISMISSED.. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 10 TH FEBRUARY, 2014. SD/- SD/- (G.D. AGRAWAL) ( I.C. SUDHIR ) VICE PRESIDENT JUDICIAL MEMBER DATED 10 TH FEBRUARY 2014 ITA NO. 4148/DEL/2013 4 VEENA COPY OF ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSISTANT REGISTRAR, ITAT