ACIT, New Delhi V. M/s International Cars & Motors Ltd., New Delhi

ITA 5149/DEL/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7073 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 29-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUMIT KUMAR BANSAL
• Keywords: Depreciation; Additional depreciation; Bonafide belief; Capital receipt
• Section: 271(1)(c); 143(3); 14A; 40(a)(ia); 27; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : C , NEW DELHI BEFORE SHRI BHAVNESH SAINI , JUDICIAL M EMBER AND SH RI O.P. KANT , ACCOUNTANT MEMBER ITA NO S.5149 & 5150 /DE L/ 2016 ASSESSMENT YEAR S : 2007 - 08 & 2008 - 09 ACIT, CIRCLE - 12(2), C.R. BUILDING, NEW DELHI VS. M/S. INTERNATIONAL CARS & MOTORS LTD., SONALIKA HOUSE, 283, A.G.C. R. ENCLAVE, KARKARDOOMA, NEW DELHI PAN : AABCI2403D (APPELLANT) (RESPONDENT) APPELLANT BY SMT. RINKU SIN GH , SR.DR RESPONDENT BY SHRI SUMIT KUMAR BANSAL, CA ORDER PER O.P. KANT, A .M. : THESE TWO APPEALS BY THE R EVENUE ARE DIRECTED AGAINST TWO SEPARATE ORDERS DATED 18/07/2016 PASSED BY THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) - 4, NEW DELHI [IN SHORT THE LD. CIT(A) ] IN RELATION TO PENALTY UNDER SECTION 271(1)(C) OF THE INCOME - TAX A CT, 1961 (IN SHORT THE A CT ) FOR ASSESSMENT YEAR 2007 - 08 AN D 2008 - 09 RESPECTIVELY . THE ISSUE INVOLVED IN BOTH THE APPEALS BEING IDENTICAL, BOTH WERE HEARD TO GETHER AND DISPOSE D OF F BY WAY OF THIS CONSOLIDATED ORDER FOR CONVENIENCE. DATE OF HEARING 29.04.2019 DATE OF PRONOUNCEMENT 30.04.2019 2 ITA NO S.5149 & 5150/DEL/2016 ITA NO.5149/DEL/2016 , FOR AY: 2007 - 08 2. FIRST, WE TAKE UP THE APPEAL FOR ASSESSMENT YEAR 2007 - 08 HAVING ITA NO. 5149/D EL/2016. THE GROUNDS OF APPEAL RAISED BY THE R EVENUE ARE REPRODUCED AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED IN DELETING THE PENALTY IMPOSED AMOUNT O F RS.3,66,63,680/ - . 2. T HE APPELLANT CRAVES LEAVE FOR RESERVING THE RIGHT TO AMEND, MODIFY, ADD OR FOREGO ANY GROUND(S) OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF APPEAL. 3. B RIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSME NT UNDER SECTION 143(3) OF THE A CT WAS COMPLETED ON 17/12/200 9 AT A LOSS OF RS. 16,00,19,910/ - AS AGAINST RETURN ED INCOME OF NIL FILED ON 27/10/2007. THE ADDITIONS MADE BY THE ASSESSING OFFICER INCLUDED DISALLOWANCE OF RESEARCH AND DEVELOPMENT EXPENDITURE, DISALLOWAN CE OF EXTRA ORDINARY CAPITAL RECEIPT, DISALLOWANCE UNDER SECTION 14A, DISALLOWANCE OF DEPRECIATION ON SOFTWARE, DISALLOWANCE OF DEPRECIATION ON ENERGY - SAVING DEVICES, DISALLOWANCE OF ADDITIONAL DEPRECIATION, DISALLOWANCE OF PRELIMINARY EXPENSES, REJECTION OF CLAIM UNDER SECTION 40(A)(IA) OF THE ACT . ON FURTHER APPEAL, THE LD. CIT(A) PARTLY UPHELD THE ADDITIONS VIDE ORDER DATED 03/12/2013. IN RESPECT OF ADDITIONS CONFIRMED BY THE LD. CIT(A), THE ASSESSING OFFICER ISSUED SHOW CAUSE TO THE ASSESSEE AS WHY PEN ALTY UNDER SECTION 27 1 ( 1 )(C) OF THE ACT MAY NOT BE LEVIED. AFTER CONSIDERING SUBMISSION OF THE ASSESSEE, THE ASSESSING WAS SATISFIED THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF THE INCOME IN RESPECT O F ADDITION/DISALLOWANCES OF RS.12,22,12, 26 3 / - AND LEVIED PENALTY AT THE RATE OF 100% OF THE TAX SO UGHT TO BE EVADED AMOUNTING TO RS. 3,66,63,679/ - . THE LD. CIT(A) DELETED THE PENALTY OBSERVING 3 ITA NO S.5149 & 5150/DEL/2016 THAT NO SATISFACTION FOR INITIATION O F THE PENALTY UNDER SECTION 27 1 ( 1 )(C) OF THE A CT WAS MADE IN THE ASSE SSMENT ORDER BY THE ASSESSING OFFICER WHICH IS A PREREQUISITE TO ASSUME THE JURISDICTION FOR LEVY OF THE PENALTY. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE T RIBUNAL RAISING THE GROUNDS AS REPRODUCED ABOVE. 4. BEFORE US , THE LD. DR RELIED ON THE ORDER OF THE ASSESSING OFFICER AND SUBMITTED THAT PENALTY HAS BEEN LEVIED IN ACCORDANCE WITH LAW. 5. ON THE CONTRARY, THE LD. COUNSEL OF THE ASSESSEE RELIED ON THE ORDER OF THE LD. CIT(A) AND FILED A PAPER - BOOK CONTAINING PAGES 1 TO 55. THE LD. COUNSEL REFERRED TO THE COPY OF THE ASSESSMENT ORDER AVAILABLE ON PAGE S 1 TO 8 OF THE PAPER - BOOK AND SUBMITTED THAT THE ASSESSING OFFICER HAS NOT RECORDED ITS SATISFACTION IN THE ASSESSMENT ORDER TO INITIATE THE PENALTY PRO CEEDINGS UNDER SECTION 271(1)(C ) OF THE A CT. THE L D. COUNSEL RELIED ON THE DECISION OF THE T RIBUNAL IN THE CASE OF SHAMBHU DAYAL IN ITA NO. 3391/DEL/2013 FOR ASSESSMENT YEAR 2006 - 07 TO SUBSTANTIATE THAT IN ABSENCE OF ANY PRIMA FACIE SATISFACTION RECORDED BY THE ASSESSING OFFICER FOR INITIATION OF THE PENALTY IN THE ASSESSMENT ORDER, THE PENALTY LEVIED BY THE ASSESSING OFFICER I S WITHOUT JURISDICTION AND VOID - AB - INITIO . 6. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE RELEVANT M ATERIAL ON RECORD. THE LD. CIT(A) HAS DELETED THE PENALTY OBSERVING AS UNDER : I HAVE GONE THROUGH THE SUBMISSION OF APPELLANT AND ALSO PURSUED THE ASSESSMENT ORDER RELEVANT TO THE ASSESSMENT YEAR 2007 - 08, THE CONTENTION OF THE APPELLANT IS FOUND TO BE CO RRECT AND NO SATISFACTION FOR INITIATION OF PENALTY UNDER SECTION 271(L)(C) HAS BEEN MADE IN THE ASSESSMENT ORDER. 4 ITA NO S.5149 & 5150/DEL/2016 THE RECORDING OF SATISFACTION FOR INITIATING PENALTY PROCEEDINGS IS A MANDATORY REQUIREMENT OF THE SECTION WHICH CANNOT BE CURED SUBSEQUENTL Y. I FIND MERIT IN THE SUBMISSION OF THE ASSESSEE RELYING ON THE DECISION OF THE JURISDICTION TRIBUNAL SHAMBOO DYAL VS ACIT ITA NO. 3391/DEL/2013 (DEL - TRIB.) AND ALSO DECISION OF JURISDICTIONAL HIGH COURT IN CASE OF MADHUSHREE GUPTA VS UOI 317 ITR 107 AND CIT V MANJUNATHA COTTON & GINNING FACTORY (2013) 53 (I) ITCL 2 (KARN - HC). I HAVE ALSO GONE THROUGH THE DECISION OF THE HON'BLE DELHI HIGH COURT IN CASE OF CIT V VIKAS PORMOTER PVT LTD 277 ITR 337 AND THE PARA 4 IS REPRODUCED 'HAVING PERUSED THE JUDGMENT O F THE SUPREME COURT AFORE REFERRED, WE ARE OF THE OPINION THAT THE ARGUMENT OF THE LEARNED COUNSEL APPEARING FOR THE DEPARTMENT IS MISCONCEIVED. THEIR LORDSHIPS OF THE SUPREME COURT HAVE REPEATEDLY EMPHASISED THE WORD 'SATISFACTION' AND THE SATISFACTION IS NOT TO BE IN THE MIND OF THE ASSESSING OFFICER BUT MUST BE REFLECTED FROM THE RECORD. IT IS A SETTLED RULE OF LAW THAT THE AUTHORITY PERFORMING QUASI - JUDICIAL OR JUDICIAL FUNCTION MUST GIVE REASONS IN SUPPORT OF ITS ORDER SO AS TO PROVIDE IN THE ORDER ITS ELF THE GROUND WHICH WEIGHED WITH THE AUTHORITY CONCERNED FOR PASSING AN ORDER ADVERSE TO THE INTEREST OF THE ASSESSEE. FURTHERMORE, THE PROVISIONS OF SECTION 271(L)(C) ARE PENAL. IN NATURE THUS MUST BE STRICTLY CONSTRUED, THE ELEMENT OF SATISFACTION SHOUL D BE APPARENT FROM THE ORDER ITSELF. IT IS NOT FOR THE COURTS TO GO INTO THE MIND OF THE AUTHORITIES OR TRACE THE REASONS FROM THEFIIES OF SUCH AUTHORITIES.' KEEPING IN VIEW THE FACTS OF THE CASE AND LEGAL POSITION AS ABOVE 1 HEREBY DELETE THE PENALTY REL EVANT TO ASSESSMENT YEAR 2007 - 08. AS THE APPEAL HAS BEEN ADJUDICATED ON THE LEGAL ISSUE OF NOT RECORDING THE SATISFACTION, THE MERITS OF THE CASE DO NOT REQUIRE ADJUDICATION. 7. THERE IS NO DISPUTE ON THE FACTUAL OBSERVATION THAT PENALT Y UNDER SECTION 27 1 ( 1 )(C) OF THE A CT WAS NOT INITIATED IN THE ASSESSMENT ORDER. THE LD. COUNSEL ALSO CONTENDED THAT NO NOTICE UNDER SE CTION 274 READ WITH SECTION 27 1 ( 1 )(C) OF THE A CT WAS ISSUED ALONG WITH ASSESSMENT ORDER, THOUGH THE ASSESSING OFFICER HAS MENTIONED IN THE PENALTY ORDER THAT SUCH NOTICE WAS ISSUED. BEFORE US , ALSO NO COPY OF SUCH NOTICE I SSUED HAS BEEN PRODUCED BY THE REVENUE. WE FIND THAT THE T RIBUNAL IN THE CASE OF SHAMBHU DAYAL (SUPRA) RELIED ON THE DECISION OF THE HON BLE DELHI HIGH COURT IN THE CASE OF MADHUSHREE GUPTA VS. UNION OF 5 ITA NO S.5149 & 5150/DEL/2016 INDIA (2009), 317 ITR 107 (DEL.) . THE RELEVANT FINDING OF THE T RIBUNAL IS REPRODUCED AS UNDER: 8. AS WE FIND THAT THE ID. ASSESSING OFFICER HAS FAILED TO RECORD PRIMA - FACIE SATISFACTION FOR INITIATE PENALTY PROCEEDING IN THE ASSESSMENT ORDER PASSED UNDER SECTION 144 OF THE ACT, RESPECTFULLY FOLLOWING THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF MADHUSHREE GUPTA( SUPRA) AND DECISION OF THE TRIBUNAL PAGE 5 OF 6 ITA NO. 339I/DEL/2()I3 IN THE CASE OF TRIVENI ENGIN EERING AND INDUSTRIES LTD. (SUPRA), WE HOLD THAT IN ABSENCE OF ANY PRIMA - FACIE SATISFACTION RECORDED BY THE ID. ASSESSING OFFICER FOR INITIATION OF PENALTY IN THE ASSESSMENT ORDER, THE PENALTY LEVIED BY THE AO IS WITHOUT ANY JURISDICTION AND VOID AB - INITIO , THEREFORE, ORDER OF THE LEARNED ASSESSING OFFICER PASSED UNDER 27I(I)(C ) OF ACT IS QUASHED AND THE GROUND NO. 1 OF THE ASSESSEE IS ALLOWED. 8. AS IN THE INSTANT CASE ALSO , NO SATISFACTION HAS BEEN RECORDED BY THE ASSESSING OFFICER FOR INITIATION OF P ENALTY IN THE ASSESSMENT ORDER , RESPECTFULLY FOLLOWING THE ABOVE D ECISION, THE FINDING OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE IS UPHELD. T HE GROUND OF THE APPEAL OF THE R EVENUE IS ACCORDINGLY DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE R EVENUE IS DISMISSED. ITA NO.5150/DEL/2016, FOR AY: 2008 - 09 10. NOW WE TAKE UP THE APPEAL FOR ASSESSMENT YEAR 2008 - 09 HAVING ITA NO. 5150/DEL/2016. THE GROUNDS OF APPEAL ARE REPRODUCED AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY IMPOSED AMOUNT OF RS.2,06,77,160/ - 2. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIGHT TO AMEND, MODIFY, ADD OR FOREGO ANY GROUND(S) OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF APPEAL. 11. B RIEFLY STATED FACTS OF THE CASE ARE THAT ASSESSME NT UNDER SECTION 143(3) OF THE A CT WAS COMPLETED ON 27/12/2010 AT A LOSS OF RS.21,43,98,785/ - AGAINST LOSS OF RS.31,52,77,634/ - CLAIMED IN 6 ITA NO S.5149 & 5150/DEL/2016 THE RETURN OF INCOME FILED O N 01/10/2008. ON FURTHER APPEAL, CERTAIN ADDITIONS/DISALLOWANCE S WERE UPHELD BY THE LD. CIT(A). THE ASSESSING OFFICER AFTER CONSIDERING SUBMISSION OF THE ASSESSEE HELD THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME IN RESPECT OF THE ADDITIONS/DISALLOWANCES OF RS.6,89,23, 860 / - AND LEVIED PENALTY EQUAL TO 100% OF THE TAX SOUGHT TO BE EVADED AMOUNTING TO RS. 2, 06,77,158/ - . ON FURTHER APPEAL, THE LD. CIT(A) DELETED THE PENALTY OBSERVING THAT THE ASSESSING OFFICER HAD INITIATED THE PENALTY ONLY FOR ADDITION MADE UNDER SECTION 14A OF THE A CT AND ALSO THE EXPLANATION FOR MAKING SUCH CLAIMS WERE FOUND TO MADE UNDER BONA FIDE BELIEF. AGGRIEVED WITH THE FINDING OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE THE T RIBUNAL RAISING THE GROUNDS AS REPRODUCED ABOVE. 12. BEFORE US, THE LD. DR RELIE D ON THE ORDER OF THE ASSESSING OFFICER AND SUBMITTED THAT PENALTY LEVIED BY THE ASSESSING OFFICER MIGHT BE UPHELD. 13. ON THE CONTRARY, THE LD. COUNSEL OF THE ASSESSEE FILED A PAPER - BOOK CONTAINING PAGES 1 TO 259 AND SUBMITTED THAT THE ASSESSING OFFICER H AS RECORDED SATISFACTION FOR INITIATION OF THE PENALTY ONLY IN RESPECT OF THE ADDITION OF RS.4,79, 380/ - UNDER SECTION 14 A OF THE A CT. FURTHER , HE REFERRED TO COPY OF NOTICE DATED 27/12/2010 I SSUED UNDER SECTION 274 OF THE A CT FILED ALONGWITH THE WRITTEN SU BMISSION AND SUBMITTED, THAT IN THE NOTICE ISSUED THE RELEVANT CHARGE OF CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF THE INCOME WAS NOT STRUCK BY THE ASSESSING OFFICER. THE LD. COUNSEL FURTHER RELYING ON THE ORDER OF THE HO N BLE SUPREME COURT IN THE CASE OF CIT VS. R ELIANCE PETROPRODUCTS PRIVATE LIMITED , 322 ITR 158 , SUBMITTED THAT MERELY BECAUSE THE ASSESSEE HAS CLAIMED EXPENDITURE, WHICH WAS 7 ITA NO S.5149 & 5150/DEL/2016 NOT ACCEPTED THAT BY ITSELF, WOULD NOT ATTRACT PENALT Y UNDER SECTION 27 1 (1)(C) OF THE A CT. 14. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE RELEVANT FINDING OF THE LD. CIT(A) DELETING THE PENALTY IS REPRODUCED AS UNDER: 4. THE APPELLANT IS IN THE APPEAL AGAINST THE ORDER PASSED UNDER SECTION 271(1)(C) RELEVANT TO ASSESSMENT YEARS 2008 - 09. IN THE ASSESSMENT YEAR 2008 - 09, THE PENALTY OF RS.2,06,77,158/ - HAS IMPOSED ON THE ADDITIONS CONFIRMED BY THE LD. CIT(A) ON ACCOUNT OF DISALLOWANCES AS BELOW: - I. DISALLOWANCE OF ADDITIONAL DEPRECIATION ON TOOLS & DIES PURCHASED FROM GROUP COMPANY. II. DISALLOWANCE OF DEPRECIATION ON TOOLS PURCHASED FROM ASSOCIATE CONCERN. III. DISALLOWANCE OF ADDITIONAL DEPRECIATION ON ELECTRIC INSTALLATION, TOOLS & DIES AND MATERIAL HANDLING EQUIPMENTS. IV. DISALLOWANCE OF INTEREST ON CWIP U/S 36 (1) (II). V. DISALLOWANCE RESEARCH AND DEVELOPMENT EXPENDITURE. VI. DISALLOWANCE OF DEPRECIATION ON SOFTWARE BY TREATING IT HAS INTANGIBLE ASSETS. VII. DISALLOWANCE OF DEPRECIATION ON IMPAIRED ASSETS. THE ASSESSEE HAVE SHOWN THE NET LOSS OF RS. 31,52,77,634/ - AND IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) THE NET LOSS WAS ASSESSED AT RS. 24,63,53,774/ - . ALL THE GROUNDS OF APPEAL ARE RELATED TO THE IMPOSITION OF PENALTY U/S 271(1) (C) AND ARE CONSIDERED AND ADJUDICATED T OGETHER. THE CASE OF THE AO IS THAT VARIOUS ADDITIONS WERE MADE BY THE AO AFTER RECORDING FACTS AND THE LEGAL POSITION AND SOME OF THE ADDITIONS WERE ALSO CONFIRMED BY THE CIT(A). THE AO HAS GIVEN THE RELEVANT FINDINGS OF THE CIT(A) AND FOUND THAT THE EXP LANATION AS OFFERED BY THE ASSESSEE IS NOT ACCEPTABLE, THEREFORE CONSIDERING THE FACTS AND CIRCUMSTANCES, IMPOSED THE PENALTY. THE APPELLANT HAS SUBMITTED THAT THE ADDITIONS HAVE BEEN MADE OR CONFIRMED BY THE FIRST APPELLATE AUTHORITY ON THE DIFFERENT INT ERPRETATION OF LEGAL POSITION AND HAS ALREADY GONE IN APPEAL TO ITAT. IT IS FURTHER SUBMITTED THAT THE EXPLANATION HAS BEEN FURNISHED 8 ITA NO S.5149 & 5150/DEL/2016 IN RESPONSE TO PENALTY PROCEEDINGS AND THE APPEIIANT HAS ALSO STATED THAT NO FINDINGS HAVE BEEN MADE BY THE AO OR THE CIT( A) THAT ANY PARTICULARS OF INCOME OR INFORMATION WERE FOUND TO BE FALSE OR INACCURATE. THE NATURE AND LEGAL POSITION OF EACH ADDITION HAS BEEN EXPLAINED. THE ASSESSEE HAS FURTHER SUBMITTED THAT THE AO HAS INITIATED THE PENALTY PROCEEDING ONLY IN CASE OF A DDITION MADE UNDER SECTION 14A OF RS. 4,79,380/ - AND THAT NO SUCH SATISFACTION HAS BEEN RECORDED SEPARATELY FOR OTHER ADDITIONS. THIS ADDITION U/S 14A HAS BEEN DELETED BY THE CIT (A) HENCE NO PENALTY IS IMPOSABLE. THE APPELLANT HAS FURTHER ARGUED THAT AO H AS GONE THROUGH THE FACTS OF THE CASE AND THE EXPLANATION MADE FOR EACH ADDITION AND AFTER HIS APPLICATION OF HIS MIND FOUND THAT ONLY IN CASE OF ADDITION U/S 14A THE INCORRECT PARTICULARS ARE FURNISHED. NO SUCH SATISFACTION HAS BEEN RECORDED FOR OTHER ADD ITIONS. THE PRESENT AO HAS IMPOSED THE PENALTY ON ALL THE ADDITIONS AS CONFIRMED, WHEREAS; THE AO WHO PASSED THE ORDER HAD INITIATED THE PENALTY FOR ONLY FOR THE ADDITION MADE U/S 14A. THE CASE OF THE APPELLANT IS THAT THESE ADDITIONS ARE MADE OR CONFIRME D DUE TO DIFFERENT LEGAL INTERPRETATION OTHERWISE, FULL PARTICULARS WERE DISCLOSED IN THE RETURN OF INCOME AND THE EXPLANATION AS OFFERED HAS NOT BEEN PROPERLY APPRECIATED AND VARIOUS CASE LAWS ARE NOT CONSIDERED. THUS THEIR CASE IS FULLY COVERED BY THE EX PLANATION 1 PART (A) & (B). THE PENALTY HAS BEEN IMPOSED MERELY ON THE BASIS THAT ADDITIONS HAVE BEEN CONFIRMED. I HAVE PURSUED THE ASSESSMENT ORDER AND FIND THAT THE CONTENTION OF THE ASSESSEE IS CORRECT THAT IN THE ASSESSMENT ORDER THE AO HAS STATED, 'S INCE THE ASSESSEE HAS FILED INCORRECT PARTICULARS OF ITS INCOME, PENALTY PROCEEDINGS UNDER SECTION 271(L)(C) HAVE BEEN INITIATED SEPARATELY'. NO SUCH SATISFACTION HAS BEEN RECORDED UNDER ANY OTHER ADDITION. I HAVE GONE THROUGH THE SUBMISSIONS OF THE APPEL LANT ON THE MERITS OF THE CASE AND CONSIDERED EACH ADDITION AND ALSO GONE THROUGH THE ASSESSMENT ORDER AND THE ORDER OF CIT(A). IT IS FOUND THAT OUT OF TOTAL SEVEN ADDITIONS THE FIVE ADDITIONS AT SR. NO. (I), (II), (III) (VI) & (VII) ARE RELATED WITH THE C LAIM OF DEPRECIATION OR ADDITIONAL DEPRECIATION. THE ADDITION AT SR. NO. (IV) RELATES TO THE DISALLOWANCE OF INTEREST ON CAPITAL WORK IN PROGRESS AND AT S. NO (V) RELATES TO DISALLOWANCE OF RESEARCH & DEVELOPMENT EXPENSES. THE APPELLANT HAS GIVEN THE DESCR IPTION OF EACH OF THE ADDITIONS. REGARDING THE DEPRECIATION THE APPELLANT HAS FULLY DISCLOSED THE PARTICULARS OF ITS CLAIM NOT ONLY IN THE STATEMENT OF INCOME BUT IS ALSO IN THE AUDITED BALANCE SHEET & 3CD REPORT. IN CASE OF ADDITION ON ACCOUNT OF INTEREST U/S 36(L)(II) FOR THE CAPITAL WIP, THE APPELLANT HAS DEMONSTRATED THAT SUFFICIENT INTEREST FREE FUNDS WERE AVAILABLE WITH THE APPELLANT. IN CASE OF THE DISALLOWANCE OF RESEARCH & DEVELOPMENT EXPENSES, THE PARTICULARS OF SUCH EXPENSES ARE GIVEN IN THE PARA 6 AND THE NOTES TO ACCOUNT NO 7 9 ITA NO S.5149 & 5150/DEL/2016 SCHEDULE 21 ANNEXED TO BALANCE SHEET WHICH HAS BEEN REPRODUCED IN THE ASSESSMENT ORDER. THE BREAKUP OF THE VARIOUS EXPENSES INCURRED UNDER THE HEAD 'RESEARCH & DEVELOPMENT' HAVE BEEN REPRODUCED ON THE PAGE 15 OF THE ASSESSM ENT ORDER. APPARENTLY THESE EXPENSES ARE OF REVENUE NATURE INCURRED FOR PRODUCT DEVELOPMENT AND HAVE BEEN INCURRED FOR THE PURPOSE OF BUSINESS BUT CAPITALIZED IN THE BOOKS UNDER THE HEAD 'INTANGIBLE ASSETS' AND CLAIMED SEPARATELY AS REVENUE EXPENSES IN THE RETURN OF INCOME. I HAVE GONE THROUGH THE SUBMISSIONS OF THE APPELLANT AND ALSO THE VARIOUS DECISIONS RELIED UPON BY THE APPELLANT. IT IS SEEN THAT THOUGH THE APPELLANT HAS MADE VARIOUS CLAIMS OF EXPENSES INCLUDING HIGHER DEPRECIATION, IT IS ALSO SEEN TH AT THE PARTICULARS AND EXPLANATION SUBMITTED BY THE APPELLANT ARE CORRECT AND WERE DULY SHOWN IN THE FINANCIAL STATEMENTS SUBMITTED DURING THE ASSESSMENT PROCEEDINGS. IT IS A CASE WHERE THE CLAIMS OF THE APPELLANT HAVE NOT BEEN ACCEPTED BY THE AO. THE APPE LLANT HAS PROVED THAT SUCH CLAIMS WERE MADE UNDER THE BONA - FIDE BELIEF AND ALSO RELIED UPON ON VARIOUS CASE LAWS WHERE SUCH CLAIMS ARE ALLOWED. KEEPING IN VIEW OF THE FACTS OF THE CASE AND RELYING ON THE DECISION OF THE HON'BLE SUPREME COURT IN CASE OF RE LIANCE PETRO PRODUCTS 322 1TR 158 AND THE DECISION OF OXFORD SOFTECH PVT. LTD VS. ITO WARD - 13(L) VIDE ITA NO. 5100/DEL/2011, I HOLD THAT MAKING A CLAIM FOR THE DEDUCTION UNDER THE BONAFIDE BELIEF, THOUGH THE ASSESSING AUTHORITIES HAVE FOUND THAT THE CLAIM IS NOT ADMISSIBLE, CANNOT BE SAID THAT THIS IS A CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN VIEW OF THE DISCUSSIONS ABOVE, I HEREBY DELETE THE PENALTY IMPOSED UNDER SECTION 271(L)(C). 15. THE LD. CIT(A) HAS NOTED THAT OUT OF THE SEVEN AD DITIONS, FIVE ADDITIONS ARE RELATED TO THE CLAIM OF DEPRECIATION OR ADDITIONAL APPRECIATION. THE REMAINING TWO CLAIMS RELATE TO DISALLOWANCE OF INTEREST ON CAPITAL WORK IN PROGRESS AND DISALLOWANCE OF RESEARCH AND DEVELOPMENT EXPENSES. THE LD. CIT(A) POINT ED OUT THAT REGARDING THE DEPRECIATION THE ASSESSEE HAS FULLY DISCLOSE D ALL THE PARTICULAR S OF CLAIM NOT ONLY IN THE STATEMENT OF INCOME BUT IN THE AUDITED BALANCE SHEET AND 3CD REPORTS ALSO. IN RESPECT OF THE CAPITAL WORK - IN - PROGRESS AND RESEARCH AND DEVELOPMENT EXPENSES ALSO ALL DETAILS HAVE BEEN FILED BY THE ASSESSEE IN NOTES TO ACCOUNT ANNEXED TO BALANCE SHEET. WE CONCUR WITH THE OBSERVATION OF THE 10 ITA NO S.5149 & 5150/DEL/2016 LD. CIT(A) THAT MERELY REJECTION OF THE CLAIM MAY NOT INVITE THE ASSESS EE TO PENALTY UNDER SECTION 27 1 ( 1 )(C) OF THE A CT. THE LD. DR COULD NOT CONTROVERT THE OBSERVATION OF THE LD. CIT(A). IN OUR OPINION, THE FINDING OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE IS WELL REASONED AND WE DO NOT FIND ANY INFIRMITY IN THE SAME AND ACCORDIN GLY , WE UPHOLD THE SAME. ACCORDINGLY, THE GROUND OF THE APPEAL IS DISMISSED. AS THE GROUND HAS ALREADY BEEN DISMISSED ON THE MERIT, WE ARE NOT ADJUDICATING UPON THE OTHER ARGUMENTS OF THE LD. COUNSEL OF THE ASSESSEE CHALLENGING THE JURISDICTION ASSUMED WHI LE LEVYING THE PENALTY. 16. IN THE RESULT, THE APPEAL OF THE R EVENUE IS DISMISSED. 17. TO SUM UP, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 3 0 T H APRIL , 201 9 . S D / - S D / - [ BHAVNESH SAINI ] [O.P. KANT] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 3 0 T H APRIL , 2019 . RK / - [D.T.D.S] COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ASST. REGISTRAR, ITAT, NEW DELHI