ACIT, New Delhi V. M/s Oriental Structural Engineers Pvt. Ltd., New Delhi

ITA 5760/DEL/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7322 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 04-08-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 12-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GUNJAN P RASAD
• Assessee Lawyers: KVSS KRISHNA DATES OF HEARIN
• Keywords: Capital asset; Depreciation; Retrospective amendment; Wrong claim; Revised return; Capital expenditure
• Section: 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : E NEW DELHI [CORAM: SMT. DIVA SINGH, JM, AND SHRI PRAMOD KUMAR , AM] I.T.A. NO.: 5760/DEL/2012 ASSESSMENT YEAR: 2005-06 JOINT COMMISSIONER OF INCOME TAX .APPELLANT RANGE 1, NOIDA VS. ORIENTAL STRUCTURAL ENGINEERS PVT LTD RESPONDENT 21/48,MALCHA MARG, COMMERCIAL COMPLEX, DIPLOMATIC ENCLAVE, NEW DELHI 110028 [PAN: AAACO 0054 F] APPEARANCES BY: GUNJAN PRASAD, FOR THE APPELLANT. KVSS KRISHNA, FOR THE RESPONDENT. DATES OF HEARING OF APPEALS : AUGUST 27, 2014 DATE OF PRONOUNCING THE ORDER : SEPT 26 TH , 2014 O R D E R PER PRAMOD KUMAR 1. THIS APPEAL IS DIRECTED AGAINST THE ORDER DATED 30 TH JULY, 2012 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-XVI, N EW DELHI IN THE MATTER OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX A CT, 1961, FOR THE ASSESSMENT YEAR 2005-06. 2. THE SHORT ISSUE THAT WE ARE REQUIRED TO ADJUDICA TE IN THIS APPEAL IS WHETHER OR NOT THE LEARNED CIT(A) WAS JUSTIFIED IN DELETING TH E IMPUGNED PENALTY OF RS 2,91,89,300, AS APPELLANT IS AGGRIEVED OF THE CIT(A ) DOING SO, BUT THE APPELLANT HAS ITA NO.5760 /DEL/ 2012 ASSESSMENT YEAR 2005-06 2 RAISED SEVERAL GROUNDS OF APPEAL, WHICH ARE MAINLY ARGUMENTS IN SUPPORT OF THE GRIEVANCE OF THE ASSESSEE, AS FOLLOWS: 1. WHETHER ON THE FACTS & IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) HAS ERRED IN DELETING PENALTY U/S 271(1)(C) OF 2,91 ,89,300/- IN THE LIGHT OF THE FACT THAT ASSESSEE HAD WILLFULLY CLAIMED THE WRONG DEDUC TIONS AND EXCESS DEPRECIATING HEREBY NEGLECTING THE PROVISIONS LAID BY IT ACT. 2. WHETHER ON THE FACTS & IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) HAS FAILED TO APPRECIATE THE FACTS DISCUSSED IN DET AIL, IN THE ASSESSMENT ORDER BY IGNORING THE FACTS THAT THE ASSESSEE HAD INTENTIONA LLY CLAIMED EXCESS DEPRECIATION HEREBY IGNORING THE PROVISIONS OF SEC. 32(1) OF THE I.T. ACT IN VIEW OF THE FACT THAT ON ONE HAD HAD TREATED THE EXPENDITUR E ON TEMPORARY BARRACKS AS CAPITAL EXPENDITURE AND INCLUDED THE SAME IN THE BL OCK OF ASSET AND ON THE OTHER HAND IGNORED THE FIRST PROVISO TO SEC.32(1) OF THE ACT. 3. WHETHER ON THE FACTS & IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) HAS FAILED TO APPRECIATE THE FACTS DISCUSSED IN DET AIL, IN THE PENALTY ORDER U/S 271(1)(C) OF THE AO, REGARDING ASSESSEES DELIBERAT E CLAIMING VARIOUS NON ALLOWABLE EXPENSES. 4. WHETHER ON THE FACTS & IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) HAS ERRED IN IGNORING THE FACT THAT THE ASSESSEE HA D PAID ENTIRE TAX BUT ALSO MADE INCORRECT CLAIMS U/S 80-IA UNDER THE BELIEF TH AT THE SAME MIGHT BE ACCEPTED U/S 143(1). HAD THE INTENTIONS OF THE ASSE SSEE BEEN CLEAR THEN IT WOULD HAVE REVISED ITS RETURN, IN STEAD OF WAITING UPTO S CRUTINY PROCEEDINGS. 5. WHETHER ON THE FACTS & IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) HAS ERRED IN IGNORING THE FACT THAT THE ASSESSEE, I N THE YEAR UNDER CONSIDERATION, DECLARED THE TEMPORARY BARRACKS AS CAPITAL ASSETS A ND CLAIMED DEPRECIATION @ 100% ON ASSETS ACQUIRED AFTER 30.09.2004, HENCE CLA IMING EXPENSES AS REVENUE EXPENSES. 3. TO ADJUDICATE ON THIS ISSUE, ONLY A FEW MATERIAL FACTS NEED TO BE TAKEN NOTE OF. THE ASSESSEE IS ENGAGED IN THE BUSINESS IF EXECUTIO N OF WORK RELATING TO DEVELOPMENT OF ROADS AND HIGHWAYS, AS AWARDED BY THE NATIONAL H IGHWAY AUTHORITY OF INDIA AND OTHER STATE BODIES. DURING THE COURSE OF THE SCRUTI NY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS CLA IMED DEDUCTION UNDER SECTION 80 IA AMOUNTING TO RS 8,21,81,892 EVEN THOUGH THE ASSE SSEE WAS NOT DEVELOPING THE ITA NO.5760 /DEL/ 2012 ASSESSMENT YEAR 2005-06 3 INFRASTRUCTURE FACILITY BUT MERELY EXECUTING THE WO RKS CONTRACT RELATED TO CONSTRUCTION OF HIGHWAYS. THE ASSESSING OFFICER FURTHER NOTICED THA T, IN VIEW OF THE RETROSPECTIVE AMENDMENT TO SECTION 80IA BROUGHT ABOUT BY THE FINA NCE ACT 2007, IT IS NOW BEYOND ANY DOUBT OR CONTROVERSY THAT THE ASSESSEE WAS NOT ENTITLED TO THIS DEDUCTION. WHEN ASSESSEE WAS CONFRONTED WITH THIS POSITION, THE ASS ESSEE, VIDE LETTER DATED 15 TH OCTOBER 2007, WITHDREW THE CLAIM IN VIEW OF THE LA TEST AMENDMENT MADE IN THE FINANCE ACT 2007 IN THE PROVISIONS OF SECTION 80IA OF THE INCOME TAX ACT 1961 FROM RETROSPECTIVE EFFECT. THE MATTER DID NOT REST AT THAT. THE ASSESSING OFFICER CONSIDERED IT A FIT CASE FOR IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) FOR HAVING FURNISHED INACCURATE PARTICULARS AND WRONG DEDUCTIO N, AND, ACCORDINGLY, INITIATED THE PENALTY PROCEEDINGS. THESE PENALTY PROCEEDINGS WERE ALSO INITIATED IN RESPECT OF A DISALLOWANCE OF RS 66,40,733 IN RESPECT OF CLAIMING 100% DEPRECIATION FOR TEMPORARY BARRACKS BEING ADDED TO THE BLOCK OF ASSETS, EVEN T HOUGH THE ASSETS WERE PUT TO USE FOR LESS THAN 180 DAYS. THE ASSESSEES EXPLANATION WAS THAT THIS ISSUE WAS IN APPEAL BEFORE THE CIT(A) FOR IMMEDIATELY PRECEDING YEAR, B UT NOW THAT THE CIT(A) HAS DECIDED THE ISSUE AGAINST THE ASSESSEE AND THE ASSE SSEE DOES NOT WISH TO PURSUE THE MATTER FURTHER, THE ASSESSEE HAS SURRENDERED TH E DISALLOWANCE. IN THE PENALTY PROCEEDINGS, WHICH FOLLOWED, THE ASSESSING OFFICER WAS OF THE VIEW THAT SINCE THE ASSESSEE DID NOT REVISE THE INCOME TAX RETURN, AFTE R THE AMENDMENT IN SECTION 80IA WAS INTRODUCED, THIS LAPSE CLEARLY INDICATES THE M ALAFIDE INTENTION OF THE ASSESSEE AND THAT THE ASSESSEE HAD IGNORED FIRST PROVISO TO SECTION 32(1) WHICH SHOWED THAT THE ASSESSEE HAD FILED INACCURATE PARTICULARS . THE ASSESSING OFFICER, ON THIS BASIS, ALSO REJECTED ASSESSEES CONTENTION TO THE EFFECT T HAT THE CLAIM WAS ADMISSIBLE, BUT FOR THE AMENDMENT, IN VIEW OF TRIBUNAL DECISION IN THE CASE OF PATEL ENGINEERING LTD VS DCIT (94 ITD 411), AND THAT THE CLAIM WAS MADE IN A TRANSPARENT MANNER. A REFERENCE WAS ALSO MADE TO HONBLE SUPREME COURTS JUDGMENT IN THE CASE OF UNION OF INDIA VS DHARMENDRA TEXTILE PROCESSORS (306 ITR 277), AS ALSO TO HONBLE DELHI HIGH COURTS JUDGMENT IN THE CASE OF CIT VS ZOOM CO MMUNICATIONS PVT LTD (327 ITR 510). THE PENALTY WAS, THEREFORE, IMPOSED IN RESPEC T OF THESE QUANTUM DISALLOWANCES OF RS 8,21,81,892 AND RS 66,40,733, IN RESPECT OF 8 0IA DISALLOWANCE AND PARTIAL ITA NO.5760 /DEL/ 2012 ASSESSMENT YEAR 2005-06 4 DEPRECIATION DISALLOWANCE, RESPECTIVELY. AGGRIEVED BY THE STAND SO TAKEN BY THE AO, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CI T(A). LEARNED CIT(A) UPHELD THE GRIEVANCES OF THE ASSESSEE AND DELETED THE PENALTY IN RESPECT OF BOTH OF THESE DISALLOWANCES. WHILE DOING SO, LEARNED CIT(A) OBSER VED AS FOLLOWS: 4.3 AFTER CAREFUL CONSIDERATION OF THE FACTS AND CI RCUMSTANCES OF THE CASE AND JUDICIAL PRONOUNCEMENTS CITED BY THE APPELLANT, I AM OF THE CONSIDERED VIEW THAT THE APPELLANT COMPANY HAS NOT FURNISHED ANY IN ACCURATE PARTICULARS OF ITS INCOME; THE ALLOWABILITY OF CLAIM U/S 80IA TO THE A PPELLANT COMPANY ON A PLAIN READING OF THE PROVISIONS WAS TENABLE. THE CLAIM WA S MADE WITH PROPER DISCLOSURE IN THE COMPUTATION ALONG WITH ORIGINAL R ETURN FILED. THE VARIOUS CASE LAWS REFERRED TO BY THE A.O. DO NOT APPLY TO THE FA CTS OF THE CASE OF APPELLANT COMPANY. THE CLAIM OF THE APPELLANT WAS ALSO SUPPOR TED BY THE ORDERS OF THE ITAT AS WELL AS CIT(A) WHICH EXISTED AT THAT PARTIC ULAR POINT OF TIME. THE CLAIM WAS WITHDRAWN BECAUSE OF THE SUBSEQUENT AMENDMENT W HICH CLARIFIED THE LEGAL POSITION WITH RETROSPECTIVE EFFECT FROM 1.4.2000. T HE AMENDMENT AS EXPLAINED ABOVE CAME ON TO THE STATUTE ON 11.5.2007 BY THE FI NANCE ACT, 2007, WHICH IS MUCH LATER THAN THE RETURN FILED ON 31.10.2005. ALS O THE TIME FOR REVISION OF RETURN HAD EXPIRED ON 31.3.2007 FOR A.Y. 2005-06. A N ASSESSEE CANNOT BE EXPECTED TO REVISE HIS RETURN BASED ON FINANCE BILL WHICH IS YET TO BECOME LAW. THEREFORE THE AO'S CONTENTION THAT APPELLANT COULD HAVE REVISED ITS RETURN FAILS. FURTHER, APPELLANT HAS ALSO INDICATED IN THE RETURN THE FACT OF CLAIMING DEDUCTION U/S 80LA AND SUBSEQUENTLY DURING THE COUR SE OF ASSESSMENT PROCEEDINGS A REVISED RETURN WITH COVERING LETTER D ATED 1.10.2007 ALONG WITH REVISED COMPUTATION WAS FILED WHICH WAS NOT ACCEPTE D BY AO ON THE GROUND THAT NO REVISION IN THE RETURNED INCOME WAS PERMISSIBLE AS THE TIME FOR REVISION HAD EXPIRED. THERE IS NO CASE FOR PENALTY AS THERE IS N EITHER CONCEALMENT OF INCOME NOR FURNISHING OF ANY INACCURATE PARTICULARS OF INC OME. IT IS ALSO SEEN THAT AS PER THE COMPUTATION OF INCOME FILED BY THE APPELLANT, O RIGINAL AS WELL AS REVISED, COMPLETE TAXES WERE PAID WITHOUT EVEN CONSIDERING T HE CLAIM OF DEDUCTION U/S 80IA. THIS GOES TO PROVE THAT THE ISSUE WHETHER TH E APPELLANT WAS ENTITLED OR NOT TO THE DEDUCTION WAS NOT FREE FROM DOUBT AND THEREF ORE, THE ENTIRE TAXES WERE PAID TO THE GOVERNMENT AND CLAIM WAS MADE. THERE IS NO LOSS TO THE REVENUE. IT IS ALSO SEEN THAT THE APPELLANT COMPANY, IN ITS RETURN FILED ON 08.12.2008 IN PURSUANCE TO NOTICE DATED 12.11.2008 U/S 153 C, DID NOT MAKE A CLAIM U/S 80IA. A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REG ARDING THE INCOME OF AN ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOU NT TO FURNISHING INACCURATE PARTICULARS. PENALTY IS ATTRACTED ONLY IN THOSE INSTANCES WHERE THE ASSESSEE HAS CONCEALED THE PARTICULARS OF ITS INCOME OR HAS FURN ISHED INACCURATE PARTICULARS OF SUCH INCOME WITH INTENT TO MISLEAD THE REVENUE. THE INCOME-TAX ACT DOES NOT ITA NO.5760 /DEL/ 2012 ASSESSMENT YEAR 2005-06 5 ENVISAGE OR EXPLICITLY PROVIDE THAT IN EVERY CASE W HERE THE RETURN IS NOT ACCEPTED AS CORRECT AND THE ASSESSMENT IS FRAMED AT AN INCOM E HIGHER THAN THAT PRESENTED AND OFFERED FOR TAXATION BY AN ASSESSEE I N THE FORM OF ITS RETURN, PENALTY PROCEEDINGS MUST BE INITIATED. IT IS ALSO NOTICED THAT NO PENALTY PROCEEDING WAS I NITIATED & NO PENALTY LEVIED IN THE ORDER U/S 153C PASSED ON 31.12.2008 F OR THIS ASSESSMENT YEAR. IT IS ALSO NOTICED THAT THERE IS NO CASE FOR INVOKI NG PENALTY PROVISIONS BECAUSE THE APPELLANT HAS FILED EXPLANATION DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND DISCLOSED COMPLETELY ALL THE INFORM ATION BASED ON WHICH THE CLAIMS HAVE BEEN MADE. HENCE, THERE IS NO CASE FOR LEVY OF PENALTY ALLEGING CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF SUCH INCOME AS ALL THE DETAILS WERE SUBMITTED TO THE ASSESSING OFFICER. THE ASSESSING OFFICER IS NOT JUSTIFIED IN DOING SO. I DELETE THE PENALTY LEVIED BY THE ASSESSING OFFICER ON THIS ACCOUNT TO THE TUNE O F RS.2,76,62,425/-. APPEAL ON THESE GROUNDS IS ALLOWED. .. 5.3 .. I AM OF THE CONSIDERED OPINION THAT THE APPELLANT COMPANY HAD NOT MADE A WRONG CLAIM DUE TO WHICH THE DEPRECIATIO N WAS DISALLOWED, BUT THIS WAS BECAUSE OF THE OPERATION OF PROVISO TO SEC.32(1 ) WHICH HAS RESULTED IN THE DISALLOWANCE OF DEPRECIATION IN THIS YEAR AND CARRY FORWARD TO THE NEXT YEAR. THERE IS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME FOR LEVY OF PENALTY. THE PARTICULARS FILED I N RESPECT OF THE ADDITIONS TO 'TEMPORARY BARRACKS' HAVE NOT BEEN FOUND TO BE FALS E OR BOGUS. THE CASE LAWS CITED BY APPELLANT ALSO EQUALLY APPLY FOR THIS GROU ND FOR NON-LEVY OF PENALTY. THE ASSESSING OFFICER IS NOT JUSTIFIED IN IMPOSING PENA LTY. I DELETE THE PENALTY LEVIED BY THE ASSESSING OFFICER ON THIS ACCOUNT TO THE TUN E OF RS.15,26,875/-. APPEAL ON THESE GROUNDS IS ALLOWED. 4. THE ASSESSING OFFICER IS AGGRIEVED OF THE RELIEF SO GIVEN BY THE CIT(A) AND IS IN APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED THE FACTUAL MATRIX OF THE CASE AS ALSO T HE APPLICABLE LEGAL POSITION. 6. SO FAR AS PENALTY IN RESPECT OF DISALLOWANCE OF DEDUCTION SECTION 80IA FOR RS RS 8,21,81,892 IS CONCERNED, WE HAVE NOTED THAT AT TH E POINT OF TIME OF MAKING THIS CLAIM OF DEDUCTION, THE CLAIM OF THE ASSESSEE WAS SUPPORT ED BY JUDICIAL PRECEDENTS AND ITA NO.5760 /DEL/ 2012 ASSESSMENT YEAR 2005-06 6 THERE WAS NOTHING WRONG IN MAKING OF THE CLAIM. EVE N THE ASSESSING OFFICER HAS NOT QUESTIONED THE BONAFIDES OF CLAIM BEING MADE BUT HI S INFERENCES ABOUT LACK OF BONAFIDES IS ON THE BASIS OF ASSESSEES CONDUCT IN NOT REVISING THE CLAIM OF DEDUCTION ON HIS OWN. ON THIS ASPECT, THE CIT(A) HAS GIVEN A CATEGORICAL FINDING TO THE EFFECT THAT EVEN TIME FOR REVISING THE INCOME TAX RETURN LAPSED MUCH BEFORE LEGAL AMENDMENT, RENDERING THIS CLAIM INADMISSIBLE, CAME INTO EFFECT ON 11 TH MAY 2007. THIS FINDING REMAINS UNCONTROVERTED AND EVEN UNCHALLENGED. IN AN Y EVENT, THE PENALTY UNDER SECTION 271(1)(C) FOR CONCEALMENT OF INCOME OR FILI NG OF INACCURATE PARTICULARS IN THE INCOME TAX RETURN. AS LONG AS THE CONDUCT IN SO MAK ING THE CLAIM IN THE INCOME TAX RETURN IS FOUND TO BE BONAFIDE, THE ASSESSEE CANNOT BE IMPOSED THIS PENALTY. NO DOUBT A SUBSEQUENT ACT DOES HELP ESTABLISHING THE BONAFID ES, OR LACK OF BONAFIDES, AT THE EARLIER POINT OF TIME, SUCH HELP IS NOT NEEDED AS A SSESSEES CONDUCT IN MAKING CLAIM FOR THE DEDUCTION OF RS 8,21,81,892 IS FOUND TO BE BONAFIDE. THERE WERE JUDICIAL PRECEDENTS IN HIS FAVOUR AND THE CLAIM WAS MADE IN AN UNFRONT AND TRANSPARENT MANNER. AS FAR AS CLAIM OF DEDUCTION FOR 100% DEPRE CIATION ON TEMPORARY BARRACKS IS CONCERNED, WE HAVE NOTED THAT THE ASSESSE WAS IN AP PEAL BEFORE THE CIT(A) ON THIS ISSUE, IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR , AND THE DECISION AGAINST THE ASSESSEE WAS PASSED BY THE CIT(A) ONLY ON 25 TH OCTOBER 2007. THE CLAIM OF THE ASSESSEE WAS THAT THE EXPENDITURE ON THE BARRACKS, IN THE CONSTRUCTION BUSINESS, WAS IN THE NATURE OF WRITE OFF, AND, ACCORDINGLY, THE P ROVISIONS OF PROVISO TO SECTION 32 DID NOT COME INTO PLAY IN SUCH A CASE. BY THE TIME DECI SION OF THE CIT(A) CAME, IN THIS CASE ALSO, THE TIME FOR REVISING THE INCOME TAX RET URN WAS ALREADY OVER. THEREFORE, THE ASSESSEES CONDUCT CANNOT BE FAULTED FOR THE REASON OF NOT HAVING REVISING THE RETURN ON THIS COUNT EITHER. AS FOR THE CLAIM OF ONE HUNDR ED PERCENT DEPRECIATION MADE BY THE ASSESSEE, IT APPEARS, AS EVIDENT FROM THE GROUNDS O F APPEAL BEFORE THE CIT(A) FOR 2004-05 A COPY OF WHICH WAS FILED BEFORE US AS WE LL, THAT THE CLAIM OF THE ASSESSEE WAS THAT IT IS A DEFACTO WRITE OFF, AND, THEREFORE, NOT HIT BY PROVISO TO SECTION 32(1). THAT IS A LEGAL CLAIM AND ITS MERE INADMISSIBILITY, OR ASSESSEE HAVING ABANDONED THIS CLAIM AFTER HAVING LOST BEFORE THE CIT(A) IN THE IM MEDIATELY PRECEDING YEAR, DOES NOT ESTABLISH THE MALAFIDES OF THE ASSESSEE. WE HAVE TA KEN NOTE OF LEARNED DRS ITA NO.5760 /DEL/ 2012 ASSESSMENT YEAR 2005-06 7 VEHEMENT CONTENTION THAT SINCE THIS CLAIM IS CONTRA RY TO LAW, AND, AS SUCH, IN VIEW OF HONBLE DELHI HIGH COURTS JUDGMENT IN THE CASE OF ZOOM COMMUNICATIONS (SUPRA), IT IS A FIT CASE FOR IMPOSITION OF PENALTY. WHILE H E IS INDEED RIGHT THAT, AS OBSERVED BY HONBLE DELHI HIGH COURT IN THIS CASE, IF THE ASSESSEE MAKES A CLAIM WHICH IS NOT ONLY INCORRECT IN LAW BUT IS ALSO WHOLLY WITHOUT AN Y BASIS AND THE EXPLANATION FURNISHED BY HIM FOR MAKING SUCH A CLAIM IS NOT FOU ND TO BE BONA FIDE, IT WOULD BE DIFFICULT TO SAY THAT HE WOULD STILL NOT BE LIAB LE TO PENALTY UNDER S. 271(1)(C) OF THE ACT , WHAT HE OVERLOOKS IS THAT THESE OBSERVATIONS WER E MADE IN THE CONTEXT OF A CLAIM WHICH THE ASSESSEE DID NOT EVEN PURSUE OR PLE AD BEFORE THE AO OR EVEN BEFORE THE CIT(A), AS EVIDENT FROM THE OBSERVATION THAT IT WAS NOT THE CONTENTION BEFORE US THAT CLAIMING OF SUCH A DEDUCTION UNDER S. 32(1) (III) WAS A DEBATABLE ISSUE ON WHICH THERE WERE TWO OPINIONS PREVAILING AT THE REL EVANT TIME. IN FACT, THE ASSESSEE DID NOT CLAIM, EITHER BEFORE THE AO OR BEF ORE THE CIT(A) THAT SUCH A DEDUCTION WAS PERMISSIBLE UNDER S. 32(1)(III) OF TH E ACT . THATS NOT THE CASE BEFORE US. THE PRINCIPLE LAID DOWN BY HONBLE HIGH COURT SEEMS, AS THEIR LORDSHIPS PUT IT IN SO MANY WORDS, IS THAT IF THE CLAIM BESIDES BEING INCORRECT IN LAW IS MALA FIDE, EXPLN. 1 TO S. 271(1) WOULD COME INTO PLAY AN D WORK TO THE DISADVANTAGE OF THE ASSESSEE BECAUSE WHILE IT IS TRUE THAT MERE SUBMITTING A CLAIM WHICH IS INCORRECT IN LAW WOULD NOT AMOUNT TO GIVING INACCUR ATE PARTICULARS OF THE INCOME OF THE ASSESSEE , IT CANNOT BE DISPUTED THAT THE CLAIM MADE BY THE AS SESSEE NEEDS TO BE BONA FIDE . THEIR LORDSHIPS WERE DEALING WITH A CASE IN WHI CH MALAFIDES WERE ESTABLISHED IN ASSESSEES OWN CONDUCT AS HE HA D NOTHING TO SAY FOR ADMISSIBILITY OF HIS CLAIM BEFORE ANY OF THE AUTHORITIES, THE AO OR THE CIT(A) OR EVEN THE ITAT. THE ASSESSEES DEFENCE SEEMED TO BE THAT IT WAS A LEGAL CLAIM AND MERE MAKING OF A LEGAL CLAIM CANNOT INVITE PENALTY UNDER SECTION 271(1)(C) . THIS CONDUCT, IN MAKING A PATENTLY INADMISSIBLE AND INDEFENSIBLE CLAIM, WAS FOUND TO B E MALAFIDE. THE CASE THAT WE ARE DEALING WITH IS QUALITATIVELY MUCH DIFFERENT. HERE IS A CASE IN WHICH SIMILAR CLAIM OF ONE HUNDRED PERCENT DEPRECIATION, WHICH IS CLAIMED TO B E A DE FACTO WRITE OFF, WAS SAID TO HAVE BEEN ALLOWED BY THE ASSESSING OFFICER HIMSELF ALL ALONG AND WHEN AO DECLINED THE SAME IN THE IMMEDIATELY PRECEDING ASSESSMENT YE AR, ASSESSEE CHALLENGED THE ITA NO.5760 /DEL/ 2012 ASSESSMENT YEAR 2005-06 8 SAME BEFORE THE CIT(A). IT WAS ONLY WHEN CIT(A) DEC IDED THE MATTER AGAINST THE ASSESSEE AND THE ASSESSEE REALIZED THAT IT IS REVEN UE NEUTRAL, INASMUCH AS IF THE ASSESSEE IS BEING DISALLOWED 50% DEPRECATION, FOR A SSET HAVING BEEN PUT TO USE FOR LESS THAN 180 DAYS, THE ASSESSEE IS BEING ALLOWED T HE SAME 50% DEPRECIATION IN THE IMMEDIATELY FOLLOWING YEAR, THAT THE ASSESSEE DID N OT PURE THE MATTER FURTHER AND SURRENDERED THE CLAIM. IT IS NOT THE ADMISSIBILITY OF CLAIM BUT TIMING OF THE CLAIM WHICH WAS IN DISPUTE. IN THESE CIRCUMSTANCES AND BEARING IN MIND ENTIRETY OF THE CASE, IN OUR CONSIDERED VIEW, THE CLAIM MADE BY THE ASSESSEE, TH OUGH PARTLY INADMISSIBLE IN THIS ASSESSMENT YEAR, CANNOT BE SAID TO BE A PATENTLY IN ADMISSIBLE CLAIM MERE MAKING OF WHICH SHOULD BE VISITED WITH PENALTY PROCEEDINGS UN DER SECTION 271(1)(C). LEARNED CIT(A) WAS, THEREFORE, QUITE JUSTIFIED IN DELETING THE PENALTY IN RESPECT OF THIS DISALLOWANCE AS WELL. IN VIEW OF THESE DISCUSSIONS, AS ALSO BEARING IN MIND ENTIRETY OF THE CASE, WE APPROVE THE CONCLUSIONS ARRIVED AT BY THE CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. 8. IN THE RESULT, THE APPEAL IS DISMISSED. PRONOUNC ED IN THE OPEN COURT TODAY ON 26 TH DAY OF SEPTEMBER, 2014. SD/- SD/- (DIVA SINGH) (PRAMOD KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED 26.09.2014 COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, ASSISTANT REGISTRAR