M/s. Tosha International Ltd., New Delhi V. ITO, New Delhi

ITA 5832/DEL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4005 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2002-2003
• Appeal Filed On: 27-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Wrong claim; Difference of opinion

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D NEW DELHI BEFORE SH. G.D.AGRAWAL, HONBLE PRESIDENT AND SH.K.N.CHARRY, JUDICIAL MEMBER ITA NO. 5832/DEL/2015 (ASSESSMENT YEAR: 2 002-03) APPELLANT BY NONE RESPONDENT BY SH. ARUN KUMAR YADAV, SR.DR DATE OF HEARING 20 .0 9 .2017 DATE OF PRONOUNCEMENT 0 9 . 1 0 .2017 ORDER PER K.N.CHARRY, JUDICIAL MEMBER THIS APPEAL PREFERRED BY THE ASSESSEE CHALLENGING T HE ORDER DATED 18.08.2015 IN APPEAL NO. 41/13-14 PASSING BY THE COMMISSIONER OF INCOME TAX (APPEAL) [IN SHORT CIT(A)]-9, NEW DELHI FOR 2002-03 ASSESSMENT YEAR FOR LEVYING THE PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT ACT). 2. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS A SICK COMPANY ENGAGED IN THE MANUFACTURE OF BLACK AND WHITE PICTURE TUBE. FOR A Y 2002-03, WHILE COMPLETING THE ASSESSMENT, THE LD.AO DISALLOWED THE DEPRECIATI ON OF AN AMOUNT OF RS.24,85,842/- CLAIMED BY THE ASSESSEE ON PLANT & M ACHINERY ON THE GROUND THAT THE ASSESSEE WAS NOT CARRYING OUT ANY BUSINESS ACTI VITY IN THAT YEAR. TOSHA INTERNATIONAL LTD., E-34, 2 ND FLOOR, CONNAUGHT PLACE, NEW DELHI-110001. PAN-AAACT4528K VS IT O , WARD-16(3), NEW DELHI. (APPELLANT) (RESPONDENT) ITA NO. 5832/DEL/2015 PG. 2 3. LD.AO SIMULTANEOUSLY INITIATED THE PENALTY U/S 2 71(1)(C) OF THE ACT AND LEVIED PENALTY OF RS.8,87,446/- WHICH THE ASSESSEE CONTEST ED BEFORE THE LD.CIT(A) ARGUING THAT THE CLAIM OF DEPRECIATION OF PLANT & MACHINERY IN RESPECT OF THE YEAR FOR WHICH NO BUSINESS ACTIVITY WAS CARRIED OUT, WAS A DEBATAB LE ISSUE AND NO PENALTY COULD BE LEVIED ON THE DISALLOWANCES MADE ON THE BASIS OF SU CH DEBATABLE ISSUES. HOWEVER, THE LD.CIT(A) HELD THAT AS PER LAW, THE ASSESSEE CA N MAKE CLAIM IF THE ASSET WAS USED ONLY DURING THE COURSE OF BUSINESS ACTIVITY AN D ON THAT GROUND, LD.CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE. 4. IT IS THE ARGUMENTS OF THE LD. AR THAT IN VIEW O F THE DECISION OF THE HONBLE HIGH COURT IN THE CASE OF YAMUNA MOTORS INDIA PVT.LTD. AND CIT VS SOCIETEX , ALLOWABILITY OF DEPRECIATION ON THE PLANT & MACHINE RY IN RESPECT OF THE YEARS IN WHICH THE PLANT & MACHINERY WAS NOT PUT TO USE IF O NCE THE PLANT & MACHINERY WAS USED FOR THE EARLIER YEARS, IS A DEBATABLE ISSUE. HE SUBMITTED THAT MERELY BECAUSE THE AO HAD TAKEN A VIEW THAT SUCH A CLAIM IS NOT TO BE ALLOWED, IN THE ABSENCE OF ANY ELEMENT OF CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS THEREOF, PENALTY CANNOT BE IMPOSED. PER CONTRA, LD. DR VEHE MENTLY RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE FAL SE CLAIM AMOUNTS FURNISHING OF INACCURATE PARTICULARS THEREOF. 5. WE HAVE CAREFULLY GONE THROUGH THE RECORD. ABSO LUTELY THERE IS NO DISPUTE AS TO WHETHER THE ASSESSEE FURNISHED THE PARTICULARS O F THE CLAIM OF DEPRECIATION TRULY AND FULLY IN THE RETURN OF INCOME. HOWEVER, THERE IS A DIFFERENCE OF OPINION BETWEEN THE ASSESSEE AND THE AO AS TO WHETHER SUCH DEPRECIA TION IS ALLOWABLE OR NOT. THERE IS A DIFFERENCE BETWEEN FALSE CLAIM AND WRONG CL AIM. HERE IN THIS CASE MERELY BECAUSE THE AO THOUGHT IT FIT TO DISALLOW THE CLAIM OF DEPRECIATION PER SE , IT DOES NOT BECOME A FALSE CLAIM OR AMOUNT TO CONCEALMENT OF I NCOME OR FURNISHING ALL ITA NO. 5832/DEL/2015 PG. 3 INACCURATE PARTICULARS THEREOF. SO LONG AS THE ASS ESSEE HAD FURNISHED ALL THE DETAILS RELATING TO THE CLAIM OF DEPRECIATION IN THE RETURN OF INCOME, IN THE ABSENCE OF ANY ALLEGATION AS TO THE FALSE CLAIM, INVOKING TO THE P ROVISIONS OF SECTION 271(1)(C) OF THE ACT IS BAD UNDER LAW. IF THE ASSESSEE PREFERS A CL AIM FOR DEPRECIATION WITHOUT INSTALLING THE PLANT & MACHINERY, IT BECOMES FALSE CLAIM. BUT IF THE DEPRECIATION IS NOT ALLOWED AS DEDUCTION, IT CANNOT BE A FALSE CLAI M AND AT THE BEST, IT COULD BE A WRONG CLAIM. WITH THIS VIEW OF THE MATTER, WHILE R ESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE APEX COURT IN THE DECISION OF CIT VS RELIANCE PETROPRODUCTS PVT. LTD. [2010] 322 ITR 158 [SC], WE HOLD THAT EVERY DISALLOWANCE OF ANY CLAIM FOR DE DUCTION WILL NOT AUTOMATICALLY LEAD TO THE LEVY OF THE PENA LTY. WE, THEREFORE, FIND IT DIFFICULT TO SUSTAIN THE LEVY OF PENALTY IN THIS MATTER. WE, THEREFORE, DIRECT THE AO TO DELETE THE PENALTY FOR THE RELEVANT YEAR. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 09 TH OCTOBER, 2017. SD/- SD/- (G.D.AGRAWAL) (K.N.CHARRY) PRESIDENT JUDICIAL MEMBER *AMIT KUMAR* DATE:-09.10.2017 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSI STANT REGISTRAR ITAT NEW DELHI