BUNGE INDIA P.LTD, MUMBAI V. JCIT (OSD) 8(1), MUMBAI

ITA 6510/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88419 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 05-01-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 29-10-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PREMANAND J
• Assessee Lawyers: V MOHAN
• Keywords: Depreciation; Wrong claim

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE S/SHRI I.P. BANSAL, (JM) AND B.R.BASKARAN (AM) . . , . . , ./ I.T.A. NO.6510/MUM/2012 ( / ASSESSMENT YEAR : 2004-05) BUNGE INDIA PRIVATE LIMITED, B-401 & 501, BUSINESS SQUARE, ANDHERI KURLA ROAD, CHAKALA, ANDHERI (E), MUMBAI-400093 / VS. JT.COMMISSIONER OF INCOME TAX (OSD) 8(1), ROOM NO.210, 2ND FLOOR, AYAKAR BHAVAN,M.K.ROAD, MUMBAI-400020 ( / APPELLANT) .. ( ! / RESPONDENT) ./ '# ./PAN/GIR NO. :AAACG7034K $ / ASSESSEE BY: SHRI V MOHAN ! % $ / REVENUE BY:: SHRI PREMANAND J & ' % ( ) / DATE OF HEARING :6.1.2015 *+ % ( ) / DATE OF PRONOUNCEMENT : 18.2.2015 / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 01- 08-2012 PASSED BY LD CIT(A)-16, MUMBAI CONFIRMING T HE PENALTY OF RS.62,83,900/- LEVIED BY THE AO U/S 271(1)(C) OF TH E ACT FOR THE ASSESSMENT YEAR 2004-05. ITA NO.6510/M/12 2 2. WE HEARD THE PARTIES AND PERUSED THE RECORD. THE AO NOTICED THAT THE ASSESSEE HAS CLAIMED DEPRECIATION @ 40% ON PLAN T AND MACHINERY, WHERE AS THE APPLICABLE RATE OF DEPRECIATION WAS ON LY 25%. SIMILARLY, THE AO NOTICED THAT THE ASSESSEE HAS CLAIMED DEPRECIATI ON @ 10% ON LAND AND DEVELOPMENT WORKS, WHERE AS THE ACT DOES NOT PROVID E DEPRECIATION ON LAND. AFTER CONFRONTING THESE MISTAKES, THE AO REC OMPUTED THE DEPRECIATION AND ACCORDINGLY DISALLOWED EXCESS CLAI M AND ALSO LEVIED PENALTY U/S 271(1)(C) OF THE ACT ON THE SAID DISALL OWANCE. THE LD CIT(A) ALSO CONFIRMED THE SAME. 3. WE NOTICE THAT THE EXPLANATION OF THE ASSESSEE WAS THAT THE DEPRECIATION CHART OF THE CURRENT YEAR WAS PREPARED THROUGH THE COMPUTER SYSTEM BY ADOPTING THE RELEVANT FIGURES FROM THE IM MEDIATELY PRECEDING YEAR. HOWEVER, THE RATE OF DEPRECIATION RELATING TO THE PLANT AND MACHINERY WAS INADVERTENTLY OMITTED TO BE MODIFIED TO 25% FRO M 40% AND THE SAID ERROR CAME TO BE NOTICED ONLY WHEN THE AO POINTED O UT THE SAME. ACCORDINGLY IT WAS SUBMITTED THAT THE MISTAKE HAS O CCURRED DUE TO INADVERTENCE. BUT THE SAID EXPLANATION WAS NOT ACC EPTABLE TO BOTH THE TAX AUTHORITIES. 4. NOW THE EFFECTIVE QUESTION THAT ARISES BEFORE US IS WHETHER THE ABOVE SAID EXPLANATION OF THE ASSESSEE IS A BONAFID E ONE OR NOT. IF IT IS FOUND TO BE A BONAFIDE ONE, THEN THE PENALTY SHALL NOT LIE IN VIEW OF THE EXPLANATION 1 TO SEC 271(1)(C) OF THE ACT. THE FAC T THAT THE ASSESSEE WAS ITA NO.6510/M/12 3 ELIGIBLE TO CLAIM HIGHER RATE OF DEPRECIATION @ 40% IN THE IMMEDIATELY PRECEDING YEAR WAS NOT DISPUTED. IT IS ALSO QUIET NATURAL IN THIS COMPUTER ERA TO PREPARE DEPRECIATION CHART BY DOWNLOADING TH E RELEVANT FIGURES FROM THE CHART OF THE IMMEDIATELY PRECEDING YEAR. VIEWED FROM THIS ANGLE, WE ARE OF THE VIEW THAT THE EXPLANATION OF THE ASSE SSEE APPEARS TO BE BONAFIDE ONE. IT IS QUITE POSSIBLE THAT THE DEPREC IATION RATE MAY ESCAPE THE ATTENTION WHILE PREPARING THE DEPRECIATION CHAR T, SINCE THE BASIC DEPRECIATION RATE HAS NOT BEEN CHANGED IN THE STATU TE DURING THE YEAR UNDER CONSIDERATION. HENCE, WE ARE OF THE VIEW THA T THE EXPLANATION GIVEN BY THE ASSESSEE SHOULD BE CONSIDERED AS BONAFIDE ON E AND HENCE EXPLANATION 1 TO SEC. 271(1)(C) SHALL APPLY TO THE SAME. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD CIT(A) ON THE PENALTY LEV IED ON THE DISALLOWANCE OF DEPRECIATION CLAIMED ON PLANT AND MACHINERY AND DIRECT THE AO TO DELETE THE PENALTY LEVIED THEREON. 5. THE NEXT DISALLOWANCE RELATE TO THE DEPRECIATIO N CLAIMED ON LAND. IT IS AN ADMITTED POSITION OF LAW THAT THE DEPRECIATIO N IS NOT ALLOWABLE ON LAND. HENCE, THE DEPRECIATION CLAIMED BY THE ASSES SEE LAND TURNS OUT TO BE A WRONG CLAIM EVEN IN THE IMMEDIATELY PRECEDING YEAR. FURTHER, WE NOTICE THAT THE ASSESSEE HAS FAILED TO FURNISH ANY EXPLANATION IN THIS REGARD. UNDER THESE SET OF FACTS, WE ARE OF THE VI EW THAT THE LD CIT(A) WAS JUSTIFIED IN CONFIRMING THE PENALTY LEVIED ON D ISALLOWANCE OF DEPRECIATION RELATING TO LAND. ITA NO.6510/M/12 4 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 18TH FEB, 2015. *+ & , - . 18TH FEB, 2015 + % /' 0 SD SD ( . . /I.P. BANSAL ) ( . . ,/ B.R. BASKARAN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER & ' MUMBAI: 18TH FEB,2015. . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. ! / THE RESPONDENT. 3. & 2( ( ) / THE CIT(A)- CONCERNED 4. & 2( / CIT CONCERNED 5. 6. 34 / (5 , ) 5 , & ' / DR, ITAT, MUMBAI CONCERNED / 6 7 ' / GUARD FILE. 8 & / BY ORDER, TRUE COPY 9 ' (ASSTT. REGISTRAR) ) 5 , & ' /ITAT, MUMBAI