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2022 (2) TMI 702 - ITAT SURATPenalty u/s 271(1)(c) - disallowance of depreciation on plant & machinery lease out to the tenant - HELD THAT:- In the present case, the assessee throughout proceeding, the claim that the asset on which depreciation was claimed is existed and was sold only in AY 2018-19 and earned Short Term Capital Gains/Loss thereon was offered to tax. The assessee while filing its return of income offered the rental income as “business income”. Assessing Officer treated the rental income as “business income” primarily on the fact that the assessee was not doing any business activities and that plant & machinery were not shown in the lease deed. The Hon'ble Jurisdictional High Court in ROYALE MANOR HOTELS & IND. LTD. [2012 (8) TMI 1106 - GUJARAT HIGH COURT] held that where there was no intention of the assessee to claim wrong deduction of depreciation on hotel building, and mistake was bona fide penalty could not be imposed. In present case as the claim of assessee is that they have let out its business premises to various parties alongwith plant & machinery and income earned on letting out was offered for tax under the head business income from “business profession” and the assessee was under bonafide belief that the depreciation is allowable of the block of asset, we find merit in the submission of Ld. AR for the assessee that the assessee made a bonafide claim and mere disallowance thereof would not lead to conclusion that the assessee furnished inaccurate particulars. Thus, in view of the above factual and legal discussion, the grounds of appeal raised by the assessee are allowed.
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