TMI Blog2024 (4) TMI 1054X X X X Extracts X X X X X X X X Extracts X X X X ..... eover, since the mining right are held as an intangible asset eligible for depreciation u/s 32 of the Act by the ITAT, Hyderabad in the case of NMDC Limited for various assessment years from AY 2008-09 [ 2014 (3) TMI 682 - ITAT HYDERABAD] , AY 2009-10 [ 2014 (9) TMI 629 - ITAT HYDERABAD] , AY 2010-11 [ 2014 (7) TMI 993 - ITAT HYDERABAD] , AY 2011-12 [ 2015 (3) TMI 928 - ITAT HYDERABAD] , AY 2012-13 [ 2017 (5) TMI 1714 - ITAT HYDERABAD] , AY 2013-14, AY 2014-15 [ 2018 (10) TMI 1120 - ITAT AHMEDABAD] the assessee company has a bonafide belief that depreciation would be allowed on such mining rights to the assessee company. It is also an admitted fact transpired from the order of Ld. CIT(A) that the assessee appellant had filed an application before the Ld. AO, seeking immunity u/s 270AA of the Act after fulfilling all the pre-requisite conditions of the said section. There was no reason for the Ld. AO to deny grant of immunity to the assessee towards the application submitted u/s 270AA. Considering the facts and circumstances of the case, since there were justifiable reasons supporting the bonafide belief of the assessee in claiming the depreciation on mining rights and since mala-fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,417/- for a period of less than 180 days and depreciation of @25% for half year amounting to Rs. 21,69,41,302/- was claimed. The allowability of depreciation so claimed by the assessee was denied by the revenue on account of no activity leading to income from extraction of Iron Ore in the relevant year or in the preceding year, it is also observed that by the Ld. AO, that the business of the assessee has not commenced in the relevant AY. Notice u/s 274 r.w.s. 270A was issued to the assessee, in response, a reply was submitted by the assessee, wherein the assessee contended that there must be mens rea or malafide intentions to levy penalty. It was the contention that the word inaccurate signifies a deliberate act or omission on part of the assessee, reliance was placed on the order of Hon ble Apex Court in the case of Dilip N. Shroff vs. CIT (291 ITR 519) (SC). Assessee also advanced the argument that the claim of depreciation was on the basis of judicial pronouncement in existence wherein similar claims by the assessee s were allowed by the Hon ble Courts, thus, the assessee was under bonafide belief. The Assessing Officer makes addition adopting different interpretation, in such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. The assesse has declared a loss in business only due to the depreciation claimed thus choosing to make a wrong claim by underreporting income so that benefits out of such wrong claims can be reaped later in subsequent years. hence, the addition was made amounting to Rs. 21,69,41,302/- and added back to the income of the assessee, Based on the above facts, it is clear that the assessee has under reported income to the extent of Rs. 21,69,41,302/- Therefore, the case of the assessee squarely falls within the ambit of under-reporting of income for the purpose of levy of penalty u/s 270A of the Act. 8. It is also put forward that the entire scheme of penalty was modified so that different categories of misdemeanor in the furnishing of the return of income can be graded and penalized accordingly. 9. The assessee's silence in the matter on the above disallowances made is an admission of the fact that it did commit a default within the meaning of section 270A of the Act without any reasonable cause. It is a settled law that in economic offences, the statutory liability to pay either duty or tax is nothing but a strict liability where the question of proving beyond the shadow of do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and had paid tax on the same a/w interest, this clearly shows that there was under reporting of income by the assessee. It was the submission that the penalty was imposed under the provisions of law as a remedy to stop the leakage of revenue, therefore, the present case was a fit case for imposition of penalty u/s 271A of the Act. Ld. CIT DR in terms of aforesaid submissions requested to uphold the penalty order of Ld. AO and set aside the order of Ld. CIT(A). 7. Per contra, in rebuttal Ld. AR of the assessee submitted a written submission in support of assessee s contentions that the claim was based on a bonafide belief considering certain judicial precedents and assessee had no malafide intention to under report the income. The written submission of the assessee, for the sake of better appreciation of the facts, is extracted as under: Before the Income Tax Appellate Tribunal, Raipur- DB BENCH In ITA 303/RPR/2023 Deputy Commissioner of Income Tax-1(1) vs. NMDC CMDC LIMITED Respondent PAN: AACCN8925C AY: 2018-19 WRITTEN SUBMISSION With reference to the above-mentioned appeal, in continuation to the submissions made on 22.11.2023 followed by the hearing on 23.11.2023, we hereby mak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re 3 aspects based on which the claim of assessee was disallowed. 1. AO took a view that Mining rights do not fall within the purview of intangible asset as specified for claiming depreciation u/s 32. This issue is debatable with various judicial precedents in favour of assessee mainly the case of assessee's holding company. Infact at one place in the order (precisely in para 3.2), the AO himself stated that Mining Right is an intangible asset. 2. AO stated that asset is not owned by the assessee. This statement is incorrect as in the order itself the AO has stated that In this case, assessee has acquired land from government for the exploration (Para 3.1). Then in para 3.3 also the AO has stated that transfer of lease land after granting of mining rights is one of the starting point and state government transferred the lease on 04.12.2017 . Therefore, this observation of the AO is incorrect. 3. AO stated that the asset is not put to use during the year. The fact whether a particular asset is put to use or not depends on various factors including the nature of asset, its use. In the present case it is pertinent to note that the asset under question is an intangible asset i.e. m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aining mining lease. Eventually all the activities will lead to commercial exploitation. It is humbly submitted that an asset can be said to be put to use when its availability is contributing to any of the activity. In the present case, as stated above there are certain activities which could be done only after obtaining of mining lease. The obtaining of mining lease has enabled the assessee to carry on further activities such as enumeration and felling of trees. inviting tender and appointing of MDO. Without having the mining lease, the assessee couldn't have proceeded with these activities and accordingly in our understanding it should constitute put use of the asset because when availability of something is leading to/enabling happening of other thing it implies that it is put to use. In the assessment order the AO himself has stated that the grant of mining right is one of the starting point, government has transferred the lease on 04.12.2017 and thereafter many essential activities are required to be carried out which includes felling of trees, construction of roads, convenor belts, etc. We also wish to submit that the issue under consideration is with regard to penalty m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as a depreciable asset eligible for depreciation u/s 32 of the Act, by coordinate bench of ITAT, Hyderabad in the following Income Tax Appeals: 1. ITA No. 714/Hyd/2012 dated 28/02/2014 for AY 2008-09. 2. ITA No. 288/Hyd/2013 dated 18/07/2014 for AY 2009-10. 3. ITA No. 1795/Hyd/2013 dated 09/05/2014 for AY 2010-11. 4. ITA No. 1593/Hyd/2014 dated 20/03/2015 for AY 2011-12. 5. ITA No. 148/Hyd/2017 dated 09/05/2017 for AY 2012-13. 6. ITA No. 1785/Hyd/2017 dated 17/10/2018 for AY 2013-14. 7. ITA No. 1786/Hyd/2017 dated 17/10/2018 for AY 2014-15 10. The extract of findings by Ld. CIT(A) is culled out for the sake of completeness and clarity: 5.4 The above submissions of the appellant have been carefully considered. The assessee's plea could be summarized as under: a. The disallowance of depreciation on the mining lease is a subject matter of debate. There are decisions of various courts including in the case of the appellant's holding company NMDC to the effect that mining right is a depreciable, asset. b. The appellant has commenced business operations in that performance security has been deposited with the State Government, agreement signed with State Government, mining leas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is only in cases where proceedings for Levy of penalty have been initiated on account of alleged misreporting of income that an assessee is prohibited from applying and availing the benefit of Immunity from penalty and prosecution under s. 270AA. 6. In fact, the statutory scheme for grant of impunity is based on satisfaction of three fundamental conditions, namely, (i) payment of tax demand; (ii) non- institution of appeal; and (iii) initiation of penalty on account of underreporting of income and not on account of delay/default on the part of the Revenue. 7. This Court is also or the View that the petitioner cannot be prejudiced by the inaction of the AO in passing an order under s. 270AA of the Act within the statutory time limit as it is settled law that no prejudice can be caused to any assessee on account of delay/default on the part of the Revenue. 8. In the present case, the petitioner has satisfied the aforesaid conditions, in as much as, (i) the tax has been paid on the additions; (ii) appeal has undisputedly not been filed; and (iii) penalty (as would be evident from the penalty notice) has been initiated on account of underreporting of income. 9. Consequently, this C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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