1989 (5) TMI 87 - AT - Income Tax

Summary

Issues Involved:
1. Penalty u/s 271(1)(c) for false claim of higher depreciation.
2. Depreciation claims on Extra Shift Allowance (ESA) on electrical installations.
3. Depreciation claims on Pollution Control Equipment.
4. Depreciation claims on Dumpers.

Summary:

1. Penalty u/s 271(1)(c) for False Claim of Higher Depreciation:
The assessee, a public limited company in the cement industry, contested a penalty of Rs. 2 crores imposed u/s 271(1)(c) for allegedly making false claims of higher depreciation. The Tribunal found that the assessee had revised its depreciation claim from Rs. 53.57 crores to Rs. 47.15 crores before the assessment began, indicating no intent to deceive. The Tribunal held that the penalty was not justified as the claims were revised due to inadvertence and lack of proper application of mind, not with a mala fide intention.

2. Depreciation Claims on ESA on Electrical Installations:
The assessee initially claimed ESA on the Opening Block only, even though it was entitled to ESA on additions as well. The Tribunal noted this as an inadvertent mistake and found no grounds for invoking the provisions of section 271(1)(c). The assessee decided not to claim the ESA due to the time and effort required to gather the necessary information.

3. Depreciation Claims on Pollution Control Equipment:
The assessee claimed depreciation only on additions made during the relevant previous year, omitting the Opening Block. The Tribunal recognized this as another instance of inadvertence. The original claim was Rs. 2.18 crores, revised to Rs. 2.60 crores, with the Assessing Officer allowing Rs. 2.52 crores. The Tribunal concluded that no motive could be attributed to the assessee to justify the penalty.

4. Depreciation Claims on Dumpers:
The issue of whether dumpers qualify as "earth-moving machinery used in open cast mining" was debatable. The assessee was eligible to claim Rs. 0.99 crores but revised it to Rs. 0.83 crores to avoid litigation. The Tribunal found no basis for invoking section 271(1)(c) for this act.

Conclusion:
The Tribunal held that the income-tax authorities were not justified in imposing the penalty u/s 271(1)(c) and cancelled the penalty. The appeal was allowed, emphasizing that the assessee's actions were due to inadvertence and not with any intent to deceive the Revenue.