Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding
  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2024 (7) TMI AT This

  • Login
  • Cases Cited
  • Summary

Forgot password       New User/ Regiser

⇒ Register to get Live Demo



 

2024 (7) TMI 139 - AT - Income Tax


Issues:
Penalty under section 271(1)(c) for difference in depreciation rate on biometric device.

Analysis:
The appeal was against the penalty imposed under section 271(1)(c) of the Income-tax Act, 1961, on the addition made due to a variance in the depreciation rate applied to a biometric device. The assessee claimed depreciation at 60% by considering the device part of the computer block, while the Assessing Officer treated it as part of the plant and machinery block, allowing depreciation at 15%. The disallowance led to a penalty of ?53,000, which was contested before the Tribunal. The key contention was whether the penalty was justified for furnishing inaccurate particulars of income by claiming a higher depreciation rate.

The assessee argued that the biometric devices were rightfully considered part of the computer block for depreciation calculation purposes, following the prescribed rules. The Assessing Officer, however, considered them part of the plant and machinery block, leading to the disallowance and subsequent penalty. The assessee relied on the decision of the Hon’ble Supreme Court in the case of CIT vs. Reliance Petro Products Pvt. Ltd., emphasizing that a mere disallowance of a claim does not automatically warrant a penalty under section 271(1)(c).

The Revenue contended that the assessee furnished inaccurate particulars by knowingly claiming a higher depreciation rate, despite the devices being categorized under plant and machinery. The Revenue argued that the penalty was rightly imposed as the assessee intentionally claimed a rate not permissible under the law. The authorities below upheld this view, asserting that the penalty was justified for providing inaccurate particulars of income.

After hearing both sides, the Tribunal noted that the dispute centered on the interpretation of the asset classification for depreciation purposes and not on the legitimacy of the claim itself. The Tribunal emphasized that the assessee had disclosed all relevant facts and details regarding the higher depreciation claim, supported by legal precedents. Relying on the decision in Reliance Petro Products Pvt. Ltd., the Tribunal concluded that the penalty could not be imposed solely based on the disallowance of the depreciation claim. Consequently, the penalty was deleted, and the appeal of the assessee was allowed.

In conclusion, the Tribunal ruled in favor of the assessee, emphasizing that the penalty for the difference in depreciation rate on the biometric device was unwarranted based on the facts presented and legal precedents cited. The decision highlighted the importance of disclosing all relevant information and clarified that a mere disagreement on the depreciation rate does not constitute furnishing inaccurate particulars of income, leading to the deletion of the penalty imposed.

 

 

 

 

Quick Updates:Latest Updates