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2016 (3) TMI 411 - AT - Income TaxPenalty u/s 271(1)(c) - Excess claim of deprecation under TUF Scheme and capital subsidy - Held that - Penalty imposed by the AO cannot be held as sustainable and the first appellate authority rightly deleted the same. Our conclusion also gets support from the landmark judgment of the Hon ble Supreme Court in the case of CIT Vs. Reliance Petro Products Pvt. Ltd 2010 (3) TMI 80 - SUPREME COURT and judgment of CIT Vs. Brahmaputra Consortium Ltd. 2011 (8) TMI 8 - DELHI HIGH COURT wherein it was held that merely because claim of the assessee was not accepted or not found to be acceptable by the Revenue does not amount o concealment of particulars of income or furnishing of inaccurate particulars of income. - Decided in favour of assessee
Issues Involved:
1. Deletion of penalty imposed by the AO on account of excess claim of depreciation under TUF Scheme. 2. Deletion of penalty imposed by the AO on account of disallowance out of capital subsidy. Detailed Analysis: Issue 1: Deletion of Penalty on Excess Claim of Depreciation under TUF Scheme The primary issue in this appeal concerns the deletion of a penalty amounting to Rs. 1,91,33,400/- imposed by the AO on the assessee for an excess claim of depreciation under the Technology Upgradation Fund Scheme (TUF Scheme). The AO had disallowed the excess depreciation claim of Rs. 5,42,93,162/- and initiated penalty proceedings under Section 271(1)(c) of the Income-tax Act, 1961 on the grounds of concealment of income or furnishing inaccurate particulars of income. The assessee contended that the claim was made under a bona fide belief based on a report published in the Financial Express, which suggested that the Finance Ministry had decided to retain special depreciation benefits for textile machinery installation under the TUF Scheme. The CIT(A) accepted this argument, noting that the assessee disclosed all relevant facts during the assessment proceedings and that there was no concealment or furnishing of inaccurate particulars of income. The CIT(A) concluded that the issue was a matter of interpretation of the applicable depreciation rate, which does not constitute concealment or furnishing of inaccurate particulars. The Tribunal upheld the CIT(A)'s decision, citing the judgment in CIT Vs. Reliance Petroproducts Pvt. Ltd., where it was held that merely making a claim that is not sustainable in law does not amount to furnishing inaccurate particulars. The Tribunal also referenced similar cases from the ITAT Ahmedabad Bench, where penalties were deleted on the grounds that the excess claim of depreciation was a debatable issue and not a case of concealment or furnishing of inaccurate particulars. Issue 2: Deletion of Penalty on Disallowance out of Capital Subsidy The second issue pertains to the deletion of penalty imposed on the disallowance of a capital subsidy amounting to Rs. 25,50,000/-. The AO had treated the subsidy as revenue in nature and imposed a penalty for concealment of income or furnishing inaccurate particulars. The CIT(A) found that the issue of the nature of the subsidy was debatable and that the assessee had disclosed all relevant facts. The CIT(A) cited the case of CIT Vs. Brahmaputra Consortium Ltd., where it was held that a mere disallowance of a claim does not amount to concealment of income or furnishing inaccurate particulars if the claim was made under a bona fide belief. The Tribunal agreed with the CIT(A)'s decision, referencing the ITAT Chandigarh's judgment in ITA No. 451/Chd/2014, which held that penalties are not imposable on debatable issues. The Tribunal noted that the assessee's claim was based on one possible view and that making such a bona fide claim does not attract the penal provisions of Section 271(1)(c). Conclusion: The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to delete the penalties. The Tribunal emphasized that both issues involved debatable interpretations of law, and the assessee had disclosed all relevant facts, thus not warranting penalties for concealment of income or furnishing inaccurate particulars. The judgment reinforces the principle that penalties under Section 271(1)(c) are not justified in cases involving bona fide claims based on debatable issues.
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