2019 (11) TMI 1035 - AT - Income Tax

Penalty u/s.271(1)(c) - addition of leasehold improvement which was claimed as Revenue expenditure and treated as capital in nature by the Assessing Officer - HELD THAT - As decided in own case 2012 (9) TMI 261 - ITAT DELHI it was a clear case of difference of opinion with respect to claim of assessee. Mere non filing of appeal by assessee against the additions made by AO cannot be said to be admission by assessee of having submitted wrong claim. In view of the above, we are of the considered opinion that penalty imposed by AO and upheld by the Ld. CIT (A) is not justified. - Decided in favour of assessee.

Summary

Issues involved:
1. Deletion of penalty under section 271(1)(c) for Assessment Year 2008-09 regarding leasehold improvements.

Analysis:
The appeal was filed by the Revenue and Cross Objection by the assessee against the order dated 28.09.2016, related to penalty proceedings under section 271(1)(c) for the Assessment Year 2008-09. The Revenue challenged the deletion of penalty amounting to ?1,28,28,500. The assessee had debited ?4,00,17,141 for leasehold improvements, claiming it as revenue expenditure. The Assessing Officer treated it as capital expenditure, allowing depreciation on a portion and making an addition for the remaining amount. The penalty proceedings were initiated based on this disallowance, which was confirmed by the ITAT. However, the assessee cited a previous Tribunal decision in their favor for the Assessment Year 2006-07, where a similar issue was decided in favor of the assessee, leading to the deletion of penalty by the CIT (A).

The Tribunal in the current case noted that the assessee had provided all necessary details and opinions to support their claim of leasehold improvements as revenue expenditure. They highlighted that the nature of the expenses and differing opinions in courts regarding such matters justified the assessee's position. The Tribunal referenced judicial pronouncements and previous cases to support the assessee's claim, emphasizing that it cannot be considered inaccurate reporting of income. Based on the consistency with the previous decision for the Assessment Year 2006-07, the Tribunal confirmed the deletion of penalty, dismissing the Revenue's appeal.

The Cross Objection raised by the assessee challenged the technical grounds of the penalty imposition, stating that the Assessing Officer did not specify the charge under which the penalty proceedings were initiated in the show-cause notice. However, since the penalty was already deleted, the grounds raised in the Cross Objection were deemed academic and irrelevant. As a result, both the appeal of the Revenue and the Cross Objection of the assessee were dismissed, affirming the deletion of the penalty.

In conclusion, the Tribunal upheld the deletion of the penalty imposed under section 271(1)(c) for the Assessment Year 2008-09 regarding the treatment of leasehold improvements as revenue expenditure, based on consistent reasoning with a previous decision in favor of the assessee for the Assessment Year 2006-07.