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TMI Blog2010 (1) TMI 664X X X X Extracts X X X X X X X X Extracts X X X X ..... peal the Assessing Officer's action of denying this deduction, the assessee can be deemed to have concealed his income - The explanation given by the assessee ought to have been accepted on the facts of the present case - Decided in favour of the assessee X X X X Extracts X X X X X X X X Extracts X X X X ..... ter in appeal before the Commissioner of Income-tax (Appeals) who deleted the penalty and observed as follows: "It is submitted that the treatment of software licence as capital expenditure instead of as revenue expenditure has not been litigated in quantum proceedings by the assessee on account of the fact that on and from the very next year, viz., the assessment year 2003-04, the depreciation at 60 per cent is allowable resulting in virtual write off in a span of 2 to 3 years. With regard to sustained disallowance of 10 per cent of hotel expenses, it is submitted that while an appeal was filed to the Hon'ble Tribunal, the same was withdrawn on account of smallness of revenue involved as also the fact that in later years, the entire disa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... possible views with which an Assessing Officer may disagree. This phenomenon today is an accepted position and is supported by a catena of decisions. I have, therefore, no hesitation in deleting the penalty of Rs. 4,02,751 imposed on treatment of computer software expenses as capital expenditure entitled to depreciation instead of as revenue expenditure in the quantum assessment and I also delete penalty of Rs. 73,487 imposed for ad hoc disallowance of 10 per cent of hotel expenditure." 4. The revenue is aggrieved by the relief so given by the Commissioner of Income-tax (Appeals) and is in appeal before us. 5. Having heard the rival contentions and having perused the material on record, we are not inclined to interfere in the matter. As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e being an artificial judicial person, any disallowance for personal expenses is not possible. The nature of disallowance, therefore, is such that this disallowance per se, even if accepted by the assessee, cannot be a sound basis for imposition of penalty. Merely because the assessee has allowed the matter to attain finality and not challenged the same in appeal, it cannot be inferred that the assessee was at fault. There can be several reasons, entirely unrelated to the merits of related additions as well, for not filing an appeal and accepting the disallowance. Therefore, accepting a disallowance per se cannot be used against the assessee, as was done by the Assessing Officer in this case, cannot be reason enough to impose penalty in res ..... X X X X Extracts X X X X X X X X Extracts X X X X
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