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TMI Blog2013 (11) TMI 1319X X X X Extracts X X X X X X X X Extracts X X X X ..... f Depreciation admissible under Sec.32 the Appellant's contention that the depreciation is allowable on the basis of passive use. The Appellant have enclosed the schedule of depreciation which was enclosed with the return of income. The Tax Auditor also has made a similar observation under Annexure II to its tax audit report under Sec.44AB. Further, the Appellant had made elaborate submissions during the assessment proceedings justifying the legal stand on which they had relied upon. So, in view of the above the Appellant have not furnished any inaccurate particulars and had indeed furnished all necessary details and information in the return filed by us and it is on the basis of such information that the order of assessment has been framed. Your Appellant crave leave to add to, alter or amend any of the above grounds of appeal, if felt necessary" 2. The appellant, engaged in the business of investment and finance, filed its return of income on 27.10.2004 declaring the total income of Rs.1.54 Crores. The assessment was finalised by the Assessing Officer (AO) under section 143 (3) of the Income-tax Act(Act) on 30.11.2006 determining the income of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act, Penalty was, amounting to Rs. was levied by him on the appellant by order dated 24.02.2010. 3. In the appellate proceedings, FAA held that in the year under consideration, the appellant had claimed depreciation on factory building, that the claim was made on the basis of passive use of the building relying on the decision in the case of CIT vs. Geotech Construction Corporation (244 ITR 452), that depreciation had been claimed by the appellant right from assessment year 2001-02 onwards, that Section 32 of the Act clearly stated that the benefit of depreciation could be accorded to the appellant only if the asset used was owned by the appellant and was used for the purpose of business of the appellant in the year concerned, that the appellant had not acquired the said asset for the purpose of business-but it was an investment, that the asset had never been put to use for the purpose of business, that the said asset had been let out on rent and the income received was offered as income from house property, that the appellant had also not engaged itself in the business of manufacturing in the year, that it was carrying out business of financing and investing only during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the business or profession during a particular AY. Explanation 1to the section envisages that where the business or profession of the assessee is carried on in a building not owned by him but in respect of which the assessee holds a lease or other right of occupancy and any capital expenditure is incurred by the assessee for the purposes of the business or profession on the construction of any structure or doing of any work, in or in relation to, and by way of renovation or extension of, or improvement to, the building, then, the aseessee will be entitled to depreciation with regard to the said structure or /building. In short ownership of building is not an essential precondition for claiming/allowing depreciation. But, as far as carrying on of business or profession is concerned Act is very clear - it is a mandatory condition. In other words for claiming depreciation for a building it should be 'put to use for business or profession'. Burden of proof is on assessee to prove that buildings was put to use for the business or profession. There is no doubt that keeping plant or machinery ready for use has been considered passive use of the asset and depreciation has been allowed for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out ten hours. The Tribunal held that the margin of time was enough for tippers to move from Pondicherry to the work site and even if it is accepted, as contended by the Revenue, there was no actual user, the fact that they were kept ready for use would be enough for grant of depreciation on the principle of passive user of the asset. Accordingly, the claim of depreciation was allowed. In the appeal filed by the department Hon'ble High Court held that the tippers were purchased on March 29,1986,that it was inconceivable that the assessee, after spending so much of money, would keep the tippers at Pondicherry without bringing them to the work site, that it was possible for the tippers to reach the work site, that same had reached the work site, that Tribunal had come to a conclusion on the facts about the assets being put to use and in the alternative applying the principle of passive user, that the conclusions were irreversible. It was further held that Tribunal had recorded the finding that there was positive material to show the existence of the asset at the work site, and about the passive user it could not be termed to be one without any basis or illegal. Accordingly, the claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration. In the present case AO as well as FAA has given a factual and categorical finding that assessee had furnished inaccurate particular of income and had concealed income. Both of them found that explanation filed by the assessee was not as per the provisions of law. 5.4. We are of the opinion that in view of Explanation1 to section 271(1) (c), penalty for concealment of income or furnishing inaccurate particulars can be imposed if an assessee offers an explanation which is found by the AO / FAA to be false, or if the assessee offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide. In such matters the onus is on the assessee to offer an explanation in respect of the claims made by him in the return of income. It is said that the object behind the enactment of Section 271(1)(c) read with the Explanations is to provide for a remedy for loss of revenue. In other words, Section 271(1)(c) has to be strictly applied in the larger interest of discipline in filing correct returns by the assessees. Secondly, as per the established principles of tax-jurisprudence assessee should file some positive evidences whenever he ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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