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TMI Blog2014 (2) TMI 594X X X X Extracts X X X X X X X X Extracts X X X X ..... n the depreciation claim by the AO - With regard to the Proportionate swap cost on the outstanding swap contracts is concerned, the addition made only on the difference of opinion between the department and the assessee - If the AO is correct the assessee is entitled for deduction and the balance amount in the next accounting year – it is clear from the order of CIT(A) that the assessee neither concealed its income nor furnished any inaccurate particulars of income – Decided against Revenue. - ITA No. 4040/Mum/2007 - - - Dated:- 22-9-2011 - R.S. SYAL AND V. DURGA RAO, JJ. For the Appellant : Mr. Goli Srinivas Rao For the Respondent : Mr. D.S. Mainkar ORDER PER : V. DURGA RAO, J.M. This appeal filed by the Revenue is di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on these counts. The Tribunal has deleted the additions in sofar as Interest accrued but not due as on 31/03/01 of Rs. 84,71,62,630/- and Loss on forward exchange transaction of Rs. 8,74,020/- vide its order dated 17 th June, 2011 in ITA No. 4343/Mum/2005. 6. As regards the penalty, on disallowance of depreciation of 1,20,00,948/-, the learned AR of the assessee contended before the CIT(A) that basic test of levy of penalty on account of disallowance of depreciation on leased assets fail due to the fact that there is negative addition to total income after reducing capital recoveries. In this case, although there is addition of depreciation inherentin this addition is the reduction of capital recoveries and consequently there is net ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I hold that penalty u/s 271(1)(c) of the Act is not leviable on this issue. 7. As regards the penalty with regard to disallowance of swap cost as prepaid expenditure of Rs. 79,61,454/-, the CIT(A) held as under:- 7.1 The appellant is a banking company. The appellant received foreign currency deposits as per the schemes approved by the Reserve Bank of India. These deposits are to be repaid in foreign currency along with interest thereon and are hence vulnerable to exchange fluctuation risk. Banks are permitted to hedge the interest and foreign exchange fluctuation risk involved in these transactions by carrying out swap transactions. The appellant converts its foreign currency funds into rupee funds by way of swap transactions. Fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce amount in the next accounting year. Normally, the telex, telephone and franking machine expenses will be paid for 3 months period. The AO wanted to restrict the expenditure which are relatable to that accounting period and to disallow the remaining expenditure aspre paid expenditure but the Hon ble Madras High Court in the case of CIT Vs. Southern roadways Ltd., 282 ITR 379 (Mad) did not approve the AO s view. In view of the above, I am of the view that the addition made by the AO is on the basis of interpretation of the accounting principles. There is no concealment of income not furnishing of any inaccurate particulars of income. 8. Aggrieved by the order of the CIT(A) in deleting the penalties levied by the AO u/s 271(1)(c) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of the additions made by the AO in the assessment, as above. Moreover, we find that in the quantum appeal, the Tribunal deleted the additions in respect of interest accrued but not due as on 31/03/01 of Rs. 84,71,62,630/- and Loss on forward exchange transaction of Rs. 8,74,020/- vide its order dated 17 th June, 2011 in ITA No. 4343/Mum/2005. A copy of the said order is available on record. Therefore, we find no infirmity in the order of the CIT(A) in deleting the penalties levied by the AO u/s 271(1)(c) against the said additions. In so far as depreciation claim is concerned, we find that it is a legal claim made by the assessee and even the same claim was made in the earlier years. The CIT(A) gave afinding that the assessee neithe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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