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TMI Blog2015 (4) TMI 910X X X X Extracts X X X X X X X X Extracts X X X X ..... had claimed the depreciation on land perse and not on intangible assets. The said claim was against the provisions of the Act and was thus not bonafide claim made by the assessee. On this account also, the assessee is liable to levy of penalty under section 271(1)(c) of the Act. Another contention raised by the assessee was that merely because the claim by it had been held to be not correct, would not amount to furnishing of in-accurate particulars of income. Reliance in this regard was placed on the ratio laid down by the Hon’ble Supreme Court in Price Waterhouse Coopers [2012 (9) TMI 775 - SUPREME COURT]. The said plea of the assessee does not stand because it is undisputed that the claim made by the assessee, was not bonafide. The claim of the assessee in any case, was not sustainable in law and in view of the above, where the explanation of the assessee is not found to be bonafide, the assessee is liable to levy of penalty under section 271(1)(c) of the Act. Accordingly, we uphold the order of CIT(A) in confirming the levy of penalty under section 271(1)(c) of the Act. - Decided against the assessee. - ITA No.285/PN/2014 - - - Dated:- 13-2-2015 - Shri G.S. Pannu And MS. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order passed by the Deputy Commissioner of Income tax levying penalty without establishing particulars of income furnished in the return of income and in the accounts submitted as inaccurate and without considering plausible explanations offered by the appellant for its claim for deduction of depreciation allowance on leasehold right as business and commercial rights and thus an intangible asset u/s. 32(1)(ii) of the Act. 1.4 The Hon'ble Commissioner of Income-tax (Appeals) erred in confirming the order passed by the Deputy Commissioner of Incometax levying penalty u/s.271(1)(c) of the Income tax Act when the appellant had discharged its primary burden by cogent explanations a)whereby difference between land - a non depreciating asset and leasehold i.e. right to use land was explained with reference to the provisions of Transfer of Property Act,, Income tax Act and the case laws decided by the Supreme court and High courts in tax proceedings; and b) leasehold right was explained as falling within the definition of the term an intangible asset and that the Id. AO was unable to rebut the same. 1.5 The Hon'ble Commissioner of Income-tax (Appeals) erred in confirmin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee carried the matter to the Tribunal, which in turn, had deleted the addition on account of depreciation claimed on technical know-how fees and also deleted the adjustment to the international transaction determined by the TPO. The only addition upheld by the Tribunal was the claim of depreciation on leasehold land at ₹ 47,87,204/-. Pursuant to the order of Tribunal, notice under section 274 r.w.s. 271(1)(c) of the Act was issued to the assessee. The claim of the assessee was that the assessee was having leasehold rights in the land and had claimed depreciation on the said leasehold land under section 32(1)(ii) of the Act. In cases the depreciation was not allowable on such leasehold rights, then amortization of cost over the lease period should be allowed. In any case, the claim of deduction even if it was wrong, could not be treated as concealment of income. The Assessing Officer was of the view that the case of the assessee fits into default created under section 271(1)(c) read with Explanation -1. The alternate plea made by the assessee of reasonable cause for default was also rejected by the Assessing Officer and the assessee was held to have furnished in-accurate parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on under the Act, such person fails to offer an explanation or offers an explanation which is found to be false or such person offers an explanation which he has not able to substantiate and fails to prove that such explanation is bonafide, then the amount added or disallowed in computing total income of such person as result thereof, shall for the purposes of clause (c) to section 271(1) of the Act be deemed to represent the income in respect of which particulars have been concealed. Meaning otherwise, in cases governed by Explanation - 1, where the explanation offered by the person is found to be false, not bonafide or where the explanation has not been substantiated with and in cases where the person fails to offer any explanation, are the cases where the person is held to have concealed particulars of his income and is liable to levy of penalty under section 271(1)(c) of the Act. 11. Now, coming to the facts of the present case, the assessee had acquired a running unit of Greaves Cotton Limited, situated at Nashik, which in turn, was engaged in the manufacturing of drilling equipment for oil fields, blast hole drilling (mining) and waterway drilling application. As per the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed depreciation on various blocks of assets i.e. (1) building, (2) furniture and fittings, (3) machinery plant and (4) intangible assets @ 25%. As per the schedule D attached to the balance sheet also, the leasehold land and the factory building and the office buildings were shown separately on which depreciation was claimed as per the Companies Act. The said depreciation chart is placed at page 4 of the Paper Book. The assessee claims that it had revised its claim of depreciation during the course of assessment proceedings alleging that it was entitled to the depreciation @ 25% on the value of leasehold land as depreciation was allowable under section 32(1)(ii) of the Act. The Tribunal while deciding quantum appeal, vide order dated 23.08.2011 had held that the depreciation even in the amended section 32(1)(ii) of the Act was allowable on the restricted categories of tangible assets or intangible assets, which are in specifically enumerated in the section. 13. The Tribunal further held that the provisions of the Act cannot be interpreted to mean that leasehold rights granting such type of ownership over land, etc. would also qualify as intangible assets for the purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X
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