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TMI Blog2016 (3) TMI 411X X X X Extracts X X X X X X X X Extracts X X X X ..... This appeal filed by the Revenue is directed against the order of the CIT(A)-XII, New Delhi, dated 18/06/2012 in appeal No. 59/11-12 for A.Y 2006-07. 2. The only issue involved in this appeal is in relation to the ld. CIT(A) s order deleting the penalty of ₹ 1,91,33,400/- imposed by the AO on account of Excess claim of deprecation of ₹ 5,42,93,162/- under TUF Scheme and capital subsidy of ₹ 25,50,000/-. 3. Briefly stated, the facts of the case are that the ld. CIT(A) confirmed the additions on account f excess claim of depreciation under TUF Scheme and disallowance out of capital subsidy. The AO initiated penalty proceedings u/s 271(1)(c) of the Income-tax Act, 1961 [ the Act for short] and imposed penalty on both the said issues. Aggrieved, the assessee preferred an appeal before the ld. CIT(A) who deleted the entire penalty and thus the aggrieved Revenue is before this Tribunal in this second appeal. 4. We have heard the rival submissions and have perused the relevant material on record. The ld. DR contended that wrong claims were made by the assessee in quantum proceedings and therefore, the AO made disallowances/additions on account of excess claim o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mission filed by the assessee and 1 am of the opinion that depreciation under Income Tax Act is to be allowed by the Assessing Officer as per the correct rates stated in the Rule. In this case, the assessee under bonafide belief based on report in the Financial Express ...The Finance Ministry has decided to retain the special depreciation benefits for textile machinery installation under the Technology Upgradation Fund Scheme(TUFS) Fresh investments under TUFS-an interest subsidy scheme to promote capacity building in the textile industry-will continue to benefit from 50% depreciation in the first year. Further, the eligibility criteria for the extra depreciation benefit would be benchmarked on the TUFS norms with regard to the sophistication levels of the machine installed. The special dispensation will be co-terminus with TUFS, which has been extended to 2006-07... had claimed higher depreciation. There was no concealment involved nor this is a case of filing of inaccurate particulars as everything was disclosed in the deprecation chart attached with the Income-tax Return. Furthermore, this case is also not covered under Zoom Communication, Delhi High Court, as in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h is accordingly dismissed. (A.K. SIKRI) In view of the facts stated above, the penalty of ₹ 1,91,33,400/- u/s 271(1)( c) imposed by the AO on two addition i.e of ₹ 5,42,93,162 on account of depreciation claimed and for amount of ₹ 25,50,000/- on account of subsidy is hereby cancelled and the assessee s appeal is allowed. 7. As per the order of ITAT Chandigarh in ITA No. 451/Chd/2014 on the issue of penalty on account of rejected claim of the assessee in regard to capital subsidy has been decided with the following proposition: 8. We have heard the rival contentions and perused the record. The issue of levy of penalty under section 271(l)(c) of the Act on the treatment of sales tax subsidy as revenue receipt arose before the Tribunal in assessee's own case relating to assessment year 2004-05. The Tribunal in consolidated order passed in ITA No. 1445/Chd/2010 in appeal filed by the assessee and ITA No. 290/Chd/2011 in the appeal filed by the revenue, vide order dated 06.03.2014 deleted the penalty levied under section 271(l)(c) of the Act on the said issue of sales tax subsidy observing as under : 43. The next item of addition is the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n relation to levy of penalty u/s 271(1, (c) of the Act on such debatable issue. The plea of the assessee in the present case was admitted for adjudication before the Higher Forums, makes the issue debatable, issue. The addition in the present case has been made on the basis of such debatable issue that whether the sales tax subsidy received by the assessee was capital in nature or not. We further find that similar issue of receipt of subsidy under the West Bengal Incentive Scheme has been held to be capital receipt in the case of CIT Vs. Rasoi Ltd.(supra) by the Hon'ble Calcutta High Court. The unit of the assessee has been established in the State of West Bengal and the case of the assessee is that it is governed by the said scheme as before the Hon'ble Calcutta High Court. In view thereof, the issue raised before us is where addition has been made in relation to such debatable issue, the assessee could be said to have furnished inaccurate particulars of income making it exigible to levy of penalty u/s 271(l)(c) of the Act. 19. The Hon'ble Punjab Haryana High Court in CIT Vs. M/s Gurdaspur Cooperative Sugar Mills (supra) on the issue whether the amount of gran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Petroproducts Pvt Ltd (supra) have laid down the proposition that A mere making of the claim, which is not sustainable in law, by itself will not amount to furnishing inaccurate particulars regarding the income of the assessee . 22. In the totality of the above said facts and following the ratio laid down by the Hon'ble Supreme Court in CIT, Ahemdabad l/s. Reliance Petroproducts Pvt. Ltd (supra/ and the Hon'ble Punjab Haryana High Court in CIT l/s. M/s Gurdaspur Cooperative Sugar Mills (supra) and CIT Vs. 7e* Ram (HUF) (supra) we hold that in view of the debatable issue raised, the assesses is not exigible to levy of penalty u/s 271(1 )(c) of the Act in the facts of the present case where the claim of the assessee that the receipts were capital in nature was rejected and the receipts were held to be revenue in nature and hence taxable. Upholding the order of the CIT (Appeals) we dismiss the grounds of appeal raised by the Revenue in ITA No.70/Chd/2012. 46. Following the same finding, we find no merit in holding the assessee to have furnished inaccurate particulars of income in respect of such debatable issue. The assessee is not exigible to levy of penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchased machinery by availing loan under TUFS scheme. The assessee was under a bonafide belief that since it has purchased machinery by availing loan from Bank under TUF Scheme, it was eligible for depreciation @ 50% on the machinery purchased. The claim of depreciation was not altogether bogus. The dispute was only with respect to the rate of depreciation. The belief of the assessee is not found to be untrue or false by the A.O. On these facts it cannot be said that assessee has furnished inaccurate particulars and is therefore liable to penalty u/s.271(1)(c ). In the case of Eagle Fibres Pvt. Ltd. (supra) the Coordinate Bench, on similar facts had deleted the penalty by holding as under:- 5. We have considered the material placed on record. As far as the Revenue s appeal in respect of excess claim of depreciation on machinery is concerned, the A.O. had made a disallowance of depreciation of ₹ 18,04,688/- primarily on the ground that the depreciation on machinery and plant (TUF Scheme) was allowable @ 25%, however, the assessee had claimed the depreciation at 50%. According to A.O., the eligible depreciation as per the Income tax Rules was only 25%, hence, the same wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings AO on verification of details filed by the assessee company observed that assessee has claimed depreciation on plant and machinery used in weaving, processing and garment sector which are purchased under TUFS on or after first day of April, 2004 are eligible for 50% depreciation. The assessee did not provide any details as if the machineries claimed to have been purchased during the year under consideration is covered by TUFS. In absence of any evidences/documents it could not be ascertained as if machineries are eligible under TUFS or not. Therefore, AO was of the view that it was established that the assessee-company engaged in the field of texturising the POY which was not covered by either of the process as covered by the provision of Rule 5 of the Income Tax Rules. Hence, depreciation claimed on plant and machinery at ₹ 48,35,632/- being 50% of WDV at ₹ 96,77,264/- was restricted to the depreciation allowable at normal rate as prescribed for the block of asset under the head Plant and Machinery @ 15% on the WDV which comes out at 14,50,690/-. Accordingly, the excess depreciation claimed by the assessee-company which comes out at ₹ 33,84,942/- (bein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concealment of particulars of his income by the assessee or furnishing of accurate particulars of such income. What is to be seen is whether the said claim made by the assessee was bon-fide and whether all the material facts relevant thereto have been furnished and once it is so established, the assessee cannot be held liable for concealment penalty u/s. 271(1 )(c) of the Act. Since all the material facts relevant to the said claim had been furnished by the assessee, in our opinion it is not a fit case to attract the levy of penalty u/s. 271 (1)(c) of the Act. A mere rejection of the claim of the assessee by relying on different interpretations does not amount to concealment of the particulars of income or furnishing inaccurate particulars of income, by the assessee. When two views, are possible, no penalty can be imposed, is a principle that has been enunciated in the decision in the case of CIT v. P.K. Narayanan [1999] 238 ITR 905 (Ker) Hon ble Punjab Haryana High Court in the case of CIT vs. Ajaib Singh Co. (2001) 170 CTR (P H) 489: (2002) 253 ITR 630 (P H) have observed that merely because certain expenses claimed by the assessee are disallowed by an authority, it cann ..... X X X X Extracts X X X X X X X X Extracts X X X X
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